G4S misses profit forecasts, hit by tagging charges
By Neil Maidment
LONDON (Reuters) - Security firm G4S missed annual profit forecasts on Wednesday and took a raft of heavy charges related to restructuring and a troubled British tagging contract that has further hit its reputation.
The world's biggest security group posted a 2.8 percent rise in 2013 underlying operating profit on restated 2012 figures to 442 million pounds ($735 million), missing analyst forecasts of 455 million pounds, due to lower revenues in Europe and the U.S.
Taking into account 386 million pounds of charges, including a 136 million pound pre-tax charge following a review of its contracts which is mostly related to a repayment of its deal to tag UK offenders, group operating profits plummeted 85 percent to 56 million pounds.
After a disastrous 2012, in which it failed to provide enough guards for the London Olympics, G4S's attempts to restore its reputation have been undermined by more woe in 2013, the most notable being a ban on winning new British government work after it was found to have overcharged on a contract to tag offenders.
Talks between the government and G4S to agree a repayment fee have dragged on for months and the firm said on Wednesday they continued to engage with ministers. Analysts have said an agreement will be needed before the government can consider lifting its ban.
The scandal also remains the focus of an investigation by the Serious Fraud Office, adding to G4S headaches which include problems overseas. The firm has had unrest at a prison in South Africa and faces an investigation by the Australian government into deadly clashes at an immigration detention centre in Papua New Guinea where it provided security.
Shares in the firm, which runs services from cash transportation and airport security to guarding tennis players at Wimbledon, were down 2.8 percent to 238.6 pence at 0830 GMT.
G4S's Ashley Almanza, CEO since June, has moved fast to try and revive its credibility, increasing scrutiny on contract risks and strengthening management, while also fixing its balance sheet with a share sale, restructuring its UK and Ireland cash security arm and identifying 35 units to improve or sell in favour of investment in high-growth developing markets.
Annual group revenue grew 5.8 percent to 7.43 billion pounds, or 4.7 percent excluding the impact of acquisitions, with business in emerging markets particularly strong. The group's underlying operating margin fell 10 basis points to 6.0 percent, however, due to pressures in the UK and Europe.
(Editing by Kate Holton)
