G4S plc
Half-Yearly Results Announcement
January - June 2011
G4S, the world's leading international security solutions group, today announces
its half year results for the six months to 30 June 2011.
RESULTS HIGHLIGHTS
* Group turnover* up 5% to £3,761 million (2010: £3,575m)
* Organic turnover growth* of 5% (2010: 2%)
* PBITA* up 3% to £239 million (2010: £233m)
* PBITA margin* 6.4% (2010: 6.5%)
* Operating cash flow generation of 60% of PBITA (2010: 72%); expect to
achieve full year target of 85%
* Adjusted earnings per share increased 8% to 10.0p (2010: 9.3p) at actual
exchange rates and increased 10% (2010: 9.1p) at constant exchange rates
* Interim dividend up 8% to 3.42 pence per share, DKK 0.2928 (2010:
3.17p/DKK 0.2877)
* at constant (2011) exchange rates
Nick Buckles, Chief Executive Officer, commented:
"Following a robust performance during the global recession, organic growth is
accelerating in most regions and business sectors and we have a healthy pipeline
of bidding opportunities, particularly in the UK government market. Our New
Markets businesses (now 29% of group revenues) continue to show excellent
organic growth - up 9% overall.
We expect growth in Cash Solutions in developed markets (13% of group revenues)
will continue to be impacted by low interest rates, but we are encouraged by
recent discussions with financial institutions regarding outsourcing
opportunities.
At the Capital Markets Day in May this year, we highlighted our plans to invest
around £200 million per year on acquisitions whilst maintaining our strict
financial screening criteria. We have a strong pipeline of M&A opportunities
which should come to fruition within the next six to twelve months. This
pipeline, together with the recovery in growth in our existing business, gives
us confidence in the outlook for the full year and into 2012. That confidence is
reflected in the 8% increase in our interim dividend."
For further enquiries, please contact G4S plc:
Helen Parris - Director of Investor Relations+44 (0) 1293 554423
Nick Buckles - Chief Executive Officer
Trevor Dighton - Chief Financial Officer
For Media enquiries, please contact Tulchan Group:
David Allchurch or John Sunnucks +44 (0) 207 543 4200
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 more than
125 countries and more than 625,000 employees. For more information on G4S,
visit www.g4s.com.
Presentation of Results:
A presentation to investors and analysts is taking place today at 09.00hrs at
the London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS. The
presentation will be webcast at:
Webcast
http://view-w.tv/p/707-803-10008/en
Telephone Dial-in Facility
The details for the telephone dial-in facility are as follows:-
UK Access Number + 44 (0)20 3140 0722
UK Toll Free Number 0800 368 1916
DK Toll Free Number 808 89 215
US Toll Free Number 1 855 716 1594
Replay Details
To listen to a reply of the presentation after the event, here are the details:
UK Toll Access Number +44 (0)20 3140 0698
UK Toll Free Number 0800 368 1890
US Toll Free Number +1 877 846 3918
DK Toll Free Number +45 7 014 2885
Conference Reference 378275#
FINANCIAL SUMMARY
Results
The results which follow have been prepared under International Financial
Reporting Standards, as adopted by the European Union (EU adopted IFRSs).
Group Turnover
Turnover of Continuing Businesses H111 H110
£m £m
Turnover at constant exchange rates 3,761 3,575
Exchange difference - 54
Total continuing business turnover 3,761 3,629
Turnover, at constant exchange rates, increased by 5% to £3,761 million.
Organic turnover growth was 5%.
Organic Turnover Growth Europe North America Developed Markets New Markets Total
*
Secure Solutions 4% 4% 4% 9% 6%
Cash Solutions -2% -4% -2% 8% 1%
Total 3% 4% 3% 9% 5%
* Calculated to exclude acquisitions and disposals, and at constant exchange
rates
Group Profit
PBITA * of Continuing Businesses H111 H110
£m £m
PBITA at constant exchange rates 239 233
Exchange difference - 5
Total continuing business PBITA 239 238
PBITA margin at constant exchange rates 6.4% 6.5%
* PBITA is defined as profit before interest, taxation, amortisation of
acquisition-related intangible assets and acquisition-related costs.
PBITA, at constant exchange rates, increased by 3% to £239 million. The PBITA
margin decreased slightly to 6.4%.
Cash Flow and Financing
Cash Flow H111 H110
£m £m
Operating cash flow 143 171
Operating cash flow / PBITA 60% 72%
Operating cash flow, as analysed on page 23, was £143 million in the period,
representing 60% of PBITA. Without delayed payment from the US government in
respect of two large contracts, the operating cash generation for the half year
would have been over 80%.
The group expects to meet its full year target of 85% of PBITA. Net cash
invested in acquistions was £51 million. Net debt at the end of the period, as
analysed on page 22, was £1,576 million (June 2010: £1,515m, December 2010:
£1,426m).
Adjusted earnings per share
Adjusted earnings per share H111 H110 at constant exchange rates H110
£m £m £m
PBITA from continuing operations 239 233 238
Interest (before pensions) (47) (49) (50)
Tax (42) (46) (48)
Non-controlling interests (10) (10) (10)
Adjusted profit attributable to 140 128 130
shareholders
Average number of shares (m) 1,405 1,404 1,404
Adjusted EPS (p) 10.0 9.1 9.3
Adjusted earnings per share, reconciled to basic earnings per share on page 21,
increased by 8% at actual exchange rates and by 10% at constant exchange rates.
BUSINESS ANALYSIS
Secure Solutions
Turnover PBITA Margins Organic Growth
£m £m
* At constant exchange rates
H111 H110 H111 H110 H111 H110 H111
Europe * 1,358 1,297 86 79 6.3% 6.1% 4%
North America * 818 784 46 44 5.6% 5.6% 4%
New Markets * 910 818 72 65 7.9% 7.9% 9%
Total Secure Solutions * 3,086 2,899 204 188 6.6% 6.5% 6%
Exchange differences - 57 - 4
At actual exchange rates 3,086 2,956 204 192
Overall, the secure solutions business continued its robust performance with
organic growth of 6% and slightly improved margins of 6.6% - derived from
improved margins in the UK and solid performances elsewhere in the group.
