G4S 9-Month Organic Revenue Up, Sees Profit Growth Ahead; Stock Up

(RTTNews) - Shares of G4S Plc (GFS.L, GFSZY.PK) increased around 3 percent in the early morning trading in London after the private security firm reported Wednesday that its organic revenue growth for the nine months to September 30 increased 4.2 percent at constant exchange rates, and the financial performance was in line with plans.

G4S further said the benefits from its programme of corporate transformation resulted in underlying PBITA and earnings growth ahead of revenues, with the profit growth in the half year continuing into the third quarter and expected to continue for the full year.

In its interim management statement, the company noted that emerging markets' organic revenue growth for the nine months was 11 percent at constant exchange rates. Developed markets' organic revenue increased 1 percent, with a 6 percent rise in the North American business was partially offset by a 1 percent decline in the UK and Europe.

Chief Executive Officer 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 percent decline in revenues in the UK and Europe."

The company said it continued to invest in organic growth and has won new contracts with annual revenues of over 870 million pounds and total contract value of 1.7 billion pounds.

Contract retention for the nine months was similar to historical levels, at slightly above 90 percent. The company ended the period with a sales pipeline of 5.1 billion pounds.

Operating cash flow for the nine months also improved from last year.

In the third quarter, the company signed a binding sale and purchase agreement for the sale of its 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.

Commenting on current trading and outlook, Ashley Almanza said, "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".

The company will release its full-year results on March 10.

In London, G4S shares were gaining 9.10 pence or 3.44 percent, and trading at 273.60 pence.