In similar fashion to rival outsourcer Serco (SRP), security services specialist G4S (GFS) is in the process of a strategic shift, albeit further down the road. A restructuring of its UK and Ireland cash-handling businesses is under way, and there are plans to sell or close 46 of its non-core businesses. As a result, the group incurred a number of one-off costs during the first-half, including a £17m charge relating to a review of its assets, liabilities and legacy contracts. This pulled down operating profit by 12 per cent to £124m.
The UK and Ireland segment was a weak spot for the group, with revenue falling 3.2 per cent year on year to £760m. Comparatives weren't helped by the cessation of the group's UK electronic monitoring contract during the first quarter of 2014, along with the loss of a large retail contract at the close of the year,. Across the pond, trading was brighter with revenue for North America up 5 per cent to £740m. This business achieved double-digit growth in commercial security, although this was partly offset by the loss of a nuclear power contract. Despite the macroeconomic slowdown in Brazil, revenue increased by 12 per cent in Latin America to £285m, while the group's sales pipeline in the region nearly doubled.
Bloomberg consensus forecast for adjusted EPS this year is 15.2p.
G4S (GFS) | ||||
---|---|---|---|---|
ORD PRICE: | 264p | MARKET VALUE: | £4.1bn | |
TOUCH: | 263.8-264p | 12-MONTH HIGH: | 310p | LOW: 240p |
DIVIDEND YIELD: | 3.6% | PE RATIO: | 56 | |
NET ASSET VALUE: | 48p* | NET DEBT: | 219% |
Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2014 (restated) | 3.38 | 80.0 | 3.1 | 3.40 |
2015 | 3.41 | 70.0 | 2.0 | 3.59 |
% change | +1 | -13 | -35 | +6 |
Ex-div: 3 Sep Payment: 16 Oct *Includes intangible assets of £2bn, or 130p a share |