Europe
Turnover PBITA Margins Organic Growth
£m £m
* At constant exchange rates
H111 H110 H111 H110 H111 H110 H111
UK & Ireland * 612 571 50 45 8.2% 7.9% 6%
Continental Europe * 746 726 36 34 4.8% 4.7% 3%
Total Europe * 1,358 1,297 86 79 6.3% 6.1% 4%
Organic growth in Europe was 4% and margins were up to 6.3% mainly as a result
of the UK margin improvements.
In the UK & Ireland region, organic growth was 6%, with strong growth in Secure
Solutions, Utility Services and Integrated Services. These gains were partly
offset by the loss of the UKBA contract in May and the performance of our
business in Ireland, where turnover has declined 3% due to continuing difficult
market conditions.
New contracts won in the government sector during the first half of the year
included:
* Security provider to the London 2012 Olympic and Paralympic Games which
commenced in March
* HMP Birmingham (to commence October 2011) and HMP Featherstone (to
commence April 2012)
* three regions for the Department of Work & Pensions, Work Programme
which commenced in June
* the prisoner escorting contract for the Scottish Prison Service
effective from January 2012
* a number of facilities management contracts in the health sector,
including Liverpool Women's Hospital and Heartlands hospital in the
Midlands, which is one of the UK's largest acute hospitals
These contracts, once fully up and running, will more than offset the loss of
the UK Court Services contract which will transfer to a competitor at the end of
August.
New contracts won or commencing in the commercial sector during the first half
of the year included the renewal of the security contract for RBS in the UK and
a new contract for Ireland, contracts with Hewlett Packard, Nationwide Building
Society and British Gas smart metering services and temporary contracts in
Ireland to support the visits of HM Queen Elizabeth and President Obama.
In July, G4S welcomed the publication of the UK government's reports on "Open
Public Services" and "Competition Strategy for Offender Services" which provide
further clarity on the government's stance on public sector reform and the
greater role of the private sector in the delivery of offender management. We
believe these reforms will improve efficiency, quality and financial
accountability across the offender management sector as well as wider public
services. We expect to take part in the next round of the government's prison
competition process which was announced in July.
There have also been a number of capability-building acquisitions in the UK and
Ireland since the start of the year, with the acquisition of investigative
services provider, Cotswold Group; electronic monitoring equipment provider
Guidance Monitoring (GML); and AMS, a leading security system monitoring company
in Ireland.
In Continental Europe, organic growth was 3%, as a result of new contracts in
Belgium for Brussels airport and the European Commission and in Norway due to
increased volumes at Oslo airport. The security systems business in Israel
performed well. Overall, the security systems businesses are still facing
difficult market conditions although we have benefited from increased
installations in the Belgian banking sector. Most Eastern European markets seem
to have stabilised although growth has not yet returned.
New contracts include the US embassy in Slovenia and a manned security contract
for ING in Turkey. We recently won a detention centre contract in Luxembourg
and a manned security contract with Siemens across 19 locations in Austria.
Lost contracts include the Hellenic airport contract in Greece and the EU
Commission contract in Luxembourg. The bidding pipeline in Belgium for both
commercial and government contracts remains very healthy. Greece and Romania
remain very challenging markets for the group due primarily to the current
macro-economic situation.
There are a number of electronic monitoring of offenders opportunities which we
expect to come up for tender in the next six months or so in markets such as
Cyprus, Turkey, Romania, Bulgaria, Czech Republic and Portugal.
North America
Turnover PBITA Margins Organic Growth
£m £m
* At constant exchange rates
H111 H110 H111 H110 H111 H110 H111
North America * 818 784 46 44 5.6% 5.6% 4%
Organic growth in North America was 4%, representing a strong improvement over
the 2% growth achieved in the same period of 2010. Margins held firm during the
period at 5.6%.
In the United States, organic growth was 4%, primarily as a result of strong
performance in the commercial, compliance and investigations and systems
integration businesses.
Organic growth increased due to some key strategic account wins in the
commercial, regulated and government sectors and retention of work re-bid in the
period. A strong pipeline of opportunities remains with potential new customers
looking at the G4S integrated security approach with a particular interest in
risk management and travel security.
US government growth was slightly negative overall, but there were some new
contract wins such as the provision of services to the Diego Garcia military
base, Bonneville Power, the Greek, Thai and Gambian embassies, two new juvenile
programs for the State of Florida and two major systems contracts for the States
of Massachusetts and Colorado funded by federal stimulus funding.
The international accounts division agreed extensions to existing contracts and
a number of new contracts with US-based customers valued at £67 million per year
for the provision of secure solutions across multiple markets in 2011.
In Canada the business performed well compared to the same period in 2010
assisted by new contract wins in healthcare, commercial and chemical sectors and
with improved margins. On 8 August, we announced that we had won a major
contract for airport screening services in the Pacific region in Canada,
providing services at 20 airports, including Vancouver International. The
contract is valued at more than £250m over the initial five-year term.
New Markets
Turnover PBITA Margins Organic Growth
£m £m
* At constant exchange rates
H111 H110 H111 H110 H111 H110 H111
Asia * 320 286 21 19 6.6% 6.6% 12%
Middle East * 219 217 17 18 7.8% 8.3% 1%
Africa * 173 159 19 17 11.0% 10.7% 6%
Latin America & Caribbean * 198 156 15 11 7.6% 7.1% 18%
Total New Markets * 910 818 72 65 7.9% 7.9% 9%
In New Markets, there was strong organic growth of 9%, and margins were
maintained at 7.9% with some overall improvements offset by the requirement to
comply with a Saudi Arabian government request to pay a bonus to all employees
during the Middle East period of unrest. We expect to recover this in the
second half of 2011.
