G4S plc
Interim Results Announcement
January - June 2008
G4S plc, the international security solutions group, today announces its half
year results for the six months to 30 June 2008.
RESULTS HIGHLIGHTS
Very strong organic turnover growth* of 10.5% (2007: 7.5%)
Group turnover* up 19.3% to £2,697.3 million (2007:£2,261.5m)
PBITA* up 19.4% to £174.8 million (2007:£146.4m)
Margin* maintained at 6.5%
Cash flow generation up 35.6% to £132.5 million, 77% of PBITA (2007: 71%)
Adjusted earnings per share increased 26.3% to 7.2p (2007: 5.7p) and by 18% at
constant exchange rates (2007:6.1p)
Interim dividend up 30% to 2.75 pence per share, DKK 0.2572 (2007: 2.11p/DKK
0.2319)
Invested £533 million net in capability-building acquisitions and raised £282
million via a share placing
Good performance across all regions and business segments
Excellent progress on the integration of GSL and ArmorGroup
Expect to continue good performance for the full year
* at constant (2008) exchange rates
Nick Buckles, Chief Executive Officer, commented:
“Despite the well-reported difficulties in the economies of a number of
international markets, trading is ahead of where we expected it to be at the
half year - we have continued to deliver double digit organic growth and profit
margins have held firm.
Adjusted earnings per share growth has been very strong at 26.3% and the
integration of a number of major capability-building acquisitions is on schedule
and on target to deliver the expected benefits and estimated synergy savings.
Overall, we have delivered an excellent performance for the first half of 2008
and we are very confident for the remainder of the year.”
For further enquiries, please contact:
Nick Buckles - Chief Executive Officer +44 (0) 1293 554400
Trevor Dighton - Chief Financial Officer
Helen Parris - Director of Investor Relations
Media enquiries:
Kevin Smith - Citigate Dewe Rogerson +44 (0) 7973 672649
High resolution images are available for the media to view and download free of
charge from www.vismedia.co.uk
Notes to Editors:
G4S is the world's leading international security solutions group, which
specialises in outsourced business processes in sectors where security and
safety risks are considered a strategic threat.
G4S is the largest employer quoted on the London Stock Exchange and has a
secondary stock exchange listing in Copenhagen. G4S has operations in over 110
countries and over 570,000 employees. For more information on G4S, visit
www.g4s.com.
Presentation of Results:
A presentation to investors and analysts is taking place today at 0830hrs at the
London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS. The
presentation will be webcast at:
http://www.investorcalendar.com/IC/CEPage.asp?ID=132364
A telephone dial-in facility is available on:
UK Access number +44 (0)20 8609 0581
UK Free phone* number 0800 358 1448
Denmark Toll free* number +45 808 870 69
US Toll free* number 1 866 388 1925
*If you are calling from a mobile phone your provider may charge you when
connected to our toll free /free phone number.
FINANCIAL SUMMARY
Results
The results which follow have been prepared under International Financial
Reporting Standards, as adopted by the European Union (adopted IFRSs).
Group Turnover
--------------------------------------------------------------------------------
| Turnover of Continuing Businesses | H108 | H107 |
| | £m | £m |
--------------------------------------------------------------------------------
| Turnover at constant exchange | 2,697.3 | 2,261.5 |
| rates | | |
--------------------------------------------------------------------------------
| Exchange difference | - | (124.5) |
--------------------------------------------------------------------------------
| Total continuing business | 2,697.3 | 2,137.0 |
| turnover | | |
--------------------------------------------------------------------------------
Turnover, at constant exchange rates, increased by 19.3% to £2,697.3 million.
Organic turnover growth was 10.5%.
--------------------------------------------------------------------------------
| Organic Turnover | Europe | North | New Markets | Total |
| Growth * | | America | | |
--------------------------------------------------------------------------------
| Security Services | 9.5% | 6.9% | 17.4% | 10.4% |
--------------------------------------------------------------------------------
| Cash Services | 11.0% | -2.6% | 15.6% | 10.6% |
--------------------------------------------------------------------------------
| Total | 9.9% | 6.2% | 17.1% | 10.5% |
--------------------------------------------------------------------------------
* Calculated to exclude acquisitions and disposals, and at constant exchange
rates
Group Profit
--------------------------------------------------------------------------------
| PBITA * of Continuing Businesses | H108 | H107 |
| | £m | £m |
--------------------------------------------------------------------------------
| PBITA at constant exchange rates | 174.8 | 146.4 |
--------------------------------------------------------------------------------
| Exchange difference | - | (7.5) |
--------------------------------------------------------------------------------
| Total continuing business PBITA | 174.8 | 138.9 |
--------------------------------------------------------------------------------
| PBITA margin | 6.5% | 6.5% |
--------------------------------------------------------------------------------
* PBITA is defined as profit before interest, taxation and amortisation of
acquisition-related intangible assets
PBITA at constant exchange rates increased by 19.4% to £174.8 million. The
PBITA margin was 6.5%.
Cash Flow and Financing
--------------------------------------------------------------------------------
| Cash Flow | H108 | H107 |
| | £m | £m |
--------------------------------------------------------------------------------
| Operating cash flow | 132.5 | 97.7 |
--------------------------------------------------------------------------------
| Operating cash flow / PBITA | 77% | 71% |
--------------------------------------------------------------------------------
Operating cash flow, as analysed on page 24, was up 35.6% to £132.5 million in
the period, representing 77% of PBITA. Net cash invested in acquistions was
£533.0 million. Net debt at the end of the period, as analysed on page 22, was
£1,134.2 million (June 2007:£801.5 m; December 2007: £804.9m).
Adjusted earnings per share
--------------------------------------------------------------------------------
| Adjusted earnings per | H108 | H107 at constant | H107 |
| share | £m | exchange rates | £m |
| | | £m | |
--------------------------------------------------------------------------------
| PBITA from continuing | 174.8 | 146.4 | 138.9 |
| operations | | | |
--------------------------------------------------------------------------------
| Interest (before pensions) | (37.5) | (27.8) | (26.8) |
--------------------------------------------------------------------------------
| Tax | (37.1) | (33.6) | (31.8) |
--------------------------------------------------------------------------------
| Minorities | (5.7) | (7.1) | (7.1) |
--------------------------------------------------------------------------------
| Adjusted profit | 94.5 | 77.9 | 73.2 |
| attributable to | | | |
| shareholders | | | |
--------------------------------------------------------------------------------
| Average number of shares | 1,310.3 | 1,274.4 | 1,274.4 |
| (m) | | | |
--------------------------------------------------------------------------------
| Adjusted EPS (p) | 7.2p | 6.1p | 5.7p |
--------------------------------------------------------------------------------
Adjusted earnings per share, reconciled to basic earnings per share on page 21,
increased by 26.3%, or by 18.0% at constant exchange rates.
BUSINESS ANALYSIS
Security Services
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Turnover | PBITA | Margins | Organic |
| £m | £m | | Growth |
--------------------------------------------------------------------------------
| H108 | H107 | H108 | H107 | H108 | H107 | H108 |
--------------------------------------------------------------------------------
| * At | |
| constant | |
| exchange | |
| rates | |
--------------------------------------------------------------------------------
| Europe * | 1,054 | 874.1 | 64.6 | 53.0 | 6.1% | 6.1% | 9.5% |
| | .1 | | | | | | |
--------------------------------------------------------------------------------
| North | 570.8 | 518.2 | 30.8 | 27.8 | 5.4% | 5.4% | 6.9% |
| America * | | | | | | | |
--------------------------------------------------------------------------------
| New Markets | 509.4 | 379.5 | 38.9 | 31.1 | 7.6% | 8.2% | 17.4% |
| * | | | | | | | |
--------------------------------------------------------------------------------
| Total | 2,134 | 1,771 | 134.3 | 111.9 | 6.3% | 6.3% | 10.4% |
| Security | .3 | .8 | | | | | |
| Services * | | | | | | | |
--------------------------------------------------------------------------------
| Exchange | - | (95.8 | - | (5.3) | |
| differences | | ) | | | |
--------------------------------------------------------------------------------
| At actual | 2,134 | 1,676 | 134.3 | 106.6 | |
| exchange | .3 | .0 | | | |
| rates | | | | | |
--------------------------------------------------------------------------------
The security services business continued its strong performance with good
organic growth of 10.4% and margins constant at 6.3%.
Europe
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Turnover | PBITA | Margins | Organic |
| £m | £m | | Growth |
--------------------------------------------------------------------------------
| H108 | H107 | H108 | H107 | H108 | H107 | H108 |
--------------------------------------------------------------------------------
| * At constant | |
| exchange rates | |
--------------------------------------------------------------------------------
| UK & Ireland * | 397.8 | 287.1 | 30.7 | 21.9 | 7.7% | 7.6% | 8.2% |
--------------------------------------------------------------------------------
| Continental | 656.3 | 587.0 | 33.9 | 31.1 | 5.2% | 5.3% | 10.1% |
| Europe * | | | | | | | |
--------------------------------------------------------------------------------
| Total Europe * | 1,054 | 874.1 | 64.6 | 53.0 | 6.1% | 6.1% | 9.5% |
| | .1 | | | | | | |
--------------------------------------------------------------------------------
Organic growth in Europe was 9.5% and margins remained at 6.1%.
