Half-yearly report
(Thomson Reuters ONE) - G4S plc Half-Yearly Results Announcement January - June 2009G4S, the world's leading international security solutions group,today announces its half year results for the six months to 30 June2009.RESULTS HIGHLIGHTS* Group turnover* up 11.8% to £3,486.1 million (2008:£ 3,117.0m)* Organic turnover growth* of 4.8% (2008: 10.5%)* PBITA* up 13.4% to £229.8 million (2008:£202.6m)* Margin* improved to 6.6% (2008: 6.5%)* Operating cash flow generation of 75% of PBITA (2008: 77%)* Adjusted earnings per share increased 25.0% to 9.0p (2008: 7.2p) and by 9.8% at constant exchange rates (2008: 8.2p)* Interim dividend up 10% to 3.02 pence per share, DKK 0.2599 (2008: 2.75p/DKK 0.2572)* Continued good performance across all regions and business segments* Expect a strong performance for the full year* at constant (2009) exchange ratesNick Buckles, Chief Executive Officer, commented:"Our overall achievement of 4.8% organic growth and 9.8% EPS growthis a strong performance against a back-drop of lower economic growthand inflation falling in many of our markets. This demonstrates theresilience of our business model and the robustness of our customerrelationships and contract base. Our higher growth, more complexbusiness segments in government, cash solutions and new markets areall performing very well.Through good cost control, productivity improvements and focus onservice quality across the group, we have achieved double digitprofit growth and an improvement in the margin compared to the prioryear.Overall, we remain confident about our performance for the year andinto 2010."For further enquiries, pleasecontact:Nick Buckles Chief Executive +44 (0) 1293 Officer 554400Trevor Dighton Chief Financial OfficerHelen Parris Director of Investor RelationsMedia enquiries:Kevin Smith Citigate Dewe Rogerson +44 (0) 7973 672649High resolution images are available for the media to view anddownload free of charge from www.vismedia.co.ukNotes to Editors:G4S is the world's leading international security solutions group,which specialises in outsourced business processes in sectors wheresecurity and safety risks are considered a strategic threat.G4S is the largest employer quoted on the London Stock Exchange andhas a secondary stock exchange listing in Copenhagen. G4S hasoperations in over 110 countries and over 585,000 employees. Formore information on G4S, visit www.g4s.com.Presentation of Results:A presentation to investors and analysts is taking place today at0900hrs 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=707-803-7777&target=enA telephone dial-in facility will be available on:+---------------------------------------------+| UK Access Number | +44 (0)20 7075 6551 ||-----------------------+---------------------|| UK Toll Free* Number | 0800 376 4751 ||-----------------------+---------------------|| US Toll Free* Number | 1866 793 4273 ||-----------------------+---------------------|| US Toll Number | +1 703 621 9125 ||-----------------------+---------------------|| DK Toll Free* Number | 80 88 49 45 ||-----------------------+---------------------|| Participant PIN Code | 933947# |+---------------------------------------------+*If you are calling from a mobile phone your provider may charge youwhen connected to our toll free phone number.FINANCIAL SUMMARYResultsThe results which follow have been prepared under InternationalFinancial Reporting Standards, as adopted by the European Union(adopted IFRSs).Group Turnover+---------------------------------------------------------+| Turnover of Continuing Businesses | H109 | H108 || | £m | £m ||-------------------------------------+---------+---------|| Turnover at constant exchange rates | 3,486.1 | 3,117.0 ||-------------------------------------+---------+---------|| Exchange difference | - | (417.0) ||-------------------------------------+---------+---------|| Total continuing business turnover | 3,486.1 | 2,700.0 |+---------------------------------------------------------+Turnover, at constant exchange rates, increased by 11.8% to £3,486.1million. Organic turnover growth was 4.8%.+-------------------------------------------------------------------+| Organic Turnover | Europe | North | Developed | New | Total || Growth * | | America | Markets | Markets | ||------------------+--------+---------+-----------+---------+-------|| Secure Solutions | 4.2% | -3.8% | 1.1% | 13.2% | 4.1% ||------------------+--------+---------+-----------+---------+-------|| Cash Solutions | 6.8% | 5.7% | 6.7% | 12.1% | 7.9% ||------------------+--------+---------+-----------+---------+-------|| Total | 4.9% | -3.3% | 2.2% | 13.0% | 4.8% |+-------------------------------------------------------------------+* Calculated to exclude acquisitions and disposals, and at constantexchange ratesGroup Profit+----------------------------------------------------------+| PBITA * of Continuing Businesses | H109 | H108 || | £m | £m ||-----------------------------------------+-------+--------|| PBITA at constant exchange rates | 229.8 | 202.6 ||-----------------------------------------+-------+--------|| Exchange difference | - | (28.2) ||-----------------------------------------+-------+--------|| Total continuing business PBITA | 229.8 | 174.4 ||-----------------------------------------+-------+--------|| PBITA margin at constant exchange rates | 6.6% | 6.5% |+----------------------------------------------------------+* PBITA is defined as profit before interest, taxation andamortisation of acquisition-related intangible assetsPBITA at constant exchange rates increased by 13.4% to £229.8million. The PBITA margin improved to 6.6%.Cash Flow and Financing+-------------------------------------------------------------------+| Cash Flow | H109 | H108 at constant exchange | H108 || | £m | rates | £m || | | £m | ||-----------------------+-------+---------------------------+-------|| Operating cash flow | 171.2 | 155.0 | 132.1 ||-----------------------+-------+---------------------------+-------|| Operating cash flow / | 75% | 77% | 77% || PBITA | | | |+-------------------------------------------------------------------+Operating