G4S plc
Half-Yearly Results Announcement
January - June 2010
G4S, the world's leading international security solutions group, today announces
its half year results for the six months to 30 June 2010.
RESULTS HIGHLIGHTS
* Group turnover* up 4% to £3,632.3 million (2009: £3,493.6m)
* Organic turnover growth* of 2%
* PBITA* up 3% to £238.1 million (2009: £230.8m)
* PBITA margin* held at 6.6% (2009: 6.6%)
* Operating cash flow generation of 72% of PBITA (2009: 75%)
* Adjusted earnings per share increased 4.5% to 9.3p (2009: 8.9p) at actual
and constant exchange rates
* Interim dividend up 5% to 3.17 pence per share, DKK 0.2877 (2009:
3.02p/DKK 0.2599)
* at constant (2010) exchange rates
Nick Buckles, Chief Executive Officer, commented:
"This is a solid set of results, with operating profits up 3% compared to the
same period last year and excellent cost control helping margins to hold firm at
6.6%. This demonstrates a good performance in a market environment that
continues to be challenging as a result of the slow pace of the global economic
recovery and ongoing impact of low inflation and interest rates.
"Our performance is a direct result of our differentiated strategy and the
spread and international diversity of our operations, with New Markets growing
organically by 7%. Our focus on delivering innovative, outsourced solutions to
customers, helping them to drive efficiency and reduce costs within their
businesses, will ensure the group remains well positioned for strong long term
growth once economies recover.
"We expect organic growth to improve in the second half, whilst we continue to
maintain our discipline on margins and cash generation."
For further enquiries, please contact:
Helen Parris - Director of Investor Relations +44 (0) 1293 554423
Nick Buckles - Chief Executive Officer
Trevor Dighton - Chief Financial Officer
Media enquiries:
Alison Flynn - Media Manager +44 (0) 1293 554447
Kevin Smith - Citigate Dewe Rogerson +44 (0) 7710 815924
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.
Presentation of Results:
A presentation to investors and analysts is taking place today at 0900hrs at the
London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS. The
presentation will be webcast at:
http://streamstudio.world-television.com/CCUIv3/login.aspx?ticket=707-803-8819&t
arget=en
Telephone Dial-in Details
UK Access Number + 44 (0)20 7075 1520
UK Toll Free 0808 238 7320
US Toll Access Number 703 621 9125
US Toll Free 1 866 793 4273
Denmark Toll Access Number 3271 4200
Denmark Toll Free 80 88 49 45
Participant PIN Code 133617#
Replay Details (available for 7 days).
UK Toll Access Number +44 (0)20 3364 5943
UK Toll Free Access Number 0808 238 9699
US Toll Free Access Number 1 866 286 6997
Denmark Toll Free Access Number 808 87 069
Conference Reference 271856#
Participant PIN Code 133617#
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 | H110| H109|
| | £m| £m|
+-----------------------------------+-------+-------+
|Turnover at constant exchange rates|3,632.3|3,493.6|
+-----------------------------------+-------+-------+
|Exchange difference | -| (15.0)|
+-----------------------------------+-------+-------+
|Total continuing business turnover |3,632.3|3,478.6|
+-----------------------------------+-------+-------+
Turnover, at constant exchange rates, increased by 4.0% to £3,632.3 million.
Organic turnover growth was 1.8%.
+---------------------+------+-------------+-----------------+-----------+-----+
|Organic Turnover |Europe|North America|Developed Markets|New Markets|Total|
|Growth * | | | | | |
+---------------------+------+-------------+-----------------+-----------+-----+
|Secure Solutions |-0.4% | 1.8% | 0.4% | 7.6% |2.4% |
+---------------------+------+-------------+-----------------+-----------+-----+
|Cash Solutions |-2.3% | -1.1% | -2.2% | 4.5% |-0.6%|
+---------------------+------+-------------+-----------------+-----------+-----+
|Total |-0.9% | 1.6% | -0.1% | 7.1% |1.8% |
+---------------------+------+-------------+-----------------+-----------+-----+
* Calculated to exclude acquisitions and disposals, and at constant exchange
rates
Group Profit
+---------------------------------------+-----+-----+
|PBITA * of Continuing Businesses | H110| H109|
| | £m| £m|
+---------------------------------------+-----+-----+
|PBITA at constant exchange rates |238.1|230.8|
+---------------------------------------+-----+-----+
|Exchange difference | -|(0.7)|
+---------------------------------------+-----+-----+
|Total continuing business PBITA |238.1|230.1|
+---------------------------------------+-----+-----+
|PBITA margin at constant exchange rates| 6.6%| 6.6%|
+---------------------------------------+-----+-----+
* PBITA is defined as profit before interest, taxation and amortisation of
acquisition-related intangible assets
PBITA at constant exchange rates increased by 3.2% to £238.1 million. The PBITA
margin held firm at 6.6%.
Cash Flow and Financing
+---------------------------+-----+-----+
|Cash Flow | H110| H109|
| | £m| £m|
+---------------------------+-----+-----+
|Operating cash flow |170.7|171.5|
+---------------------------+-----+-----+
|Operating cash flow / PBITA| 72%| 75%|
+---------------------------+-----+-----+
Operating cash flow, as analysed on page 22, was £170.7 million in the period,
representing 72% of PBITA. The group expects to meet its full year target of
85% of PBITA. Net cash invested in acquistions was £28.2 million. Net debt at
the end of the period, as analysed on page 21, was £1,514.6 million (June 2009:
£1,385.9m, December 2009: £1,433.4m).
Adjusted earnings per share
+----------------------------------+-------+---------------------------+-------+
|Adjusted earnings per share | H110| H109 at constant exchange| H109|
| | £m| rates| £m|
| | | £m| |
+----------------------------------+-------+---------------------------+-------+
|PBITA from continuing operations | 238.1| 230.8| 230.1|
+----------------------------------+-------+---------------------------+-------+
|Interest (before pensions) | (49.5)| (48.5)| (47.7)|
+----------------------------------+-------+---------------------------+-------+
|Tax | (48.1)| (48.3)| (48.4)|
+----------------------------------+-------+---------------------------+-------+
|Non-controlling interests | (9.9)| (8.6)| (8.6)|
+----------------------------------+-------+---------------------------+-------+
|Adjusted profit attributable to | 130.6| 125.4| 125.4|
|shareholders | | | |
+----------------------------------+-------+---------------------------+-------+
|Average number of shares (m) |1,404.3| 1,402.5|1,402.5|
+----------------------------------+-------+---------------------------+-------+
|Adjusted EPS (p) | 9.3| 8.9| 8.9|
+----------------------------------+-------+---------------------------+-------+
Adjusted earnings per share, reconciled to basic earnings per share on page 20,
increased by 4.5% at actual and constant exchange rates.