Organic growth increased from 6.2% in the prior year to 8.2% in the UK & Ireland
with margins also improving assisted by higher UK manned security margins. New
contracts won or commencing included security services for Shell and port
security services with ABP Humberside. The care and justice business had a
strong increase in electronic tagging and prisoner escorting volumes. In
Belfast, a new state-of-the-art security system monitoring centre was opened,
providing national and international monitoring services.
In addition a number of major capability-building acquisitions were completed
including GSL, ArmorGroup and the RockSteady Group.
In Continental Europe, organic growth from continuing operations improved to
10.1%, compared to 6.5% in the prior year. Margins were slightly lower due to
start up costs on two aviation contracts - a new contract at Oslo airport in
Norway which successfully commenced operations in February and the Schiphol
airport contract in the Netherlands which was retained under competitive rebid,
against a new brief from the customer. Margins for the region should improve in
the second half of 2008.
G4S concluded a further 25% buy out of the businesses in the Baltics taking the
G4S holding to 90%, with the remaining 10% to be acquired in the second half of
2008. These businesses performed well with Lithuania and Estonia performing
very strongly with excellent organic growth and strong margins. In Luxembourg
and Belgium the businesses retained the European Parliament contracts for a
further five years under competitive rebid.
Austria had strong organic growth assisted by security contracts for the 2008
European football championships. Sweden also saw a recovery in its organic
growth with a positive margin impact.
In Greece, revenues and profits improved strongly on the same period last year.
The business was awarded two major contracts to provide passenger screening
services to four regional airports for three years, and a four year contract to
provide security services to the Athens Metro.
In Serbia, the acquisition of Progard Securitas was completed in the first half
of the year. Progard is the market leader and this acquisition will assist G4S
expansion in the region and commence operations in Croatia, Montenegro and
Macedonia through Progard's existing subsidiaries.
In Malta, the acquisition of ISecure in January 2008 enabled G4S Malta to enter
the security systems market.
North America
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Turnover | PBITA | Margins | Organic |
| £m | £m | | Growth |
--------------------------------------------------------------------------------
| H108 | H107 | H108 | H107 | H108 | H107 | H108 |
--------------------------------------------------------------------------------
| * At constant | |
| exchange rates | |
--------------------------------------------------------------------------------
| North America * | 570.8 | 518.2 | 30.8 | 27.8 | 5.4% | 5.4% | 6.9% |
--------------------------------------------------------------------------------
Organic growth in North America was 6.9% and margins were unchanged at 5.4%.
The United States achieved good margin improvement in the commercial sector
through a reduction in non-billed overtime. This was offset by significant
start-up costs related to new contracts in the government sector, in particular
a large immigration monitoring contract for 27 cities. Organic growth of 6.9%
was achieved despite commencing the transition out of the Exelon nuclear
contract. Growth in WSI, the government business was double digit, assisted by
contract additions such as security services for army bases, NYFPS and the
Savannah River nuclear site.
RONCO, Touchcom and MJM were acquired during the first half and performed
strongly and in line with our expectations.
Canada had an improved performance compared to the same period in 2007, with
better margins in a continuing tough market.
New Markets
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Turnover | PBITA | Margins | Organic |
| £m | £m | | Growth |
--------------------------------------------------------------------------------
| H108 | H107 | H108 | H107 | H108 | H107 | H108 |
--------------------------------------------------------------------------------
| * At constant | |
| exchange rates | |
--------------------------------------------------------------------------------
| Asia * | 179.4 | 128.9 | 14.9 | 10.9 | 8.3% | 8.5% | 16.5% |
--------------------------------------------------------------------------------
| Middle East * | 119.9 | 85.0 | 8.2 | 7.4 | 6.8% | 8.7% | 21.9% |
--------------------------------------------------------------------------------
| Africa * | 111.3 | 85.9 | 9.6 | 7.4 | 8.6% | 8.6% | 13.9% |
--------------------------------------------------------------------------------
| Latin America & | 98.8 | 79.7 | 6.2 | 5.4 | 6.3% | 6.8% | 17.8% |
| Caribbean * | | | | | | | |
--------------------------------------------------------------------------------
| Total New | 509.4 | 379.5 | 38.9 | 31.1 | 7.6 % | 8.2% | 17.4% |
| Markets * | | | | | | | |
--------------------------------------------------------------------------------
In New Markets, organic growth was very strong at 17.4% with margins slightly
lower than the previous year due in part to the impact of the ArmorGroup
acquisition on the Middle East results, together with the expected impact of the
renegotiated Colombia tolls contract.
Organic growth in Asia was 16.5% and margins were slightly lower than the same
period last year due to higher wage and fuel costs in some markets which we
expect to pass on in the second half. Macau, Indonesia and Pakistan all achieved
organic growth of over 20%. India has won some breakthrough contracts in the
aviation and healthcare sectors. Thailand had organic growth above 20% assisted
by new contracts in the aviation and financial services sectors.
In Bhutan there has been government approval for outsourcing of security
services to G4S which should contribute to growth in the medium term. In March
2008 the business in Papua New Guinea became the preferred supplier to the
United Nations for manned security of domestic and commercial buildings occupied
by UN personnel, security systems monitoring and armed response services. In
China the facilities management business performed well with organic growth of
38%. As expected, the government has indicated that the security industry is to
be partially opened to foreign participation under new regulations.
In the Middle East there was organic growth of 21.9%, with particularly strong
performances in Kuwait, Qatar and Saudi Arabia. All central costs for
ArmorGroup have been assigned to Iraq and we expect these to be reduced over
time through synergy benefits. In Egypt, G4S was awarded the Cairo Metro project
which commenced earlier this month.
In Africa, organic growth was 13.9% and margins were maintained at the same
level as the prior half year. The acquisition of ArmorGroup contributed to an
expanding G4S footprint in Africa with current operations in nearly 30
countries. The acquisition has also enhanced the services provided to customers
in the region, including the provision of security services to 17 US Embassies.
Strong growth was achieved in Kenya, Namibia, Tanzania and Uganda. Morocco grew
very strongly due to new security solutions contracts in the banking and oil
industries with excellent margin improvements.
The Latin America and Caribbean region achieved organic growth of 17.8% and
margins were 6.3%. The larger markets of Argentina, Guatemala and Peru
continued to perform very well, with the renegotiated Colombia tolls contract
impacting on margins as expected.
Cash Services
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Turnover | PBITA | Margins | Organic |
| £m | £m | | Growth |
--------------------------------------------------------------------------------
| H108 | H107 | H108 | H107 | H108 | H107 | H108 |
--------------------------------------------------------------------------------
| * At | |
| constant | |
| exchange | |
| rates | |
--------------------------------------------------------------------------------
| Europe * | 402.1 | 359.5 | 39.7 | 34.7 | 9.9% | 9.7% | 11.0% |
--------------------------------------------------------------------------------
| North | 41.9 | 43.0 | 0.2 | 1.0 | 0.5% | 2.3% | -2.6% |
| America * | | | | | | | |
--------------------------------------------------------------------------------
| New Markets | 119.0 | 87.2 | 18.0 | 13.6 | 15.1% | 15.6% | 15.6% |
| * | | | | | | | |
--------------------------------------------------------------------------------
| Total Cash | 563.0 | 489.7 | 57.9 | 49.3 | 10.3% | 10.1% | 10.6% |
| Services * | | | | | | | |
--------------------------------------------------------------------------------
| Exchange | - | (28.7 | - | (2.3) | |
| differences | | ) | | | |
--------------------------------------------------------------------------------
| At actual | 563.0 | 461.0 | 57.9 | 47.0 | |
| exchange | | | | | |
| rates | | | | | |
--------------------------------------------------------------------------------
The cash services division performed well with organic growth of 10.6%. Margins
were up slightly on the same period last year at 10.3% assisted by higher
margins in Europe but partly offset by lower margins in Canada and New Markets.
Whilst there has been an increase in fuel costs across the business, we expect
to recover these increased costs through our price increase programmes
throughout the remainder of the year. The Retail Solutions technology is now
fully tested and is in an active roll-out phase, with pilots in six countries
and the first contracts being signed. The pilot sites and prospects in those
countries represent an opportunity of 22,000 retail sites and we expect to have
launched in at least ten countries by the end of 2008.
Organic growth in Europe was 11%. In the UK a major HBOS ATM contract has been
fully implemented and the business has won significant new additional volumes in
Scotland in both the retail and financial sectors. A new “superbranch” has
opened in Bristol and the opening of an additional “superbranch” in central
London is expected in the third quarter of 2008, which will rationalise a number
of smaller branches in the London area, providing operational efficiencies.
Romania grew very strongly with the continued roll-out of bank outsourcing
contracts. Greece achieved strong growth through ATM servicing and the Baltics
also achieved excellent organic growth built on its strong market positions.
In Sweden, the Swedbank ATM management contract continues to be very successful,
but is partly offset by the high operating and investment costs of national
security regulations. In Belgium, significant organic growth came from a number
of banks increasing their remote ATM estates.
Hungary had a very good first half as a result of growing cash volumes and
continuing operating efficiencies, particularly at the Budapest cash centre.
In the Czech Republic, the business focused on improving the security aspects of
its operations after a major robbery in December 2007. Significant investments
in security technology have been made and the business is performing very well.
The business in Poland is continuing to improve following a major restructure
based on terminating poorly performing contracts. They are continuing to win
new contracts and additional volume in both cash management and transportation.
In Ireland a major new outsourced contract for An Post (the Post Office) is
currently being implemented, and this will provide additional growth.