Organic growth in Asia was 12% and margins held firm at 6.6% helped by strong
performances in India and Malaysia. Recent contract wins in the region include
Hactl SuperTerminal 1 in Hong Kong, the world's largest single air cargo
terminal, and additional project wins from Corning in China. In Kazakhstan our
business grew strongly in the oil and gas sector.
Despite the unrest in the Middle East, growth continues in Egypt, Yemen and
Bahrain. Organic growth overall was 1%, with particularly strong performances in
Qatar and in Afghanistan, helped by the re-negotiated US embassy contract which
is now expected to continue until the end of 2011. As expected, organic growth
was negatively affected by the ending of US army work in Iraq, without which the
organic growth would have been above 15%. Also in Iraq, we have recently won
contracts supporting the development of the southern oil fields which should
help the business return to growth in the medium term. In September, the first
electronic monitoring of offenders project in the Middle East starts in Saudi
Arabia through GML, our recent acquisition based in the UK. The margin in the
Middle East declined overall to 7.8%.
In Africa, organic growth was 6% and margins improved to 11.0% despite difficult
market conditions in South Africa. The recently launched Maritime Security
Solutions service, created to address the increase in piracy in the region, has
performed strongly and achieved double-digit margins. This service will be
promoted to shipping lines, ship owners and insurance underwriters involved in
maritime activity in these increasingly dangerous zones. Morocco performed
strongly with organic growth of more than 20%.
The Latin America and Caribbean region achieved strong organic growth of 18%
with increased PBITA margins of 7.6%. Almost all countries performed extremely
well in the first half and helped offset the expected loss of the Colombia tolls
contract. Growth has been driven primarily through price increases associated
with increased statutory pay and benefits costs and growth from new customers.
The region has completed two small technology acquisitions since the start of
the year - Detcom in Argentina and EBC in Colombia.
Cash Solutions
Turnover PBITA Margins Organic Growth
£m £m
* At constant exchange rates
H111 H110 H111 H110 H111 H110 H111
Europe * 437 451 37 43 8.5% 9.5% -2%
North America * 53 55 - 2 0.0% 3.6% -4%
New Markets * 185 170 23 22 12.4% 12.9% 8%
Total Cash Solutions * 675 676 60 67 8.9% 9.9% 1%
Exchange differences - (3) - 1
At actual exchange rates 675 673 60 68
The Cash Solutions division saw organic growth of 1% in the first half, with
strong growth in New Markets being offset by declines in developed markets due
to the continued impact of low interest rates causing service reductions in some
areas. In developed markets, robberies have been at a lower level in the first
six months compared to the prior year, but there has been an increase in attacks
in some New Markets such as Saudi Arabia and South Africa which has affected
margins.
Organic growth in Europe was -2% despite a strong performance in Belgium where
we have recently taken on work from a competitor exiting the market - this
transition has been very successful, positioning us very strongly in this
market. A number of central banks and commercial banks are reviewing
outsourcing of services which should create opportunities for growth the medium
term. The new cash transportation contract with ERSTE Bank in Serbia started in
July.
In Romania the continuing effect of the loss of the Post Office contract had a
negative impact on organic growth and margins. Discussions continue regarding
the re-starting of the contract in non-urban areas.
In the UK, organic growth was -5% due to a major bank restructuring its service
requirements in September 2010. However margins have been maintained due to
extensive overhead controls, a continued strong focus on operational efficiency
and investment in technology reducing the level of attacks. In Ireland the
business has responded to reductions in turnover by re-organising its
operations. The benefit of this will occur in the second half of the year due to
the non-recurrence of associated restructuring costs.
The G4Si business continues its very strong performance with organic growth of
16% helped by both new contract wins and volume increases with existing
customers across all sectors, but particularly in the diamond and jewellery
sector.
Sales of CASH360, the group's retail cash solutions system, have been achieved
in nine countries, and we have a further six countries where we expect to have
the first pilot or sale by the end of the year.
In North America, the business in Canada was impacted by the loss of part of the
BMO contract.
In New Markets, organic growth was strong at 8% but margins were lower due to
increased attacks in South Africa and robberies and cash losses in Saudi Arabia,
together with the employee bonus payment. Elsewhere in New Markets there was
strong, double-digit growth across many countries including Hong Kong, Thailand,
Malaysia, Morocco, Colombia, Qatar and UAE.
OTHER FINANCIAL ISSUES
Acquisitions and divestments
G4S invested a total of £42m on acquisitions completed during the period. Of
this, £10m was invested in purchasing the Cotswold Group Limited, the UK's
market leader in surveillance, fraud, analytics, intelligence and investigations
services, £17m in purchasing Guidance Monitoring, an offender monitoring
technology business and £14m in purchasing Munt Centrale Holland B.V., a coin
management service company based in the Netherlands. In addition, the group has
paid out £21m during the period in relation to acquisitions completed in prior
years.
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 50 and 51 of the company's annual report
for the financial year ended 31 December 2010, a copy of which is available on
the group websitewww.g4s.com.
The risks and uncertainties are expected to be the same during the remaining six
months of the financial year.
Financing & Interest
The group has a prudent approach to managing its financing and since 2007 it has
been diversifying its sources of finance away from the bank market. This
diversification began with the private placement market and more recently,
following the award of a BBB credit rating from Standard & Poor's in March
2009, from the public bond market. The rating was reconfirmed by Standard &
Poor's with a stable outlook in April 2011.
The group is currently well capitalised with no significant maturities until
2013. Borrowings are at attractive rates and liabilities broadly match the
business mix by currency.
