12th Sep 2005 06:15
GROUP 4 SECURICOR plc Interim Results Announcement January - June 2005Group 4 Securicor, the international security solutions group,today announces results for the six months to 30 June 2005.RESULTS HIGHLIGHTS- Merger integration completed- Expected annual synergy benefits increased to ‚£35 million(associated one-off costs increased to ‚£55 million)- Very strong organic turnover growth of 6.9%- Group turnover up 9% to ‚£1.97 billion- PBITA up 20% to ‚£112 million- Margin improvement of 0.5% to 5.7%- Cashflow generation of ‚£70 million, 63% of PBITA- Interim dividend of 1.30 p (DKK 0.143)- Strong platform for future developmentNick Buckles, Group Chief Executive, commenting on the results,said:"The integration of the merging businesses has been completedsignificantly ahead of schedule and ahead of our targeted ‚£30 million annualsynergies, thanks to the substantial planning exercise that took place priorto the merger and the hard work and determination of our managers and staff todeliver on their commitments.At the same time, we have achieved strong organic growth and amargin improvement of 0.5% during a period of significant change.Whilst there are still some challenging conditions in some markets,the businesses are performing well and this provides the group with a solidbase on which we can continue with our vision of being recognised as theglobal leader in providing security solutions."Note: All comparatives are based on 2004 pro forma resultsFor further enquiries, please contact:Nick Buckles +44 (0) 1293 554400Trevor DightonDebbie McGrathMedia Enquiries:Patrick Toyne-Sewell +44 (0) 7973 672649Notes to Editors:Group 4 Securicor is an international security solutions group, operating inover 100 countries throughout the world and employing over 360,000 people.Group 4 Securicor is a market leader in the provision of manned security,security systems and cash services in many of the countries in which itoperates. For more information on Group 4 Securicor, visitwww.group4securicor.com.Presentation of Results:A presentation to investors and analysts is taking place today at 0900 at theLondon Stock Exchange, 10 Paternoster Square, London, EC4M 7LS. A telephonedial-in facility is also available on 020 7162 0125 if dialing from within theUK and +44 20 7162 0125 if dialing from outside the UK.FINANCIAL SUMMARYResultsThe results which follow have been prepared under InternationalFinancial Reporting Standards (IFRS). A statement detailing the implicationsof the changes resulting from IFRS was made on 5 September 2005. The resultsalso contain comparatives that reflect the pro forma statements (converted toIFRS) issued in September 2004.Group TurnoverTurnover of Continuing Businesses Six Months Ended Six Months Ended 30 June 2005 30 June 2004 ‚£m ‚£m Turnover at constant exchange rates* 1,971.3 1,812.8Exchange difference (5.9)Total continuing business turnover 1,971.3 1,806.9* converted at the average exchange rate for 2005Turnover increased by 9% in the period. Changes in currency conversion rateshad only a minor impact in this period. Overall organic growth was 6.9%.Organic turnover growth Europe North America New Markets TotalManned Security 3.1% 8.4% 19.7% 7.3%Security Systems 1.8% 66.7% 63.8% 5.9%Cash Services 5.7% (4.9%) 20.6% 5.9%Total 3.7% 7.6% 21.8% 6.9%Group ProfitPBITA of Continuing Businesses Six Months Six Months Ended Ended 30 June 2005 30 June 2004 ‚£m ‚£m PBITA at constant exchange rates* 112.2 92.6Exchange difference 0.9Total continuing business PBITA 112.2 93.5* converted at the average exchange rate for 2005There was a 20% increase in PBITA (at constant exchange rates) over theperiod. The PBITA margin increased by 0.5% to 5.7%.Cashflow and financingCashflow Six Months Six Months Ended Ended 30 June 2005 30 June 2004 ‚£m ‚£m Operating Cashflow 70.0 97.8Operating Cashflow / PBITA 63% 105%Operating cashflow was lower as a percentage of profits than lastyear mostly due to a very strong performance in 2004 and the expansion intosome larger contracts. Operating cashflow generation is expected to improve inthe second half.DIVISIONAL ANALYSISManned Security Turnover PBITA Margins ‚£m ‚£m At constant exchangerates* H105 H104 H105 H104 H105 H104Europe 671.2 654.0 35.2 31.8 5.2% 4.9%North America 471.2 435.7 25.3 23.5 5.4% 5.4%New Markets 228.5 184.4 17.7 14.6 7.7% 7.9%Exchange differences 0.9 1.2At actual exchange rates 1,370.9 1,275.0 78.2 71.1 5.7% 5.6%*Converted at the average exchange rate for the six months to 30 June 2005Manned Security achieved an overall organic growth at constantexchange rates of 7.3% in the first half.Margins improved slightly to 5.7% (at constant exchange rates) inline with our expectations.Within Europe, the results were good overall. UK organic growth wasslightly negative, reflecting the ongoing focus on the largest integrationexercise within the group together with lower new sales volumes which wereexpected during the integration period. Strong focus on customers hasmaintained the retention rate at around 90% for the last six months but newbusiness