Following the restructuring of the Canada business as a consequence of banking
contract losses in Ontario in 2007, the business is running on a stable
operational platform. Following a branch and route rationalisation project, an
improved second half financial performance is expected.
G4SI, the international valuables business, achieved strong growth, particularly
in the precious metals and banknote sectors. G4SI has won major new precious
metal mine contracts in South America and Africa, and the outlook for this
sector remains very positive.
In New Markets, organic growth was 15.6% and margins were down slightly at 15.1%
as a result of the renegotiated Colombia tolls contract. There were continued
strong results in Malaysia with organic growth of nearly 20% from the growth of
ATMs and cash deposit machines. In Thailand, the business signed three new
contracts - two for cash transport and management and one for the servicing of
400 ATMs. The South Africa cash services business acquired in March 2007 also
grew nearly 20% from both the finance and retail sectors with improved margins.
Kenya performed well with organic growth of nearly 15% despite a difficult start
to the year following the political unrest in January. Saudi Arabia grew very
strongly through ATM servicing.
OTHER FINANCIAL ISSUES
Acquisitions and divestments
Our strategy implementation continues to move ahead at a good pace and we have
selected a number of countries as priorities for the capability-building
approach to driving accelerated growth and development that we outlined to the
market towards the end of 2007.
We have completed a number of acquisitions during the first half of 2008
including ArmorGroup, one of the world's leading protective security companies,
on 7 May and GSL, an international leader in the provision of government support
services, on 12 May. The group has been running detailed worldwide integration
programmes since completion of the acquisitions with the objective of fully
integrating GSL and ArmorGroup within the next six months. That process is
progressing well with management teams focused on delivering the planned
business performance and synergies.
The GSL businesses are currently being integrated into the G4S UK & Ireland
region to create a significantly stronger UK Care and Justice business as well
providing additional secure outsourcing capability in the UK government sector.
At the time of the GSL acquisition we announced that we expected to achieve cost
synergies of around £7 million. We expect the costs of achieving these
synergies to be charged in 2008, with the full effect of the synergy benefits
coming through in 2009.
The majority of ArmorGroup's 27 country operations have now been merged into the
relevant G4S regions. The UK elements of ArmorGroup have been merged with G4S
Risk Management Solutions to create a business which focuses on government
contracts in Afghanistan, Iraq and Kosovo as well as the provision of mine
clearance, training and risk management consultancy.
The opportunity to acquire further capability-building businesses across the
group's international footprint continues to be strong and we expect to make
further acquisitions in both developed and New Markets in areas such as secure
facilities management, cash solutions, data and document management and risk
management consulting in the second half of the year.
At the end of 2007, we signalled our intention to divest of our remaining
businesses in France and Germany. The majority of these businesses have now
been divested. We expect the remaining manned security business in France to be
divested by the end of the year.
Risks and uncertainties
A discussion of the group's risk assessment and control processes and the
principal risks and uncertainties that could affect the business activities or
financial results are detailed on pages 20 and 21 of the company's annual report
for the financial year ended 31 December 2007, a copy of which is available on
the group website www.g4s.com.
The risks and uncertainties are expected to be the same during the remaining six
months of the financial year.
Share capital
On 13 May 2008 the group completed a placing of 127 million ordinary shares of
25p at a price of 222p per share. Gross proceeds were £281.9 million and issue
costs £5.9 million.
Financing & Interest
The group's primary source of finance is a £1.1billion multicurrency revolving
credit facility provided by a consortium of lending banks at a margin of 0.225%
over LIBOR and maturing on 28 June 2012.
During the period the group also had US$550 million in financing from the
private placement of notes, maturing at various dates between 2014 and 2022 and
bearing interest at rates between 5.77% and 6.06%.
At 30 June 2008 the group had other short-term committed facilities of £45
million and uncommitted facilities of £481 million. It also had additional
committed facilities amounting to £350 million, bearing interest at a margin of
0.60% over LIBOR and expiring on 31 December 2008.
On 15 July 2008 the group completed a further $514 million and £69 million
private placement of notes, which mature at various dates between 2013 and 2020
and bear interest at rates between 6.09% and 7.56%. At the same date, the
additional £350 million committed facilities referred to above were cancelled.
As of 30 June 2008, net debt was £1,134.2 million representing a gearing of 80%.
The group has sufficient borrowing capacity to finance current investment plans.
Net interest payable on net debt was £37.5 million. This is an increase of 40%
over the 2007 cost of £26.8 million, due principally to the increase in the
group's average gross debt.
Also included within financing is net income of £2.5 million (2007: £2.8
million) in respect of movements in the group's retirement benefit obligations.
Taxation
Tax has been provided at the estimated effective tax rate for the full year of
27.0% on adjusted earnings, compared to 27.5% for the full year in 2007. The
group believes that this rate is sustainable going forward.
Retirement benefit obligations
The group's funding shortfall on funded defined retirement benefit schemes, on
the valuation basis specified in IAS19 Employee Benefits, was £149 million
before tax or £107 million after tax (31 December 2007: £136 million and £98
million respectively). The main schemes are in the UK. The latest full
actuarial valuations were undertaken at 5 April 2006 in respect of the Securicor
scheme and 31 March 2007 in respect of the Group 4 scheme.
The valuation of gross liabilities has decreased since 31 December 2007 due to
an increase in the appropriate AA corporate bond rate from 5.8% to 6.6%.
However, the value of the assets held in the funds (adjusted for acquired
pension funds and additional contributions) decreased by £97 million during the
period. Additional company contributions were £25 million and a further £2
million of additional contributions is payable in the second half of the year.
The group believes that, over the very long term in which retirement benefits
become payable, investment returns should eliminate the deficit reported in the
schemes in respect of past service liabilities. However, in recognition of the
regulatory obligations upon pension fund trustees to address reported deficits,
the group anticipates that, in the medium term, additional cash contributions
will continue to be made at least at a level similar to that in 2008.
Dividend
The Board has declared an interim dividend for 2008 of 2.75p per share (DKK
0.2572) payable on 31 October 2008. This represents an increase of 30% on the
interim dividend for 2007 and a prospective dividend cover of 2.5 times (2007:
2.7 times) on adjusted earnings for the year.
REVIEW AND OUTLOOK
Trading for the first half of the year was ahead of our expectations and we have
continued to achieve double digit organic growth and good margins despite the
general economic difficulties in some key countries across the world.
This strong trading performance, along with our strategy of acquiring
capability-building businesses and driving through the relevant synergy benefits
from major acquisitions, provides us with confidence for the second half.
As well as growing earnings per share by 26.3% we have also increased dividend
per share by 30%, further reflecting the continued strong momentum of the
business.
The opportunity to acquire further capability-building businesses across the
group's international footprint continues to be strong and we hope to make
further focussed acquisitions in developed and in New Markets including areas
such as secure facilities management, cash solutions, data and document
management and risk management in the second half of the year.
Our strategy implementation continues to move ahead at a good pace and we have
selected a number of countries as our priorities for moving forward to drive
accelerated growth and development that we outlined to the market towards the
end of 2007.
Overall, we have had an excellent performance for the first half of 2008 and are
very confident for the remainder of the year.
27 August 2008
G4S plc
Unaudited interim results announcement
For the six months ended 30 June 2008
Directors' responsibility statement in respect of the interim results
announcement
We confirm that to the best of our knowledge:
this condensed set of financial statements has been prepared in accordance with
International Accounting Standard (IAS) 34 Interim Financial Reporting as
adopted by the EU;
the Interim Management Report includes a fair review of the information required
by:
(a) DTR 4.2.7R of the Disclosure Rules and Transparency Rules, being an
indication of important events that have occurred during the first six months of
the financial year ending 31 December 2008 and their impact on the condensed set
of financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the financial year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the financial year
ending 31 December 2008 and that have materially affected the financial position
or performance of G4S Plc during that period; and any changes in the related
party transactions described in the Annual Report 2007 that could do so.
