I am happy with the way matters are moving here.

Tuesday November 6
• G4S will provide a trading update on the third quarter. It will be the company’s first opportunity to update the market on how the company is faring following the Olympics security fiasco which ultimately cost two of G4S’s senior management their jobs.

Interim Management Statement

Overview of the financial performance for the nine months to 30 September 2012
In the first nine months of 2012, overall revenues compared to the same period last year, excluding the London 2012 contract, grew by 6.3% at constant exchange rates and by 4.1% at actual exchange rates. Including the London 2012 contract, revenues grew by 9.2% at constant rates and by 6.9% at actual exchange rates. As expected, the group operating margin was lower compared to the same period in 2011.

G4S loses Wolds prison contract

Private security firm G4S has lost its contract to run Wolds prison in East Yorkshire and failed to win a number of other private jail contracts.

A report by HM Inspectorate of Prisons in August said HMP Wolds had "clear weaknesses", with poor behaviour and high levels of drug use among inmates.

G4S said it was "disappointed".

Statement re London 2012 Games Security Contract

G4S, the international secure outsourcing group, today announces that it has agreed a financial settlement with the London Organising Committee of the Olympic Games and Paralympic Games ("LOCOG") in respect of the provision of the security workforce for the London 2012 Olympic & Paralympic Games ("the Games").

The terms of the settlement mean that G4S will incur an overall loss on the contract of approximately £70 million. The group has also incurred additional costs of approximately £11 million, relating to charitable donations and external fees and a further £7 million relating to the cost of sponsorship and marketing. All of these costs will be taken in the 2012 accounts as an exceptional charge (£50 million having been provided for at the half year based on the previous contract loss estimate). The main difference between the previous estimate and the final settlement is an agreement to waive a larger proportion of the project management charge.

StockMarketWire.com
G4S, the international security solutions group, has decided to divest its US Government solutions business.

G4S Government Solutions provides security, fire protection, facilities management, training and mine clearance services to US Government organisations including the Departments of Energy, Homeland Security and Defence in addition to international organisations such as NATO and the United Nations, both within the United States and overseas.

It operates sensitive Government contracts requiring high level security clearances and is therefore managed under a proxy board structure in order to comply with US national security regulations. The company believes that an alternative parent would be able to create or add more value to the business than G4S because as a non-US parent, with restricted access to important commercial data, its ability to manage the business and share best practice is severely limited.

In 2012, G4S Government Solutions had annual revenues of around £400m.

The company will retain its highly-regarded US commercial security business which provides a broad range of security services and technology to commercial companies and Government departments at a Federal, State and local level, where high level security clearances are not required. The revenues of this business, combined with G4S' other ongoing US operations totalled around £1.2bn billion in 2012.

Houlihan Lokey has been appointed to manage the divestment process and it is expected that the transaction will be completed within the next six months, subject to all necessary approvals.

StockMarketWire.com
Security firm G4S said turnover increased by 5.5% to £7.297bn in the year to end-December, 8.1% at constant currency. Organic turnover growth was 6.9%.

PBITA was £516m up 6.0% at constant exchange rates excluding the Olympic Games contract and up 2.8% in total at actual rates. The PBITA margin was 7.1%.

Operating cash flow, excluding the Olympics contract, was £492 million in the period, representing 95% of PBITA. This exceeded the target of 85% through continual analysis of all aspects of the operating cash cycle to improve cash collections. Net cash invested in current year acquistions was £93 million. Net debt at the end of the period was £1,802 million (December 2012: £1,616 million) which was impacted by an Olympic Games related receivable of £75 million which was received in February 2013.

The board recommends a final dividend of 5.54p per share. This represents an increase of 8% on the final dividend for 2011. The interim dividend was 3.42p per share and the total dividend, if approved, will be 8.96p per share, representing an increase of 5% on the total dividend for 2011.

The group expects to continue to increase dividends broadly in line with normalised adjusted earnings.

Nick Buckles, CEO, commented: 'Our 2012 financial results reflect the significant exceptional costs associated with the Olympic contract and our overhead reduction programme together with the large impairment charge related to the discontinued US Government Solutions business.

'Despite these issues, the underlying business has performed well in 2012 with an acceleration in organic turnover growth to 7% and with margins holding at over 7%. The acceleration in organic growth was due largely to a number of new North American commercial and UK government contracts and continued strong growth in developing markets and was achieved despite continued economic challenges in Europe.

'Our developing markets business now accounts for a third of group revenues and continues to grow strongly and our recent acquisitions in Brazil, Vanguarda and Interativa, are performing well.

'The breadth of our portfolio in over 125 countries continues to present many new growth opportunities and we continue to see good opportunities for outsourcing in key sectors such as government, financial institutions, aviation, oil and gas, mining and ports. Our market leading businesses, broad customer base and £3.5bn per annum contract pipeline give us confidence in the outlook for the group.'

G4S's full-year results failed to please the market on Wednesday as headlines focused on the impact of one-offs, such as its failing at the London Olympics, but Panmure Gordon has reiterated its 'buy' rating and 320p target price for the security firm, saying that its underlying performance was strong.

"Overall while the shares have had a good run of late, we are likely to maintain a positive stance on the basis that the valuation remains undemanding particularly given the re-rating seen elsewhere in the outsourcing sector," the broker said.