has been below expectations, with customers delaying buying decisionspending the market impact of the new licensing legislation.We are encouraged that the Security Industry Authority (SIA) hasstated that it intends to meet the 20 March 2006 licensing deadline which haspreviously been announced. We did have concerns that the licensing backlog mayforce the SIA to delay the deadline. We are confident of achieving the SIAtarget of 45% of the workforce to be licensed by the end of September, whichwill give us approved contractor status.In the Netherlands, organic growth has been good for the half year,mainly driven by strong demand in the aviation sector. The divestment of theFalck security business to Facilicom, announced in June, is awaiting therelevant regulatory approvals and should be completed in the near future.In Germany, the business continues to improve with modest growthand positive margins during the half year.In France, growth has slowed to a modest level as we have lost anumber of contracts through aggressive price competition in the market. Themarket in France is experiencing significant change with a number of securitycompanies exiting the market.In terms of other material businesses within Europe mannedsecurity, Sweden, Norway and Poland have all returned to profitability afterreporting losses in the same period last year.In Justice Services, growth was lower overall in the first halfcompared to last year, but the business exited the first half with growth atover 10%.Overall, organic growth was over 3% in Europe despite the lack ofgrowth in the UK, and margins were up slightly - an encouraging result.In the USA, Wackenhut had good organic growth in the first half atover 10%, with excellent customer retention and new business wins. Marginswere at the same level as H1 2004 as expected with good performances in allthree sectors - government, commercial and nuclear. However the market remainstight and there continues to be margin pressure in the US.As we announced during our trading update in June, Wackenhut wasthe first, and is currently the only, US security company to receive SAFETYAct certification from the US Department of Homeland Security. Thiscertification recognises the high standards of operation within Wackenhut andprovides the company and its customers with additional liability protectionshould a terrorist incident occur.It was announced on 31 August that the security contracts ofCognisa have been sold, for a consideration of up to $40million.Canada had reported negative organic growth since the loss of theToronto airport contract from April 2004, but returned to positive organicgrowth by the end of the first half of 2005.In New Markets we continued the very strong prior performance,achieving 20% organic growth for the half year and a margin of 7.7%.India and the Middle East (two large businesses in the New Marketsregion) performed exceptionally well with very strong organic growth. We nowhave more than 80,000 employees within our operating companies in India.The complex integration in South Africa was recently completed anda new Black Economic Empowerment structure was put in place for the newintegrated organisation. The market has stabilised and the outlook for SouthAfrica is good.Latin America & the Caribbean achieved double digit organic growthrates for H1 2005, well ahead of prior year growth rates. Margins are alsowell ahead of prior periods and we expect these strong results to continue.Security Systems Turnover PBITA Margins ‚£m ‚£mAt constant exchange H105 H104 H105 H104 H105 H104rates*Europe 163.3 152.6 11.7 10.4 7.2% 6.8%North America 1.5 0.9 0.0 0.1 0.0% 11.1%New Markets 21.0 9.9 2.0 0.9 9.5% 9.1%Exchange differences (0.9) (0.1)At actual exchange rates 185.8 162.5 13.7 11.3 7.4% 7.0%* converted at the average exchange rate for the six months to 30 June 2005The security systems division continues its overall trend ofperformance improvement, with organic growth of 5.9% and PBITA marginsincreasing to 7.4% from 7%.Management focus on improving internal controls and sales processeshas supported the 0.4% margin improvement.Good improvements were delivered in Denmark, Norway, Austria,Israel, Hungary and the Baltic States.Significant investment has been made in enhancing managementcapability in the security systems division in the first half and benefitsshould start to flow through within the moderate performers such as Belgium,Sweden, France and Greece.The security systems businesses in New Markets continue with verystrong growth, doubling turnover and earnings.Cash Services Turnover PBITA Margins ‚£m ‚£mAt constant exchange H105 H104 H105 H104 H105 H104rates*Europe 333.3 311.3 23.9 19.7 7.2% 6.3%North America 34.3 32.9 2.5 1.6 7.3% 4.9%New Markets 47.0 31.1 5.8 3.5 12.3% 11.3%Exchange differences (5.9) (0.5)At actual exchange rates 414.6 369.4 32.2 24.3 7.8% 6.6%* converted at the average exchange rate for the six months to 30 June 2005There was good progress overall in the cash services division, withoverall organic growth at around 6% and margins increasing by 