The responsibility statement is signed by:
Nick Buckles Trevor Dighton
Chief Executive Chief Financial Officer
G4S plc
Unaudited interim results announcement
For the six months ended 30 June 2008
Consolidated income statement
For the six months ended 30 June 2008
--------------------------------------------------------------------------------
| | | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | |
--------------------------------------------------------------------------------
| | | 30.06.08 | 30.06.07 | 31.12.07 |
--------------------------------------------------------------------------------
| | Note | £m | £m | £m |
| | s | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Continuing operations | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Revenue | 2 | 2,697.3 | 2,137.0 | 4,483.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit from operations before | | 173.0 | 137.5 | 308.4 |
| amortisation of acquisition-related | | | | |
| intangible assets and share of | | | | |
| profit from associates | | | | |
--------------------------------------------------------------------------------
| Share of profit from associates | | 1.8 | 1.4 | 3.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit from operations before | 2 | 174.8 | 138.9 | 311.4 |
| amortisation of acquisition-related | | | | |
| intangible assets (PBITA) | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Amortisation of acquisition-related | | (30.4) | (18.9) | (41.6) |
| intangible assets | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit from operations before | 2, 3 | 144.4 | 120.0 | 269.8 |
| interest and taxation (PBIT) | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Finance income | 6 | 50.0 | 44.6 | 92.6 |
--------------------------------------------------------------------------------
| Finance costs | 7 | (85.0) | (68.6) | (146.3) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit from operations before | | 109.4 | 96.0 | 216.1 |
| taxation (PBT) | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Taxation: | | | | |
--------------------------------------------------------------------------------
| - Before amortisation of | (37.8) | (32.6) | (70.9) |
| acquisition-related intangible assets | | | |
--------------------------------------------------------------------------------
| - On amortisation of | | 8.5 | 5.5 | 14.9 |
| acquisition-related intangible | | | | |
| assets | | | | |
--------------------------------------------------------------------------------
| | 8 | (29.3) | (27.1) | (56.0) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit from continuing operations | | 80.1 | 68.9 | 160.1 |
| after taxation | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| (Loss)/profit from discontinued | 4 | - | (0.5) | 0.5 |
| operations | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit for the period | | 80.1 | 68.4 | 160.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to: | | | | |
--------------------------------------------------------------------------------
| Equity holders of the parent | | 74.4 | 61.3 | 147.2 |
--------------------------------------------------------------------------------
| Minority interests | | 5.7 | 7.1 | 13.4 |
--------------------------------------------------------------------------------
| Profit for the period | | 80.1 | 68.4 | 160.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share attributable to | 9 | | | |
| ordinary equity shareholders | | | | |
| of the parent from continuing and | | | | |
| discontinued operations | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Basic | | 5.7p | 4.8p | 11.5p |
--------------------------------------------------------------------------------
| Diluted | | 5.7p | 4.8p | 11.5p |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Dividends declared and proposed in | 10 | | | |
| respect of the period | | | | |
--------------------------------------------------------------------------------
| Interim dividend of 2.75p per share | | 38.7 | 27.0 | 27.3 |
| (2007: 2.11p per share) | | | | |
--------------------------------------------------------------------------------
| Final dividend (2007: 2.85p per | | - | - | 36.3 |
| share) | | | | |
--------------------------------------------------------------------------------
| Total | | 38.7 | 27.0 | 63.6 |
--------------------------------------------------------------------------------
Condensed consolidated balance sheet
As at 30 June 2008
--------------------------------------------------------------------------------
| | | As at | As at | As at |
--------------------------------------------------------------------------------
| | | 30.06.08 | 30.06.07 | 31.12.07 |
--------------------------------------------------------------------------------
| | Note | £m | £m | £m |
| | s | | | |
--------------------------------------------------------------------------------
| ASSETS | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current assets | | | | |
--------------------------------------------------------------------------------
| Goodwill | | 1,702.8 | 1,273.2 | 1,336.0 |
--------------------------------------------------------------------------------
| Other acquisition-related intangible | | 425.1 | 229.6 | 222.5 |
| assets | | | | |
--------------------------------------------------------------------------------
| Other intangible assets | | 37.9 | 22.5 | 31.3 |
--------------------------------------------------------------------------------
| Property, plant and equipment | | 459.5 | 358.4 | 401.7 |
--------------------------------------------------------------------------------
| Investment in associates | | 3.0 | 9.6 | 10.2 |
--------------------------------------------------------------------------------
| Trade and other receivables | | 143.9 | 118.5 | 153.8 |
--------------------------------------------------------------------------------
| | | 2,772.2 | 2,011.8 | 2,155.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current assets | | | | |
--------------------------------------------------------------------------------
| Inventories | | 72.3 | 52.3 | 57.9 |
--------------------------------------------------------------------------------
| Investments | | 72.3 | 72.8 | 73.2 |
--------------------------------------------------------------------------------
| Trade and other receivables | | 1,085.0 | 863.3 | 886.0 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | | 446.6 | 306.9 | 381.3 |
--------------------------------------------------------------------------------
| Assets classified as held for sale | 11 | 111.1 | 22.3 | 130.9 |
--------------------------------------------------------------------------------
| | | 1,787.3 | 1,317.6 | 1,529.3 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | | 4,559.5 | 3,329.4 | 3,684.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| LIABILITIES | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current liabilities | | | | |
--------------------------------------------------------------------------------
| Bank overdrafts | | (127.1) | (97.1) | (109.9) |
--------------------------------------------------------------------------------
| Bank loans | | (59.8) | (44.3) | (80.6) |
--------------------------------------------------------------------------------
| Obligations under finance leases | | (19.0) | (12.5) | (16.2) |
--------------------------------------------------------------------------------
| Trade and other payables | | (950.0) | (756.9) | (868.2) |
--------------------------------------------------------------------------------
| Provisions | | (137.8) | (72.1) | (72.9) |
--------------------------------------------------------------------------------
| Liabilities associated with assets | 11 | (74.8) | (13.2) | (78.3) |
| classified as held for sale | | | | |
--------------------------------------------------------------------------------
| | | (1,368.5 | (996.1) | (1,226.1 |
| | | ) | | ) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current liabilities | | | | |
--------------------------------------------------------------------------------
| Bank loans | | (1,112.5 | (713.6) | (729.1) |
| | | ) | | |
--------------------------------------------------------------------------------
| Loan notes | | (290.8) | (274.1) | (290.4) |
--------------------------------------------------------------------------------
| Obligations under finance leases | | (61.1) | (40.3) | (46.0) |
--------------------------------------------------------------------------------
| Trade and other payables | | (37.1) | (30.1) | (38.7) |
--------------------------------------------------------------------------------
| Provisions | | (272.5) | (176.5) | (231.5) |
--------------------------------------------------------------------------------
| | | (1,774.0 | (1,234.6 | (1,335.7 |
| | | ) | ) | ) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total liabilities | | (3,142.5 | (2,230.7 | (2,561.8 |
| | | ) | ) | ) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net assets | | 1,417.0 | 1,098.7 | 1,123.0 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| EQUITY | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Share capital | | 352.1 | 320.2 | 320.2 |
--------------------------------------------------------------------------------
| Share premium and reserves | | 1,030.1 | 748.0 | 766.9 |
--------------------------------------------------------------------------------
| Equity attributable to equity | 12 | 1,382.2 | 1,068.2 | 1,087.1 |
| holders of the parent | | | | |
--------------------------------------------------------------------------------
| Minority interests | | 34.8 | 30.5 | 35.9 |
--------------------------------------------------------------------------------
| Total equity | | 1,417.0 | 1,098.7 | 1,123.0 |
--------------------------------------------------------------------------------
Condensed consolidated cash flow statement
For the six months ended 30 June 2008
--------------------------------------------------------------------------------
| | | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | |
--------------------------------------------------------------------------------
| | | 30.06.08 | 30.06.07 | 31.12.07 |
--------------------------------------------------------------------------------
| | Note | £m | £m | £m |
| | s | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit from continuing operations | | 109.4 | 96.0 | 216.1 |
| before taxation | | | | |
--------------------------------------------------------------------------------
| Loss/(profit) from discontinued | | - | (0.4) | 0.4 |
| operations before taxation | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Adjustments for: | | | | |
--------------------------------------------------------------------------------
| Finance income | | (50.0) | (44.6) | (92.6) |
--------------------------------------------------------------------------------
| Finance costs | | 85.0 | 68.6 | 146.3 |
--------------------------------------------------------------------------------
| Finance costs attributable to | | 1.9 | 1.0 | 3.3 |
| discontinued operations | | | | |
--------------------------------------------------------------------------------
| Depreciation of property, plant and | | 48.9 | 44.0 | 91.1 |
| equipment | | | | |
--------------------------------------------------------------------------------
| Amortisation of acquisition-related | | 30.4 | 18.9 | 41.6 |
| intangible assets | | | | |
--------------------------------------------------------------------------------
| Amortisation of other intangible | | 4.8 | 3.8 | 8.5 |
| assets | | | | |
--------------------------------------------------------------------------------
| Other operating cash flow movements | | 1.1 | - | (25.3) |
--------------------------------------------------------------------------------
| Operating cash flow before movements | | 231.5 | 187.3 | 389.4 |
| in working capital | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net working capital movement | | (64.1) | (71.6) | (31.9) |
--------------------------------------------------------------------------------