The group's primary sources of finance are:-
* £1.1bn multicurrency revolving credit facility provided by a consortium of
banks at a margin of 0.80% over LIBOR and maturing 10 March 2016. As at 30
June 2011 the drawings were US$ 290m, Euro 379m and £250m.
* $550m private placement notes, issued 1 March 2007, which mature at various
dates between 2014 and 2022 with interest coupons of between 5.77% and
6.06%.
* $514m and £69m private placement notes, issued 15 July 2008 which mature at
various dates between 2013 and 2020 with interest coupons of between 6.09%
and 7.56%.
* £350m 7.75% 2019 bond. This bond was issued 13 May 2009 and matures 13 May
2019.
At 30 June 2011, the group had uncommitted facilities of £597m. The group
headroom available from committed funds was £341m. The group has sufficient
borrowing capacity to finance its current investment plans.
As of 30 June 2011, net debt was £1,576m which gave book gearing of 94%. The
market gearing, using the 30 June 2011 closing share price of 279.8 pence, is
40%.
Net interest payable on net debt was £47m. This was broadly similar to the 2010
cost of £50m and reflects the stability created from the portion of debt held at
fixed rates and the continued low short term interest rates applicable to the
portion of debt held at floating rates.
The group's average cost of borrowings during the half year was 4.9% compared to
4.7% in 2010.
Taxation
Tax has been provided for at the estimated effective tax rate for the full year
of 22% on adjusted earnings, compared to 24% for the full year in 2010. 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 £249m before tax
or £184m after tax (31 December 2010: £265m and £191m respectively). The main
schemes are in the UK. The latest full actuarial valuations were undertaken at
5 April 2009 in respect of all three major UK schemes.
The valuation of gross liabilities has barely changed since 31 December 2010
with slight increases in both the discount rate and inflation rate assumptions.
The value of the assets held in the funds (adjusted for acquired pension funds
and additional contributions) is also very similar to the value at 31 December
2010. Additional company contributions were £19m.
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. During the period the group
completed a consultation period with members of the UK scheme with a view to
closing the scheme to future accrual in order to limit the future growth in
liabilities. The closure took effect in July 2011. Existing members will retain
their benefits accrued to date and will be given the option to transfer to a
defined contribution scheme for future pension benefits.
Dividend
The Board has declared an interim dividend for 2011 of 3.42 pence per share (DKK
0.2928) payable 14 October 2011. This represents an increase of 8% on the
interim dividend for 2010.
STRATEGY REVIEW AND OUTLOOK
Despite the ongoing challenging macro-economic environment and the additional
recent turmoil in global markets, we are encouraged by the underlying
improvement in growth trends which has enabled us to increase organic growth to
5% in the first half of the year.
Our continued focus on controlling costs, maintaining customer service levels
and building our capability through acquisitions and focus on key sectors, has
enabled us to improve our growth and hold margins at the same time.
There are positive signs from customers, both in government and the financial
institution sector, that outsourcing is very firmly on their agenda and we are
well placed to win further contracts in these areas.
Some markets remain challenging, but overall there is a good level of positive
momentum to help us drive the business forward, and we will continue to maintain
our discipline on margins and cash generation.
We have a very healthy acquisition pipeline which will enable us to continue to
build on our multi-service strategy and maximise our ability to deliver
outsourcing solutions for our customers. This pipeline together with the
recovery in growth in our existing business gives us confidence in the outlook
for the full year and into 2012. That confidence is reflected in the 8% increase
in our interim dividend.
23 August 2011
G4S plc
Unaudited half-yearly results announcement
For the six months ended 30 June 2011
Directors' responsibility statement in respect of the half-yearly 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 half-yearly report includes a fair review of the information required
by:
a. DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first six months of the
financial year 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 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 current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do so.
The responsibility statement is signed by:
Nick Buckles Trevor Dighton
Chief ExecutiveChief Financial Officer
G4S plc
Unaudited half-yearly results announcement
For the six months ended 30 June 2011
Consolidated income statement
For the six months ended 30 June 2011
Six months ended Six months ended Year
ended
30.06.11 30.06.10 31.12.10
Notes £m £m £m
--------------------------------------------------------------------------------
Continuing operations
Revenue 2 3,761 3,629 7,392
--------------------------------------------------------------------------------
Profit from operations before
amortisation of acquisition-
related intangible assets and
share of profit from
associates 238 236 523
Share of profit from 1 2 5
associates
--------------------------------------------------------------------------------
Profit from operations before
amortisation of acquisition-
related intangible assets
(PBITA) 2 239 238 528
Amortisation of acquisition- (43) (43) (88)
related intangible assets
Acquisition-related expenses (1) - (4)
--------------------------------------------------------------------------------
Profit from operations before 195 195 436
interest and taxation (PBIT) 2, 3
Finance income 6 54 49 98
Finance costs 7 (100) (102) (203)
--------------------------------------------------------------------------------
Profit from operations before 149 142 331
taxation (PBT)
--------------------------------------------------------------------------------
Taxation:
+------------------------------------------------------------------------------+
| Before amortisation of (42) (47) (102)|
|acquisition-related intangible |
|assets |
| |
| - On amortisation of 12 12 25|
|acquisition-related |
|intangible assets |
| |
| - On acquisition-related - - 1|
|expenses |
+------------------------------------------------------------------------------+
8 (30) (35) (76)
--------------------------------------------------------------------------------
Profit from continuing 119 107 255
operations after taxation
Loss from discontinued 4 (1) (3) (10)
operations
--------------------------------------------------------------------------------
Profit for the period 118 104 245
--------------------------------------------------------------------------------
Attributable to:
Equity holders of the parent 108 94 223
Non-controlling interests 10 10 22
--------------------------------------------------------------------------------
Profit for the period 118 104 245
--------------------------------------------------------------------------------
Earnings per share
attributable to ordinary
equity shareholders 9
of the parent from continuing
and discontinued operations
Basic and diluted 7.7p 6.7p 15.9p
--------------------------------------------------------------------------------
+------------------------------------------------------------------------------+
|Dividends declared and |
|proposed in respect of the 10 |
|period |
| |
|Interim dividend of 3.42p per 48 45 45|
|share (2010: 3.17p per share) |
| |
|Final dividend (2010: 4.73p - - 66|
|per share) |
+------------------------------------------------------------------------------+
|Total 48 45 111|
