I am happy with the way matters are moving here.

MoJ and Cross Government Contract Review
G4S plc, the global integrated security company, notes the announcements and statements made today by the Ministry of Justice (MoJ) and the Cabinet Office.

G4S has worked closely with the MoJ and Cabinet Office on an extensive review of its major contracts since July this year. This review is now complete and, with the exception of two court facilities management (FM) contracts, it has not identified any significant issues. The information available to G4S indicates that any financial exposure on the court FM contracts is not expected to be material to the Group.

G4S also notes the decision by the MoJ to refer the court FM contracts to the Serious Fraud Office (SFO) to consider whether it should investigate matters related to these contracts. The MoJ has advised G4S that the Ministry does not have any evidence of dishonesty in relation to these contracts. Furthermore, G4S has no evidence of such conduct.

The cross Government review found no evidence of deliberate acts or omissions by G4S in relation to charging and billing arrangements on its major contracts.

G4S places the highest premium on adherence to its company values, including customer service and integrity. We take the MoJ's concerns very seriously and the company has recently strengthened the service management team on the court FM contracts and continues to work closely with the MoJ to ensure that G4S delivers a facilities management service to the courts that reflects the high standards of performance which G4S expects to provide to all customers.

G4S continues to engage constructively with Her Majesty's Government regarding the Electronic Monitoring contracts.

RBC Capital has added G4S (LON:GFS) to its list of stocks to avoid and moved its recommendation to "underperform" (from 'sector perform') viewing the shares as being more than fully valued. Even assuming its best case scenario plays out perfectly over the coming four years, the broker reckons the shares would still only be worth around £3 each. G4S has been heavily re-rated with the market affording vastly higher valuations to a new management team, analysts said in a note to investors. We struggle with these valuations and move to Underperform.
The broker has cut its price target to 235 pence a share (from 255 pence) to reflect downgrades to earnings forecasts.

Analysts at Panmure Gordon have recommended investors ‘sell’ shares of security solutions firm G4S after the company’s annual results missed forecasts. The broker maintained its 200p target price for the stock, which implies 18% downside from current levels.

“We anticipate further pressure on consensus estimates on the back of these results and maintain our cautious stance on the shares for now.”

Citigroup Neutral 232.50 232.50 270.00 250.00 Retains

Goldman Sachs Conviction Sell 232.50 232.50 193.00 175.00 Reiterates

Deutsche Bank Hold 232.50 232.50 221.00 221.00 Reiterates

StockMarketWire.com
Security group G4S said today that Q1 revenues, compared to the same three month period last year grew by 4.8%, with organic growth of 5.0%.

Underlying profit before interest, tax and amortisation (PBITA) and earnings were slightly higher than the same period of 2013.

Emerging markets organic revenue growth was 16% with double-digit growth across all emerging markets regions. Developed markets' revenue was flat compared with 2013.

The group had a positive start to the year winning new business with annual revenues of over £440 million. Major contract wins include retail and services customers in the US, retail customers in Brazil, port security consultancy in the Middle East, cash solutions contracts in the Netherlands and significant new business with the UK Government.

In April, the UK Government gave a positive assessment of the group's Corporate Renewal Plan in the UK which forms part of the group's wider corporate transformation programme

The group continues to have a strong financial position, with S&P recently confirming its investment grade credit rating at BBB- (Stable).

Ashley Almanza, CEO said
"Our trading performance is in line with our plans, reflecting strong growth in emerging markets and satisfactory performance in developed markets. We continue to implement a group-wide transformation programme which is focused on embedding our group values, restructuring key businesses and investing in organic growth, technology, innovation and cost leadership and which supports our long term objectives of delivering sustainable growth in earnings, cash flow and dividend."

StockMarketWire.com
Security group G4S says its financial performance for the nine months to 30 September was in line with its plans.

The group reports organic revenue growth, compared to the corresponding nine month period last year was up by 4.2%.

It adds: "We continued to invest in organic growth and we have won new contracts with annual revenues of over £870 million and total contract value of £1.7 billion. Contract retention for the nine months was similar to historical levels, at slightly above 90%. Notwithstanding very high pipeline conversion, we ended the period with a sales pipeline of £5.1 billion.

"The benefits from our programme of corporate transformation resulted in underlying PBITA and earnings growth ahead of revenues, with the half year improvement in profits continuing into the third quarter and expected to continue for the full year. Operating cash flow for the nine months also improved compared with last year.

"Emerging markets' organic revenue growth for the nine months was 11% compared with 2013. Developed markets' organic revenue growth for the same period was 1%, with a continued strong performance in the North American business of 6%, partially offset by a 1% decline in the UK and Europe.