| Cash generated by operations | | 167.4 | 115.7 | 357.5 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Tax paid | | (37.9) | (29.8) | (66.2) |
--------------------------------------------------------------------------------
| Net cash flow from operating | | 129.5 | 85.9 | 291.3 |
| activities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Investing activities | | | | |
--------------------------------------------------------------------------------
| Interest received | | 7.7 | 7.1 | 24.9 |
--------------------------------------------------------------------------------
| Cash flow from/(to) associates | | 9.5 | (0.4) | 1.0 |
--------------------------------------------------------------------------------
| Net cash flow from capital | | (61.1) | (44.2) | (109.0) |
| expenditure | | | | |
--------------------------------------------------------------------------------
| Net cash flow from acquisitions and | | (308.0) | (98.7) | (132.1) |
| disposals | | | | |
--------------------------------------------------------------------------------
| Sale/(purchase) of trading | | 1.9 | (2.3) | (0.3) |
| investments | | | | |
--------------------------------------------------------------------------------
| Own shares purchased | | (4.5) | - | (3.1) |
--------------------------------------------------------------------------------
| Net cash used in investing | | (354.5) | (138.5) | (218.6) |
| activities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Financing activities | | | | |
--------------------------------------------------------------------------------
| Share issues | | 276.8 | 0.9 | 0.9 |
--------------------------------------------------------------------------------
| Dividends paid to minority interests | | (3.4) | (0.5) | (3.8) |
--------------------------------------------------------------------------------
| Loan to minority interests | | (4.2) | - | (13.3) |
--------------------------------------------------------------------------------
| Dividends paid to equity | | (36.4) | (32.0) | (59.3) |
| shareholders of the parent | | | | |
--------------------------------------------------------------------------------
| Net increase in borrowings | | 129.4 | 122.8 | 140.4 |
--------------------------------------------------------------------------------
| Interest paid | | (50.4) | (30.6) | (79.9) |
--------------------------------------------------------------------------------
| Net cash flow from translation | | (39.0) | (2.2) | (4.3) |
| hedging financial instruments | | | | |
--------------------------------------------------------------------------------
| Repayment of obligations under | | (4.8) | (5.8) | (4.6) |
| finance leases | | | | |
--------------------------------------------------------------------------------
| Net cash flow from financing | | 268.0 | 52.6 | (23.9) |
| activities | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net increase in cash, cash equivalents and | 43.0 | - | 48.8 |
| bank overdrafts | | | |
| 13 | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash, cash equivalents and bank | | 270.7 | 210.0 | 210.0 |
| overdrafts at the beginning of the | | | | |
| period | | | | |
--------------------------------------------------------------------------------
| Effect of foreign exchange rate | | 8.6 | - | 11.9 |
| fluctuations on cash held | | | | |
--------------------------------------------------------------------------------
| Cash, cash equivalents and bank | | 322.3 | 210.0 | 270.7 |
| overdrafts at the end of the period | | | | |
--------------------------------------------------------------------------------
Consolidated statement of recognised income and expense
For the six months ended 30 June 2008
--------------------------------------------------------------------------------
| | | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | |
--------------------------------------------------------------------------------
| | | 30.06.08 | 30.06.07 | 31.12.07 |
--------------------------------------------------------------------------------
| | | £m | £m | £m |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Exchange differences on translation | | 25.8 | (2.7) | 37.4 |
| of foreign operations | | | | |
--------------------------------------------------------------------------------
| Actuarial (losses)/gains on defined | | (56.5) | 147.1 | 64.7 |
| retirement benefit schemes | | | | |
--------------------------------------------------------------------------------
| Change in fair value of cash flow | | 5.0 | 4.0 | (7.0) |
| hedging financial instruments | | | | |
--------------------------------------------------------------------------------
| Change in fair value of net | | (19.1) | 0.3 | (19.0) |
| investment hedging financial | | | | |
| instruments | | | | |
--------------------------------------------------------------------------------
| Tax on items taken directly to | | 27.5 | (47.4) | (14.0) |
| equity | | | | |
--------------------------------------------------------------------------------
| Net income/(expense) recognised | | (17.3) | 101.3 | 62.1 |
| directly in equity | | | | |
--------------------------------------------------------------------------------
| Profit for the period | | 80.1 | 68.4 | 160.6 |
--------------------------------------------------------------------------------
| Net recognised income | | 62.8 | 169.7 | 222.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Attributable to: | | | | |
--------------------------------------------------------------------------------
| Equity holders of the parent | | 57.1 | 162.6 | 209.3 |
--------------------------------------------------------------------------------
| Minority interests | | 5.7 | 7.1 | 13.4 |
--------------------------------------------------------------------------------
| Net recognised income | | 62.8 | 169.7 | 222.7 |
--------------------------------------------------------------------------------
Notes to the interim results announcement
1) Basis of preparation and accounting policies
These condensed financial statements comprise the unaudited interim consolidated
results of G4S plc (“the group”) for the six months ended 30 June 2008. These
interim financial results do not comprise statutory accounts within the meaning
of Section 240 of the Companies Act 1985 and should be read in conjunction with
the Annual Report and Accounts 2007.
The comparative figures for the financial year ended 31 December 2007 are not
the company's statutory accounts for that year. Those accounts have been
reported on by the company's auditor and delivered to the registrar of
companies. The report of the auditor was (i) unqualified, (ii) did not contain a
reference to any matters to which the auditor drew attention by emphasis of
matter without qualifying their report, and (iii) did not contain any statement
under Section 237 of the Companies Act 1985.
The condensed financial statements of the group presented in this interim
announcement have been prepared in accordance with IAS 34 Interim Financial
Reporting, and with the Disclosure and Transparency Rules of the Financial
Services Authority. The accounting policies applied are the same as those set
out in the group's Annual Report and Accounts 2007.
The financial information in these condensed financial statements for the half
years to 30 June 2008 and 30 June 2007 have been neither audited nor verified.
The comparative income statement for the six months ended 30 June 2007 has been
re-presented for operations qualifying as discontinued during the six months
ended 31 December 2007 and the six months ended 30 June 2008. The comparative
income statement for the year ended 31 December 2007 has been re-presented for
operations qualifying as discontinued during the six months ended 30 June 2008.
For the six months ended 30 June 2007, revenue has been reduced by £126.9m and
PBT has been increased by £0.4m compared to the figures published previously.
For the year ended 31 December 2007, revenue has been reduced by £6.9m and PBT
has been reduced by £0.7m compared to the figures published previously.
The comparative balance sheet as at 30 June 2007 has been restated to reflect
the completion during the six months ended 31 December 2007 and the six months
ended 30 June 2008 of the initial accounting in respect of acquisitions made
during the six months ended 30 June 2007. Adjustments made to the provisional
calculation of fair values of assets and liabilities acquired and the
consideration payable amount to £8.6m, with an equivalent increase in the
reported value of goodwill.
The comparative balance sheet as at 31 December 2007 has been restated to
reflect (i) the completion during the six months ended 30 June 2008 of the
initial accounting in respect of acquisitions made during the six months ended
30 June 2007, and (ii) adjustments made in the six months to 30 June 2008 to the
preliminary assessment of the fair values of assets and liabilities acquired
during the six months ended 31 December 2007. Adjustments made to the
provisional calculation of the fair values of assets and liabilities acquired
and the consideration payable amount to £3.6m, with an equivalent increase in
the reported value of goodwill.
2) Segmental analysis
The group operates in two core product areas: security services and cash
services. The group operates on a worldwide basis and derives a substantial
proportion of its revenue and profits from each of the following geographic
regions: Europe (comprising the United Kingdom and Ireland, and Continental
Europe), North America, and New Markets (comprising the Middle East and Gulf
States, Latin America and the Caribbean, Africa, and Asia Pacific).
The current management structure of the group is a combination of product area
and geography, within which the larger businesses generally report by product
area. The group's primary segmentation is therefore by business segment and its
secondary segmentation is by geography.
Notes to the interim results announcement (continued)
Segment information for continuing operations is presented below:
Segment revenue
--------------------------------------------------------------------------------
| Revenue by business segment | | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | |
--------------------------------------------------------------------------------
| | | 30.06.08 | 30.06.07 | 31.12.07 |
--------------------------------------------------------------------------------
| | | £m | £m | £m |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Security Services | | | | |
--------------------------------------------------------------------------------
| UK and Ireland | | 397.8 | 283.9 | 593.0 |
--------------------------------------------------------------------------------
| Continental Europe | | 656.3 | 508.2 | 1,078.3 |
--------------------------------------------------------------------------------
| Europe | | 1,054.1 | 792.1 | 1,671.3 |
--------------------------------------------------------------------------------
| North America | | 570.8 | 515.8 | 1,043.8 |
--------------------------------------------------------------------------------
| Middle East and Gulf States | | 119.9 | 84.7 | 177.9 |
--------------------------------------------------------------------------------
| Latin America and the Caribbean | | 98.8 | 75.0 | 158.0 |
--------------------------------------------------------------------------------
| Africa | | 111.3 | 84.6 | 183.9 |
--------------------------------------------------------------------------------
| Asia Pacific | | 179.4 | 123.8 | 268.9 |
--------------------------------------------------------------------------------
| New Markets | | 509.4 | 368.1 | 788.7 |
--------------------------------------------------------------------------------
| Total Security Services | | 2,134.3 | 1,676.0 | 3,503.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash Services | | | | |
--------------------------------------------------------------------------------
| Europe | | 402.1 | 337.3 | 706.3 |
--------------------------------------------------------------------------------