+------------------------------------------------------------------------------+
Condensed consolidated statement of comprehensive income
For the six months ended 30 June 2011
Six months ended Six months ended Year
ended
30.06.11 30.06.10 31.12.10
£m £m £m
--------------------------------------------------------------------------------
Profit for the period 118 104 245
Other comprehensive income
Exchange differences on translation 7 29 41
of foreign operations
Actuarial (losses)/gains on defined (13) (109) 15
retirement benefit schemes
Change in fair value of cash flow 2 18 15
hedging financial instruments
Tax on items taken directly to (2) 32 (11)
equity
--------------------------------------------------------------------------------
Other comprehensive income, net of (6) (30) 60
tax
--------------------------------------------------------------------------------
Total comprehensive income for the 112 74 305
period
--------------------------------------------------------------------------------
Attributable to:
Equity holders of the parent 102 64 283
Non-controlling interests 10 10 22
--------------------------------------------------------------------------------
Total comprehensive income for the 112 74 305
period
--------------------------------------------------------------------------------
Condensed consolidated statement of changes in equity
For the six months ended 30 June 2011
Six months ended Six months ended Year
ended
30.06.11 30.06.10 31.12.10
£m £m £m
--------------------------------------------------------------------------------
At beginning of period 1,577 1,407 1,407
Total comprehensive income
attributable to equity shareholders
of the parent 102 64 283
Dividends declared (66) (59) (103)
Own shares purchased (8) (6) (10)
Equity settled transactions 1 5 7
Transactions with non-controlling - (5) (7)
interests
--------------------------------------------------------------------------------
At end of period 1,606 1,406 1,577
--------------------------------------------------------------------------------
Condensed consolidated statement of financial position
At 30 June 2011
As at As at As at
30.06.11 30.06.10 31.12.10
Notes £m £m £m
--------------------------------------------------------------------------------
ASSETS
Non-current assets
Goodwill 2,167 2,109 2,147
Other acquisition-related intangible assets 258 325 286
Other intangible assets 73 65 71
Property, plant and equipment 560 560 580
Investment in associates 7 11 10
Trade and other receivables 300 280 299
--------------------------------------------------------------------------------
3,365 3,350 3,393
--------------------------------------------------------------------------------
Current assets
Inventories 124 85 84
Investments 69 92 82
Trade and other receivables 1,543 1,479 1,463
Cash and cash equivalents 429 327 351
Assets classified as held for sale 11 - 10 -
--------------------------------------------------------------------------------
2,165 1,993 1,980
--------------------------------------------------------------------------------
Total assets 5,530 5,343 5,373
--------------------------------------------------------------------------------
LIABILITIES
Current liabilities
Bank overdrafts (46) (37) (45)
Bank loans (113) (81) (113)
Obligations under finance leases (13) (16) (21)
Trade and other payables (1,236) (1,144) (1,266)
Retirement benefit obligations - (55) (61)
Provisions (28) (36) (33)
Liabilities associated with assets classified 11 - (9) -
as held for sale
--------------------------------------------------------------------------------
(1,436) (1,378) (1,539)
--------------------------------------------------------------------------------
Non-current liabilities
Bank loans (803) (660) (574)
Loan notes (1,137) (1,196) (1,153)
Obligations under finance leases (55) (56) (49)
Trade and other payables (11) (38) (48)
Retirement benefit obligations (300) (400) (245)
Provisions (139) (169) (142)
--------------------------------------------------------------------------------
(2,445) (2,519) (2,211)
--------------------------------------------------------------------------------
Total liabilities (3,881) (3,897) (3,750)
--------------------------------------------------------------------------------
Net assets 1,649 1,446 1,623
--------------------------------------------------------------------------------
EQUITY
Share capital 353 353 353
Share premium and reserves 1,253 1,053 1,224
--------------------------------------------------------------------------------
Equity attributable to equity holders of the 1,606 1,406 1,577
parent
Non-controlling interests 43 40 46
--------------------------------------------------------------------------------
Total equity 1,649 1,446 1,623
--------------------------------------------------------------------------------
Condensed consolidated statement of cash flow
For the six months ended 30 June 2011
Six months ended Six months ended Year
ended
30.06.11 30.06.10 31.12.10
Notes £m £m £m
--------------------------------------------------------------------------------
Profit from continuing 149 142 331
operations before taxation
Adjustments for:
Finance income (54) (49) (98)
Finance costs 100 102 203
Depreciation of property, 64 64 131
plant and equipment
Amortisation of 43 43 88
acquisition-related
intangible assets
Acquisition-related costs 1 - 4
Amortisation of other 10 9 17
intangible assets
Other non-cash items - 3 (23)
--------------------------------------------------------------------------------
Operating cash flow before 313 314 653
movements in working
capital
Net working capital (141) (93) (114)
movement
--------------------------------------------------------------------------------
Net cash flow from 172 221 539
operating activities of
continuing operations
Net cash used by operating 1 (3) (5)
activities of discontinued
operations
--------------------------------------------------------------------------------
Cash generated by 173 218 534
operations
Tax paid (42) (37) (86)
--------------------------------------------------------------------------------
Net cash flow from 131 181
operating activities 448
--------------------------------------------------------------------------------
Investing activities
Interest received 3 2 11
Cash flow from associates 3 (1) 3
Net cash flow from capital (53) (70)
expenditure (139)
Net cash flow from (51) (28)
acquisitions and disposals (43)
Sale/(purchase) of trading 11 (2)
investments 5
Own shares purchased (8) (6) (10)
--------------------------------------------------------------------------------
Net cash used in investing (95) (105)
activities (173)
--------------------------------------------------------------------------------
Financing activities
Share issues - - -
Dividends paid to non- (9) (6)
controlling interests (12)
Dividends paid to equity (66) (59)
shareholders of the parent (103)
Net movement in borrowings 203 57 (18)
Transactions with non- (6) -
controlling interests (3)
Interest paid (67) (63) (105)
Repayment of obligations (11) (10)
under finance leases (20)
--------------------------------------------------------------------------------
Net cash flow from 44 (81)
financing activities (261)
--------------------------------------------------------------------------------
Net increase/(decrease) in cash, cash
equivalents and bank overdrafts
12 80 (5) 14
Cash, cash equivalents and 306 291
bank overdrafts at the
beginning of the period 291
Effect of foreign exchange (3) 2
rate fluctuations on cash
held 1
--------------------------------------------------------------------------------
Cash, cash equivalents and 383 288
bank overdrafts at the end
of the period 306
--------------------------------------------------------------------------------
Notes to the half-yearly 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 2011. These
half-yearly financial results do not comprise statutory accounts and should be
read in conjunction with the Annual Report and Accounts 2010.