cash flow, as analysed on page 22, was up 30% to £171.2million in the period, representing 75% of PBITA. Net cash investedin acquistions was £54.8 million. Net debt at the end of the period,as analysed on page 21, was £1,385.9 million (June 2008: £1,134.2m,December 2008 £1,347.7m).Adjusted earnings per share+-------------------------------------------------------------------+| Adjusted earnings per | H109 | H108 at constant | H108 || share | £m | exchange rates | £m || | | £m | ||----------------------------+---------+------------------+---------|| PBITA from continuing | 229.8 | 202.6 | 174.4 || operations | | | ||----------------------------+---------+------------------+---------|| Interest (before pensions) | (47.8) | (45.7) | (37.6) ||----------------------------+---------+------------------+---------|| Tax | (47.3) | (42.3) | (37.1) ||----------------------------+---------+------------------+---------|| Minorities | (8.6) | (7.3) | (5.7) ||----------------------------+---------+------------------+---------|| Adjusted profit | 126.1 | 107.3 | 94.0 || attributable to | | | || shareholders | | | ||----------------------------+---------+------------------+---------|| Average number of shares | 1,402.5 | 1,310.3 | 1,310.3 || (m) | | | ||----------------------------+---------+------------------+---------|| Adjusted EPS (p) | 9.0 | 8.2 | 7.2 |+-------------------------------------------------------------------+Adjusted earnings per share, reconciled to basic earnings per shareon page 20, increased by 25%, or by 9.8% at constant exchange rates.BUSINESS ANALYSISSecure Solutions+--------------------------------------------------------------------------+| | Turnover| PBITA| Margins|Organic|| | £m| £m| | Growth||* At constant exchange |---------------+------------+---------+-------||rates | H109| H108| H109| H108|H109|H108| H109||---------------------------+-------+-------+-----+------+----+----+-------||Europe * |1,304.2|1,134.6| 79.7| 69.9|6.1%|6.2%| 4.2%||---------------------------+-------+-------+-----+------+----+----+-------||North America * | 753.8| 758.9| 42.3| 40.8|5.6%|5.4%| -3.8%||---------------------------+-------+-------+-----+------+----+----+-------||New Markets * | 759.6| 603.9| 58.2| 46.0|7.7%|7.5%| 13.3%||---------------------------+-------+-------+-----+------+----+----+-------||Total Secure Solutions * |2,817.6|2,497.4|180.2| 156.7|6.4%|6.3%| 4.1%||---------------------------+-------+-------+-----+------+-----------------||Exchange differences | -|(362.1)| -|(22.8)| ||---------------------------+-------+-------+-----+------+-----------------||At actual exchange rates |2,817.6|2,135.3|180.2| 133.9| |+--------------------------------------------------------------------------+The secure solutions business continued its robust performance withorganic growth of 4.1% and margins slightly higher at 6.4%. Marginswere improved due to the mix effect of continued strong growth in thehigher margin segments of government and New Markets, but werenegatively impacted by a margin reduction in the security systemsbusinesses. In some markets customers have come under pressure toreduce costs and we have worked with them to reconfigure theirsecurity requirements. This has dampened organic growth in the shortterm but profitability was maintained. The group has also reducedoverheads in selected markets where necessary to maintain margins.Europe+-----------------------------------------------------------------------+| | Turnover| PBITA| Margins|Organic|| | £m| £m| | Growth||* At constant exchange |---------------+---------+---------+-------||rates | H109| H108|H109|H108|H109|H108| H109||---------------------------+-------+-------+----+----+----+----+-------||UK & Ireland * | 556.9| 398.5|44.1|31.4|7.9%|7.9%| 9.6%||---------------------------+-------+-------+----+----+----+----+-------||Continental Europe * | 747.3| 736.1|35.6|38.5|4.8%|5.2%| 0.6%||---------------------------+-------+-------+----+----+----+----+-------||Total Europe * |1,304.2|1,134.6|79.7|69.9|6.1%|6.2%| 4.2%|+-----------------------------------------------------------------------+Organic growth in Europe was 4.2% and margins were 6.1%.In the UK & Ireland, organic growth increased from 8.2% in the prioryear to 9.6%, with margins remaining at 7.9%. Organic growth andmargins have been helped by strong growth in the risk management andgovernment sectors offset by lower growth in commercial securityparticularly in Ireland, where turnover has declined 12%.In the government sector, new contracts won or commencing during thefirst half included Brook House immigration and detention centre fromMarch (£10m pa for five years) and Tinsley House Immigration RemovalCentre which started in May (£5m pa for five years). The electricmonitoring contract (£40m pa) was extended for a further two yearsand the detention and escorting contract has been extended for ninemonths into 2010.In Continental Europe, organic growth from continuing operationsreduced to 0.6%. Growth was slightly negative in a number of largermarkets and in the Baltics organic growth was a negative 13%. Romaniacontinues to be a strong performer with organic growth of more than45% and Greece benefited from a good performance in the aviationsector.Margins were impacted by a reduction in security systems margins anda 50% decline in high margin temporary security work, both of whichwe would expect to recover when economic growth improves. Thesenegatives were partly offset by the operational restructuring of twoaviation contracts to address declining passenger numbers. The groupcontinues to respond to customer demand to reduce security spend withinnovation and further deployment of solutions that includetechnology, which has helped maintain our very high level of customerretention of 94%.New contracts won during the first half included an output basedsolutions contract with an oil and gas major, local governmentcontracts in Denmark and Estonia and Tartu Airport in Estonia.North America+-------------------------------------------------------------------+| | Turnover | PBITA | Margins | Organic || | £m | £m | | Growth || * At | | | | || constant |---------------+-------------+-------------+---------|| exchange | H109 | H108 | H109 | H108 | H109 | H108 | H109 || rates | | | | | | | ||-------------+-------+-------+------+------+------+------+---------|| North | 753.8 | 758.9 | 42.3 | 40.8 | 5.6% | 5.4% | -3.8% || America * | | | | | | | |+-------------------------------------------------------------------+Organic growth in North America was a decline of 3.8%, of which 3%was due to the loss of the Exelon contract. Margins improved to 5.6%from 5.4% in the prior year.In the United States, organic growth in the government and commercialsectors were relatively flat but new contracts in the second halfwill see growth improve.As expected, good margin improvement was achieved through a reductionin non-billed overtime across a number of our businesses and animprovement in the commercial nuclear sector margins. We now haveannual revenues of over $180m in the sector and the contractsstarting under the new solutions model have improved margins.In the government sector, the landmine clearance business which wasacquired in 2008 is performing very strongly and the NASA contractwas extended (up to $120m pa for up to 10 years).Canada had an improved performance compared to the same period in2008, with better margins in a continuing tough market.New Markets+-------------------------------------------------------------------+| | Turnover | PBITA | Margins | Organic || | £m | £m | | Growth || * At | | | | || constant |---------------+-------------+-------------+---------|| exchange | H109 | H108 | H109 | H108 | H109 | H108 | H109 || rates | | | | | | | ||-------------+-------+-------+------+------+------+------+---------|| Asia * | 255.4 | 208.5 | 18.8 | 16.4 | 7.4% | 7.9% | 7.7% ||-------------+-------+-------+------+------+------+------+---------|| Middle East | 211.1 | 157.9 | 16.9 | 11.5 | 8.0% | 7.3% | 22.4% || * | | | | | | | ||-------------+-------+-------+------+------+------+------+---------|| Africa * | 155.6 | 122.1 | 15.4 | 10.8 | 9.9% | 8.8% | 11.8% ||-------------+-------+-------+------+------+------+------+---------|| Latin | 137.5 | 115.4 | 7.1 | 7.3 | 5.2% | 6.3% | 12.7% || America & | | | | | | | || Caribbean * | | | | | | | ||-------------+-------+-------+------+------+------+------+---------|| Total New | 759.6 | 603.9 | 58.2 | 46.0 | 7.7% | 7.6% | 13.3% || Markets * | | | | | | | |+-------------------------------------------------------------------+In New Markets, organic growth was very strong at 13.3 %, withmargins slightly higher at 7.7% compared to the previous year.Organic growth in Asia was 7.7% and margins were lower at 7.4%mainly due to the mix effect of Australia having lower margins onaverage. However, Australia is performing well and is integrating asecure solutions acquisition to build on its existing care andjustice expertise. India and Thailand both had organic growth ofaround 15%. G4S signed an electronic monitoring contract for NewZealand which will be in operation in the fourth quarter of 2009.In the Middle East there was organic growth of 22.4%, withparticularly strong performances in UAE, Qatar and Saudi Arabia.Margins in Iraq improved as expected and organic growth was helped bythe AUL contract and further outsourcing, partly offset by reducedservice requirements for the US air-force contract supplyingparamedic and firefighter support. In the UAE, the cost of regulatedwage increases of around 200% was recovered successfully.In Africa, organic growth was 11.8% and margins improved strongly to9.9%. In South Africa, margins have improved considerably due to adeliberate termination of low margin contracts and continued strongperformance of the justice services business. Tenders for four newprisons in South Africa were submitted at the end of May with news ofawards expected in Q2 2010. G4S was awarded the UK Embassy contractsfor Uganda, Kenya, DRC, Zambia and Mozambique. Strong growth wasachieved in Ghana and Morocco.The Latin America and Caribbean region achieved organic growth of12.7% but margins were lower at 5.2% as expected due to therenegotiated Colombia tolls contracts. Good levels of organic growthwere achieved across most of the region with Argentina and Perubeing particularly strong performers.Cash Solutions+-----------------------------------------------------------------------+| | Turnover| PBITA| Margins|Organic||* At constant exchange | £m| £m| | Growth||rates |------------+----------+-----------+-------|| | H109| H108|H109| H108| H109| H108| H109||---------------------------+-----+------+----+-----+-----+-----+-------||Europe * |460.1| 430.5|45.0| 42.3| 9.8%| 9.8%| 6.8%||---------------------------+-----+------+----+-----+-----+-----+-------||North America * | 48.8| 46.5| 2.0| 0.2| 4.1%| 0.4%| 5.7%||---------------------------+-----+------+----+-----+-----+-----+-------||New Markets * |159.6| 142.6|23.3| 21.6|14.6%|15.1%| 12.1%||---------------------------+-----+------+----+-----+-----+-----+-------||Total Cash Solutions * |668.5| 619.6|70.3| 64.1|10.5%|10.3%| 7.9%||---------------------------+-----+------+----+-----+-------------------||Exchange differences | -|(54.9)| -|(6.5)| ||---------------------------+-----+------+----+-----+-------------------||At actual exchange rates |668.5| 564.7|70.3| 57.6| |+-----------------------------------------------------------------------+The cash solutions division performance in the first half of the yearwas very robust with organic growth of 7.9% compared with 10.6% in2008. Margins were up slightly on the same period last year at 10.5%assisted by a turnaround in the Canadian business.Organic growth in Europe was 6.8%. In the UK, organic growth wasaround 4% due to fewer services being required by the retail sectorand lower interest rates. However margins have been maintained due tooverhead controls and a strong focus on operational efficiency.The Baltics and Benelux have performed well despite very challengingmarket and economic conditions by being proactive in cutting costsand optimising CIT routes.A new Head Office and cash centre in