BUSINESS ANALYSIS
Secure Solutions
+-------------------------+---------------+-----------+---------+--------------+
| | Turnover | PBITA | Margins |Organic Growth|
| | £m | £m | | |
|* At constant exchange +-------+-------+-----+-----+----+----+--------------+
|rates | H110 | H109 |H110 |H109 |H110|H109| H110 |
+-------------------------+-------+-------+-----+-----+----+----+--------------+
|Europe * |1,292.4|1,297.4| 79.4| 79.4|6.1%|6.1%| -0.4% |
+-------------------------+-------+-------+-----+-----+----+----+--------------+
|North America * | 820.0| 742.7| 46.3| 41.3|5.6%|5.6%| 1.8% |
+-------------------------+-------+-------+-----+-----+----+----+--------------+
|New Markets * | 846.5| 776.5| 66.4| 59.1|7.8%|7.6%| 7.6% |
+-------------------------+-------+-------+-----+-----+----+----+--------------+
|Total Secure Solutions * |2,958.9|2,816.6|192.1|179.8|6.5%|6.4%| 2.4% |
+-------------------------+-------+-------+-----+-----+----+----+--------------+
|Exchange differences | -| (2.5)| -| 0.4| |
+-------------------------+-------+-------+-----+-----+------------------------+
|At actual exchange rates |2,958.9|2,814.1|192.1|180.2| |
+-------------------------+-------+-------+-----+-----+------------------------+
Secure solutions continued its robust performance with organic growth of 2.4%
and margins slightly higher at 6.5% helped by margins holding firm in developed
markets and improved margins in New Markets.
Europe
+---------------------------+---------------+---------+---------+--------------+
| | Turnover | PBITA | Margins |Organic Growth|
| | £m | £m | | |
|* At constant exchange +-------+-------+----+----+----+----+--------------+
|rates | H110 | H109 |H110|H109|H110|H109| H110 |
+---------------------------+-------+-------+----+----+----+----+--------------+
|UK & Ireland * | 571.7| 555.4|45.1|44.1|7.9%|7.9%| 2.9% |
+---------------------------+-------+-------+----+----+----+----+--------------+
|Continental Europe * | 720.7| 742.0|34.3|35.3|4.8%|4.8%| -2.8% |
+---------------------------+-------+-------+----+----+----+----+--------------+
|Total Europe * |1,292.4|1,297.4|79.4|79.4|6.1%|6.1%| -0.4% |
+---------------------------+-------+-------+----+----+----+----+--------------+
Organic growth in Europe was -0.4% and margins held firm at 6.1 %.
In the UK & Ireland, organic growth was 2.9%, with strong growth in the Care and
Justice Services and Integrated Services businesses offset by Ireland, where
turnover has declined 6% due to continuing difficult market conditions. Good
cost control meant that margins were unchanged overall at 7.9% despite the
deterioration in Ireland. We expect Ireland's profitability to improve in 2011.
New contracts won or retained in the government sector during the first half of
the year included management of police custody suites for Lancashire police
force, forensic medical services for five police forces and the award of back
office services for Cleveland police force. G4S was also awarded a security
solutions contract by Her Majesty's Revenue and Customs and two contracts by the
Foreign and Commonwealth Office (FCO) for the provision of security services in
Afghanistan and in the UK. Both FCO contracts, which together are worth around
£27 million per annum, are for a three-year period.
New contracts won or commencing in the commercial sector during the first half
of the year included: a strategic, global five year contract with
GlaxoSmithKline, which covers the provision of security services in 29 countries
and is worth around £17m per year; a series of significant contracts for the
installation of smart meters for major utility companies; and a two year
contract for the Silverstone motor racing circuit. The landmine clearance
business which is managed from the UK awarded a $23 million contract by a major
oil and gas company in Iraq and is bidding on a number of similar contracts.
Following the election, the new UK Government announced its aim to reduce
government spending by up to 25% over the next three years. As a major long
term partner of the UK Government, G4S remains in close dialogue at a strategic
and operational level to determine how the group can assist in achieving the UK
Government's targets. The group has already recommended a number of areas where
the private sector can deliver further cost savings to individual departments on
existing contracts as well as more significant potential savings in areas of
more extensive outsourcing, areas still to be outsourced or areas which could be
fully privatised in due course. The group believes that this strategy will
continue to provide medium term growth opportunities in the outsourced
government sector.
In Continental Europe, organic growth was -2.8%. Extensive cost control measures
have ensured that margins have been maintained. Service reductions by customers
in some of the larger markets such as Benelux and Scandinavia have stabilised,
but systems installation volumes are taking longer to recover from the recent
economic turmoil, with sales down 4%. After a period of very strong historical
organic growth some Eastern European markets such as Romania and Estonia have
declined recently by 15% as their economies have worsened with GDP declining by
up to 14%.
The Netherlands business has recently won government contracts for the Ministry
of Defence and for immigration centres. A number of southern and eastern
European governments are developing their Care and Justice Services outsourcing
strategies and the group is working on a number of opportunities for electronic
monitoring of offenders in markets such as Cyprus, Turkey, Romania, Serbia,
Hungary, Russia, Austria and Bulgaria.
North America
+----------------------------+-----------+---------+---------+--------------+
| | Turnover | PBITA | Margins |Organic Growth|
| | £m | £m | | |
|* At constant exchange rates+-----+-----+----+----+----+----+--------------+
| |H110 |H109 |H110|H109|H110|H109| H110 |
+----------------------------+-----+-----+----+----+----+----+--------------+
|North America * |820.0|742.7|46.3|41.3|5.6%|5.6%| 1.8% |
+----------------------------+-----+-----+----+----+----+----+--------------+
Organic growth in North America was 1.8% which was a strong improvement after a
decline of -3.8% in the same period of 2009 as a result of the loss of contracts
in the commercial nuclear power sector. Margins held firm during the period at
5.6%.
In the United States, organic growth was 2%, mainly as a result of the
extensions to the Bank of America Merrill Lynch contract. New contracts awarded
recently in the commercial healthcare and local government sectors, together
with US government stimulus funding and a continued strong performance from the
US acquisitions made towards the end of 2009, should see growth momentum
continuing into the second half of this year.