| North America | | 41.9 | 38.4 | 78.0 |
--------------------------------------------------------------------------------
| New Markets | | 119.0 | 85.3 | 195.4 |
--------------------------------------------------------------------------------
| Total Cash Services | | 563.0 | 461.0 | 979.7 |
--------------------------------------------------------------------------------
| Total revenue | | 2,697.3 | 2,137.0 | 4,483.5 |
--------------------------------------------------------------------------------
Segment result
--------------------------------------------------------------------------------
| PBITA by business segment | | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | |
--------------------------------------------------------------------------------
| | | 30.06.08 | 30.06.07 | 31.12.07 |
--------------------------------------------------------------------------------
| | | £m | £m | £m |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Security Services | | | | |
--------------------------------------------------------------------------------
| UK and Ireland | | 30.7 | 21.8 | 48.4 |
--------------------------------------------------------------------------------
| Continental Europe | | 33.9 | 27.0 | 61.5 |
--------------------------------------------------------------------------------
| Europe | | 64.6 | 48.8 | 109.9 |
--------------------------------------------------------------------------------
| North America | | 30.8 | 27.7 | 61.5 |
--------------------------------------------------------------------------------
| Middle East and Gulf States | | 8.2 | 7.4 | 14.2 |
--------------------------------------------------------------------------------
| Latin America and the Caribbean | | 6.2 | 4.9 | 10.3 |
--------------------------------------------------------------------------------
| Africa | | 9.6 | 7.1 | 16.0 |
--------------------------------------------------------------------------------
| Asia Pacific | | 14.9 | 10.7 | 22.9 |
--------------------------------------------------------------------------------
| New Markets | | 38.9 | 30.1 | 63.4 |
--------------------------------------------------------------------------------
| Total Security Services | | 134.3 | 106.6 | 234.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash Services | | | | |
--------------------------------------------------------------------------------
| Europe | | 39.7 | 32.8 | 77.4 |
--------------------------------------------------------------------------------
| North America | | 0.2 | 0.9 | 0.6 |
--------------------------------------------------------------------------------
| New Markets | | 18.0 | 13.3 | 29.0 |
--------------------------------------------------------------------------------
| Total Cash Services | | 57.9 | 47.0 | 107.0 |
--------------------------------------------------------------------------------
| Total PBITA before head office costs | | 192.2 | 153.6 | 341.8 |
--------------------------------------------------------------------------------
| Head office costs | | (17.4) | (14.7) | (30.4) |
--------------------------------------------------------------------------------
| Total PBITA | | 174.8 | 138.9 | 311.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Result by business segment | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total PBITA | | 174.8 | 138.9 | 311.4 |
--------------------------------------------------------------------------------
| Amortisation of acquisition-related | | (30.4) | (18.9) | (41.6) |
| intangible assets | | | | |
--------------------------------------------------------------------------------
| Total PBIT | | 144.4 | 120.0 | 269.8 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Security Services | | 115.9 | 98.2 | 215.4 |
--------------------------------------------------------------------------------
| Cash Services | | 45.9 | 36.5 | 84.8 |
--------------------------------------------------------------------------------
| Head office costs | | (17.4) | (14.7) | (30.4) |
--------------------------------------------------------------------------------
| Total PBIT | | 144.4 | 120.0 | 269.8 |
--------------------------------------------------------------------------------
Notes to the interim results announcement (continued)
3) Profit from operations before interest and taxation
The income statement can be analysed as follows:
--------------------------------------------------------------------------------
| Continuing operations | | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | |
--------------------------------------------------------------------------------
| | | 30.06.08 | 30.06.07 | 31.12.07 |
--------------------------------------------------------------------------------
| | | £m | £m | £m |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Revenue | | 2,697.3 | 2,137.0 | 4,483.5 |
--------------------------------------------------------------------------------
| Cost of sales | | (2,108.7 | (1,660.3 | (3,479.2 |
| | | ) | ) | ) |
--------------------------------------------------------------------------------
| Gross profit | | 588.6 | 476.7 | 1,004.3 |
--------------------------------------------------------------------------------
| Administration expenses | | (446.0) | (358.1) | (737.5) |
--------------------------------------------------------------------------------
| Share of profit from associates | | 1.8 | 1.4 | 3.0 |
--------------------------------------------------------------------------------
| Profit from operations before | | 144.4 | 120.0 | 269.8 |
| interest and taxation | | | | |
--------------------------------------------------------------------------------
Included within administration expenses is the amortisation charge for
acquisition-related intangible assets.
4) Discontinued operations
Operations qualifying as discontinued in the current period primarily comprise
the security services business in Germany, which principally comprises G4S
Sicherheitsdienste GmbH and G4S Sicherheitssysteme GmbH, disposed of on 15 May
2008, and the security services business in France, which principally comprises
Group 4 Securicor SAS, the disposal of which is still in progress. Further
operations qualifying as discontinued in the prior year primarily comprise G4S
Cash Services (France) SAS, disposed of on 2 July 2007.
Notes to the interim results announcement (continued)
5) Acquisitions
Current Period Acquisitions
The most significant acquisition in subsidiary undertakings in the period was
the purchase of De Facto 1119 Limited, the holding company of the Global
Solutions group (“GSL”) an international leader in the provision of support
services for governments, companies and public authorities, based in the UK,
which was completed on 12 May 2008. Other principal acquisitions in subsidiary
undertakings in the period include the purchases of ArmorGroup International
plc, an international provider of defensive, protective security services,
head-quartered in the UK; Touchcom, Inc., a security consultancy and design
business in the US; RONCO Consulting Corporation, an international provider of
humanitarian mine action and ordnance services, specialised security and
training, head-quartered in the US; MJM Investigations, Inc., a provider of
insurance fraud mitigation and claims services in the US; the Rock Steady group
of companies, providing event security in the UK; and Travel Logistics Limited,
a provider of passport and visa services in the UK. In addition, the group
completed the acquisition of a further 25% of Aktsiaselts G4S Baltics,
increasing to 90% its holding in this company, the holding company of the G4S
subsidiaries in Estonia, Latvia and Lithuania, which provide both security
services and cash services. This transaction was largely accrued at 31 December
2007 through the recognition of a put option. The group also acquired the 49% of
G4S Macau Limitada, a provider of both security services and cash services that
it did not already own.
The following table sets out the book values and provisional fair values at
acquisition of the identifiable assets and liabilities acquired by the group
during the period:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | Fair value | |
--------------------------------------------------------------------------------
| | Book value | adjustments | Fair value |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | £m | £m | £m |
--------------------------------------------------------------------------------
| Acquisition-related intangible assets | | 2.9 | 231.1 | 234.0 |
--------------------------------------------------------------------------------
| Other intangible assets | | 2.2 | - | 2.2 |
--------------------------------------------------------------------------------
| Investment in associates | | 2.9 | (1.0) | 1.9 |
--------------------------------------------------------------------------------
| Property, plant and equipment | | 40.7 | (7.6) | 33.1 |
--------------------------------------------------------------------------------
| Inventories | | 4.1 | (0.1) | 4.0 |
--------------------------------------------------------------------------------
| Trade and other receivables | | 125.3 | 4.6 | 129.9 |
--------------------------------------------------------------------------------
| Deferred tax assets | | 7.5 | (1.7) | 5.8 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | | 16.0 | 1.0 | 17.0 |
--------------------------------------------------------------------------------
| Trade and other payables | | (116.3) | (7.6) | (123.9) |
--------------------------------------------------------------------------------
| Provisions | | 4.3 | (18.6) | (14.3) |
--------------------------------------------------------------------------------
| Borrowings | | (224.7) | (0.3) | (225.0) |
--------------------------------------------------------------------------------
| Deferred tax liabilities | | (1.2) | (65.9) | (67.1) |
--------------------------------------------------------------------------------
| Net assets acquired of subsidiary | | (136.3) | 133.9 | (2.4) |
| undertakings | | | | |
--------------------------------------------------------------------------------
| Acquisition of minority interests | | 3.9 | - | 3.9 |
--------------------------------------------------------------------------------
| Goodwill | | | | 342.2 |
--------------------------------------------------------------------------------
| Total purchase consideration | | | | 343.7 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Satisfied by: | | | | |
--------------------------------------------------------------------------------
| Cash | | | | 314.4 |
--------------------------------------------------------------------------------
| Transaction costs | | | | 10.5 |
--------------------------------------------------------------------------------
| Contingent consideration | | | | 18.8 |
--------------------------------------------------------------------------------
| Total purchase consideration | | | | 343.7 |
--------------------------------------------------------------------------------
Adjustments made to identifiable assets and liabilities on acquisition are to
reflect their fair value. These include the recognition of customer-related
intangible assets amounting to £231.1m attributable to the acquisition of
subsidiary undertakings. The fair values of net assets acquired are provisional
and represent estimates following a preliminary valuation exercise. These
estimates may be adjusted to reflect refinements in their calculation and any
development in the issues to which they relate. Final fair value adjustments
will, if required, be set out in the group's 2008 Annual Report and Accounts
and/or in the group's 2009 Annual Report and Accounts as appropriate.
The goodwill arising on acquisitions can be ascribed to the existence of a
skilled, active workforce and the opportunities to obtain new contracts and
develop the business. Neither of these meets the criteria for recognition as
intangible assets separable from goodwill. Goodwill arising on acquisition
includes £13.7m arising on the acquisition of minority interests.