"In the third quarter we signed a binding sale and purchase agreement (SPA) for the sale of our US government solutions business for $135 million, comprising cash proceeds of $80 million and retained receivables of $55 million. The retained receivables are expected to be collected within 18 months of completion. The binding SPA is subject to customary closing conditions and the sale is expected to complete by the year end."

Group chief executive Ashley Almanza, said "We are executing a clear and focused strategy which is delivering tangible benefits. Our trading performance is in line with our plans, reflecting double digit revenue growth in emerging markets, the return of strong growth in North America and, as expected, a 1% decline in revenues in the UK and Europe. Our trading performance in 2014 and the on-going implementation of our performance improvement plans are expected to provide good momentum for the group in 2015".

StockMarketWire.com
Security group G4S reports underlying profit before interest, tax and amortisation of £424m for the year to the end of December - 7.9% up on 2013.

Underlying revenues rose to £6,750m from £6,496m and uinderlying earnings increased to £210m from £188m.

Emerging markets revenues rose by 8.9% to £2,398 million; North America was up 6.9% while revenues in the UK and Europe were down 1%.

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.

Group chief executive Ashley Almanza 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."

StockMarketWire.com
Jefferies has downgraded its recommendation on security services group G4S (LON:GFS) to 'hold' from 'buy' in a note to clients, today.

The broker said: "To restore the Buy rating we would appreciate clean results and greater insight into cost efficiency initiatives. To be clear, we do not desire specific guidance from management but rather an understanding of individual initiatives as they occur."

Analysts also pegged their target back to 290 pence a share from 300 pence.

Meanwhile, Deutsche Bank upped its investment rating on the stock to 'hold' from 'sell', on Monday, despite admitting that the shares still look a little on the expensive side.

Nevertheless, the broker added: "Still, there is a lack of clear negative catalysts as the data and market environment continue to be supportive.

"Longterm, we are still cautious on the dynamics in developedmarket manned guarding and see more potential for structural growth at G4S."

Analysts at the bank boosted their price target to 280 pence per share (from 220 pence) as they roll their valuation a year forward (to 2015E).

StockMarketWire.com
G4S saw revenue from continuing operations increase by 2.8% to £3,285m in the six months to the end of June - up 4.2% excluding completion of three large contracts in Q1 2014.

Emerging markets revenues rose 5.7% to £1,183 million; up 8.7% excluding the Manus Island contract; with strong underlying growth in Asia Middle East and Latin America; North America up 5.4%; UK down 3.2%; Europe up 2%. PBITA increased by 4.9% to £193 million (2014: £184 million); emerging markets maintained at £87 million; developed markets up 3.2% to £129 million; corporate costs of £23 million, down £5 million.

Other highlights:
- Specific items included net £17 million charge from review and re-measurement of assets, liabilities and legacy contracts. Restructuring charges for the period were £16 million

- Cash from operating businesses was £195 million (2014: £185 million), up 5%.

- Underlying earnings of £95 million (2014: £86 million), up 10.5%

- Interim dividend up 5% to 3.59p per share

Chief executive Ashley Almanza said, "We continue to make good progress with our strategic plans, investing in growth and productivity programmes which underpinned strong growth in our pipeline and a 10.5% increase in underlying earnings. We won new contracts with a total value of £1.4 billion and sales, new contract mobilisation and on-going productivity programmes provided increasingly good momentum through the first half. This is expected to deliver further improvements in the group's performance in the second half."

StockMarketWire.com
G4S reports underlying earnings of GBP227m for the year to the end of December, up from GBP199m last time.

Revenues rose to GBP6,433m from a restated GBP6,187m and underlying PBTA rose to GBP427m from a restated GBP404m.

On a statutory basis earnings were GBP8m against GBP145m last tine. The group says this is is after charging onerous contract provisions of £65 million, restructuring of £44 million, losses on businesses being sold or closed of £40 million and non-cash charges of £106 million relating to the amortisation/impairment of goodwill.

Chief executive Ashley Almanza said, "During 2015 we made substantial progress with the strategic and operational transformation of G4S. Our portfolio management programme combined with our investment in sales, innovation and re-structuring is reflected in the results of our continuing operations where the group's revenues rose by 4% and underlying earnings rose by 14%. These programmes remain a priority and are expected to sustain our growth and strengthen our balance sheet. "We continue to actively manage our onerous legacy contracts in the UK which were entered into prior to 2013. We have had to increase the provisions in relation to these contracts. We have also established robust controls governing new major contracts. "Against a background of global economic uncertainty, demand for our services has remained resilient and growth accelerated in the second half of 2015, providing good support for further operating and financial progress in 2016."