StockMarketWire.com
Numis has moderated its recommendation on G4S (LON:GFS) to "add" from "buy" following the recent strong run on the share price. Shares in the company have increased in value by around 5 per cent in the past month and by nearly 20 per cent over the past three months. The City broker has increased its price target on the security firm to 340 pence per share (previously 315 pence). Separately, JP Morgan Cazenove reaffirmed its "overweight" rating with an unchanged price target of 345 pence per share. Broker Forecasts consensus data shows that three quarters of brokers have a "buy" (or equivalent) rating on the stock with only 10 per cent rating the shares as a "sell"

StockMarketWire.com
Anglo-Danish security group G4S said today that in the quarter to end-March, overall revenues compared to the same period last year, grew by 7.5% at constant exchange rates and by 7.7% at actual exchange rates.

Group operating margin was around 0.6% lower compared to the same period in 2012.

Overall organic growth was encouraging at 6%, with 12% in developing markets and 4% in developed markets

⬢In secure solutions, organic growth was 6%, helped by a continued strong performance in developing markets and UK government

⬢In cash solutions, organic growth was 3% overall. Developed markets declined 1% and developing markets grew 14%.

Overall, the group margin was down around 0.6% due principally to continued challenging economic and trading conditions in Continental Europe, ongoing pricing pressure in the UK and Ireland cash solutions businesses, the mix effect of new contracts starting up in UK Government and the impact of a £6m charge in the African region relating mainly to the write-off of receivables. The proposed closure of 30 prisons and other cost reductions by the Netherlands Ministry of Justice will have a significant negative impact on the group's Dutch business which provides staff to the prisons. For all of these reasons, and despite ongoing business improvement plans, the first quarter margin trends are expected to continue for the full year.

During the first three months of the year, the group invested £5m in capability-building acquisitions such as the Deposita cash solutions business in South Africa. The process for the sale of the US Government Solutions business is underway and the group now intends to include its regulated secure solutions business, which provides services to regulated markets such as nuclear power, in the sale of the US Government Solutions business. RSS had revenues of around £100m and profits of around £6m in 2012.

The group had committed credit facilities of £1,100m, of which £760m was unutilised at 31 March.

The business has continued to achieve good underlying organic growth despite continuing challenging macro-economic conditions in Europe.

The North American commercial businesses had an exceptionally strong performance in 2012 and so, as expected, growth in the first quarter of 2013 was slightly lower. The UK government business continued to grow strongly, helped by contracts started in 2012.

The group's developing markets businesses, which account for more than a third of group profits, continue to achieve strong results and their organic growth rates are expected to continue for 2013.

The macro-economic environment has affected developed markets margins and, despite active business improvement plans which are being implemented, group margins are expected to continue to be impacted adversely in the short term.

Exane BNP Paribas Neutral 260.00 260.00 330.00 280.00 Downgrades

Citigroup Neutral 0.00 260.00 325.00 270.00 Retains

Goldman Sachs Conviction Sell 261.90 260.00 242.00 210.00 Reiterates

Canaccord Genuity Buy 261.70 260.00 325.00 300.00 Retains

Lots of choice there! In the short term I would favour somewhere around 240p before I considered buying in.

Yes - there isn't anything endearing atm.

House broker Cazenove comment:
"Organic growth was 6% (12% in developing and 4% in developed) compared to 6.9% in 2012 and within management’s previous guidance of 6% to 7% for the FY. We forecast 6.8% for the FY.
However, the operating margin is down 0.6%, compared to the 0.1% decline in FY 2012 due a range of factors 1) tough trading in Continental Europe 2) ongoing pricing pressure in the UK & Ireland cash business 3) the cost of new contract start ups 4) £6m of bad debts in the Africa region. The statement refers to ongoing improvement plans but due to costs associated with the closure of 30 prisons in the Netherlands, management expects the 60bp reduction to continue for the FY. We had forecast the margin rising by 20bp but comparability is difficult due to the Olympics impact and the proposed sale of the US Government Solutions business.
Estimates; we currently forecast 2013 EPS of 25.3p, 5% above Bloomberg consensus of 24.2p and 2014 EPS of 27.5p, 3% above consensus of 26.6p. However, comparability is somewhat impacted by the fact that some analysts such as us probably still include the US Government Solutions business which is being sold and this would take 2% off our EPS. We think Bloomberg consensus for 2013 may come down by 7% to 8% post this statement.
Recommendation; today’s news on the margin is disappointing, especially as the organic revenue has continued to hold up well and the shares have been recovering since the Olympic news. It may be that all the bad news on the margin is now out but the shares will probably decline on this. We have an Overweight mainly as we think the shares are cheap for the long term EPS growth they have achieved. G4S trades on a 2014E PER of 11.1x compared to the Business Services sector on 14.7x"

HL lunchtime synopsis has 8.42% sells v 91.58% buys.

Bill Gates buys into security firm G4S

LONDON | Mon Jun 10, 2013 1:42pm BST
(Reuters) - Microsoft co-founder Bill Gates has increased his stake in G4S, the world's biggest security firm, which is looking to bounce back from a blunder over its staffing of the London 2012 Olympics.

The Bill & Melinda Gates Foundation Trust and Cascade Investment, an asset management firm owned by Bill Gates - one of the world's richest people - increased their combined holding in G4S to 3.2 percent last week by acquiring around 6 million more shares, G4S said on Monday.

G4S, which runs services such as cash transportation and prison management in over 125 countries, suffered a blow to its reputation when it failed to provide a promised 10,400 guards for the London Games. Following a profit warning in May, its chief executive stepped down last month.

Interesting chart and almost at the 52 week low. Big gap to fill on the way up.

edited!

Also edited!

At the 240 level again.

Harry - yes it is incorrect - if I could only remember which company I meant to post it on!