WSI has been awarded the contract to provide security services to the Department
of Energy's Strategic Petroleum Reserve (SPR), located along the Gulf Coast with
sites in Louisiana and Texas. The SPR is the largest stockpile of
government-owned crude oil in the world and provides the United States with
protection against disruptions in oil supply. The contract is for three-years
with a further two option years and a total value of around £56 million.
The international accounts division signed contracts with new US-based customers
valued at £23 million for the provision of secure solutions across multiple
markets in 2010.
In Canada the business performance improved compared to the same period in
2009, with slightly better margins in a continuing tough market.
New Markets
+----------------------------+-----------+---------+----------+--------------+
| | Turnover | PBITA | Margins |Organic Growth|
| | £m | £m | | |
|* At constant exchange rates+-----+-----+----+----+-----+----+--------------+
| |H110 |H109 |H110|H109|H110 |H109| H110 |
+----------------------------+-----+-----+----+----+-----+----+--------------+
|Asia * |286.7|272.3|19.9|20.1|6.9% |7.4%| 1.8% |
+----------------------------+-----+-----+----+----+-----+----+--------------+
|Middle East * |235.3|205.3|18.8|16.4|8.0% |8.0%| 14.6% |
+----------------------------+-----+-----+----+----+-----+----+--------------+
|Africa * |164.3|157.5|17.7|15.2|10.8%|9.7%| 4.2% |
+----------------------------+-----+-----+----+----+-----+----+--------------+
|Latin America & Caribbean * |160.2|141.4|10.0| 7.4|6.2% |5.2%| 12.9% |
+----------------------------+-----+-----+----+----+-----+----+--------------+
|Total New Markets * |846.5|776.5|66.4|59.1|7.8% |7.6%| 7.6% |
+----------------------------+-----+-----+----+----+-----+----+--------------+
In New Markets, there was strong organic growth of 7.6%, and margins improved to
7.8%, compared to 7.6% in the previous year.
Organic growth in Asia was 1.8% as a result of the impact of the loss of the
immigration centre contract in Australia - growth in Asia was 11.8% excluding
this contract. Margins were also impacted by the lost contract and regulatory
cost increases in Macau and Indonesia. Strong growth was achieved in Papua New
Guinea. India performed extremely well with 16% organic growth and now employs
156,000 people.
In the Middle East organic growth was 14.6%, with particularly strong
performances in UAE, Qatar and Saudi Arabia as a result of a strong demand for
event security in UAE and for new contracts with a number of government
agencies. As mentioned in the UK & Ireland review, the group won a major
contract to provide secure solutions for the FCO in Afghanistan. The loss-making
US embassy contract in Afghanistan will end around the end of 2010. In Iraq, the
group continues to see a lot of opportunity from work supporting the development
of the southern Iraq oilfields.
The group has created 18,000 new jobs across India, Pakistan and the Middle East
in the first six months of 2010.
In Africa, organic growth was 4.2% and margins improved to 10.8%, due mainly to
the cancellation of some low margin contracts In South Africa. Strong growth was
achieved in Djibouti where the group won and commenced a significant contract
for US army bases.
The Latin America and Caribbean region achieved organic growth of 12.9% and
margins improved to 6.2% due partly to some new, higher margin, contracts in the
utilities and oil and gas sectors. There was good organic growth across most of
the region with Argentina, Chile and Colombia being particularly strong
performers. G4S is bidding on new government contracts in Peru for the
outsourcing of Care and Justice Services. Additionally the business in Colombia
won a two year contract with Ecopetrol (the national oil company) and a five
year contract with the Cerromatoso Mine (BHP Billiton).
In June, G4S announced its entry into the security market in Brazil, the world's
fifth largest security market, with the acquisition of Instalarme, the leading
systems installation company in Brazil for the financial sector. Today, G4S has
announced an agreement to acquire Plantech, a leading fully integrated security
systems provider which, together with Instalarme, makes G4S the largest security
systems business in Brazil with combined revenues of around £40m per year.
Cash Solutions
+---------------------------+------------+----------+-----------+--------------+
| | Turnover | PBITA | Margins |Organic Growth|
|* At constant exchange | £m | £m | | |
|rates +-----+------+----+-----+-----+-----+--------------+
| |H110 | H109 |H110|H109 |H110 |H109 | H110 |
+---------------------------+-----+------+----+-----+-----+-----+--------------+
|Europe * |447.6| 457.9|43.1| 44.7|9.6% |9.8% | -2.3% |
+---------------------------+-----+------+----+-----+-----+-----+--------------+
|North America * | 54.4| 55.0| 2.3| 2.2|4.2% |4.1% | -1.1% |
+---------------------------+-----+------+----+-----+-----+-----+--------------+
|New Markets * |171.4| 164.1|22.8| 24.9|13.3%|15.2%| 4.5% |
+---------------------------+-----+------+----+-----+-----+-----+--------------+
|Total Cash Solutions * |673.4| 677.0|68.2| 71.8|10.1%|10.6%| -0.6% |
+---------------------------+-----+------+----+-----+-----+-----+--------------+
|Exchange differences | -|(12.5)| -|(1.2)| |
+---------------------------+-----+------+----+-----+--------------------------+
|At actual exchange rates |673.4| 664.5|68.2| 70.6| |
+---------------------------+-----+------+----+-----+--------------------------+
The cash solutions division saw organic growth decline by 0.6% in the first
half, with low interest rates in developed markets causing service reductions in
some areas and the loss of a major South African banking contract. The loss of
this contract together with one-off restructuring costs in Europe meant that the
margins remained strong, but reduced to 10.1% from 10.6% in the prior year.
Organic growth in Europe was -2.3% with all the major markets down slightly, but
with larger declines in Ireland, Sweden and Romania. The Baltics and Benelux
have performed well despite very challenging markets and difficult economic
conditions by being proactive in cutting costs, optimising cash transportation
routes and recently renewing some key contracts. A large state-of- the-art cash
centre, capable of processing €90bn per annum was opened in Greece in June.
A number of central banks and commercial banks across Continental Europe are
considering cash cycle initiatives which should create opportunities for more
cash outsourcing in the medium term.
In the UK, organic growth was -1% due to fewer services being required by the
retail sector as a result of lower interest rates. 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.
In North America, the business in Canada is performing in line with our
expectations. Margins are now at 4.2%, up slightly on the prior year. Organic
growth was impacted by a very competitive pricing environment; however the
business has recently re-signed all its major banking contracts which secures
revenues and margins for the next three to four years.
