8 November 2010
G4S PLC
INTERIM MANAGEMENT STATEMENT
G4S, the international security solutions group, will be updating analysts and
investors today on trading for the year to date, including an overview of
financial performance to 30 September 2010.
Trends from the first half continued into the third quarter with strong
performances in new markets and signs that some of the developed markets have
stabilised.
An overview of the financial performance for the nine months to 30 September
2010 is as follows:
In the first nine months of 2010 overall revenues grew by 5.6% at actual
exchange rates compared to the same period last year and by 4.2% at constant
exchange rates. The group operating margin was in line with the same period in
2009 at both actual and constant exchange rates.
Organic Growth
Overall organic growth was 2.1%, with 0.4% in developed markets and 7% in new
markets.
* In secure solutions, organic growth was 2.7% helped by a continued strong
performance in the government sector and new markets together with a lower
decline in revenues in Continental Europe than that experienced in the first
six months.
* In cash solutions organic growth was -0.5% with strong growth in new markets
offset by the impact of low interest rates in developed markets causing
service reductions.
Margins
Overall margins were unchanged on the same period last year.
* Secure solutions margins were up slightly helped by new markets with strong
performances in Africa and the Middle East.
* Cash solutions margins were slightly down on the same period last year as
they were in the first half of 2010.
Comprehensive Spending Review
G4S is pleased to announce today that it has reached agreement with the UK
Government on a number of contracts relating to the Cabinet Office Comprehensive
Spending Review (CSR) and as a result has signed a Memorandum of Understanding
(MoU) with the UK Government detailing the areas of savings to be achieved in
partnership with G4S. Savings have been achieved largely through specification
amendments on existing contracts.
The group believes that there are a number of areas where the private sector can
deliver further cost savings to the government as a result of more extensive
outsourcing which will provide medium term growth opportunities in the
outsourced government sector and allow G4S to grow its market share in this
area.
Contract Update
On 29 October 2010, the UK Home Office announced that G4S had not been
successful in winning the re-bid for escorting people detained by the UK Border
Agency (UKBA). The current G4S contract is due to end in May 2011.
In September 2010, G4S was successful in winning an extension to a major UK
Government contract which will more than compensate for any 2011 revenue
reductions resulting from the loss of the UKBA contract.
As previously reported, the US Embassy contract in Kabul, Afghanistan, will come
to an end in December this year and we expect the US forces contract in Iraq to
scale down over the same period.
In October, G4S was awarded the Brussels Airport contract for three years from
February 2011.
Acquisitions & Divestments
During the first nine months of the year, G4S has invested a total of £42m on
acquisitions. Of this, £38m was invested in capability building acquisitions
such as electronic software and hardware integration businesses in Brazil and
£4m was spent purchasing the remaining 40% non-controlling interest in an
Argentinean business. Due to phasing it is unlikely that any further material
acquisitions will be completed by the end of the year.
Financial position
Our financial position continues to be strong and we have significant current
headroom from committed funds. Cash flow also remains strong and we are on
track to hit our cash conversion target of 85% of PBITA for the full year.
Summary & Outlook
The business has continued to perform well despite continued challenging market
conditions with positive organic growth and margins maintained.
European markets are still proving to be challenging, especially in Eastern
Europe, although the UK and US commercial markets have now stabilised. Our New
Markets businesses, which now account for more than a third of group profits,
continue to achieve strong results.
These factors combined with our strategy to deliver integrated security
solutions give us confidence that we will continue to show good progress for
this year and into the next.
For further enquiries, please contact:
Helen Parris - Director of Investor Relations +44 (0) 1293 554400
Media Enquiries:
Alison Flynn - Media Manager +44 (0) 1293 554447
Kevin Smith - Citigate Dewe Rogerson+44 (0) 207 282 1054
An investor and analyst conference call is taking place today at 09.00 (UK
time). Participants should dial in 10 minutes before the conference start time.
+---------------------------+--------------------+-----------------------------+
| |Live call at 9am |Replay (available for 7 days)|
+---------------------------+--------------------+-----------------------------+
|UK standard international |+ 44 (0)20 7075 6551|+ 44 (0)20 3364 5943 |
+---------------------------+--------------------+-----------------------------+
|UK Free call |0800 376 4751 |0808 238 9699 |
+---------------------------+--------------------+-----------------------------+
|US Free call |1 866 793 4273 |1 866 286 6997 |
+---------------------------+--------------------+-----------------------------+
|Denmark Free call |80 88 49 45 |808 87 069 |
+---------------------------+--------------------+-----------------------------+
|Conference ID/replay number|133617# |277325# |
+---------------------------+--------------------+-----------------------------+
Webcast
Please paste the link below into your browser and follow the on-screen
instructions:-
http://streamstudio.world-television.com/CCUIv3/login.aspx?ticket=707-
803-9068&target=en
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
110 countries and more than 610,000 employees. For more information on G4S,
visit www.g4s.com.
Preliminary results for the year to 31 December 2010 will be published on 15
March 2011.
[HUG#1459770]
Interim Management Statement
| Source: G4S plc