Global security company G4S has announced its financial results for the six-month period that ended on 30 June 2019. Secure Solutions revenues are up by 4.9% and those for Cash Solutions by 3.9%. The PBITA margin sits at 6.2% (2018: 6.4%). The positive impact of growth has been offset by new one-off contract mobilisation costs (£4 million in 2019) and a one-off bullion contract profit in 2018 of £8 million.
There’s an operating cash flow conversion of 88% (2018: 109%) with the expectation of a full-year conversion above 100%. Net debt to EBITDA is 2.85x (30 June 2018: 2.73x). Interim dividend is set at 3.59 pence per share (the exact same figure as per this time last year).
Statutory earnings of £59 million (2018: £101 million) include businesses sold, onerous contracts and exchange rate movements, £36 million restructuring and separation costs and £35 million goodwill impairment relating to Brazilian businesses acquired in 2012.
Speaking about this latest set of financials, G4S CEO Ashley Almanza commented: “In the first half of this year, our improving sales performance in both Secure Solutions and Cash Solutions saw the Group deliver underlying revenue growth of 4.7%. This growth, together with new contract wins, supports our medium-term revenue goal of 4% to 6% per annum.”
Almanza added: “Our revenue mix continued to improve as our technology-enabled revenues in Secure Solutions grew by 14.8% across the globe and our North American cash technology revenues grew by 33%. The Group’s half-year performance, sales pipeline, revenue momentum and productivity programmes support a positive outlook.”
On a structural note, Almanza stated: “Our separation review is now complete and the Board has approved the separation of Cash Solutions from the Group. As a result, we have set in train plans for the de-merger of Cash Solutions in H1 2020. We believe that this will create two strong and focused businesses each with the clear potential to capitalise on market-leading positions and unlock substantial value for customers, shareholders and employees.”
Since announcing the separation review in December last year, G4S has received a number of unsolicited expressions of interest from third parties to acquire parts or all of the Cash Solutions business. The company has actively engaged with these parties and the Board will continue to evaluate proposals for all or parts of the business alongside the implementation of the aforementioned de-merger plans, although the business is swift to point out that no assurance can be provided at this stage that any third party proposals will lead to a transaction.
In addition to the separation of Cash Solutions, the Group will be managing for value or exiting a number of non-core businesses and implementing programmes to deliver further identified operational efficiencies. The company expects that, over time, these combined actions will provide further financial strength and flexibility to support the attractive growth opportunities in its core businesses.
*Read the full 42-page financial statement on the G4S website