In New Markets, organic growth was 4.5% and margins were very strong at 13.3%.
The cash solutions business in Thailand was disrupted by a month of political
protests and the South African business continues to restructure its operations
as a result of the loss of a large contract with ABSA, a major South African
bank. Excluding the ABSA contract, organic growth for cash solutions in New
Markets was 8.4%.
Initial pilots of CASH360, the group's retail cash solutions system, in a number
of countries have been converted into sales or "paid pilots" pending sales
agreements. There is a strong pipeline which continues to grow in all countries
in which the solution is being marketed actively.
OTHER FINANCIAL ISSUES
Acquisitions and divestments
G4S invested a total of £32.4m on acquisitions during the period. Of this,
£25.3m was invested in purchasing Instalarme, an electronic software and
hardware integration company in Brazil, including contingent consideration of
£6.4m, and £4.1m was spent on purchasing the remaining non-controlling interest
in an Argentine business. The group has today announced the acquisition of
Plantech, the leadings systems integration business in Brazil. The group
disposed of the Taiwan cash solutions business on 15 July 2010.
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 38 and 39 of the company's annual report
for the financial year ended 31 December 2009, 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.
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 May 2010.
The group is currently well capitalised with no significant maturities until
2012. 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 0.225% over LIBOR and maturing 28 June 2012. As at 30
June 2010 the drawings were US$ 275m, Euro 344m and £155m.
* $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 2010, the group had uncommitted facilities of £537m. The group
headroom available from committed funds was £457m. The group has sufficient
borrowing capacity to finance its current investment plans.
As of 30 June 2010, net debt was £1,514.6m which gave book gearing of 105%. The
market gearing, using the 30 June 2010 closing share price of 267.3 pence, is
40%.
Net interest payable on net debt was £49.5m. This was broadly similar to the
2009 cost of £47.7m and reflects the accrual of a full six months of interest on
the long dated public bond replacing cheaper short term bank financing, offset
by lower short term interest rates.
The group's average cost of borrowings during the half year was 4.7% compared to
4.9% in 2009.
Also included within financing costs is a net cost of £3.0m (2009: £9.8m) in
respect of movements in the group's retirement benefit obligations.
Taxation
Tax has been provided for at the estimated effective tax rate for the full year
of 25.5% on adjusted earnings, compared to 26.0% for the full year in 2009. 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 £413m before tax
or £297m after tax (31 December 2009: £328m and £236m 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 increased since 31 December 2009 due to a
decrease in the appropriate AA corporate bond rate from 5.7% to 5.3% although
lower inflation assumptions have helped to offset this slightly. The value of
the assets held in the funds (adjusted for acquired pension funds and additional
contributions) is very similar to the value at 31 December 2009. Additional
company contributions were £24m.
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.
Dividend
The Board has declared an interim dividend for 2010 of 3.17 pence per share (DKK
0.2877) payable on 15 October 2010. This represents an increase of 5% on the
interim dividend for 2009.
REVIEW AND OUTLOOK
Whilst many markets are yet to show signs of economic recovery and inflation and
interest rates remain low, we have still performed strongly, growing operating
profits by 3% in the period and holding our margins constant at the same level
as the previous year.
The larger developed markets of North America and Europe are showing early signs
of a recovery, but some Eastern European markets which have grown strongly in
recent years have significantly deteriorated as a result of the economic
downturn. This continues to prove challenging for us, but we are taking
appropriate action to mitigate the impact by controlling costs and maximising
operational efficiencies.
We have achieved excellent organic growth and strong margin performances across
our businesses in New Markets. We are continuing to enhance our New Markets
presence, most recently with our entry into the Brazilian security market
through the acquisitions of Instalarme and Plantech, which combine to give us
the market leadership position in security systems in one of the fastest growing
security markets in the world.
Our performance in the first half of this year builds on our consistent historic
track record of year on year revenue and profit growth and is a result of the
efforts of our high quality management across our businesses, our resilient
business model, our broad geographic spread and the strength of our customer
relationships and contract base.
Overall, our solutions strategy continues to enhance our ability to meet the
increasingly sophisticated needs of our customers in key market sectors and we
expect this to be a driver of growth for the business into the future.
Our expectations for the full year are unchanged. We expect the organic growth
rate to improve in the second half and we will continue to maintain our
discipline on margins and cash generation.
26 August 2010
G4S plc
Unaudited half-yearly results announcement
For the six months ended 30 June 2010
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 and gives a true and fair view of the assets,
liabilities, financial position and profit of the group as required by DTR
4.2.4;
· this half-yearly results announcement includes a fair review of the
information required by DTR 4.2.7-8.
