G4S upbeat as profits rise
- Credit: PA
Outsourcing giant G4S has posted its first improvement in profit in four years, despite a fresh £45 million hit from its troubled UK Government contracts.
Pre-tax profits rose to £148 million from a loss of £190 million the year before, when there was a £136 million hit from a review of contracts that included an offender tagging deal at the centre of an overcharging scandal.
The group is being overhauled by chief executive Ashley Almanza, having taken the helm in 2013 following the tagging scandal and a previous debacle over its deal to supply security for the London Olympics.
It has not posted a rise in pre-tax profits since annual results for 2010.
For 2014, it was hit by a £29 million restructuring charge as well as the £45 million hit related to UK Government contracts but gained £71 million on the sale of businesses in Canada, Sweden, Norway and the US.
Underlying profits were up 7.9% to £424 million and the final dividend rose 5% to 5.82p per share, cheering shareholders as the stock rose 3%. It has now risen more than 20% compared to a year ago and is around levels last seen in 2013.
Mr Almanza said: 'The group made good progress with its strategic plan, delivering commercial, operational and financial progress during 2014.
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'There remains much to be done to realise the full potential of our strategy and we expect to make further progress in 2015.'
The group grew revenues by 3.9% to £6.75 billion, although in the UK and Ireland they fell by 1.3% to £1.59 billion.
An improved performance for the group's UK cash transit business was offset by the end of the Ministry of Justice electronic tagging contract in March last year.
G4S won contracts during the year including a deal to manage community work placements for the long-term unemployed for the Department for Work and Pensions and the renewal of its running of the Rainsbrook secure training centre in Rugby.
Revenues grew in North America and in emerging markets including Latin America while they fell in Europe.
Lewis Sturdy, dealer at London Capital Group, said: 'The security group will have to increase provisions for UK contracts by £45 million, but at least G4S has returned to a profit and ahead of expectations.
'Having survived a very public dragging through the mud around the 2012 Olympics, the share price has quietly returned to near the £3 level and multi-year highs.
'Growth in the US and emerging markets has sustained investor interest helping deflect focus from the more troublesome domestic UK market.'
Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said: 'In all, G4S is back on firmer ground.
'An increase in the dividend payment reflects management's confidence for the future. For now, and while a full recovery is not yet in sight, the new management team is making its mark.'