Riga, Latvia, will open inSeptember 2009 and will allow the company to pursue its outsourcingagenda. A new facility will open in Belgium later this year. Romaniacontinues to grow very strongly with organic growth of more than 50%.In Sweden, the management will be working hard to achieve costreductions and efficiency improvements. Hungary has seen increasedCIT volumes as the level of cash in circulation has increaseddramatically due to worries surrounding the financial servicesindustry.Following its restructuring the operational performance of the Canadabusiness has been transformed and margins are now at 4.1%.In New Markets, organic growth was 12.1% and margins were still verystrong at 14.6%, but slightly lower compared to 2008 as a result ofthe further renegotiated Colombia tolls contracts and a price war inTaiwan. The South Africa cash services business remains a verystrong performer with good organic growth and margin improvements.In Cash 360, the group's retail solutions technology, pilot trials ina number of countries have been converted into sales or paid pilotspending a sales agreement. There is strong pipeline which continuesto grow in all countries in which the solution offering is beingmarketed actively.OTHER FINANCIAL ISSUESAcquisitions and divestmentsG4S spent a total of £54.8m on acquisitions during the period. Ofthis, £19.7m was invested in capability building acquisitions such asjuvenile justice business in the US, security systems capability inGhana, a cash solutions business in Greater China and SecuraMonde, aworldwide cash consultancy based in the UK. G4S also purchasedminority interests for a total of £33.5m mainly in Malaysia andNigeria and paid a further £1.6m in deferred consideration fromprevious acquisitions. The disposal of the French security businesswas completed in the period.Risks and uncertaintiesA discussion of the group's risk assessment and control processes andthe principal risks and uncertainties that could affect the businessactivities or financial results are detailed on pages 22 and 23 ofthe company's annual report for the financial year ended 31 December2008, a copy of which is available on the group website www.g4s.com.The risks and uncertainties are expected to be the same during theremaining six months of the financial year.Financing & InterestThe group has a prudent approach to managing its financing and overthe last two years has diversified its sources away from the bankmarket by raising funds from the private placement market. To furtherincrease the group's funding flexibility a BBB credit rating fromStandard & Poor's was obtained on 9 March 2009. The rating enablesthe group to access finance from the public markets and this resultedin the 13 May bond issue.The group is currently well capitalised with no significantmaturities until 2012. Borrowings are at attractive rates andliabilities broadly match the business mix by currency.The group's primary sources of finance are:-ÿ £1.1bn multicurrency revolving credit facility provided by aconsortium of banks at a margin of 0.225% over LIBOR and maturing 28June 2012. As at 30 June the drawings were US$ 355m, Euro 361m and£35m.ÿ $550m private placement notes, issued 1 March 2007, whichmature at various dates between 2014 and 2022 with interest couponsof between 5.77% and 6.06%.ÿ $514m and £69m private placement notes, issued 15 July 2008which mature at various dates between 2013 and 2020 with interestcoupons of between 6.09% and 7.56%.ÿ £350m 7.75% 2019 bond. This bond was issued 13 May 2009 andmatures 13 May 2019.At 30 June 2009 the group had other short term committed facilitiesof £45m and uncommitted facilities of £430m. The group headroomavailable from committed funds was £541m. The group has sufficientborrowing capacity to finance its current investment plans.As of 30 June 2009, net debt was £1,385.9m which gave book gearing of111%. The market gearing, using the 30 June closing share price of208.5 pence, is 48%.Net interest payable on net debt was £47.8m. This is an increase of27% over the 2008 cost of £37.6m and reflects the furtherdiversification of the group's funding sources, the increase in thegroup's average gross debt caused by the high level of acquisitionsin 2008 and the depreciation of the £ against the US$ and Euro. Thesefactors were partially offset by the reduction in short term LIBORinterest rates.The group's average cost of borrowings during the half year was 4.9%compared to 5.6% in 2008.Also included within financing costs is a net cost of £9.8m (2008:net income £2.5m) in respect of movements in the group's retirementbenefit obligations.TaxationTax has been provided for at the estimated effective tax rate for thefull year of 26.0% on adjusted earnings, compared to 26.9% for thefull year in 2008. The group believes that this rate is sustainablegoing forward as a result of planning initiatives undertaken.Retirement benefit obligationsThe group's funding shortfall on funded defined retirement benefitschemes, on the valuation basis specified in IAS19 Employee Benefits,was £392m before tax or £290m after tax (31 December 2008: £286m and£207m respectively). The main schemes are in the UK. The latestfull actuarial valuations were undertaken at 5 April 2006 in respectof the Securicor scheme, 31 March 2007 in respect of the Group 4scheme and March 2005 in respect of the GSL scheme. All UK schemesare currently undergoing a full valuation as at 31 March 2009.The valuation of gross liabilities has increased since 31 December2008 due to a decrease in the appropriate AA corporate bond rate from6.3% to 6.2% and due to higher inflation assumptions. However, thevalue of the assets held in the funds (adjusted for acquired pensionfunds and additional contributions) increased by £35m during theperiod. Additional company contributions were £23m.The group believes that, over the very long term in which retirementbenefits become payable, investment returns should eliminate thedeficit reported in the schemes in respect of past serviceliabilities.DividendThe Board has declared an interim dividend for 2009 of 3.02p pershare (DKK 