G4S (GFS) saw its adjusted operating profit dip by 5 per cent at constant currencies to £187m in the six months to 30 June, although this was ahead of analyst consensus expectations of £165m. This came as the Covid-19 squeeze on retail, travel and banking hit its smaller UK ‘cash solutions’ business.
The ‘secure solutions’ division increased adjusted operating profit by 1.5 per cent, as growth in the Americas and Asia countered weakness across Europe and the Middle East. The latter regions are more exposed to sectors such as aviation, tourism and oil and gas.
Statutory earnings were buoyed by the £171m gain made on the sale of its conventional cash businesses earlier this year. Reported operating profit surged by 62 per cent to £271m, despite a £50m deferred prosecution agreement with the Serious Fraud Office (SFO) over the prisoner electronic tagging scandal.
That big disposal saw net debt fall by a quarter from the December year-end position to £1.56bn, equivalent to 2.6 times cash profits. The group estimates Covid-19-related costs in countries where it has received government support will total £20m-£25m and it is looking to make £100m of cost savings this year. Meanwhile, the interim dividend has been scrapped.
Panmure Gordon anticipates adjusted pre-tax profit of £289m and EPS of 12.9p for the full year, down from £301m and 13.5p in 2019.
| G4S (GFS) | ||||
| ORD PRICE: | 137p | MARKET VALUE: | £ 2.1bn | |
| TOUCH: | 137-138p | 12-MONTH HIGH: | 224p | LOW: 70p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 125 | |
| NET ASSET VALUE: | 34p* | NET DEBT: | £1.56bn** | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 (Restated) | 3.81 | 108 | 3.8 | 3.59 |
| 2020 | 3.53 | 217 | 10.8 | - |
| % change | -7 | +101 | +184 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £1.5bn, or 100p a share, **Includes £302m in lease liabilities | ||||