1.2% to 7.8%.Combined margin improvement and organic growth has driven PBITA up 33% to‚£32.2m.In the UK, there was a strong overall performance with excellentcustomer service levels and good productivity improvements. We completed thestart-up of the Abbey cash centre contract and integrated our London cashprocessing into the newly acquired cash centre in Harlow which we took on withthe Abbey contract.We successfully secured the ex-Safeway sites through our strategicalliance with Morrisons. The price increase strategy to mitigate increasedwage costs has gone well, and is substantially complete. We are in the finalstages of the wage negotiations and hope to conclude this in the very nearfuture.In Germany, the business will break even for the year, despitereduced turnover in a continuing difficult market. Integration is complete,but further cost reduction initiatives are underway.In Benelux, the Netherlands business has secured and successfullystarted an ATM contract for ABN Amro, which has led to strong turnover growthin the first half. In Belgium, the business has had modest turnover growth andreturned to profit in the first half.Introduction of intelligent security technology has been mandatedby the Belgian Government and with the majority of our fleet already usingthis technology we are well placed in the market place.In Sweden, our business has achieved significant growth in thefirst half, and has moved into profit despite increased attack losses.The acquisition of a ‚£12m turnover ATM business in Ontario has beencompleted, and plans are being implemented for integration into our Canadiancash services business. The acquisition of a ‚£10m turnover specialistjewellery transportation company in the US has also been completed. It isbeing merged into the international valuables transportation business.In New Markets, we have had strong growth overall and good marginimprovements throughout the region. Our businesses in Colombia, Taiwan andAfrica are performing particularly well.OTHER FINANCIAL ISSUESSynergies and one-off itemsThe integration process is complete and the final annual synergybenefit will be around ‚£35m, all of which will be in place by 31 December2005. We provided ‚£37m for costs of these synergy benefits last year, afurther ‚£15m costs have been incurred in the first half of 2005 and we areexpecting a final ‚£3m in the second half, bringing the total cost of synergiesto ‚£55m.We also incurred a one-off reorganisation cost of ‚£4m in theturnaround of our German Cash Services business.FinancingOn 28 June we concluded refinancing the ‚£1 billion multicurrencyrevolving credit facility with a new margin of 0.225% which is a reduction of0.15%. We also extended the maturity date as the facility is for five yearswith options, exercisable by the banks, which potentially extends the periodto seven years. The group has other available facilities of ‚£265 million.With the adoption of IFRS, the finance cost and investment incomelines on the face of the profit and loss account now include pension fundingimplications. The operating net interest charge for the half year was ‚£17.3mwhich should be maintained at a similar level in the second half.DividendThe directors have declared an interim dividend of 1.30p (DKK0.143) per share payable on 16 December 2005. This represents an increaseapproximately in line with pro forma earnings.REVIEW and OUTLOOKThe integration of the merging businesses has been completedsignificantly ahead of schedule and ahead of our targeted ‚£30 million annualsynergies. At the same time, we have achieved strong organic growth and amargin improvement of 0.5% during a period of significant change.Whilst there are still some challenging conditions in some markets,the businesses are performing well and this provides a solid base on which wecan continue our progress through organic and acquisitive development.12 September 2005Group 4 Securicor plcPro forma interim financial information announcementFor the six months ended 30 June 2005Basis of preparationThe results for Group 4 Securicor plc for the six months to 30 June 2005include the six months trading of the former Group 4 Falck A/S and the tradingof the businesses of Securicor plc. However, the comparative results for thesix months to 30 June 2004 are those of the security businesses of the formerGroup 4 Falck A/S. Therefore, the directors consider that it is of assistanceto shareholders to show pro forma financial information of the combinedentities for the comparative period.Combined pro forma PBITAFor the six months ended 30 June 2005 Actual Pro forma Pro forma Six months Six months Year ended ended endedContinuing operations 30.06.05 30.06.04 31.12.04 ‚£m ‚£m ‚£m Revenue 1,971.3 1,806.9 3,767.3 Profit before interest, taxation,amortisation and one-off items(PBITA) Group PBITA 110.7 92.8 213.3 Share of profit from associates 1.5 0.7 2.4 Total PBITA 112.2 93.5 215.7Combined pro forma operating cash flowFor the six months ended 30 June 2005 Actual Pro forma Pro forma Six months Six months Year ended ended ended 30.06.05 