0.2599) payable on 30 October 2009. This represents anincrease of 9.8% on the interim dividend for 2008.REVIEW AND OUTLOOKOur overall achievement of 4.8% organic growth and 9.8% EPS growth isa strong performance against a back-drop of significant reductions ineconomic growth and falling inflation across many of our markets.Any pressure on growth in Continental Europe and the commercialsegment in the UK and North America is being countered strongly bycontinued double digit growth in New Markets and strong performancesin the higher growth, more complex government and cash solutionssegments.Through good cost control, productivity improvements and servicequality across the group, we have achieved double digit profit growthand an improvement in the margin compared to the prior year.Continental Europe is the only major segment where margins are behindthe same period last year, elsewhere margins are holding firm in theUK and North American commercial segment, and improving in thegovernment, New Markets and cash solutions segments.This strong performance demonstrates the quality of our managementacross the businesses, the resilience of our business model and therobustness of our customer relationships and contract base.Overall, we remain confident about our performance for the year andinto 2010.24 August 2009G4S plcUnaudited half-yearly results announcementFor the six months ended 30 June 2009Directors' responsibility statement in respect of the half-yearlyresults announcementWe 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 DightonChief Executive Chief Financial OfficerG4S plcUnaudited half-yearly results announcementFor the six months ended 30 June 2009Consolidated income statementFor the six months ended 30 June 2009 Six months Six months Year ended ended ended 30.06.09 30.06.08 31.12.08 Notes £m £m £mContinuing operationsRevenue 2 3,486.1 2,700.0 5,948.0Profit from operations beforeamortisation ofacquisition-related intangibleassets and share of profit fromassociates 229.2 172.6 412.0Share of profit from associates 0.6 1.8 3.4Profit from operations beforeamortisation ofacquisition-related intangibleassets (PBITA) 2 229.8 174.4 415.4Amortisation of (43.6) (30.4) (67.8)acquisition-related intangibleassetsProfit from operations before 186.2 144.0 347.6interest and taxation (PBIT) 2, 3Finance income 6 41.4 50.0 104.9Finance costs 7 (99.0) (85.1) (189.7)Profit from operations before 128.6 108.9 262.8taxation (PBT)Taxation: - Before amortisation of (44.8) (37.8) (89.3)acquisition-related intangible assets - On amortisation of 11.4 8.5 19.1acquisition-related intangibleassets 8 (33.4) (29.3) (70.2)Profit from continuing 95.2 79.6 192.6operations after taxation(Loss)/profit from discontinued 4 (1.5) 0.5 (27.7)operationsProfit for the period 93.7 80.1 164.9Attributable to:Equity holders of the parent 85.1 74.4 151.2Minority interests 8.6 5.7 13.7Profit for the period 93.7 80.1 164.9Earnings per share attributableto ordinary equity shareholders 9of the parent from continuingand discontinued operationsBasic 6.1p 5.7p 11.1pDiluted 6.1p 5.7p 11.1pDividends declared and proposed 10in respect of the periodInterim dividend of 3.02p per 42.5 38.7 38.6share (2008: 2.75p per share)Final dividend (2008: 3.68p per - - 51.8share)Total 42.5 38.7 90.4Condensed consolidated balance sheetAs at 30 June 2009 As at As at As at 30.06.09 30.06.08 31.12.08 Notes £m £m £mASSETSNon-current assetsGoodwill 1,956.8 1,733.3 2,090.9Other acquisition-related 355.2 436.0 403.1intangible assetsOther intangible assets 57.9 37.9 61.0Property, plant and equipment 493.6 459.4 528.5Investment in associates 5.5 3.0 7.4Trade and other receivables 284.0 143.9 353.0 3,153.0 2,813.5 3,443.9Current assetsInventories 78.6 72.4 85.5Investments 86.7 72.3 92.7Trade and other receivables 1,251.8 1,086.9 1,364.8Cash and cash equivalents 480.9 446.6 562.1Assets classified as held for 11 19.9 111.1 71.0sale 1,917.9 1,789.3 2,176.1Total assets 5,070.9 4,602.8 5,620.0LIABILITIESCurrent liabilitiesBank overdrafts (167.0) (127.1) (195.1)Bank loans (71.5) (59.8) (87.9)Obligations under finance leases (17.8) (19.0) (22.1)Trade and other payables (1,056.5) (986.9) (1,269.2)Retirement benefit obligations (54.0) (48.3) (48.9)Provisions (41.9) (95.7) (40.1)Liabilities associated with 11 (11.0) (74.8) (74.1)assets classified as held forsale (1,419.7) (1,411.6) (1,737.4)Non-current liabilitiesBank loans (604.3) (1,112.5) (877.8)Loan notes (1,107.2) (290.8) (901.9)Obligations under finance leases (59.5) (61.1) (63.6)Trade and other payables (45.1) (37.1) (63.5)Retirement benefit obligations (379.7) (130.5) (278.6)Provisions (195.5) (142.0) (226.3) (2,391.3) (1,774.0) (2,411.7)Total liabilities (3,811.0) (3,185.6) (4,149.1)Net assets 1,259.9 1,417.2 1,470.9EQUITYShare capital 352.1 352.1 352.1Share premium and reserves 872.3 1,030.1 1,074.9Equity attributable to equity 1,224.4 1,382.2 1,427.0holders of the parentMinority interests 35.5 35.0 43.9Total equity 1,259.9 1,417.2 1,470.9Condensed consolidated cash flow statementFor the six months ended 30 June 2009 Six months Six months Year ended ended ended 30.06.09 30.06.08 31.12.08 Notes £m £m £mProfit from continuing 128.6 108.9 262.8operations before taxationAdjustments for:Finance income (41.4) (50.0) (104.9)Finance costs 99.0 85.1 189.7Depreciation of property, plant 60.0 48.9 105.0and equipmentAmortisation of 43.6 30.4 67.8acquisition-related intangibleassetsAmortisation of other 7.3 4.8 11.1intangible assetsOther operating cash flow 2.6 0.3 4.7movementsOperating cash flow before 299.7 228.4 536.2movements in working capitalNet working capital movement (82.5) (60.2) (55.0)Net cash flow from operating 217.2 168.2 481.2activities of continuingoperationsNet cash used by operating (11.0) (0.8) (26.2)activities of discontinuedoperationsCash generated by operations 206.2 167.4 455.0Tax paid (37.6) (37.9) (82.0)Net cash flow from operating 168.6 129.5activities 373.0Investing activitiesInterest received 4.8 7.7 17.2Cash flow from associates 1.9 9.5 12.2Net cash flow from capital (69.3) (61.1)expenditure (161.3)Net cash flow from acquisitions (54.6) (308.0)and