`
Notes to the interim results announcement (continued)
5) Acquisitions (continued)
From their respective dates of acquisition, the acquired businesses'
contribution to the results of the group for the period was as follows:
--------------------------------------------------------------------------------
| Contribution from acquired businesses | | Revenue | PBITA | Profit |
--------------------------------------------------------------------------------
| | | £m | £m | £m |
--------------------------------------------------------------------------------
| GSL | | 79.5 | 5.8 | 2.4 |
--------------------------------------------------------------------------------
| ArmorGroup | | 27.2 | 0.9 | 0.2 |
--------------------------------------------------------------------------------
| Touchcom | | 0.7 | - | - |
--------------------------------------------------------------------------------
| RONCO | | 10.4 | 1.0 | 0.5 |
--------------------------------------------------------------------------------
| MJM | | 4.8 | 0.2 | - |
--------------------------------------------------------------------------------
| Rock Steady | | 3.5 | 0.4 | 0.1 |
--------------------------------------------------------------------------------
| Travel Logistics | | 3.2 | 0.6 | 0.3 |
--------------------------------------------------------------------------------
| Others | | 3.1 | 0.5 | 0.4 |
--------------------------------------------------------------------------------
| Total contribution from acquired | | 132.4 | 9.4 | 3.9 |
| businesses | | | | |
--------------------------------------------------------------------------------
If all the acquisitions had occurred on 1 January 2008 the results of the group
for the period would have been as follows:
--------------------------------------------------------------------------------
| Group's results if all acquisitions | | Revenue | PBITA | Profit |
| had occurred on 1 January 2008 | | | | |
--------------------------------------------------------------------------------
| | | £m | £m | £m |
--------------------------------------------------------------------------------
| Group results for the period | | 2,697.3 | 174.8 | 80.1 |
--------------------------------------------------------------------------------
| Impact of backdating acquisitions to | | | | |
| 1 January 2008 | | | | |
--------------------------------------------------------------------------------
| GSL | | 159.0 | 13.6 | 5.3 |
--------------------------------------------------------------------------------
| ArmorGroup | | 54.4 | 1.8 | 0.5 |
--------------------------------------------------------------------------------
| Touchcom | | 3.5 | - | (0.2) |
--------------------------------------------------------------------------------
| RONCO | | 20.8 | 2.0 | 1.0 |
--------------------------------------------------------------------------------
| MJM | | 4.8 | 0.2 | - |
--------------------------------------------------------------------------------
| Rock Steady | | 3.5 | 0.4 | 0.3 |
--------------------------------------------------------------------------------
| Travel Logistics | | 0.7 | 0.1 | 0.1 |
--------------------------------------------------------------------------------
| Others | | 4.9 | 0.9 | 0.3 |
--------------------------------------------------------------------------------
| Group result for the period if all | | 2,948.9 | 193.8 | 87.4 |
| acquisitions had occurred on 1 | | | | |
| January 2008 | | | | |
--------------------------------------------------------------------------------
Acquisition of GSL
The separately identifiable assets and liabilities of GSL as at the acquisition
date are presented in the table below.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | Fair value | |
--------------------------------------------------------------------------------
| | Book value | adjustments | Fair value |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | | £m | £m | £m |
--------------------------------------------------------------------------------
| Acquisition-related intangible assets | | - | 182.8 | 182.8 |
--------------------------------------------------------------------------------
| Investment in associates | | 2.9 | (1.1) | 1.8 |
--------------------------------------------------------------------------------
| Property, plant and equipment | | 20.6 | (7.3) | 13.3 |
--------------------------------------------------------------------------------
| Inventories | | 0.6 | - | 0.6 |
--------------------------------------------------------------------------------
| Trade and other receivables | | 67.0 | 6.3 | 73.3 |
--------------------------------------------------------------------------------
| Deferred tax assets | | 4.5 | (1.7) | 2.8 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | | 7.1 | 1.0 | 8.1 |
--------------------------------------------------------------------------------
| Trade and other payables | | (82.9) | (4.6) | (87.5) |
--------------------------------------------------------------------------------
| Provisions | | 4.4 | 3.6 | 8.0 |
--------------------------------------------------------------------------------
| Borrowings | | (206.9) | (0.4) | (207.3) |
--------------------------------------------------------------------------------
| Deferred tax liabilities | | - | (51.1) | (51.1) |
--------------------------------------------------------------------------------
| Minority interests | | (0.4) | - | (0.4) |
--------------------------------------------------------------------------------
| Net assets acquired of subsidiary | | (183.1) | 127.5 | (55.6) |
| undertakings | | | | |
--------------------------------------------------------------------------------
| Goodwill | | | | 230.2 |
--------------------------------------------------------------------------------
| Total purchase consideration | | | | 174.6 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Satisfied by: | | | | |
--------------------------------------------------------------------------------
| Cash | | | | 167.8 |
--------------------------------------------------------------------------------
| Transaction costs | | | | 6.8 |
--------------------------------------------------------------------------------
| Total purchase consideration | | | | 174.6 |
--------------------------------------------------------------------------------
Notes to the interim results announcement (continued)
5) Acquisitions (continued)
Prior period acquisitions
The purchase consideration and provisional fair values of acquisitions made
during the financial year to 31 December 2007 and their contribution to the
group's results for the year are set out in the group's Annual Report and
Accounts 2007. Adjustments made during the six months to 30 June 2008 to the
provisional calculation of the fair values of assets and liabilities acquired
and the consideration payable during the year to 31 December 2008 amount to
£3.6m, with an equivalent increase in the reported value of goodwill.
6) Finance income
--------------------------------------------------------------------------------
| | | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | |
--------------------------------------------------------------------------------
| | | 30.06.08 | 30.06.07 | 31.12.07 |
--------------------------------------------------------------------------------
| | | £m | £m | £m |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Interest receivable | | 7.1 | 5.8 | 15.1 |
--------------------------------------------------------------------------------
| Expected return on defined | | 42.9 | 38.8 | 77.3 |
| retirement benefit scheme assets | | | | |
--------------------------------------------------------------------------------
| Net gain in fair value adjustments | | - | - | 0.2 |
| arising from loan note hedging | | | | |
--------------------------------------------------------------------------------
| Total finance income | | 50.0 | 44.6 | 92.6 |
--------------------------------------------------------------------------------
7) Finance costs
--------------------------------------------------------------------------------
| | | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | |
--------------------------------------------------------------------------------
| | | 30.06.08 | 30.06.07 | 31.12.07 |
--------------------------------------------------------------------------------
| | | £m | £m | £m |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total group borrowing costs | | (44.6) | (32.6) | (74.0) |
--------------------------------------------------------------------------------
| Finance costs on defined retirement | | (40.4) | (36.0) | (72.3) |
| benefit obligations | | | | |
--------------------------------------------------------------------------------
| Total finance costs | | (85.0) | (68.6) | (146.3) |
--------------------------------------------------------------------------------
8) Taxation
--------------------------------------------------------------------------------
| | | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | |
--------------------------------------------------------------------------------
| | | 30.06.08 | 30.06.07 | 31.12.07 |
--------------------------------------------------------------------------------
| | | £m | £m | £m |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| UK taxation | | (4.2) | (3.1) | (8.2) |
--------------------------------------------------------------------------------
| Overseas taxation | (25.1) | (24.0) | (47.8) |
--------------------------------------------------------------------------------
| Total taxation expense | | (29.3) | (27.1) | (56.0) |
--------------------------------------------------------------------------------
Notes to the interim results announcement (continued)
9) Earnings per share attributable to ordinary shareholders of the parent
--------------------------------------------------------------------------------
| | | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | |
--------------------------------------------------------------------------------
| | | 30.06.08 | 30.06.07 | 31.12.07 |
--------------------------------------------------------------------------------
| | | £m | £m | £m |
--------------------------------------------------------------------------------
| From continuing and discontinued | | | | |
| operations | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings | | | | |
--------------------------------------------------------------------------------
| Profit for the period attributable | | 74.4 | 61.3 | 147.2 |
| to equity holders of the parent | | | | |
--------------------------------------------------------------------------------
| Effect of dilutive potential | | 0.1 | 0.1 | 0.2 |
| ordinary shares (net of tax) | | | | |
--------------------------------------------------------------------------------
| Profit for the purposes of diluted | | 74.5 | 61.4 | 147.4 |
| earnings per share | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Number of shares (m) | | | | |
--------------------------------------------------------------------------------
| Weighted average number of ordinary | | 1,310.3 | 1,274.4 | 1,275.2 |
| shares | | | | |
--------------------------------------------------------------------------------
| Effect of dilutive potential | | 1.4 | 1.4 | 1.5 |
| ordinary shares | | | | |
--------------------------------------------------------------------------------
| Weighted average number of ordinary | | 1,311.7 | 1,275.8 | 1,276.7 |
| shares for the purposes of diluted | | | | |
| earnings per share | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings per share from continuing and | | | |
| discontinued operations (pence) | | | |
--------------------------------------------------------------------------------
| Basic | | 5.7p | 4.8p | 11.5p |
--------------------------------------------------------------------------------
| Diluted | | 5.7p | 4.8p | 11.5p |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| From adjusted earnings | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Earnings | | | | |
--------------------------------------------------------------------------------
| Profit for the period attributable | | 74.4 | 61.3 | 147.2 |
| to equity holders of the parent | | | | |
--------------------------------------------------------------------------------
| Adjustment to exclude loss/(profit) | | - | 0.5 | (0.5) |
| from discontinued operations | | | | |
--------------------------------------------------------------------------------
| Adjustment to exclude net retirement | | (1.8) | (2.0) | (3.6) |
| benefit finance income (net of tax) | | | | |
--------------------------------------------------------------------------------
| Adjustment to exclude amortisation of | 21.9 | 13.4 | 26.7 |
| acquisition-related intangible assets | | | |
| (net of tax) | | | |
--------------------------------------------------------------------------------
| Adjusted profit for the period | | 94.5 | 73.2 | 169.8 |
| attributable to equity holders of | | | | |
| the parent | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Weighted average number of ordinary | | 1,310.3 | 1,274.4 | 1,275.2 |
| shares (m) | | | | |
--------------------------------------------------------------------------------
| Adjusted earnings per share (pence) | | 7.2p | 5.7p | 13.3p |
--------------------------------------------------------------------------------
10) Dividends
--------------------------------------------------------------------------------
| | | | Six | Six | Year |
| | | | months | months | ended |
| | | | ended | ended | |
--------------------------------------------------------------------------------
| | Pence | DKK | 30.06.08 | 30.06.07 | 31.12.07 |
--------------------------------------------------------------------------------
| | per | per | £m | £m | £m |
| | share | share | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Amounts recognised as | | | | | |
| distributions to equity | | | | | |
| holders of the parent in | | | | | |
| the period | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Final dividend for the | 2.52 | 0.2766 | - | 32.0 | 32.0 |
| year ended 31 December | | | | | |
| 2006 | | | | | |
--------------------------------------------------------------------------------
| Interim dividend for the | 2.11 | 0.2319 | - | - | 27.3 |
| six months ended 30 June | | | | | |
| 2007 | | | | | |
--------------------------------------------------------------------------------
| Final dividend for the | 2.85 | 0.2786 | 36.4 | - | - |
| year ended 31 December | | | | | |
| 2007 | | | | | |
--------------------------------------------------------------------------------
| Total | | | 36.4 | 32.0 | 59.3 |
--------------------------------------------------------------------------------
An interim dividend of 2.75p (DKK 0.2572) per share, amounting to £38.7m, for
the six months ended 30 June 2008 will be paid on 31 October 2008 to
shareholders on the register on 26 September 2008.