30.06.04 31.12.04 ‚£m ‚£m ‚£m Group PBITA 110.7 92.8 213.3Depreciation and amortisation of other intangible assets 44.8 37.2 79.7Profit on sale of - (0.2) (1.1)fixed assets(Increase)/decrease in working capital and provisions (42.7) 8.0 9.1Net cash flow from capital expenditure (42.8) (40.0) (87.9)Operating cash flow 70.0 97.8 213.1 Combined pro forma business sector and geographical analysisFor the six months ended 30 June 2005 Actual Pro forma Pro forma Six months Six months Year ended ended ended 30.06.05 30.06.04 31.12.04 ‚£m ‚£m ‚£mRevenue Manned SecurityEurope 671.2 643.1 1,315.9North America 471.2 447.1 943.7New Markets 228.5 184.8 383.8Total Manned Security 1,370.9 1,275.0 2,643.4Security SystemsEurope 163.3 151.5 317.9North America 1.5 0.8 1.8New Markets 21.0 10.2 29.5Total Security Systems 185.8 162.5 349.2Cash ServicesEurope 333.3 306.7 635.1North America 34.3 31.3 64.3New Markets 47.0 31.4 75.3Total Cash Services 414.6 369.4 774.7Total revenueEurope 1,167.8 1,101.3 2,268.9North America 507.0 479.2 1,009.8New Markets 296.5 226.4 488.6Revenue 1,971.3 1,806.9 3,767.3 PBITA Manned SecurityEurope 35.2 32.2 74.0North America 25.3 24.2 54.7New Markets 17.7 14.7 26.0Total Manned Security 78.2 71.1 154.7Security SystemsEurope 11.7 10.2 25.5North America - 0.1 0.2New Markets 2.0 1.0 2.9Total Security Systems 13.7 11.3 28.6Cash ServicesEurope 23.9 19.2 44.7North America 2.5 1.5 3.9New Markets 5.8 3.6 11.0Total Cash Services 32.2 24.3 59.6Total PBITAEurope 70.8 61.6 144.2North America 27.8 25.8 58.8New Markets 25.5 19.3 39.9 124.1 106.7 242.9Head office costs (11.9) (13.2) (27.2)Total PBITA 112.2 93.5 215.7 Group 4 Securicor plcInterim results announcementFor the six months ended 30 June 2005Consolidated interim income statementFor the six months ended 30 June 2005 Six months Six months Year ended ended ended 30.06.05 30.06.04 31.12.04 Notes ‚£m ‚£m ‚£m Continuing operations Revenue 2 1,971.3 1,200.6 3,094.8 Profit from operationsBefore amortisation, one-off items and share ofprofit from associates 110.7 50.6 163.1Share of profit from associates 1.5 0.7 2.4 Profit from operations before amortisation and 2one-off items 112.2 51.3 165.5 Amortisation of acquisition-related intangibles (15.4) - (13.4)One-off items 5 (19.3) - (151.0) Profit from operations before interest and taxation 77.5 51.3 1.1 Investment income 6 37.2 8.8 39.6Finance costs 7 (56.6) (18.0) (58.9) Profit/(loss) before taxation 58.1 42.1 (18.2) Taxation:Before amortisation and one-off items (30.0) (15.4) (48.0)On amortisation of acquisition-related intangibles 4.6 - 4.0On one-off items 3.2 - 36.5 8 (22.2) (15.4) (7.5) Profit/(loss) from continuing operations 35.9 26.7 (25.7) (Loss)/profit from discontinued operations 3 (4.3) 1.5 (39.7) Profit/(loss) for the period 31.6 28.2 (65.4) Attributable to:Equity holders of the parent 27.5 24.4 (72.3)Minority interest 4.1 3.8 6.9Profit/(loss) for the period 31.6 28.2 (65.4) Earnings/(loss) per share 10Basic 2.2p 3.4p (7.5)pDiluted 2.2p 3.4p (7.5)pConsolidated interim balance sheetAs at 30 June 2005 As at As at As at 30.06.05 30.06.04 31.12.04 Notes ‚£m ‚£m ‚£mASSETSNon-current assetsGoodwill 1,116.1 520.6 1,077.9Other intangible assets 274.9 17.7 282.1Property, plant and equipment 342.4 152.6 340.2Investment in associates 6.7 2.5 10.1Trade and other receivables 137.4 42.8 148.5 1,877.5 736.2 1,858.8Current assetsInventories 35.5 29.1 34.2Trade and other receivables 763.7 484.3 704.3Trading investments 70.8 60.2 60.7Cash and cash equivalents 198.2 45.9 191.6 1,068.2 619.5 990.8 Non-current assets held for sale 9.0 - 29.9 Total assets 2,954.7 1,355.7 2,879.5 LIABILITIESCurrent liabilitiesBank overdrafts (20.2) (17.0) (13.9)Bank loans (82.4) (41.9) (92.3)Obligations under finance leases (18.9) (4.3) (20.5)Dividends declared 9 (23.5) - -Other payables and short-term provisions (695.8) (477.9) (718.8)Retirement benefit obligation (1.0) (0.7) (1.0) (841.8) (541.8) (846.5) Non-current liabilitiesBank loans (784.2) (327.3) (695.1)Obligations under finance leases (16.6) (11.6) (16.9)Other payables and long-term provisions (147.2) (93.6) (177.9)Retirement benefit obligation (250.2) (87.9) (233.2) (1,198.2) (520.4) (1,123.1) Total Liabilities (2,040.0) (1,062.2) (1,969.6) Net Assets 914.7 293.5 909.9 EquityShare capital 316.6 180.4 316.1Reserves 566.5 87.6 563.3Equity attributable to equity holders of the 883.1 268.0 879.4parent Minority interests 31.6 25.5 30.5Total Equity 914.7 293.5 909.9Consolidated interim statement of recognised income and expenseFor the six months ended 30 June 2005 Six months Six months Year ended ended ended 30.06.05 30.06.04 31.12.04 ‚£m ‚£m ‚£m Exchange differences on translation of foreign operations 0.8 (4.4) 7.7Actuarial losses on defined benefit pension schemes (12.3) - (16.5)Tax on items taken directly to equity 3.5 (0.3) 4.9Net income recognised directly in equity (8.0) (4.7) (3.9)Profit/(loss) for the period 31.6 28.2 (65.4)Total recognised income and expense 23.6 23.5 (69.3) Attributable to:Equity holders of the parent 19.5 19.7 (76.2)Minority interest 4.1 3.8 6.9 