The responsibility statement is signed by:
Nick Buckles Trevor Dighton
Chief Executive Chief Financial Officer
G4S plc
Unaudited half-yearly results announcement
For the six months ended 30 June 2010
Consolidated income statement
For the six months ended 30 June 2010
Six months ended Six months ended Year
ended
30.06.10 30.06.09 31.12.09
Notes £m £m £m
--------------------------------------------------------------------------------
Continuing operations
Revenue 2 3,632.3 3,478.6 7,008.6
--------------------------------------------------------------------------------
Profit from operations
before amortisation of
acquisition-related
intangible assets and share
of profit from associates 236.2 229.5 499.1
Share of profit from 1.9 0.6 1.2
associates
--------------------------------------------------------------------------------
Profit from operations
before amortisation of
acquisition-related
intangible assets (PBITA) 2 238.1 230.1 500.3
Amortisation of (43.0) (43.6) (83.2)
acquisition-related
intangible assets
--------------------------------------------------------------------------------
Profit from operations 195.1 186.5 417.1
before interest and taxation
(PBIT) 2, 3
Finance income 6 49.6 41.4 81.7
Finance costs 7 (102.1) (98.9) (196.0)
--------------------------------------------------------------------------------
Profit from operations before 142.6 129.0 302.8
taxation (PBT)
--------------------------------------------------------------------------------
Taxation:
+------------------------------------------------------------------------------+
| - Before amortisation of (47.2) (45.9) (100.0) |
|acquisition-related intangible |
|assets |
| |
| - On amortisation of 12.0 11.4 23.3 |
|acquisition-related |
|intangible assets |
+------------------------------------------------------------------------------+
8 (35.2) (34.5) (76.7)
--------------------------------------------------------------------------------
Profit from continuing 107.4 94.5 226.1
operations after taxation
Loss from discontinued 4 (3.3) (0.8) (6.9)
operations
--------------------------------------------------------------------------------
Profit for the period 104.1 93.7 219.2
--------------------------------------------------------------------------------
Attributable to:
Equity holders of the parent 94.2 85.1 202.5
Non-controlling interests 9.9 8.6 16.7
--------------------------------------------------------------------------------
Profit for the period 104.1 93.7 219.2
--------------------------------------------------------------------------------
Earnings per share
attributable to ordinary
equity shareholders 9
of the parent from
continuing and discontinued
operations
Basic 6.7p 6.1p 14.4p
Diluted 6.7p 6.1p 14.4p
--------------------------------------------------------------------------------
+------------------------------------------------------------------------------+
|Dividends declared and |
|proposed in respect of the 10 |
|period |
| |
|Interim dividend of 3.17p per 44.7 42.5 42.5 |
|share (2009: 3.02p per share) |
| |
|Final dividend (2009: 4.16p - - 58.5 |
|per share) |
+------------------------------------------------------------------------------+
|Total 44.7 42.5 101.0 |
+------------------------------------------------------------------------------+
Condensed consolidated statement of financial position
At 30 June 2010
As at As at As at
30.06.10 30.06.09 31.12.09
Notes £m £m £m
--------------------------------------------------------------------------------
ASSETS
Non-current assets
Goodwill 2,109.2 1,956.8 2,046.7
Other acquisition-related intangible assets 325.1 355.2 359.1
Other intangible assets 65.0 57.9 68.7
Property, plant and equipment 560.1 493.6 545.9
Investment in associates 10.7 5.5 7.2
Trade and other receivables 280.1 284.0 289.8
--------------------------------------------------------------------------------
3,350.2 3,153.0 3,317.4
--------------------------------------------------------------------------------
Current assets
Inventories 84.7 78.6 77.7
Investments 92.4 86.7 84.4
Trade and other receivables 1,478.9 1,251.8 1,349.3
Cash and cash equivalents 327.2 480.9 307.6
Assets classified as held for sale 11 9.5 19.9 29.1
--------------------------------------------------------------------------------
1,992.7 1,917.9 1,848.1
--------------------------------------------------------------------------------
Total assets 5,342.9 5,070.9 5,165.5
--------------------------------------------------------------------------------
LIABILITIES
Current liabilities
Bank overdrafts (36.7) (167.0) (37.5)
Bank loans (81.1) (71.5) (145.6)
Obligations under finance leases (16.6) (17.8) (23.1)
Trade and other payables (1,143.9) (1,056.5) (1,162.3)
Retirement benefit obligations (54.6) (54.0) (54.6)
Provisions (36.2) (41.9) (29.8)
Liabilities associated with assets 11 (9.0) (11.0) (30.9)
classified as held for sale
--------------------------------------------------------------------------------
(1,378.1) (1,419.7) (1,483.8)
--------------------------------------------------------------------------------
Non-current liabilities
Bank loans (659.6) (604.3) (516.3)
Loan notes (1,195.9) (1,107.2) (1,116.7)
Obligations under finance leases (56.0) (59.5) (62.6)
Trade and other payables (38.6) (45.1) (42.5)
Retirement benefit obligations (399.9) (379.7) (313.0)
Provisions (168.8) (195.5) (191.0)
--------------------------------------------------------------------------------
(2,518.8) (2,391.3) (2,242.1)
--------------------------------------------------------------------------------
Total liabilities (3,896.9) (3,811.0) (3,725.9)
--------------------------------------------------------------------------------
Net assets 1,446.0 1,259.9 1,439.6
--------------------------------------------------------------------------------
EQUITY
Share capital 352.6 352.1 352.6
Share premium and reserves 1,053.5 872.3 1,054.1
--------------------------------------------------------------------------------
Equity attributable to equity holders of the 1,406.1 1,224.4 1,406.7
parent
Non-controlling interests 39.9 35.5 32.9
--------------------------------------------------------------------------------
Total equity 1,446.0 1,259.9 1,439.6
--------------------------------------------------------------------------------
Condensed consolidated statement of cashflows
For the six months ended 30 June 2010
Six months ended Six months ended Year
ended
30.06.10 30.06.09 31.12.09
Notes £m £m £m
--------------------------------------------------------------------------------
Profit from continuing 142.6 129.0 302.8
operations before taxation
Adjustments for:
Finance income (49.6) (41.4) (81.7)
Finance costs 102.1 98.9 196.0
Depreciation of property, plant 64.1 60.0 121.1
and equipment
Amortisation of 43.0 43.6 83.2
acquisition-related intangible
assets
Amortisation of other 8.5 7.3 15.1
intangible assets
Other non-cash items 3.3 2.6 5.6
--------------------------------------------------------------------------------
Operating cash flow before 314.0 300.0 642.1
movements in working capital
Net working capital movement (93.3) (82.5) (51.0)
--------------------------------------------------------------------------------
Net cash flow from operating 220.7 217.5 591.1
activities of continuing
operations
Net cash used by operating (3.2) (11.3) (14.1)
activities of discontinued
operations
--------------------------------------------------------------------------------
Cash generated by operations 217.5 206.2 577.0
Tax paid (36.1) (37.6) (67.8)
--------------------------------------------------------------------------------
Net cash flow from operating 181.4 168.6
activities 509.2
