- Revenues up 5.8 per cent
- Slips to 170m pound loss at pre-tax level
- Underlying profits up 2.8 per cent
- Dividend maintained
Annual profits and earnings from security group G4S were lower than analysts had expected, as the company looks to restructure and repair its reputation after prisoner tagging scandals in the UK.
Although robust global demand, particularly in emerging markets, meant revenues rose 5.8% to £7.43bn, underlying profits rose just 2.8% to £442m before interest, tax and amortisation as lower revenue in Europe and lower US federal government spending hit the secure solutions and systems businesses.
In the Asia and Middle East segment, G4S grew revenues 17.7% and profits 24%, but in Europe and North America sales were difficult and margins were clipped: European revenues were down 1.6% and profits down 14.8%, while North America maintained flat revenues and profits declined 17.6%.
At the statutory level, operating profits fell 84.6% to £56m and slipped to a £170m loss at the pre-tax level as management advised a £386m charge should be excluded relating to a comprehensive financial review of assets and liabilities and major contracts including an assessment of potential liabilities for the UK electronic prisoner monitoring contracts, which it said was "to provide a clear comparison of the underlying trading performance of the group".
Chief Executive Officer (CEO) Ashley Almanza, who joined G4S as Chief Financial Officer last May before being named CEO the month after, said: "This has been an extremely challenging year for G4S. We have taken clear action to address longstanding issues and have introduced wide ranging changes to strengthen our business."
However, G4S has yet to reach a settlement with the British government over its tagging contract and Justice Secretary Chris Grayling said on Tuesday that the company still faces the possibility of criminal proceedings. Rumours suggest G4S could incur charges of around £100m.
Almanza and his board conducted a detailed business review in 2013, which confirmed the strength of global market positions and identified a number of strategic priorities to drive sustainable, profitable growth. The balance sheet was strengthened through improved cash flow, a successful share placing and asset sales.
G4S has disposed of a number of businesses which has generated proceeds of £124m to date, made 28 new appointments to its global management team and has initiated a number of 'cost leadership' programmes to improve efficiency in most areas of the business.
Looking forward, Almanza said: "We can now look to the future with confidence, focusing on the growing demand for G4S's services that underpins our plans to deliver sustainable, profitable growth. That confidence is reflected in the board's recommendation to maintain the dividend."
The final dividend of 5.54p per share was unchanged from the prior period.
Broker Panmure said it anticipated further pressure on consensus estimates on the back of these results and maintained its cautious stance on the shares
Shares in G4S were down 2.6% to 239p at 08:40 on Wednesday.