23.6 23.5 (69.3)Statement of changes to equityFor the six months ended 30 June 2005 Six months Six months Year ended ended ended 30.06.05 30.06.04 31.12.04 ‚£m ‚£m ‚£m Total recognised income and expense attributableto equity holders of the parent 19.5 19.7 (76.2)Dividends (23.5) (3.6) (3.6)Fair value of shares issued on acquisition of Securicor plc - - 710.4Proceeds of shares issued 2.6 - -Consideration received on sale of own shares - - 5.4Movement arising from acquisition of minorityshareholders of the former Group 4 Falck A/S - - (10.0)Movement arising on Employee Benefit Trust reserve 0.5 - 0.8Share-based payment charge 0.4 - 0.7Tax credit on holding company foreign exchange losses 4.7 - -Amount recognised on fair value of financialinstruments at 1 January 2005 (0.6) - -Tax credit on fair value of financial instruments at 1 January 2005 0.1 - -Net increase in shareholders' funds 3.7 16.1 627.5Opening equity shareholders' funds 879.4 251.9 251.9Closing equity shareholders' funds 883.1 268.0 879.4Consolidated interim statement of cash flowsFor the six months ended 30 June 2005 Six months Six months Year ended ended ended 30.06.05 30.06.04 31.12.04 ‚£m ‚£m ‚£mCash flows from operating activities Profit from operations 77.5 51.3 1.1Depreciation of property, plant and equipment 42.2 18.3 57.6Amortisation of other intangible assets 2.6 1.7 5.8Amortisation of acquisition-related intangible assets 15.4 - 13.4Impairment of goodwill - - 55.9Dividend received 4.9 - -Other operating cash flow movements (1.0) - 7.8 Cash generated from operations before movements inworking capital 141.6 71.3 141.6 Working capital movement (65.9) 40.6 25.1 Cash generated from operations 75.7 111.9 166.7 Income taxes paid (26.9) (9.6) (30.0) Net cash from operating activities 48.8 102.3 136.7 Cash flows from investing activitiesNet cash flow from returns on investments 6.7 0.3 4.5Net cash flow from capital expenditure (42.8) (28.0) (83.1)Net cash flow from acquisitions and disposals (21.4) (18.7) (36.0)Purchase of trading investments (6.6) (7.0) (11.6)Net movement in funding balances with demergedbusinesses of the former Group 4 Falck A/S - - (48.9)Acquisition of minority shareholders of the former (7.5) - -Group 4 Falck A/S Net cash from investing activities (71.6) (53.4) (175.1) Cash flows from financing activitiesProceeds from the issue of share capital 2.5 - 5.6Increase/(decrease) in borrowings 55.2 (47.1) 209.9Repayment of obligations under finance leases (4.8) (2.4) (5.9)Dividends paid (2.5) - (5.6)Interest paid (30.5) (8.5) (25.6) Net cash from financing activities 19.9 (58.0) 178.4 Net (decrease)/increase in cash, cash equivalents andbank overdrafts (2.9) (9.1) 140.0Cash, cash equivalents and bank overdrafts at 177.7 37.4 37.4beginning of period Effect of exchange rate fluctuations on cash held 3.2 0.6 0.3 Cash, cash equivalents and bank overdrafts at end of period 178.0 28.9 177.7Reconciliation of net cash flow to movement in netdebt (Decrease)/increase in cash, cash equivalents and (2.9) (9.1) 140.0bank overdrafts Increase in liquid resources 6.6 7.0 11.6(Increase)/decrease in debt and lease financing (50.4) 49.5 (204.0) Change in net debt resulting from cash flows (46.7) 47.4 (52.4)Borrowings acquired with subsidiaries (1.2) - (212.2)New finance leases (3.4) (1.7) (5.9)Revaluation of securities (1.0) - -Movement in net debt in the year (52.3) 45.7 (270.5)Translation adjustments (14.6) (1.9) 23.9Opening net debt (586.4) (339.8) (339.8) Closing net debt (653.3) (296.0) (586.4)Notes to the interim announcement1) Basis of preparation and accounting policiesThe financial information set out in the announcement does not constitute thecompany's financial statements. No audit has been performed on the results forthe six months ended 30 June 2005 or the six months ended 30 June 2004.EU law (IAS Regulation EC 1606/2002) requires that the next annualconsolidated financial statements of the company, for the year ending 31December 2005, be prepared in accordance with International FinancialReporting Standards (IFRS) adopted for use in the EU. The financialinformation presented in this interim statement has been prepared based on therecognition and measurement requirements of IFRS expected to be applicable asat 31 December 2005. It is important to note however that these standards aresubject to ongoing review and endorsement by the European Commission, andpossible amendment by interpretative guidance by the International AccountingStandards Board (IASB), and are therefore still subject to change. Thefinancial information presented may therefore be updated for subsequentamendment to IFRS and interpretative guidance prior to inclusion in thegroup's first full set of IFRS financial statements for the year to 31December 2005. Moreover, attention is drawn to the fact that, under IFRS, onlya complete set of financial statements comprising a balance sheet, incomestatement, statement of changes in equity and cash flow statement, togetherwith financial information and explanatory notes, can provide a fairpresentation of the company's