--------------------------------------------------------------------------------
Investing activities
Interest received 2.3 4.8 11.8
Cash flow from associates (0.9) 1.9 2.4
Net cash flow from capital (70.4) (69.3)
expenditure (169.7)
Net cash flow from acquisitions (28.2) (54.6)
and disposals (162.1)
Purchase of trading investments (2.1) (5.1) (0.9)
Own shares purchased (6.0) (4.6) (9.9)
--------------------------------------------------------------------------------
Net cash used in investing (105.3) (126.9)
activities (328.4)
--------------------------------------------------------------------------------
Financing activities
Share issues 0.1 0.1 2.7
Dividends paid to (6.2) (4.4)
non-controlling interests (18.0)
Dividends paid to equity (58.5) (51.7)
shareholders of the parent (94.2)
Net increase in borrowings 56.7 99.5 23.7
Interest paid (63.2) (55.2) (98.5)
Net cash flow from translation - (10.2)
hedging financial instruments (10.2)
Repayment of obligations under (9.9) (10.9)
finance leases (24.2)
--------------------------------------------------------------------------------
Net cash flow from financing (81.0) (32.8)
activities (218.7)
--------------------------------------------------------------------------------
Net (decrease)/increase in cash, cash
equivalents and bank overdrafts
12 (4.9) 8.9 (37.9)
Cash, cash equivalents and bank 290.5 360.7
overdrafts at the beginning of
the period 360.7
Effect of foreign exchange rate 2.3 (51.2)
fluctuations on cash held (32.3)
--------------------------------------------------------------------------------
Cash, cash equivalents and bank 287.9 318.4
overdrafts at the end of the
period 290.5
--------------------------------------------------------------------------------
Condensed consolidated statement of comprehensive income
For the six months ended 30 June 2010
Six months ended Six months ended Year
ended
30.06.10 30.06.09 31.12.09
£m £m £m
--------------------------------------------------------------------------------
Profit for the period 104.1 93.7 219.2
Other comprehensive income
Exchange differences on translation 28.8 (135.2) (93.3)
of foreign operations
Actuarial losses on defined (109.1) (129.4) (63.1)
retirement benefit schemes
Change in fair value of cash flow 17.7 (28.8) (22.6)
hedging financial instruments
Change in fair value of net - 28.6 28.6
investment hedging financial
instruments
Tax on items taken directly to 32.3 29.9 21.9
equity
--------------------------------------------------------------------------------
Other comprehensive income, net of (30.3) (234.9) (128.5)
tax
--------------------------------------------------------------------------------
Total comprehensive income for the 73.8 (141.2) 90.7
period
--------------------------------------------------------------------------------
Attributable to:
Equity holders of the parent 63.9 (149.8) 74.0
Non-controlling interests 9.9 8.6 16.7
--------------------------------------------------------------------------------
Total comprehensive income for the 73.8 (141.2) 90.7
period
--------------------------------------------------------------------------------
Condensed consolidated statement of changes in equity
For the six months ended 30 June 2010
Six months ended Six months ended Year
ended
30.06.10 30.06.09 31.12.09
£m £m £m
--------------------------------------------------------------------------------
At beginning of period 1,406.7 1,427.0 1427.0
Net recognised income/(loss)
attributable to equity shareholders
of the parent 63.9 (149.8) 74.0
Shares issued 0.1 0.1 2.7
Dividends declared (58.5) (51.7) (94.2)
Own shares purchased (6.0) (4.6) (9.9)
Equity settled transactions 5.3 3.4 7.1
Transactions with non-controlling (5.4) - -
interests
--------------------------------------------------------------------------------
At end of period 1,406.1 1,224.4 1,406.7
--------------------------------------------------------------------------------
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 2010. These
half-yearly financial results do not comprise statutory accounts and should be
read in conjunction with the Annual Report and Accounts 2009.
The comparative figures for the financial year ended 31 December 2009 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 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
2009, as adjusted for the effects of:
· IFRS3 (Business combinations (2008)): From 1 January 2010 the group has
applied IFRS3 Business Combinations (2008) in accounting for business
combinations. The change in accounting policy has been applied prospectively
and has not had a material effect on the group's half-yearly results.
See note 5 for the application of the new policy to the business
combination that occurred during the period.
· IAS27 (Consolidated and Separate Financial Statements (2008)): From 1
January 2010 the group has applied IAS27 Consolidated and Separate Financial
Statements (2008) in accounting for acquisitions of non-controlling interests.
The change in accounting policy has been applied prospectively and has not had a
material effect on the group's half-yearly results.
See note 5 for the application of the new policy to the acquisition of
non-controlling interests during the current period.
· IFRIC12 (Service Concession Arrangements): From 1 January 2010 the
group has applied IFRIC12 (Service Concession Arrangements) in accounting for
concession arrangements, previously described in the group's financial
statements as PFI contracts . The change in accounting policy has been applied
retrospectively.
IFRIC 12 addresses the accounting by private sector operators involved in
the provision of public sector infrastructure assets and services where the
infrastructure assets are not controlled by the operator. Under this
interpretation infrastructure assets are recognised by the operator as a
financial asset if the operator has an unconditional right to receive a
specified amount of cash or other financial asset over the life of the
agreement. Interest in respect of the financial asset is recognised using the
effective interest method.
The financial information in these condensed financial statements for the half
years to 30 June 2010 and 30 June 2009 have been neither audited nor reviewed.
The comparative income statement for the six months ended 30 June 2009 has been
re-presented for operations qualifying as discontinued during the six months
ended 31 December 2009. For the six months ended 30 June 2009, revenue has been
reduced by £7.5m and PBT has been increased by £0.4m compared to the figures
published previously.
The comparative balance sheet as at 31 December 2009 has been restated to
reflect (i) the completion during the six months ended 30 June 2010 of the
initial accounting in respect of acquisitions made during the six months ended
30 June 2009, and (ii) adjustments made in the six months to 30 June 2010 to the
preliminary assessment of the fair values of assets and liabilities acquired
during the six months ended 31 December 2009. Adjustments made to the
provisional calculation of the fair values of assets and liabilities acquired
and the consideration payable amount to £2.8m in total, resulting in an
equivalent increase in the reported value of goodwill.
2) Segmental analysis
The group operates in two core product areas: secure solutions and cash
solutions. 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 segment disclosures are based on the components that the Board monitors in
making decisions about operating matters. Such components are identified on the
basis of internal reports that the Board reviews regularly in allocating
resources to segments and in assessing their performance.
