G4S's results were accompanied by the £9.5m takeover of Brazilian-based security company Plantech, which, coupled with June's acquisition of electronic software firm Instalarme, makes the UK-based group the largest security systems business in the South American country. By making a move into the fifth-largest security market in the world, G4S wants to take advantage of Brazil's oil and gas discoveries, as well as development ahead of the Fifa World Cup in 2014 and the Olympic Games in 2016.
The decision to focus on so-called "New Markets" looks sound as the group's organic revenue growth in the first half was predominantly driven by these regions. The Middle East was the star performer in the secure solutions division, increasing underlying revenues 14.6 per cent, with Latin America reporting 12.9 per cent growth, although Asia only posted a modest rise in sales after losing a major contract. In North America, the US security division grew revenues 1.8 per cent, which was a strong like-for-like improvement compared with the 3.8 per cent decline seen last year.
Overall, group margins held steady, cash conversion was slightly weaker and net debt increased almost 6 per cent, but the group has headroom of £457m on committed debt facilities, providing ample cash for further investment.
Broker Panmure Gordon expects full-year EPS of 21p, rising to 22.5p in 2011 (20.2p in 2009).
G4S (GFS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 256p | MARKET VALUE: | £3.61bn | |
| TOUCH: | 255-256p | 12-MONTH HIGH: | 286p | LOW: 210p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 100p* | NET DEBT: | 105% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 3.48 | 129 | 6.1 | 3.02 |
| 2010 | 3.63 | 143 | 6.7 | 3.17 |
| % change | +4 | +11 | +10 | +5 |
Ex-div: 8 Sep Payment: 15 Oct *Includes intangible assets of £2.43bn, or 173p a share | ||||