financial position, results of operations andcash flow. The financial information presented is not in compliance with IAS34 "Interim Financial Reporting" as the group has taken advantage of theexemptions within the standard.The financial information presented in this interim statement hasbeen prepared in accordance with the same accounting policies as the statutoryaccounts for the year ended 31 December 2004 save for those changes arisingfrom IFRS expected to be applicable as at 31 December 2005. The changes aredetailed in the announcement issued on 5 September 2005.As a result of a Scheme of Arrangement of Securicor plc, which becameeffective on 19 July 2004, Group 4 Securicor plc became the ultimate holdingcompany of the Securicor plc group of companies and, on the same date, and asthe result of a recommended offer for its shares, acquired Group 4 A/S, theholding company of the former security businesses of Group 4 Falck A/S. On thebasis that the transaction was effected by using a new parent, Group 4 A/S wasidentified as the acquirer. The acquisition of Securicor plc by Group 4 A/Swas accounted for under the acquisition method of accounting. Therefore thecomparative results of Group 4 Securicor plc for the six months to 30 June2004 are those of the security businesses of the former Group 4 Falck A/S onlyand the results for the year to 31 December 2004 include the full year tradingof the security businesses of the former Group 4 Falck A/S and the trading ofthe businesses of Securicor plc for the period from 20 July 2004 to 31December 2004.2) Segmental analysis Six months Six months YearRevenue ended ended ended 30.06.05 30.06.04 31.12.04 ‚£m ‚£m ‚£mBy class of businessManned SecurityEurope 671.2 405.0 1,055.1North America 471.2 427.1 921.4New Markets 228.5 102.7 293.8Total Manned Security 1,370.9 934.8 2,270.3Security SystemsEurope 163.3 151.6 315.9North America 1.5 0.7 1.8New Markets 21.0 10.2 26.6Total Security Systems 185.8 162.5 344.3Cash ServicesEurope 333.3 96.5 402.9North America 34.3 - 29.8New Markets 47.0 6.8 47.5Total Cash Services 414.6 103.3 480.2Total revenue 1,971.3 1,200.6 3,094.8 By geographical segmentEurope 1,167.8 653.1 1,773.9North America 507.0 427.8 953.0New MarketsLatin America and Caribbean 63.4 33.3 90.0Africa 74.6 23.7 94.5Middle East & Gulf States 44.1 16.1 39.9Asia and Pacific 114.4 46.6 143.5Revenue 1,971.3 1,200.6 3,094.82) Segmental analysis (continued)Profit before interest, taxation, amortisation Six months Six months Yearand one-off items (PBITA) ended ended ended 30.06.05 30.06.04 31.12.04 ‚£m ‚£m ‚£mBy class of businessManned SecurityEurope 35.2 13.9 51.6North America 25.3 21.6 53.0New Markets 17.7 8.7 19.1Total Manned Security 78.2 44.2 123.7Security SystemsEurope 11.7 9.6 25.0North America - 0.1 0.2New Markets 2.0 1.0 3.0Total Security Systems 13.7 10.7 28.2Cash ServicesEurope 23.9 1.3 23.5North America 2.5 - 2.1New Markets 5.8 1.5 8.8Total Cash Services 32.2 2.8 34.4PBITA before head office costs 124.1 57.7 186.3Head office costs (11.9) (6.4) (20.8)Total PBITA 112.2 51.3 165.5 By geographical segmentEurope 70.8 24.8 100.1North America 27.8 21.7 55.3New MarketsLatin America and Caribbean 4.7 1.8 6.1Africa 7.6 3.8 9.5Middle East & Gulf States 3.4 1.4 3.1Asia and Pacific 9.8 4.2 12.2PBITA before head office costs 124.1 57.7 186.3Head office costs (11.9) (6.4) (20.8)Total PBITA 112.2 51.3 165.53) Discontinued operationsDiscontinued operations primarily represent the operations of Falck Nederlandand its subsidiaries and of Group 4 Cash Services UK, the disposal of whichwas required by the European Commission as a condition for their approval ofthe combination between the security businesses of the former Group 4 FalckA/S and Securicor plc which took place on 19 July 2004. Also included withindiscontinued operations is the manned security business of Cognisa in the US,the sale of which was announced on 31 August 2005 and which will therefore beclassified as discontinued in the financial statements for the year to 31December 2005.4) Acquisitions and disposalsAcquisitions during the period to 30 June 2005 included Universal, acash-in-transit business in Canada, OneService, a valuables transportationbusiness in the US, and Chubb Security Services, a multi-product securitybusiness in Taiwan. Disposals during the period included the divestments ofSecuricor Luxembourg and Group 4 Cash Services UK required by the EuropeanCommission.5) One-off items Six months Six months Year ended ended ended 30.06.05 30.06.04 31.12.04 ‚£m ‚£m ‚£m Restructuring costs including those incurred inconnection with the integration of Securicor plcinto the combined group (19.3) - (37.2)Impairment of goodwill - - (55.9)Adjustment to carrying values of assets andliabilities arising from harmonisation ofaccounting estimates - - (57.9) Total one-off items (19.3) - (151.0)6) Investment income Six months Six months Year ended ended ended 30.06.05 30.06.04 31.12.04 ‚£m ‚£m ‚£m Interest receivable 6.7 2.6 4.6Investment income from pension assets 30.5 6.2 35.0 Total investment income 37.2 8.8 