G4S is returning to form

The share price fell initially in response to the release of the numbers, with some concerns over a slowing organic revenue growth rate – 6.2 per cent for continuing businesses over the first half, against JPMorgan Cazenove's 6.9 per cent forecast, with a slower second quarter to blame.

Chief executive Ashley Almanza said top-line growth was not going to be linear and the medium-term expected growth range of 4-6 per cent still stands. Operating cash flows declined by 30.7 per cent to £192m, which was attributed to supplier renegotiations in the prior period. This measure is expected to strengthen in the second half.

Operations in the Middle East and India struggled over the period, with revenue down 7.8 per cent as low oil prices impacted trading in the gulf, while demonetisation and other regulatory changes in India affected business there. G4S is investing in the region, while accelerating its productivity programme, but management expects conditions to remain difficult throughout the rest of the year.

Elsewhere, however, business was booming. This was most notable in North America – the largest geography – where revenue grew 20.6 per cent to £1.04bn. This was largely due to a selection of big contracts, both renewals from aviation and utility companies, a new retail cash deal with a major retailer and a new social network contract.

Appetite also increased for the “integrated security” offering, which uses both on-the-ground staff and a range of technological tools. Adjusted pre-tax profit was up 18.8 per cent, partly helped by efficiency gains. Streamlining has been a priority across the business, with £90m-£100m of annual savings from both operations and financing targeted by 2020.

Analysts at JPMorgan Cazenove are forecasting adjusted pre tax profit of £405m, giving EPS of 18.4p, for the year to December 2017 (from £352m and 15.9p 2016).