The comparative figures for the financial year ended 31 December 2010 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 498 (2) or (3) of the Companies Act 2006.
The half-yearly results have been prepared in accordance with the going concern
concept as the group believes that it has adequate resources to continue in
operational existence for the foreseeable future.
The condensed financial statements of the group presented in this interim
announcement have been prepared in accordance with IAS 34 Interim Financial
Reporting as adopted by the European Union, 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
2010, as adjusted for the effects of:
* IAS 24 Related Party Transactions (Revised). The revised standard clarifies
the definitions of a related party. The new definitions emphasise a
symmetrical view of related party relationships as well as clarifying in
which circumstances persons and key management personnel affect the related
party relationships of an entity. The adoption of this revised standard did
not have any impact on the financial position or performance of the group.
* IFRIC 14 Prepayments of a Minimum Funding Requirement (Amendment). The
amendment provides further guidance on assessing the recoverable amount of a
net pension asset. The amendment permits a prepayment of a minimum funding
requirement by an entity to be recognised as a pension asset. The adoption
of this interpretation had no effect on the financial position or
performance of the group.
.
* IFRS 7 Financial Instruments: Disclosures (Amendment). The amendments state
that qualitative disclosures should be made in the context of the
quantitative disclosures to better enable users to evaluate an entity's
exposure to risks arising from financial instruments.
* IAS 1 Presentation of Financial Statements (Amendment). The amendments
clarify that disaggregation of changes in each component of equity arising
from transactions recognised in other comprehensive income also is required
to be presented, but may be presented either in the statement if changes in
equity or in the notes.
The financial information in these condensed financial statements for the half
years to 30 June 2011 and 30 June 2010 have been neither audited nor reviewed.
The comparative income statement for the six months ended 30 June 2010 has been
re-presented for operations qualifying as discontinued during the six months
ended 31 December 2010 and the six months ended 30 June 2011. The comparative
income statement for the year ended 31 December 2010 has been re-presented for
operations qualifying as discontinued during the six months ended 30 June 2011.
For the six months ended 30 June 2010, revenue has been reduced by £3m but
there has been no change to PBT to the figures published previously. For the
year ended 31 December 2010, revenue has been reduced by £5m and PBT has been
increased by £1m compared to the figures published previously.
The presentation of the consolidated financial statements has been changed to
round results to the nearest £1m whereas in the previous half yearly statement
they were rounded to the nearest £0.1m. This change has required the 30 June
2010 figures to be restated and as a result there are some immaterial
inconsistencies between the restated rounded 30 June 2010 figures in the 30 June
2011 accounts compared to the same figures disclosed to the nearest £0.1m in the
2010 accounts. In addition there may be immaterial rounding inconsistencies
between the notes to the accounts and the primary statements for the 30 June
2010 figures.
2) Operating segments
The group operates in two core product areas: secure solutions and cash
solutions which represent the group's reportable segments. For each of the
reportable segments, the group's CEO (the chief operating decision maker)
reviews internal management reports on a regular basis. The group operates on a
worldwide basis and derives a substantial proportion of its revenue, PBITA and
PBIT from each of the following geographical 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).