39.67) Finance costs Six months Six months Year ended ended ended 30.06.05 30.06.04 31.12.04 ‚£m ‚£m ‚£m Interest payable (24.0) (11.0) (22.6)Finance costs from pension liabilities (31.6) (7.0) (36.3)Decrease in fair value of trading investments (0.9) - -Decrease in fair value of financial instruments (0.1) - - Total finance costs (56.6) (18.0) (58.9)8) Taxation Six months Six months Year ended ended ended 30.06.05 30.06.04 31.12.04 ‚£m ‚£m ‚£m UK taxation (6.1) (1.0) (10.3)Overseas taxation (23.9) (14.4) (37.7) Total taxation charge before taxation onamortisation and one-off items (30.0) (15.4) (48.0) Taxation credit on amortisation of acquisition-related intangibles 4.6 - 4.0Taxation credit on one-off-items 3.2 - 36.5 Total taxation charge (22.2) (15.4) (7.5)9) Dividends Six months Six months Year ended ended ended 30.06.05 30.06.04 31.12.04 ‚£m ‚£m ‚£m Amounts recognised as distributions to equityholders in the period Final dividend of DKK 0.049 per share for theyear ended 31 December 2003 - 3.6 3.6Final dividend of 1.85p (DKK 0.1981) per sharefor the year ended 31 December 2004 23.5 - - 23.5 3.6 3.6An interim dividend of 1.30p (DKK 0.143) per share for the six months ended 30June 2005 will be paid on 16 December 2005 to shareholders on the register on18 November 2005.10) Earnings per share Six months Six months Year ended ended ended 30.06.05 30.06.04 31.12.04 ‚£m ‚£m ‚£mBasicNet profit/(loss) attributable to equity holders of the parent 27.5 24.4 (72.3)Weighted average number of shares outstanding (m) 1,265.1 721.8 966.9Basic earnings/(loss) per share (pence) 2.2 3.4 (7.5) DilutedWeighted average number of shares outstanding (m) 1,272.1 721.8 966.9Diluted earnings/(loss) per share (pence) 2.2 3.4 (7.5) Normalised earnings before goodwill amortisation,discontinued operations and one-off itemsNet profit/(loss) attributable to equity holders of the parent 27.5 24.4 (72.3)One-off items and acquisition-related intangibleamortisation (net of tax) 26.9 - 123.9Pension finance costs and fair value adjustmentsto financial instruments (net of tax) 1.5 0.6 0.9Discontinued operations 4.3 (1.5) 39.7Adjusted attributable profit 60.2 23.5 92.2Weighted average number of shares outstanding (m) 1,265.1 721.8 966.9Normalised earnings per share (pence) 4.8 3.3 9.511) Contingent LiabilitiesThe company's wholly-owned US subsidiary, Argenbright Security, Inc('Argenbright'), was responsible for passenger checkpoint security screeningfor two of the flights involved in the terrorist atrocities of 11 September2001, being the United Airlines flight from Newark to San Francisco and theAmerican Airlines flight from Washington to Los Angeles. The hijacked planesperforming these flights crashed respectively in rural Pennsylvania and intothe Pentagon, Washington.The directors believe that, in respect of those two flights,Argenbright carried out its security screening services properly and inaccordance with its contractual and regulatory duties and that it should haveno liability for the losses that occurred subsequently. However, the events of11 September were so extraordinary that it is impossible at this stage tostate with certainty that no findings against Argenbright will be made.Argenbright, which is a stand-alone limited liability corporation,is being sued and a number of lawsuits have been served upon it. Securicor hasbeen named in some of the lawsuits.At 11 September 2001, Argenbright and Securicor had in place jointaviation liability insurance which included cover for acts of terrorism andwhich provided insurance cover of US$1bn for each of the two flights referredto above. The directors are confident that, if there were to be awards ofdamages against Argenbright, they would be below the limits of the availableinsurance.Group 4 Securicor plcSummary financial information in Danish KronerFor the six months ended 30 June 2005Basis of preparationThe summary financial information is a simple translation of Group 4Securicor's consolidated interim financial statements into Danish Kroner atthe stated rates of exchange. The financial information presented below hasbeen prepared based on the adoption of IFRS expected to be applicable as at 31December 2005 and the interpretation of these standards.Exchange rates for translation for the six months ended 30 June 2005, for thesix months ended 30 June 2004 and for the 12 months ended 31 December 2004 Income Statement Balance sheet 30.06.05 30.06.04 31.12.04 30.06.05 30.06.04 31.12.04 Sterling to Danish 10.861 11.036 10.967 11.033 11.079 10.507Kroner Combined pro forma PBITA presented in Kroner for illustrative purposes onlyFor the six months ended 30 June 2005 Actual Pro forma Pro forma Six months Six months YearContinuing operations ended ended ended 30.06.05 30.06.04 31.12.04 DKKm DKKm DKKm Revenue 21,410.3 19,940.9 41,316.0 Profit before interest, taxation,amortisation and one-off items(PBITA) Group PBITA 1,202.3 1,024.2 2,339.3 Share of profit from 16.3 7.7 26.3associates Total PBITA 1,218.6 1,031.9 2,365.6Combined pro forma operating cash flow in Kroner for illustrative