GFS are surely going to have to issue an RNS statement regarding questions over their vetting procedures after yesterday's Orlando shooting. Three years since the killer was checked. The company may well be sued bigtime.

Seems FBI also investigated this guy. Amazing that one man (non board member) can move a share price so much. This surely is just a knee jerk reaction from the market on the back of a down day?

The FT in the past hour:

https://next.ft.com/content/d1ccd574-30f9-11e6-ad39-3fee5ffe5b5b

G4S’s risk management policies have been thrust into the spotlight after it emerged that the world’s biggest security company employed Omar Mateen, who shot and killed at least 50 people at a gay nightclub in Orlando.

Mateen was not on duty when he launched the assault but had worked in Florida at the private security company since 2007, most recently guarding a county courthouse in Port St Lucie.

The incident will raise questions yet again over the company’s staffing and vetting procedures following a string of scandals involving G4S employees.

G4S, which employs 620,000 staff in 110 countries, on Sunday said it was “shocked and saddened” by the assault and was fully co-operating with the authorities.

Last month the company had announced a decision to pull out of work running youth detention centres in the UK and the US after staff at a young offenders centre run by G4S were filmed apparently squeezing a teenager’s windpipe as the 14-year-old screamed “I can’t breathe”. More than five staff were arrested and the investigation is ongoing.

G4S, run by chief executive Ashley Almanza, has been struggling to rebuild its fortunes ever since it failed to supply enough security guards for the London 2012 Olympics with the army called into make up the shortfall.

In 2013, it was temporarily banned by the British government from winning new contracts and told to embark on a programme of “corporate renewal” after it was referred to the Serious Fraud Office, along with rival Serco, for overcharging the ministry of justice for the electronic monitoring of offenders, including some who were dead.

With its reputation dented in the UK, G4S had increasingly been looking to North America, where demand in the $47bn-a-year security services market is increasing. Commercial clients account for about two-thirds of its work in the US with customers including Nike, IBM, General Motors and Bank of America.

G4S also has close ties with the US military, providing services for the Pentagon and at 100 US military bases from Afghanistan to South Korea. Its contracts include work for the Department of Homeland Security returning illegal Mexican immigrants to the US border.

The Telegraph 20 minutes ago:

"Shares in security company G4S have plunged to a seven-year low after it confirmed that Omar Mateen, the man who killed 50 people in an Orlando nightclub, was one of its employees."

"An analyst, who declined to be named, said: “G4S has a big presence in the US. This doesn’t reflect well on them, and the US government may take the decision to keep away from giving them more work in the light of this.

Dividend now 5.3% but not enough to entice me.

StockMarketWire.com
G4S won new contracts with a total value of £1.4 billion and revenue from its continuing businesses increased by 5.1% in the first half.

Revenue increased to £3.1 billion and PBITAa rose to £199 million up 8.2%. Earningsa of £102 million up 13.3% Operating cash flowa of £293 million up 51.8% Net debt/EBITDA fell slightly to 3.2x (December 2015: 3.3x) as the group's net cash flow covered the impact of sterling weakness. The interim dividend is maintained at 3.59p per share.

On a statutory basis, revenue increased by 3.2% to £3.5 billion and PBITA increased by 9.7% to £203 million. Earnings of £69 million (2015: £48 million), were up 43.8% after charging £27 million (2015: £40 million) of amortisation and impairment of acquisition-related intangible assets. Operating cash flow increased by 70.6% to £273 million.

Chief executive Ashley Almanza said, "In the first half of the year the Group won new contracts with a total value of £1.4 billion and revenue from our continuing businesses increased by 5.1% which, combined with the positive effect of our productivity programmes, produced a 13.3% increase in earnings. Higher operating profits and enhanced working capital management underpinned strong operating cash flow of £293 million, an increase of 51.8%.

"Our plans are delivering tangible results with our PBITA margin increasing from 5.1% to 6.45% since June 2013. We have much to do to realise the full potential of our strategy which is underpinned by our growth, innovation, productivity and portfolio programmes. Executing these programmes and reducing net debt remain our key priorities. The Board has declared an interim dividend of 3.59 pence per share."