Notes to the half-yearly results announcement (continued)
Segment information for continuing operations is presented below:
Segment revenue
Six months ended Six months ended Year
Revenue by reportable segment ended
30.06.11 30.06.10 31.12.10
£m £m £m
--------------------------------------------------------------------------------
Secure Solutions
+------------------------------------------------------------------------------+
| UK and Ireland 612 572 1,179|
| |
| Continental Europe 746 718 1,433|
+------------------------------------------------------------------------------+
Europe 1,358 1,290 2,612
North America 818 820 1,676
+------------------------------------------------------------------------------+
| Middle East and Gulf States 219 235 465|
| |
| Latin America and the |
|Caribbean 198 160 356|
| |
| Africa 173 164 333|
| |
| Asia Pacific 320 287 600|
+------------------------------------------------------------------------------+
New Markets 910 846 1,754
--------------------------------------------------------------------------------
Total Secure Solutions 3,086 2,956 6,042
--------------------------------------------------------------------------------
Cash Solutions
Europe 437 448 891
North America 53 54 106
New Markets 185 171 353
--------------------------------------------------------------------------------
Total Cash Solutions 675 673 1,350
--------------------------------------------------------------------------------
Total revenue 3,761 3,629 7,392
--------------------------------------------------------------------------------
Segment result
Six months ended Six months ended Year
PBITA by reportable segment ended
30.06.11 30.06.10 31.12.10
£m £m £m
--------------------------------------------------------------------------------
Secure Solutions
+------------------------------------------------------------------------------+
| UK and Ireland 50 45 103|
| |
| Continental Europe 36 34 78|
+------------------------------------------------------------------------------+
Europe 86 79 181
North America 46 46 96
+------------------------------------------------------------------------------+
| Middle East and Gulf States 17 19 44|
| |
| Latin America and the |
|Caribbean 15 10 26|
| |
| Africa 19 18 33|
| |
| Asia Pacific 21 20 40|
+------------------------------------------------------------------------------+
New Markets 72 67 143
--------------------------------------------------------------------------------
Total Secure Solutions 204 192 420
--------------------------------------------------------------------------------
Cash Solutions
Europe 37 43 101
North America - 2 4
New Markets 23 23 44
--------------------------------------------------------------------------------
Total Cash Solutions 60 68 149
--------------------------------------------------------------------------------
Total PBITA before head office
costs 264 260 569
Head office costs (25) (22) (41)
--------------------------------------------------------------------------------
Total PBITA 239 238 528
--------------------------------------------------------------------------------
Result by business segment
Total PBITA 239 238 528
Amortisation of acquisition- (43) (43)
related intangible assets (88)
Acquisition-related expenses (1) - (4)
--------------------------------------------------------------------------------
Total PBIT 195 195 436
--------------------------------------------------------------------------------
Secure Solutions 171 161 352
Cash Solutions 49 56 125
Head office costs (25) (22) (41)
--------------------------------------------------------------------------------
Total PBIT 195 195 436
--------------------------------------------------------------------------------
Notes to the half-yearly results announcement (continued)
3) Profit from operations before interest and taxation
The income statement can be analysed as follows:
Six months ended Six months ended Year
Continuing operations ended
30.06.11 30.06.10 31.12.10
£m £m £m
--------------------------------------------------------------------------------
Revenue 3,761 3,629 7,392
Cost of sales (2,986) (2,850) (5,807)
--------------------------------------------------------------------------------
Gross profit 775 779 1,585
Administration expenses (581) (586) (1,154)
Share of profit from associates 1 2 5
--------------------------------------------------------------------------------
Profit from operations before 195 195
interest and taxation 436
--------------------------------------------------------------------------------
Included within administration expenses is the amortisation charge for
acquisition-related intangible assets and acquisition-related expenses.
4) Discontinued operations
During the period the security solutions business in Russia was classified as
discontinued. In the previous year the cash solutions business in Taiwan was
classified as discontinued and this was disposed of on 15 July 2010
Notes to the half-yearly results announcement (continued)
5) Acquisitions
Current Period Acquisitions
During the period the group purchased the entire share capital of Munt Centrale
Holland B.V., a coin management service company based in the Netherlands on 1
January 2011 and The Cotswold Group Limited, the UK's market leader in
surveillance, fraud, analytics, intelligence and investigations services on 8
April 2011. The group also acquired the offender monitoring technology
operations of Guidance Limited on 27 April 2011.
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
--------------------------------------------------------------------------------
Intangible assets - 17 17
Property, plant and equipment 9 (2) 7
Inventories 2 - 2
Trade and other receivables 7 (1) 6
Cash and cash equivalents 8 - 8
Trade and other payables (5) - (5)
Current tax liability (1) - (1)
Provisions - (2) (2)
Borrowings - - -
Deferred tax liabilities (1) (4) (5)
--------------------------------------------------------------------------------
Net assets acquired of subsidiary
undertakings 19 8 27
Goodwill 15
--------------------------------------------------------------------------------
Total purchase consideration 42
--------------------------------------------------------------------------------
Satisfied by:
Cash 39
Deferred consideration 3
--------------------------------------------------------------------------------
Total purchase consideration 42
--------------------------------------------------------------------------------
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 £17m 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 valuation and also any
development in the issues to which they relate. Final fair value adjustments
will, if required, be set out in the group's 2011 Annual Report and Accounts
and/or in the group's 2012 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.
Prior period acquisitions
The purchase consideration and provisional fair values of acquisitions made
during the financial year to 31 December 2010 and their contribution to the
group's results for the year are set out in the group's Annual Report and
Accounts 2010. No material adjustments have been made during the six months to
30 June 2011 to the provisional calculation of the fair values of assets and
liabilities acquired during the year to 31 December 2010. In addition to the
£42m total consideration above the group has paid an additional £21m relating to
acquisitions completed in prior years which had been recognised previously as
deferred consideration.