Notes to the half-yearly results announcement (continued)
Segment information for continuing operations is presented below:
Operating segment revenue
Six months ended Six months ended Year
Revenue by business segment ended
30.06.10 30.06.09 31.12.09
£m £m £m
--------------------------------------------------------------------------------
Secure Solutions
+------------------------------------------------------------------------------+
| UK and Ireland 571.7 556.9 1,139.3 |
| |
| Continental Europe 720.7 743.9 1,497.7 |
+------------------------------------------------------------------------------+
Europe 1,292.4 1,300.8 2,637.0
North America 820.0 753.8 1,495.3
+------------------------------------------------------------------------------+
| Middle East and Gulf States 235.3 211.1 424.5 |
| |
| Latin America and the |
|Caribbean 160.2 137.4 283.0 |
| |
| Africa 164.3 155.6 305.6 |
| |
| Asia Pacific 286.7 255.4 522.0 |
+------------------------------------------------------------------------------+
New Markets 846.5 759.5 1,535.1
--------------------------------------------------------------------------------
Total Secure Solutions 2,958.9 2,814.1 5,667.4
--------------------------------------------------------------------------------
Cash Solutions
Europe 447.6 460.1 929.2
North America 54.4 48.8 98.8
New Markets 171.4 155.6 313.2
--------------------------------------------------------------------------------
Total Cash Solutions 673.4 664.5 1,341.2
--------------------------------------------------------------------------------
Total revenue 3,632.3 3,478.6 7,008.6
--------------------------------------------------------------------------------
Segment result
Six months ended Six months ended Year
PBITA by business segment ended
30.06.10 30.06.09 31.12.09
£m £m £m
--------------------------------------------------------------------------------
Secure Solutions
+------------------------------------------------------------------------------+
| UK and Ireland 45.1 44.1 97.3 |
| |
| Continental Europe 34.3 35.6 79.3 |
+------------------------------------------------------------------------------+
Europe 79.4 79.7 176.6
North America 46.3 42.3 84.8
+------------------------------------------------------------------------------+
| Middle East and Gulf States 18.8 16.9 38.5 |
| |
| Latin America and the |
|Caribbean 10.0 7.1 17.6 |
| |
| Africa 17.7 15.4 29.0 |
| |
| Asia Pacific 19.9 18.8 41.1 |
+------------------------------------------------------------------------------+
New Markets 66.4 58.2 126.2
--------------------------------------------------------------------------------
Total Secure Solutions 192.1 180.2 387.6
--------------------------------------------------------------------------------
Cash Solutions
Europe 43.1 45.0 102.0
North America 2.3 2.0 4.1
New Markets 22.8 23.6 46.3
--------------------------------------------------------------------------------
Total Cash Solutions 68.2 70.6 152.4
--------------------------------------------------------------------------------
Total PBITA before head office
costs 260.3 250.8 540.0
Head office costs (22.2) (20.7) (39.7)
--------------------------------------------------------------------------------
Total PBITA 238.1 230.1 500.3
--------------------------------------------------------------------------------
Result by business segment
Total PBITA 238.1 230.1 500.3
Amortisation of (43.0) (43.6)
acquisition-related intangible
assets (83.2)
--------------------------------------------------------------------------------
Total PBIT 195.1 186.5 417.1
--------------------------------------------------------------------------------
Secure Solutions 161.4 147.6 330.1
Cash Solutions 55.9 59.6 126.7
Head office costs (22.2) (20.7) (39.7)
--------------------------------------------------------------------------------
Total PBIT 195.1 186.5 417.1
--------------------------------------------------------------------------------
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
30.06.10 30.06.09 31.12.09
£m £m £m
--------------------------------------------------------------------------------
Revenue 3,632.3 3,478.6 7,008.6
Cost of sales (2,852.1) (2,719.7) (5,472.8)
--------------------------------------------------------------------------------
Gross profit 780.2 758.9 1,535.8
Administration expenses (587.0) (573.0) (1,119.9)
Share of profit from associates 1.9 0.6 1.2
--------------------------------------------------------------------------------
Profit from operations before 195.1 186.5
interest and taxation 417.1
--------------------------------------------------------------------------------
Included within administration expenses is the amortisation charge for
acquisition-related intangible assets.
4) Discontinued operations
Discontinued operations in the current and prior period primarily comprise the
cash solutions business in Taiwan, sold on 15 July 2010, the systems business in
Slovakia, the security services business in France, which principally comprised
of Group 4 Securicor SAS, disposed of on 28 February 2009, and the security
services business in Germany, which principally comprised G4S Sicherheitsdienste
GmbH and G4S Sicherheitssysteme GmbH, disposed of on 15 May 2008.
Notes to the half-yearly results announcement (continued)
5) Acquisitions
Current Period Acquisitions
During the period the group purchased the controlling interest in SSE Do Brasil
Ltda, the parent company of Instalarme Soluções Eletrônica Ltda ("Instalarme"),
an electronic software and hardware integration company in Brazil. The group
also purchased the remaining 40% non-controlling interest in an Argentinian
business.
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 1.0 5.0 6.0
Property, plant and equipment 6.2 - 6.2
Inventories 0.9 - 0.9
Trade and other receivables 4.3 - 4.3
Cash and cash equivalents 0.8 - 0.8
Trade and other payables (3.2) - (3.2)
Current tax liability (0.2) - (0.2)
Provisions (0.2) - (0.2)
Borrowings (1.3) - (1.3)
Deferred tax liabilities - (1.7) (1.7)
--------------------------------------------------------------------------------
Net assets acquired of subsidiary
undertakings 8.3 3.3 11.6
Acquisition of non-controlling interests -
transfer to equity - - 4.1
Goodwill 16.7
--------------------------------------------------------------------------------
Total purchase consideration 32.4
--------------------------------------------------------------------------------
Satisfied by:
Cash 24.8
Transaction costs (relating to prior year
acquisitions) 1.2
Contingent consideration 6.4
--------------------------------------------------------------------------------
Total purchase consideration 32.4
--------------------------------------------------------------------------------
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 £5.0m 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 2010 Annual Report and Accounts
and/or in the group's 2011 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 2009 and their contribution to the
group's results for the year are set out in the group's Annual Report and
Accounts 2009. Adjustments made during the six months to 30 June 2010 to the
provisional calculation of the fair values of assets and liabilities acquired
and to the consideration payable during the year to 31 December 2009 amount to
£2.8m in total, resulting in an equivalent increase in the reported value of
goodwill.