RBC note:
"H1 results are 1% ahead of us at the EBITA line driven by a slightly better organic growth (5.1% vs 4.1%) forecast and a slightly better margin performance, although again messy given restatements, disposals and onerous contracts. Cashflow and the net debt position were better than feared with a working capital inflow and less forex impact. As a result net debt is at the same level as the FY and although the IAS19 pension deficit has increased by £80m, commentary around the upcoming actuarial review is more positive. Net debt to EBITDA has drooped a touch to 3.2x and management remains confident of still gleaning £250-£350m from disposals over the next 18m. The dividend has been maintained. Whilst the balance sheet remains stretched, treading is fine and cashflow is better and given the negative sentiment over the stock, I would expect it to be up today. We recently upgraded to Sector Perform (on July 25), believing risk reward is more balanced given the valuation (11x 17E PE, 5% Div yield) if management could put the balance sheet issue to bed.
Sales – £3,086m vs forecast £3,071m
EBITA – £199m vs forecast £196.5m
Clean EPS – 6.6p vs forecast 6.0p (cons 14.5p)
DPS – 3,59p vs forecast 3.59p – flat
Sales: Organic revenue growth has come in at 5.1% vs 4.1% forecast and vs 3.6% at H215. Good growth was seen in most areas – Africa (7.4%), North America (3.5%), Asia (3.4%) Middle East (16.4%), Europe ( 5.06%) and Latam (9.4%) with only the UIk weak at -1.9%
Margin: Ex disposals and onerous contracts, the EBITA margin was 6.45% vs 6.4% forecast – up 18bp on last year. Cash services margin increased by 90bp although secure solutions was down 10bp
Exceptionals: Total exceptionals for the H1 were £11m
Net debt/Cash flow: Net debt was £1782m vs £1782m at the FY and vs £1984m forecast – a good performance – with less of an impact from forex than feared and a good working capital performance (+£53m). Net debt to EBITDA now stands at 3.2x (vs 3.3x at the year end) although this is higher if include the pension deficit.
Further disposals – Sold 7 businesses in H1 for £32m. No news on the bigger businesses held for resale other than ‘We have a structured process and active buyer interest in our remaining businesses held for sale.’
Pension deficit: £314m net of tax vs £234m at FY –reflecting changes to discount rates and the deficit reduction payments. The latest actuarial review is due in H2 but is expected to reflect strong asset performance and a reduction in the deficit
Outlook – Maintaining the 4-6% medium-term growth target and still expects to glean £250 to £350m from disposals over the next 18m."

StockMarketWire.com
Security group G4S has agreed the sale of G4S Israel to FIMI Opportunity Funds (FIMI) for an estimated net consideration of NIS425m (equivalent to £88m) which will be satisfied in cash at completion.

FIMI is a premier Israeli private equity fund.

G4S will retain a presence in Israel through ownership and continued investment in the flagship national police training centre Policity in partnership with FIMI and Shikun & Binui, a major Israeli infrastructure and real estate group.

The sale is subject to government and customary regulatory approvals which are expected within the next three months. The net proceeds will be used for general corporate purposes.

G4S Israel provides manned security and security systems across Israel. In the year to 31 December 2015, G4S Israel generated profit before taxation of £8m and, as at 31 December 2015, it had gross assets of £56m.

As part of the transaction, senior management in G4S Israel will remain with the business at completion.

G4S group chief executive Ashley Almanza said: "The sale of our business in Israel is part of our active portfolio management programme announced in 2013 to improve our strategic focus and capital discipline.

"G4S Israel is a well-managed business that will grow and prosper as part of the FIMI group providing a positive future for our 6,000 colleagues in Israel and long term, high quality service and support to customers operating in the Israeli market."

StockMarketWire.com
G4S has completed the sale of G4S Youth Services in the US to BHSB Holdings, Inc for US$56.5m in cash.

G4S said proceeds from the sale would be used for corporate purposes.

G4S Youth Services is a leading provider of residential-based juvenile services throughout Florida and in the states of Texas and Tennessee.

In the year to 31 December 2016, G4S Youth Services posted profit before taxation of US$5.1 million (2015 US$5.6 million) and, as at 31 December 2016, it had gross assets of US$21.5 million (2015 US$21.4 million).

G4S said that as part of the transaction, senior management in G4S Youth Services would remain with the business.

StockMarketWire.com
G4S has made a strong start to its financial year as it maintained momentum from the end of 2016.

Revenues from the group's continuing businesses were 8.9% higher than the first quarter of 2016.

The group said trends continued from 2016, with double-digit organic growth in developed markets and revenues broadly unchanged in emerging markets.

It said that new contract wins and the pipeline provided confidence in the group's expectation of average revenue growth in the range of 4-6% per annum.

As part of the established portfolio programme, the group realised $56.5m in the quarter from the sale of the Youth Services business in the United States.

The group said its business plan and current performance continued to support a net debt/EBITDA ratio of 2.5x or lower by the end of 2017.

Chief executive Ashley Almanza said: "In line with our expectations, the group had a strong start to the year, with the momentum from 2016 continuing into the first quarter of 2017."