disposals (368.6)(Purchase)/sale of trading (5.1) 1.9investments 5.6Own shares purchased (4.6) (4.5) (8.8)Net cash used in investing (126.9) (354.5)activities (503.7)Financing activitiesShare issues 0.1 276.8 276.8Dividends paid to minority (4.4) (3.4)interests (11.9)Loan to minority interests - (4.2) -Dividends paid to equity (51.7) (36.4)shareholders of the parent (75.0)Net increase in borrowings 99.5 129.4 173.7Interest paid (55.2) (50.4) (97.2)Net cash flow from translation (10.2) (39.0)hedging financial instruments (65.9)Repayment of obligations under (10.9) (4.8)finance leases (13.5)Net cash flow from financing (32.8) 268.0activities 187.0Net increase in cash, cash equivalentsand bank overdrafts 13 8.9 43.0 56.3Cash, cash equivalents and bank 360.7 270.7overdrafts at the beginning ofthe period 270.7Effect of foreign exchange rate (51.2) 8.6fluctuations on cash held 33.7Cash, cash equivalents and bank 318.4 322.3overdrafts at the end of theperiod 360.7Consolidated statement of comprehensive incomeFor the six months ended 30 June 2009 Six months Six months Year ended ended ended 30.06.09 30.06.08 31.12.08 £m £m £mExchange differences on translation (135.2) 25.8 182.0of foreign operationsActuarial losses on defined (129.4) (56.5) (196.9)retirement benefit schemesChange in fair value of cash flow (28.8) 5.0 36.4hedging financial instrumentsChange in fair value of net 28.6 (19.1) (81.1)investment hedging financialinstrumentsTax on items taken directly to 29.9 27.5 50.3equityNet expense recognised directly in (234.9) (17.3) (9.3)equityProfit for the period 93.7 80.1 164.9Total comprehensive income for the (141.2) 62.8 155.6periodAttributable to:Equity holders of the parent (149.8) 57.1 141.9Minority interests 8.6 5.7 13.7Total comprehensive income for the (141.2) 62.8 155.6periodConsolidated statement of changes in equityFor the six months ended 30 June 2009 Six months Six months Year ended ended ended 30.06.09 30.06.08 31.12.08 £m £m £mAt beginning of period 1,427.0 1,087.1 1,087.1Net recognised (loss)/incomeattributable to equity shareholdersof the parent (149.8) 57.1 141.9Shares issued 0.1 276.8 276.8Dividends declared (51.7) (36.4) (75.0)Own shares purchased (4.6) (4.5) (8.8)Equity settled transactions 3.4 2.1 5.0At end of period 1,224.4 1,382.2 1,427.0Notes to the half-yearly results announcement1) Basis of preparation and accounting policiesThese condensed financial statements comprise the unaudited interimconsolidated results of G4S plc ("the group") for the six monthsended 30 June 2009. These half-yearly financial results do notcomprise statutory accounts within the meaning of Section 240 of theCompanies Act 1985 and should be read in conjunction with the AnnualReport and Accounts 2008.The comparative figures for the financial year ended 31 December 2008are not the company's statutory accounts for that year. Thoseaccounts have been reported on by the company's auditor and deliveredto the Registrar of Companies. The report of the auditor was (i)unqualified, (ii) did not contain a reference to any matters to whichthe auditor drew attention by emphasis of matter without qualifyingtheir report, and (iii) did not contain any statement under Section237 of the Companies Act 1985.The condensed financial statements of the group presented in thisinterim announcement have been prepared in accordance with IAS 34Interim Financial Reporting, and with the Disclosure and TransparencyRules of the Financial Services Authority. The accounting policiesapplied are the same as those set out in the group's Annual Reportand Accounts 2008, as adjusted for the effects of:* IAS1 (Presentation of Financial Statements) The revised IAS 1 (Presentation of Financial Statements) requires a number of changes to the presentation of financial statements. All non-owner changes in equity (i.e. comprehensive income) are required to be presented in one statement of comprehensive income or in two statements (a separate income statement and a statement of comprehensive income). As a result, the group has elected to present a consolidated income statement, a consolidated statement of comprehensive income and a consolidated statement of changes in equity.* IFRS8 (Operating Segments) requires segment disclosures based on the components that the Chief Operating Decision Maker (i.e. 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 performance. This results in a segmental analysis which is similar to that presented previously under IAS 14 (Segmental Reporting).The financial information in these condensed financial statements forthe half years to 30 June 2009 and 30 June 2008 have been neitheraudited nor reviewed.The comparative income statement for the six months ended 30 June2008 has been re-presented for operations qualifying as discontinuedduring the six months ended 31 December 2008 and the six months ended30 June 2009. The comparative income statement for the year ended 31December 2008 has been re-presented for operations qualifying asdiscontinued during the six months ended 30 June 2009. For the sixmonths ended 30 June 2008, revenue has been increased by £2.7m andPBT has been reduced by £0.5m compared to the figures publishedpreviously. For the year ended 31 December 2008, revenue has beenincreased by £5.1m and PBT has been reduced by £1.4m compared to thefigures published previously.The comparative balance sheet as at 30 June 2008 has been restated toreflect the completion during the six months ended 31 December 2008and the six months ended 30 June 2009 of the initial accounting inrespect of acquisitions made during the six months ended 30 June2008. Adjustments made to the provisional calculation of fair valuesof assets and liabilities acquired and to the consideration payableamount to £30.5m in total, resulting in an equivalent increase in thereported value of goodwill.The comparative balance sheet as at 31 December 2008 has beenrestated to reflect (i) the completion during the six months ended 30June 2009 of the initial accounting in respect of acquisitions madeduring the six months ended 30 June 2008, and (ii) adjustments madein the six months to 30 June 2009 to the preliminary assessment ofthe fair values of assets and liabilities acquired during the sixmonths ended 31 December 2008. Adjustments made to the provisionalcalculation of the fair values of assets and liabilities acquired andthe consideration payable amount to £30.5m in total, resulting in anequivalent increase in the reported value of goodwill. 