Notes to the half-yearly results announcement (continued)
6) Finance income
Six months ended Six months ended Year
ended
30.06.10 30.06.09 31.12.09
£m £m £m
--------------------------------------------------------------------------------
Interest receivable 5.6 7.7 13.7
Expected return on defined 44.0 33.7 68.0
retirement benefit scheme assets
--------------------------------------------------------------------------------
Total finance income 49.6 41.4 81.7
--------------------------------------------------------------------------------
7) Finance costs
Six months ended Six months ended Year
ended
30.06.10 30.06.09 31.12.09
£m £m £m
--------------------------------------------------------------------------------
Total group borrowing costs (55.1) (55.4) (109.0)
Finance costs on defined retirement (47.0) (43.5) (87.0)
benefit obligations
--------------------------------------------------------------------------------
Total finance costs (102.1) (98.9) (196.0)
--------------------------------------------------------------------------------
8) Taxation
Six months ended Six months ended Year
ended
30.06.10 30.06.09 31.12.09
£m £m £m
-------------------------------------------------------------------
UK taxation 2.3 (2.0) (0.1)
Overseas taxation (37.5) (32.5) (76.6)
-------------------------------------------------------------------
Total taxation expense (35.2) (34.5) (76.7)
-------------------------------------------------------------------
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
30.06.10 30.06.09 31.12.09
£m £m £m
--------------------------------------------------------------------------------
From continuing and
discontinued operations
Earnings
Profit for the period 202.5
attributable to equity
holders of the parent 94.2 85.1
Effect of dilutive potential -
ordinary shares (net of tax) - 0.1
--------------------------------------------------------------------------------
Profit for the purposes of 202.5
diluted earnings per share 94.2 85.2
--------------------------------------------------------------------------------
Number of shares (m)
Weighted average number of 1,403.6
ordinary shares 1,404.3 1,402.5
Effect of dilutive potential 0.1
ordinary shares 0.1 0.8
--------------------------------------------------------------------------------
Weighted average number of
ordinary shares for the
purposes of diluted earnings
per share 1,404.4 1,403.3 1,403.7
--------------------------------------------------------------------------------
Earnings per share from continuing
and discontinued operations (pence)
Basic 6.7p 6.1p 14.4p
Diluted 6.7p 6.1p 14.4p
--------------------------------------------------------------------------------
From adjusted earnings
Earnings
Profit for the period 202.5
attributable to equity
holders of the parent 94.2 85.1
Adjustment to exclude loss 6.9
from discontinued operations 3.3 0.8
Adjustment to exclude net
retirement benefit finance
income (net of tax) 2.2 7.3 13.7
Adjustment to exclude amortisation
of acquisition-related intangible
assets (net of tax) 31.0 32.2 59.9
--------------------------------------------------------------------------------
Adjusted profit for the 283.0
period attributable to equity
holders of the parent 130.7 125.4
--------------------------------------------------------------------------------
Weighted average number of 1,403.6
ordinary shares (m) 1,404.3 1,402.5
Adjusted earnings per share 20.2p
(pence) 9.3p 8.9p
--------------------------------------------------------------------------------
10) Dividends
Six months Six months Year
ended ended ended
Pence DKK 30.06.10 30.06.09 31.12.09
per share per share £m £m £m
--------------------------------------------------------------------------------
Amounts recognised
as distributions to
equity holders of
the parent in the
period
Final dividend for 3.68 0.3052
the year ended 31
December 2008 - 51.7 51.7
Interim dividend
for the six months
ended 30 June 2009 3.02 0.2599 - - 42.5
Final dividend for 4.16 0.3408
the year ended 31
December 2009 58.5 - -
--------------------------------------------------------------------------------
Total 58.5 51.7 94.2
--------------------------------------------------------------------------------
An interim dividend of 3.17p (DKK 0.2877) per share, amounting to £44.7m, for
the six months ended 30 June 2010 will be paid on 15 October 2010 to
shareholders on the register on 10 September 2010.
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 and at 31 December
2009 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
30.06.10 30.06.09 31.12.09
£m £m £m
--------------------------------------------------------------------------------
Cash and cash equivalents 327.2 480.9 307.6
Investments 92.4 86.7 84.4
Net debt included within assets held for sale (2.6) 4.5 7.2
Current liabilities
Bank overdrafts and loans (117.8) (238.5) (183.1)
Obligations under finance leases (16.6) (17.8) (23.1)
Fair value of loan note derivative financial 13.2 8.5 11.5
instruments
Non-current liabilities
Bank loans (659.6) (604.3) (516.3)
Loan notes (1,195.9) (1,107.2) (1,116.7)
Obligations under finance leases (56.0) (59.5) (62.6)
Fair value of loan note derivative financial 101.1 60.8 57.7
instruments
--------------------------------------------------------------------------------
Total net debt (1,514.6) (1,385.9) (1,433.4)
--------------------------------------------------------------------------------
An analysis of movements in net debt in the period is presented below:
Six months ended Six months ended Year
ended
30.06.10 30.06.09 31.12.09
£m £m £m
--------------------------------------------------------------------------------
(Decrease)/increase in cash, cash
equivalents and bank overdrafts per (4.9) 8.9
condensed consolidated cash flow
statement (37.9)
Purchase of 2.1 5.1
investments 0.9
Increase in debt and (46.8) (88.6)
lease financing 0.6
--------------------------------------------------------------------------------
Change in net debt (49.6) (74.6)
resulting from cash
flows (36.4)
Borrowings acquired (0.6) (0.2)
with subsidiaries (0.4)
Net additions to (3.0) (6.6)
finance leases (19.7)
--------------------------------------------------------------------------------
Movement in net debt (53.2) (81.4)
in the period (56.5)
Translation (28.0) 43.2
adjustments (29.2)
Net debt at the (1,433.4) (1,347.7)
beginning of the
period (1,347.7)
--------------------------------------------------------------------------------
Net debt at the end (1,514.6) (1,385.9)
of the period (1,433.4)
--------------------------------------------------------------------------------
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
2009.
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 2010
Six months ended Six months ended Year
ended
30.06.10 30.06.09 31.12.09
£m £m £m
--------------------------------------------------------------------------------
PBITA before share of 236.2 229.5
profit from associates
(group PBITA) 499.1
Depreciation and amortisation of
intangible assets other than
acquisition-related 72.7 67.3 136.2
Loss on disposal of
property, plant and (0.1) (0.2)
equipment and intangible
assets other than
acquisition-related (0.3)
Increase in working capital (67.7) (55.8)
and provisions (15.4)
Net cash flow from capital (70.4) (69.3)
expenditure (169.7)
--------------------------------------------------------------------------------
Operating cash flow 170.7 171.5 449.9
--------------------------------------------------------------------------------
Reconciliation of
operating cash flows
Six months ended Six months ended Year
ended
30.06.10 30.06.09 31.12.09
£m £m £m
--------------------------------------------------------------------------------
Net cash flow from operating
activities per condensed consolidated
statement of cashflows 181.4 168.6 509.2
Net cash flow from (70.4) (69.3) (169.7)
capital expenditure
Add-back cash flow from (0.1) 11.3 12.7
exceptional items and
discontinued operations
Add-back additional 23.7 23.3 29.9
pension contributions
Add-back tax paid 36.1 37.6 67.8
--------------------------------------------------------------------------------
Operating cash flow 170.7 171.5 449.9
--------------------------------------------------------------------------------
[HUG#1440443]
Correction: Half-yearly report
| Source: G4S plc
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