Security firm G4S reported another successful year, with rising profits and growth in turnover for the sixth year running.
Security firm G4S (GFS) reported another successful year, with rising profits and growth in turnover for the sixth year running.
Profit before interest, tax and amortisation rose to £527 million in 2010 from £506 million in 2009, in line with turnover, which grew 4.1% to £7.4 billion.
Like-for-like growth in turnover eased to 2.1% from 3.7% in 2009, as the cash solutions side of the business went ex-growth. The secure solutions side of the business saw organic turnover growth of 2.8%, while cash solutions saw like-for-like revenue dip 1.1%.
Margins in the Secure Solutions business improved to 6.9% from 6.8% in 2009 but the Cash Solutions division saw margins fall to 11.0% from 11.3%.
Chief executive Nick Buckles, commented: "The excellent performance in 2010 has been achieved despite continued uncertainties with the global economic downturn, which is testament to the efforts of our global workforce of 625,000 employees."
"We have delivered further strong organic growth of 6.6% in new markets, which now account for 29% of revenue and 33% of profits, and we are encouraged by signs of economic recovery in our larger developed markets of the US and the UK. In addition, our differentiated 'integrated solutions' strategy is helping us to build market share with global customers."
The final dividend has been increased by 14% to 4.73p, making the total dividend for the year 7.90p, up 10% on 2009's pay-out.
Initially, investors seemed unimpressed, with shares down by more than 2.6% in initial trading on Tuesday.
Analyst view
Mike Allen and Paul Jones at Panmure Gordon said: "Final results are in line with our forecasts at the adjusted PBT level, albeit with fourth quarter implied organic growth lower than we hoped for, offset by better margin control than we forecast."
"The outlook for end-2011 is confident, with organic growth expected to accelerate from here. Ahead of the analyst meeting we would not expect end-2011 consensus forecasts to change significantly, and maintain our own forecasts and target price of 315p.
"Overall results do not look spectacular but the valuation remains undemanding, and the company looks better positioned for growth this year."
Jonathan Jackson, head of equities at Killik & Co said the results were broadly in line with expectations. “The dividend has been increased by 10% to 7.90p to generate a historical yield of 3.1%. Going forward, the group expects to continue to increase dividends broadly in line with normalised adjusted earnings. The shares are attractively valued on 9.8x consensus 2012 earnings per share, slightly below Securitas, its lower-quality peer, on 10.4x.”
Tony Shepard at Charles Stanley maintains an accumulate recommendation on the stock. He said: “Given the international nature of its business i.e. New markets account for about 33% of Group profit, G4S remains well placed to grow. The group has no exposure to Japan, Libya or Tunisia though it does have a presence in Egypt."
"Overall, we were pleased with the 14% rise in the final dividend which is a sign of confidence about 2011 and the medium term outlook. Dividend cover remains healthy at 2.7x and dividends should grow broadly in line with underlying earnings growth. The share rating is not expensive being on a prospective 2011 price earnings of 11.5x.
Source: www.iii.co.uk
Security firm G4S (GFS) reported another successful year, with rising profits and growth in turnover for the sixth year running.
Profit before interest, tax and amortisation rose to £527 million in 2010 from £506 million in 2009, in line with turnover, which grew 4.1% to £7.4 billion.
Like-for-like growth in turnover eased to 2.1% from 3.7% in 2009, as the cash solutions side of the business went ex-growth. The secure solutions side of the business saw organic turnover growth of 2.8%, while cash solutions saw like-for-like revenue dip 1.1%.
Margins in the Secure Solutions business improved to 6.9% from 6.8% in 2009 but the Cash Solutions division saw margins fall to 11.0% from 11.3%.
Chief executive Nick Buckles, commented: "The excellent performance in 2010 has been achieved despite continued uncertainties with the global economic downturn, which is testament to the efforts of our global workforce of 625,000 employees."
"We have delivered further strong organic growth of 6.6% in new markets, which now account for 29% of revenue and 33% of profits, and we are encouraged by signs of economic recovery in our larger developed markets of the US and the UK. In addition, our differentiated 'integrated solutions' strategy is helping us to build market share with global customers."
The final dividend has been increased by 14% to 4.73p, making the total dividend for the year 7.90p, up 10% on 2009's pay-out.
Initially, investors seemed unimpressed, with shares down by more than 2.6% in initial trading on Tuesday.
Analyst view
Mike Allen and Paul Jones at Panmure Gordon said: "Final results are in line with our forecasts at the adjusted PBT level, albeit with fourth quarter implied organic growth lower than we hoped for, offset by better margin control than we forecast."
"The outlook for end-2011 is confident, with organic growth expected to accelerate from here. Ahead of the analyst meeting we would not expect end-2011 consensus forecasts to change significantly, and maintain our own forecasts and target price of 315p.
"Overall results do not look spectacular but the valuation remains undemanding, and the company looks better positioned for growth this year."
Jonathan Jackson, head of equities at Killik & Co said the results were broadly in line with expectations. “The dividend has been increased by 10% to 7.90p to generate a historical yield of 3.1%. Going forward, the group expects to continue to increase dividends broadly in line with normalised adjusted earnings. The shares are attractively valued on 9.8x consensus 2012 earnings per share, slightly below Securitas, its lower-quality peer, on 10.4x.”
Tony Shepard at Charles Stanley maintains an accumulate recommendation on the stock. He said: “Given the international nature of its business i.e. New markets account for about 33% of Group profit, G4S remains well placed to grow. The group has no exposure to Japan, Libya or Tunisia though it does have a presence in Egypt."
"Overall, we were pleased with the 14% rise in the final dividend which is a sign of confidence about 2011 and the medium term outlook. Dividend cover remains healthy at 2.7x and dividends should grow broadly in line with underlying earnings growth. The share rating is not expensive being on a prospective 2011 price earnings of 11.5x.
Source: www.iii.co.uk
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