2) Segmental analysisThe group operates in two core product areas: secure solutions andcash solutions. The group operates on a worldwide basis and derives asubstantial proportion of its revenue and profits from each of thefollowing geographic regions: Europe (comprising the United Kingdomand Ireland, and Continental Europe), North America, and New Markets(comprising the Middle East and Gulf States, Latin America and theCaribbean, Africa, and Asia Pacific).The segment disclosures are based on the components that the Boardmonitors in making decisions about operating matters. Such componentsare identified on the basis of internal reports that the Boardreviews regularly in allocating resources to segments and inassessing their performanceNotes to the half-yearly results announcement (continued)Segment information for continuing operations is presented below:Segment revenue Six months ended Six months YearRevenue by business segment ended ended 30.06.09 30.06.08 31.12.08 £m £m £mSecure Solutions UK and Ireland 556.9 397.8 929.9 Continental Europe 747.3 656.3 1,389.6 Europe 1,304.2 1,054.1 2,319.5 North America 753.8 570.8 1,222.3 Middle East and GulfStates 211.1 119.9 315.6 Latin America and theCaribbean 137.5 99.8 225.3 Africa 155.6 111.3 248.6 Asia Pacific 255.4 179.4 412.0 New Markets 759.6 510.4 1,201.5Total Secure Solutions 2,817.6 2,135.3 4,743.3Cash Solutions Europe 460.1 402.1 859.1 North America 48.8 41.9 87.0 New Markets 159.6 120.7 258.6Total Cash Solutions 668.5 564.7 1,204.7Total revenue 3,486.1 2,700.0 5,948.0Segment result Six months Six months YearPBITA by business segment ended ended ended 30.06.09 30.06.08 31.12.08 £m £m £mSecure Solutions UK and Ireland 44.1 30.7 76.8 Continental Europe 35.6 33.9 74.9 Europe 79.7 64.6 151.7 North America 42.3 30.8 70.6 Middle East and Gulf States 16.9 8.2 26.4 Latin America and theCaribbean 7.1 5.8 13.7 Africa 15.4 9.6 22.4 Asia Pacific 18.8 14.9 32.6 New Markets 58.2 38.5 95.1Total Secure Solutions 180.2 133.9 317.4Cash Solutions Europe 45.0 39.6 94.0 North America 2.0 0.2 0.8 New Markets 23.3 17.8 38.7Total Cash Solutions 70.3 57.6 133.5Total PBITA before head office costs 250.5 191.5 450.9Head office costs (20.7) (17.1) (35.5)Total PBITA 229.8 174.4 415.4Result by business segmentTotal PBITA 229.8 174.4 415.4Amortisation of acquisition-related (43.6) (30.4)intangible assets (67.8)Total PBIT 186.2 144.0 347.6Secure Solutions 147.6 115.5 270.4Cash Solutions 59.3 45.6 112.7Head office costs (20.7) (17.1) (35.5)Total PBIT 186.2 144.0 347.6Notes to the half-yearly results announcement (continued)3) Profit from operations before interest and taxationThe income statement can be analysed as follows: Six months Six months YearContinuing operations ended ended ended 30.06.09 30.06.08 31.12.08 £m £m £mRevenue 3,486.1 2,700.0 5,948.0Cost of sales (2,726.4) (2,111.1) (4,632.6)Gross profit 759.7 588.9 1,315.4Administration expenses (574.1) (446.7) (971.2)Share of profit from associates 0.6 1.8 3.4Profit from operations before 186.2 144.0interest and taxation 347.6Included within administration expenses is the amortisation chargefor acquisition-related intangible assets.4) Discontinued operationsOperations qualifying as discontinued in the current and prior periodprimarily comprise the security services business in France, whichprincipally comprises Group 4 Securicor SAS, disposed of on 28February 2009. Further operations qualifying as discontinued in theprior year also comprised the security services business in Germany,which principally comprises G4S Sicherheitsdienste GmbH and G4SSicherheitssysteme GmbH, disposed of on 15 May 2008. A deferred taxasset in relation to the discontinued US Aviation business was alsotaken in the period.Notes to the half-yearly results announcement (continued)5) AcquisitionsCurrent Period AcquisitionsThe group undertook a number of acquisitions in the current period.Principal acquisitions in subsidiary undertakings include thepurchase of controlling interests in SecPoint Security Limited, asecurity solutions business in Ghana, Sunshine Youth Services, ajuvenile justice business in the US, CL Systems Limited, a cashsolutions business in Greater China and SecuraMonde, a cash solutionsbusiness in the UK.In addition, the group completed the minority buy-outs of its cashsolutions business in Malaysia and of Service Master Limited inNigeria.The following table sets out the book values and provisional fairvalues at acquisition of the identifiable assets and liabilitiesacquired by the group during the period: Fair value Book value adjustments Fair value £m £m £mAcquisition-related intangibleassets - 11.5 11.5Property, plant and equipment 0.6 - 0.6Inventories 0.3 (0.1) 0.2Trade and other receivables 2.9 - 2.9Cash and cash equivalents 1.8 - 1.8Trade and other payables (2.3) - (2.3)Borrowings (0.5) - (0.5)Deferred tax liabilities - (3.3) (3.3)Net assets acquired ofsubsidiary undertakings 2.8 8.1 10.9Acquisition of minorityinterests 7.8 - 7.8Goodwill 30.6Total purchase consideration 49.3Satisfied by:Cash 47.1Transaction costs 1.6Contingent consideration 0.6Total purchase consideration 49.3Adjustments made to identifiable assets and liabilities onacquisition are to reflect their fair value. These include therecognition of customer-related intangible assets amounting to £11.5mattributable to the acquisition of subsidiary undertakings. The fairvalues of net assets acquired are provisional and represent estimatesfollowing a preliminary valuation exercise. These estimates may beadjusted to reflect refinements in their valuation and also anydevelopment in the issues to which they relate. Final fair valueadjustments will, if required, be set out in the group's 2009 AnnualReport and Accounts and/or