G4S share price: Company releases 2014 results
G4S Plc (LON:GFS) today released is financial report for 2014. Key information from the report provided below, with more to follow:
**Ashley Almanza, Group Chief Executive Officer, commented:** “The group made good progress with its strategic plan, delivering commercial, operational and financial progress during 2014. This is reflected in a 7.9% increase in underlying PBITA, a 11.7% increase in underlying earnings and a 25% increase in cash flow from the group’s operating businesses. The group’s progress and prospects are reflected in the Board’s recommendation to increase the final dividend by 5%. There remains much to be done to realise the full potential of our strategy and we expect to make further progress in 2015.”
Demand for our services was strong, in emerging markets (up 8.9%) and North America (up 6.9%). As expected revenues contracted by 1% in UK & Ireland and in Europe, reflecting the impact of sales contract rationalisation and the previously announced terminations of the Electronic Monitoring contract (UK) and the Dutch Prisons contract.
Underlying PBITA (Profit before interest, tax and amortisation) of £424 million was 7.9% higher than 2013, which reflects revenue growth and improved operational gearing, as we begin to capture benefits from the implementation of our restructuring and productivity programmes.
With our increased focus on cash management, cash flow from operating businesses was £526 million, a 25% improvement on the same period last year. Total cash generated by continuing operations, including one off corporate items, was £553 million (2013: £496 million).
The board is recommending an increase in the final dividend of 5% to 5.82p per share (DKK 0.6041), bringing the total dividend for the full year to 9.24p per share, a 3.1% increase.
The group made good progress with the new strategic plan which we put in place in 2013:
**Organic growth:** We won new work with an annual contract value of over £1.14 billion and total contract value of £2.1 billion whilst, at the same time, replenishing our pipeline which now stands at an annual value of £5.5 billion. The group’s retention rate for existing contracts remains at around 90% of annual revenues.
We continue to identify opportunities to sell additional services and products, including systems and technology, in our key markets and, in line with our previously announced plans, we have invested an annualised £20 million to strengthen sales and business development capability. We are progressively embedding a consistent approach to sales operations, sales performance measurement, strategic account management and customer service management.
**Productivity:** We are improving our productivity through the successful execution of restructuring and Accelerated Best Practice programmes and this progress is reflected in the group’s commercial, operational and financial performance for 2014. These programmes are gathering momentum following the appointment of key management and subject matter experts to focus on direct labour efficiency, organisational efficiency, route planning and telematics, IT standardisation, procurement and shared services. Our major restructuring programmes to strengthen the competitiveness and profitability of a number of key businesses, principally in the UK, Ireland and Europe, are being implemented in line with the detailed plans which were developed in 2013.
**Portfolio and performance management:** Portfolio management remains important for strategic focus, capital discipline and performance management. The group now operates in over 110 countries. We have divested eight businesses at attractive exit multiples over the past 18 months for £248 million, including our US Government solutions business and a further 20 are being sold or ceased.
**People and values:** We made very good progress with our plans to strengthen our global management team, establishing and filling numerous new positions and appointing new managers to key existing positions. In our global leadership cadre of 220 we have appointed 114 senior managers to new roles in the past 18 months. We also made good progress with the implementation of our corporate renewal programme which aims to reinforce our group values in everything we do.
**Financial and Risk Management:** During 2014 we continued to invest in strengthening our financial management, risk and audit and contract management capability. In relation to contract management we have established processes to ensure that we properly assess the risk-reward balance of new contracts and to ensure that we have the capability and capacity to effectively mobilise and deliver service excellence on new contracts.
**Outlook:** Our strategic plan addresses a positive, long term demand outlook for our core services and seeks to deliver sustainable, profitable growth. We are making good progress with the implementation of our strategic plan and this was clearly reflected in the group’s commercial, operational and financial performance in 2014. There remains much to be done to realise the full potential of our strategy and we expect to make further progress in 2015.
As of 07:32 GMT, Tuesday, 10 March, G4S plc share price is 291.00p.
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