Notes to the half-yearly results announcement (continued)
6) Finance income
Six months ended Six months ended Year
ended
30.06.11 30.06.10 31.12.10
£m £m £m
--------------------------------------------------------------------------------
Interest receivable 8 5 11
Expected return on defined 46 44 87
retirement benefit scheme assets
--------------------------------------------------------------------------------
Total finance income 54 49 98
--------------------------------------------------------------------------------
7) Finance costs
Six months ended Six months ended Year
ended
30.06.11 30.06.10 31.12.10
£m £m £m
--------------------------------------------------------------------------------
Total group borrowing costs (55) (55) (110)
Finance costs on defined retirement (45) (47) (93)
benefit obligations
--------------------------------------------------------------------------------
Total finance costs (100) (102) (203)
--------------------------------------------------------------------------------
8) Taxation
Six months ended Six months ended Year
ended
30.06.11 30.06.10 31.12.10
£m £m £m
-------------------------------------------------------------------
UK taxation 4 2 (12)
Overseas taxation (34) (37) (64)
-------------------------------------------------------------------
Total taxation expense (30) (35) (76)
-------------------------------------------------------------------
Notes to the half-yearly results announcement (continued)
9) Earnings per share attributable to ordinary shareholders of the parent
Six months ended Six months ended Year
ended
30.06.11 30.06.10 31.12.10
£m £m £m
--------------------------------------------------------------------------------
From continuing and
discontinued operations
Earnings
Profit for the period 223
attributable to equity
holders of the parent 108 94
Effect of dilutive -
potential ordinary
shares (net of tax) - -
--------------------------------------------------------------------------------
Profit for the purposes 223
of diluted earnings per
share 108 94
--------------------------------------------------------------------------------
Number of shares (m)
Weighted average number 1,406
of ordinary shares 1,405 1,404
Effect of dilutive -
potential ordinary
shares - -
--------------------------------------------------------------------------------
Weighted average number
of ordinary shares for
the purposes of diluted
earnings per share 1,405 1,404 1,406
--------------------------------------------------------------------------------
Earnings per share from continuing
and discontinued operations (pence)
Basic 7.7p 6.7p 15.9p
Diluted 7.7p 6.7p 15.9p
--------------------------------------------------------------------------------
From adjusted earnings
Earnings
Profit for the period 223
attributable to equity
holders of the parent 108 94
Adjustment to exclude 9
loss from discontinued
operations 1 3
Adjustment to exclude
net retirement benefit
finance income (net of
tax) (1) 2 4
Adjustment to exclude amortisation of
acquisition-related intangible assets
(net of tax) 31 31 64
Adjustment to exclude 3
acquisition-related
expenses (net of tax) 1 -
--------------------------------------------------------------------------------
Adjusted profit for the 303
period attributable to
equity holders of the
parent 140 130
--------------------------------------------------------------------------------
Weighted average number 1,406
of ordinary shares (m) 1,405 1,404
Adjusted earnings per 21.6p
share (pence) 10.0p 9.3p
--------------------------------------------------------------------------------
10) Dividends
Six months Six months Year
ended ended ended
Pence DKK 30.06.11 30.06.10 31.12.10
per share per share £m £m £m
--------------------------------------------------------------------------------
Amounts recognised
as distributions to
equity holders of
the parent in the
period
Final dividend for 4.16 0.3408
the year ended 31
December 2009 - 58 58
Interim dividend for
the six months ended
30 June 2010 3.17 0.2877 - - 45
Final dividend for 4.73 0.4082
the year ended 31
December 2010 66 - -
--------------------------------------------------------------------------------
Total 66 58 103
--------------------------------------------------------------------------------
An interim dividend of 3.42p (DKK 0.2928) per share, amounting to £48m, for the
six months ended 30 June 2011 will be paid on 14 October 2011 to shareholders on
the register on 9 September 2011.
Notes to the half-yearly results announcement (continued)
11) Disposal groups classified as held for sale
Disposal groups classified as held for sale at 30 June 2010 primarily comprise
the assets and liabilities associated with the cash solutions business in
Taiwan, sold on 15 July 2010.
12) 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
30.06.11 30.06.10 31.12.10
£m £m £m
--------------------------------------------------------------------------------
Cash and cash equivalents 429 327 351
Investments 69 92 82
Net debt included within assets held for sale - (2) -
Current liabilities
Bank overdrafts and loans (159) (118) (158)
Obligations under finance leases (13) (16) (21)
Fair value of loan note derivative financial 13 13 11
instruments
Non-current liabilities
Bank loans (803) (660) (574)
Loan notes (1,137) (1,196) (1,153)
Obligations under finance leases (55) (56) (49)
Fair value of loan note derivative financial 80 101 85
instruments
--------------------------------------------------------------------------------
Total net debt (1,576) (1,515) (1,426)
--------------------------------------------------------------------------------
An analysis of movements in net debt in the period is presented below:
Six months ended Six months ended Year
ended
30.06.11 30.06.10 31.12.10
£m £m £m
--------------------------------------------------------------------------------
Increase/(decrease) in cash, cash
equivalents and bank overdrafts per 80 (5)
condensed consolidated cash flow
statement 14
(Sale)/purchase of (11) 2
investments (5)
(Increase)/decrease in debt (192) (47)
and lease financing 38
--------------------------------------------------------------------------------
Change in net debt (123) (50)
resulting from cash flows 47
Borrowings acquired with - (1)
subsidiaries (4)
Net additions to finance (9) (3)
leases (9)
--------------------------------------------------------------------------------
Movement in net debt in the (132) (54)
period 34
Translation adjustments (18) (28) (27)
Net debt at the beginning (1,426) (1,433)
of the period (1,433)
--------------------------------------------------------------------------------
Net debt at the end of the (1,576) (1,515)
period (1,426)
--------------------------------------------------------------------------------
13) 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
2010.
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 2011
Six months ended Six months ended Year
ended
30.06.11 30.06.10 31.12.10
£m £m £m
--------------------------------------------------------------------------------
PBITA before share of 238 236
profit from associates
(group PBITA) 522
Depreciation and amortisation of
intangible assets other than
acquisition-related 74 73 132
Movement in working (116) (68)
capital and provisions (73)
Net cash flow from (53) (70)
capital expenditure (139)
--------------------------------------------------------------------------------
Operating cash flow 143 171 442
--------------------------------------------------------------------------------
Reconciliation of
operating cash flow
Six months ended Six months ended Year
ended
30.06.11 30.06.10 31.12.10
£m £m £m
--------------------------------------------------------------------------------
Net cash flow from operating
activities per condensed consolidated
statement of cash flow 131 181 448
Net cash flow from (53) (70) (139)
capital expenditure
Add-back cash flow from 4 - 14
discontinued operations
and other items
Add-back additional 19 24 33
pension contributions
Add-back tax paid 42 36 86
--------------------------------------------------------------------------------
Operating cash flow 143 171 442
--------------------------------------------------------------------------------
`
[HUG#1540271]
Half-yearly report
| Quelle: G4S plc
Anhänge