11) Disposal groups classified as held for sale
Disposal groups classified as held for sale at 30 June 2008 primarily comprise
the assets and liabilities associated with the security services businesses in
France, which principally include Group 4 Securicor SAS. At 31 December 2007
disposal groups classified as held for sale also included the assets and
liabilities associated with the security services businesses in Germany, which
principally include G4S Sicherheitsdienste GmbH and G4S Sicherheitssysteme GmbH.
Notes to the interim results announcement (continued)
12) Reconciliation of equity attributable to equity holders of the parent
--------------------------------------------------------------------------------
| | | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | |
--------------------------------------------------------------------------------
| | | 30.06.08 | 30.06.07 | 31.12.07 |
--------------------------------------------------------------------------------
| | | £m | £m | £m |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| At beginning of period | | 1,087.1 | 935.2 | 935.2 |
--------------------------------------------------------------------------------
| Net recognised income attributable | | 57.1 | 162.6 | 209.3 |
| to equity shareholders of the parent | | | | |
--------------------------------------------------------------------------------
| Shares issued | | 276.8 | 0.9 | 0.9 |
--------------------------------------------------------------------------------
| Dividends declared | | (36.4) | (32.0) | (59.3) |
--------------------------------------------------------------------------------
| Own shares purchased | | (4.5) | - | (3.1) |
--------------------------------------------------------------------------------
| Equity settled transactions | | 2.1 | 1.5 | 4.1 |
--------------------------------------------------------------------------------
| At end of period | | 1,382.2 | 1,068.2 | 1,087.1 |
--------------------------------------------------------------------------------
On 13 May 2008 the group completed a placing of 127m ordinary shares of 25p at a
price of 222p per share. Gross proceeds were £281.9m and issue costs £5.9m. The
placing enabled the group to reduce borrowings incurred in connection with its
expenditure on acquisitions during the period and increased its capacity to make
further acquisitions.
13) Analysis of net debt
A reconciliation of net debt to amounts in the condensed consolidated balance
sheet is presented below:
--------------------------------------------------------------------------------
| | | As at | As at | As at |
--------------------------------------------------------------------------------
| | | 30.06.08 | 30.06.07 | 31.12.07 |
--------------------------------------------------------------------------------
| | | £m | £m | £m |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash and cash equivalents | | 446.6 | 306.9 | 381.3 |
--------------------------------------------------------------------------------
| Investments | | 72.3 | 72.8 | 73.2 |
--------------------------------------------------------------------------------
| Net debt included within assets held | | 2.7 | 0.7 | (1.5) |
| for sale | | | | |
--------------------------------------------------------------------------------
| Current liabilities | | | | |
--------------------------------------------------------------------------------
| Bank overdrafts and loans | | (186.9) | (141.4) | (190.5) |
--------------------------------------------------------------------------------
| Obligations under finance leases | | (19.0) | (12.5) | (16.2) |
--------------------------------------------------------------------------------
| Fair value of loan note derivative | | 14.5 | - | 14.3 |
| financial instruments | | | | |
--------------------------------------------------------------------------------
| Non-current liabilities | | | | |
--------------------------------------------------------------------------------
| Bank loans | | (1,112.5 | (713.6) | (729.1) |
| | | ) | | |
--------------------------------------------------------------------------------
| Loan notes | | (290.8) | (274.1) | (290.4) |
--------------------------------------------------------------------------------
| Obligations under finance leases | | (61.1) | (40.3) | (46.0) |
--------------------------------------------------------------------------------
| Total net debt | | (1,134.2 | (801.5) | (804.9) |
| | | ) | | |
--------------------------------------------------------------------------------
An analysis of movements in net debt in the period is presented below:
--------------------------------------------------------------------------------
| | | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | |
--------------------------------------------------------------------------------
| | | 30.06.08 | 30.06.07 | 31.12.07 |
--------------------------------------------------------------------------------
| | | £m | £m | £m |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Increase in cash, cash equivalents and bank | 43.0 | - | 48.8 |
| overdrafts per condensed consolidated cash | | | |
| flow statement | | | |
--------------------------------------------------------------------------------
| (Sale)/ purchase of investments | | (1.9) | 2.3 | 0.3 |
--------------------------------------------------------------------------------
| Increase in debt and lease financing | | (124.6) | (117.0) | (135.8) |
--------------------------------------------------------------------------------
| Change in net debt resulting from | | (83.5) | (114.7) | (86.7) |
| cash flows | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Borrowings acquired with | | (225.0) | (19.9) | (22.9) |
| subsidiaries | | | | |
--------------------------------------------------------------------------------
| Net additions to finance leases | | (8.3) | (3.6) | (10.3) |
--------------------------------------------------------------------------------
| Movement in net debt in the period | | (316.8) | (138.2) | (119.9) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Translation adjustments | | (12.5) | 9.5 | (12.2) |
--------------------------------------------------------------------------------
| Net debt at the beginning of the | | (804.9) | (672.8) | (672.8) |
| period | | | | |
--------------------------------------------------------------------------------
| Net debt at the end of the period | | (1,134.2 | (801.5) | (804.9) |
| | | ) | | |
--------------------------------------------------------------------------------
Notes to the interim results announcement (continued)
14) Related party transactions
No related party transactions have taken place in the first six months of the
current financial year which have materially affected the financial position or
the performance of the group during that period. The nature and amounts of
related party transactions in the first six months of the current financial year
are consistent with those reported in the group's Annual Report and Accounts
2007.
15) Events after the balance sheet date
On 15 July 2008, to further diversify its sources of funding and to lengthen the
maturity of its debt, the group completed a $541m and £69m private placement of
unsecured senior loan notes. The proceeds of the issue were used to reduce
drawings against the revolving credit bank facility.
Non GAAP measure - cash flow
The directors consider it is of assistance to shareholders to present an
analysis of the group's operating cash flow in accordance with the way in which
the group is managed, together with a reconciliation of that cash flow to the
net cash flow from operating activities as presented in the condensed
consolidated cash flow statement.
Operating cash flow
For the six months ended 30 June 2008
--------------------------------------------------------------------------------
| | | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | |
--------------------------------------------------------------------------------
| | | 30.06.08 | 30.06.07 | 31.12.07 |
--------------------------------------------------------------------------------
| | | £m | £m | £m |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| PBITA before share of profit from | | 173.0 | 137.5 | 308.4 |
| associates (group PBITA) | | | | |
--------------------------------------------------------------------------------
| Depreciation and amortisation of intangible | 53.7 | 47.6 | 99.6 |
| assets other than acquisition-related | | | |
--------------------------------------------------------------------------------
| Profit on disposal of property, | | - | - | (14.4) |
| plant and equipment and intangible | | | | |
| assets other than | | | | |
| acquisition-related | | | | |
--------------------------------------------------------------------------------
| Increase in working capital and | | (33.1) | (43.2) | (8.2) |
| provisions | | | | |
--------------------------------------------------------------------------------
| Net cash flow from capital | | (61.1) | (44.2) | (109.0) |
| expenditure | | | | |
--------------------------------------------------------------------------------
| Operating cash flow | | 132.5 | 97.7 | 276.4 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Reconciliation of operating cash | | | | |
| flows | | | | |
--------------------------------------------------------------------------------
| | | Six | Six | Year |
| | | months | months | ended |
| | | ended | ended | |
--------------------------------------------------------------------------------
| | | 30.06.08 | 30.06.07 | 31.12.07 |
--------------------------------------------------------------------------------
| | | £m | £m | £m |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Net cash flow from operating activities per | 129.5 | 85.9 | 291.3 |
| condensed consolidated cash flow statement | | | |
--------------------------------------------------------------------------------
| Net cash flow from capital | | (61.1) | (44.2) | (109.0) |
| expenditure | | | | |
--------------------------------------------------------------------------------
| Add-back cash flow from exceptional | | 1.2 | 1.0 | 1.8 |
| items and discontinued operations | | | | |
--------------------------------------------------------------------------------
| Add-back additional pension | | 25.0 | 22.5 | 26.1 |
| contributions | | | | |
--------------------------------------------------------------------------------
| Other items | | - | 2.7 | - |
--------------------------------------------------------------------------------
| Add-back tax paid | | 37.9 | 29.8 | 66.2 |
--------------------------------------------------------------------------------
| Operating cash flow | | 132.5 | 97.7 | 276.4 |
--------------------------------------------------------------------------------
Half Year Announcement
| Source: G4S plc
Attachments