in the group's 2010 Annual Report andAccounts as appropriate.The goodwill arising on acquisitions can be ascribed to the existenceof a skilled, active workforce and the opportunities to obtain newcontracts and develop the business. Neither of these meets thecriteria for recognition as intangible assets separable fromgoodwill. Goodwill resulting from acquisitions includes £21.2marising on the acquisition of minority interests.Prior period acquisitionsThe purchase consideration and provisional fair values ofacquisitions made during the financial year to 31 December 2008 andtheir contribution to the group's results for the year are set out inthe group's Annual Report and Accounts 2008. Adjustments made duringthe six months to 30 June 2009 to the provisional calculation of thefair values of assets and liabilities acquired and to theconsideration payable during the year to 31 December 2008 amount to£30.5m in total, resulting in an equivalent increase in the reportedvalue of goodwill.Notes to the half-yearly results announcement (continued)6) Finance income Six months Six months Year ended ended ended 30.06.09 30.06.08 31.12.08 £m £m £mInterest receivable 7.7 7.1 18.4Expected return on defined 33.7 42.9 86.5retirement benefit scheme assetsTotal finance income 41.4 50.0 104.97) Finance costs Six months Six months Year ended ended ended 30.06.09 30.06.08 31.12.08 £m £m £mTotal group borrowing costs (55.5) (44.7) (106.9)Finance costs on defined retirement (43.5) (40.4) (82.8)benefit obligationsTotal finance costs (99.0) (85.1) (189.7)8) Taxation Six months ended Six months ended Year ended 30.06.09 30.06.08 31.12.08 £m £m £mUK taxation (2.0) (4.2) (7.6)Overseas taxation (31.4) (25.1) (62.6)Total taxation expense (33.4) (29.3) (70.2)Notes to the half-yearly results announcement (continued)9) Earnings per share attributable to ordinary shareholders of theparent Six months Six months Year ended ended ended 30.06.09 30.06.08 31.12.08 £m £m £mFrom continuing and discontinuedoperationsEarningsProfit for the period attributable 151.2to equity holders of the parent 85.1 74.4Effect of dilutive potential 0.2ordinary shares (net of tax) 0.1 0.1Profit for the purposes of diluted 151.4earnings per share 85.2 74.5Number of shares (m)Weighted average number of 1,357.7ordinary shares 1,402.5 1,310.3Effect of dilutive potential 1.3ordinary shares 0.8 1.4Weighted average number ofordinary shares for the purposesof diluted earnings per share 1,403.3 1,311.7 1,359.0Earnings per share from continuing anddiscontinued operations (pence)Basic 6.1p 5.7p 11.1pDiluted 6.1p 5.7p 11.1pFrom adjusted earningsEarningsProfit for the period attributable 151.2to equity holders of the parent 85.1 74.4Adjustment to exclude 27.7loss/(profit) from discontinuedoperations 1.5 (0.5)Adjustment to exclude netretirement benefit finance income(net of tax) 7.3 (1.8) (2.7)Adjustment to exclude amortisation ofacquisition-related intangibleassets (net of tax) 32.2 21.9 48.7Adjusted profit for the period 224.9attributable to equity holders ofthe parent 126.1 94.0Weighted average number of 1,357.7ordinary shares (m) 1,402.5 1,310.3Adjusted earnings per share 16.6p(pence) 9.0p 7.2p10) Dividends Six months Six months Year ended ended ended Pence DKK 30.06.09 30.06.08 31.12.08 per per £m £m £m share shareAmounts recognised asdistributions to equityholders of the parent inthe periodFinal dividend for the 2.85 0.2786year ended 31 December2007 - 36.4 36.4Interim dividend for thesix months ended 30 June2008 2.75 0.2572 - - 38.6Final dividend for the 3.68 0.3052year ended 31 December2008 51.7 - -Total 51.7 36.4 75.0An interim dividend of 3.02p (DKK 0.2599) per share, amounting to£42.5m, for the six months ended 30 June 2009 will be paid on 30October 2009 to shareholders on the register on 25 September 2009.Notes to the half-yearly results announcement (continued)11) Disposal groups classified as held for saleDisposal groups classified as held for sale at 30 June 2009 primarilycomprise the assets and liabilities associated with the countryholding companies relating to historic disposals mainly in France andGermany, as well as the deferred tax asset in relation to thediscontinued US Aviation business. At 31 December 2008 disposalgroups classified as held for sale also included the assets andliabilities associated with the security services businesses inGermany, which principally include G4S Sicherheitsdienste GmbH andG4S Sicherheitssysteme GmbH.12) Analysis of net debtA reconciliation of net debt to amounts in the condensed consolidatedbalance sheet is presented below: As at As at As at 30.06.09 30.06.08 31.12.08 £m £m £mCash and cash equivalents 480.9 446.6 562.1Investments 86.7 72.3 92.7Net debt included within assets held 4.5 2.7 (7.3)for saleCurrent liabilities Bank overdrafts and loans (238.5) (186.9) (283.0) Obligations under finance leases (17.8) (19.0) (22.1) Fair value of loan note derivative 8.5 14.5 9.6financial instrumentsNon-current liabilities Bank loans (604.3) (1,112.5) (877.8) Loan notes (1,107.2) (290.8) (901.9) Obligations under finance leases (59.5) (61.1) (63.6) Fair value of loan note derivative 60.8 - 143.6financial instrumentsTotal net debt (1,385.9) (1,134.2) (1,347.7)Included within Loan notes is the £350m 7.75% bond issued on 13 May2009.An analysis of movements in net debt in the period is presentedbelow: Six months Six months Year ended ended ended 30.06.09 30.06.08 31.12.08 £m £m £mIncrease in cash, cash equivalentsand bank overdrafts per condensed 8.9 43.0consolidated cash flow statement 56.3(Sale)/ purchase of investments 5.1 (1.9) (5.6)Increase in debt and lease (88.6) (124.6)financing (160.2)Change in net debt resulting (74.6) (83.5)from cash flows (109.5)Borrowings acquired with (0.2) (225.0)subsidiaries (230.0)Net additions to finance leases (6.6) (8.3) (17.1)Movement in net debt in the (81.4) (316.8)period (356.6)Translation adjustments 43.2 (12.5) (186.2)Net debt at the beginning of the (1,347.7) (804.9)period (804.9)Net debt at the end of the (1,385.9) (1,134.2)period
Datum: 24.08.2009 - 08:01 Uhr
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