purposesonlyFor the six months ended 30 June 2005 Actual Pro forma Pro forma Six months Six months Year ended ended ended 30.06.05 30.06.04 31.12.04 DKKm DKKm DKKm Group PBITA 1,202.3 1,024.1 2,339.3Depreciation 486.6 410.5 874.1Profit on sale of fixed assets - (2.2) (12.1)(Increase)/decrease in working capital andprovisions (463.7) 88.3 99.8Net cash flow from capital expenditure (464.9) (441.4) (964.0)Operating cash flow 760.3 1,079.3 2,337.1 Combined pro forma business sector and geographical analysis presented in Kroner for illustrative purposes onlyFor the six months ended 30 June 2005 Actual Pro forma Six months Six months Pro forma ended ended Year ended 30.06.05 30.06.04 31.12.04 DKKm DKKm DKKmRevenue Manned SecurityEurope 7,289.9 7,097.3 14,431.6North America 5,117.7 4,934.2 10,349.5New Markets 2,481.7 2,039.5 4,209.1Total Manned Security 14,889.3 14,071.0 28,990.2Security SystemsEurope 1,773.6 1,672.0 3,486.5North America 16.3 8.8 19.7New Markets 228.1 112.6 323.5Total Security Systems 2,018.0 1,793.4 3,829.7Cash ServicesEurope 3,620.0 3,384.7 6,965.2North America 372.5 345.4 705.2New Markets 510.5 346.5 825.7Total Cash Services 4,503.0 4,076.6 8,496.1Total revenueEurope 12,683.5 12,154.0 24,883.3North America 5,506.5 5,288.4 11,074.4New Markets 3,220.3 2,498.6 5,358.3Revenue 21,410.3 19,941.0 41,316.0 PBITA Manned SecurityEurope 382.3 355.4 811.6North America 274.8 267.1 599.8New Markets 192.2 162.2 285.2Total Manned Security 849.3 784.7 1,696.6Security SystemsEurope 127.1 112.6 279.7North America - 1.1 2.2New Markets 21.7 11.0 31.8Total Security Systems 148.8 124.7 313.7Cash ServicesEurope 259.6 211.9 490.2North America 27.2 16.6 42.8New Markets 63.0 39.7 120.6Total Cash Services 349.8 268.2 653.6Total PBITAEurope 769.0 679.9 1,581.5North America 302.0 284.8 644.8New Markets 276.9 212.9 437.6 1,347.9 1,177.6 2,663.9Head office costs (129.3) (145.7) (298.3)Total PBITA 1,218.6 1,031.9 2,365.6 Summary consolidated income statement presented in Kroner for illustrative purposes onlyFor the six months ended 30 June 2005 Six months Six months Year ended ended ended 30.06.05 30.06.04 31.12.04 DKKm DKKm DKKmContinuing operationsRevenue 21,410.3 13,249.8 33,940.7Profit from operations before amortisation and 1,218.6 566.1 1,815.0one-off itemsProfit/(loss) before taxation 631.0 464.7 (199.6)Taxation (241.1) (170.0) (82.3)Profit/(loss) from continuing operations 389.9 294.7 (281.9)(Loss)/profit from discontinued operations (46.7) 16.5 (435.3)Profit/(loss) for the period 343.2 311.2 (717.2) Earnings/(loss) per shareBasic earnings per share DKK 0.24 0.38 (0.82)Diluted earnings per share DKK 0.24 0.38 (0.82)Summary consolidated balance sheet presented in Kroner for illustrative purposes onlyAs at 30 June 2005 As at As at As at 30.06.05 30.06.04 31.12.04 DKKm DKKm DKKmASSETSNon-current assetsGoodwill and other intangible assets 15,346.9 5,963.8 14,289.5Property, plant and equipment 3,777.7 1,690.7 3,574.5Investment in associates 73.9 27.7 106.1Trade and other receivables 1,515.9 474.2 1,560.3Total non-current assets 20,714.4 8,156.4 19,530.4Current assetsInventories 391.7 322.3 359.3Trade and other receivables 8,426.0 5,365.6 7,400.1Trading investments 781.1 667.0 637.8Cash and cash equivalents 2,186.7 508.5 2,013.1Total current assets 11,785.5 6,863.4 10,410.3 Non-current assets held for sale 99.3 - 314.2 Total assets 32,599.2 15,019.8 30,254.9 LIABILITIESTotal current liabilities (9,287.6) (6,002.6) (8,894.2)Total non-current liabilities (13,219.7) (5,765.5) (11,800.4) Total Liabilities (22,507.3) (11,768.1) (20,694.6)Total Equity 10,091.9 3,251.7 9,560.3GROUP 4 SECURICOR plcIFRS financial information: presentational adjustments to pro forma financialinformation For the six months ended 30 June 2004Reconciliation of combined pro forma turnover and PBITA from UK GAAP to IFRSFor the six months ended 30 June 2004 2004 IFRS 2004UK GAAP format UK GAAP adjustment IFRS IFRS format ‚£m ‚£m ‚£m TurnoverTotal turnover 1,902.4Less share of MannedSecurity joint venture(Europe) (3.5)Group turnover 1,898.9 Continuing operations 1,798.1 8.8Discontinued operations 100.8 (100.8)Group turnover 1,898.9 (92.0) 1,806.9 Group revenue Earnings before interest, Profit fromtaxation, goodwill operations beforeamortisation and one-off interest,items (EBITA) taxation, amortisation and one-off items (PBITA)Continuing operations 90.0 2.8Discontinued operations 2.2 (2.2)Group EBITA 92.2 0.6 92.8 Group PBITAShare of joint ventures andassociatesContinuing operations 4.0 (3.3) 0.7 Share of profit from associatesTotal EBITA 96.2 (2.7) 93.5 Total PBITA Revenue PBITA ‚£m ‚£m Pro forma turnover and EBITA for the financial period underUK GAAP 1,898.9 96.2 Adjustments to conform to IFRSPresentation of discontinued operations (100.8) (2.2)Employee benefits - (0.7)Share-based payment - (0.6)Reclassification of leases - 0.8Joint ventures 8.8 - Total adjustment to PBITA (92.0) (2.7) Pro forma revenue and PBITA for the financial period underIFRS 1,806.9 93.5Reconciliation of combined pro forma business sector and geographical analysisfrom UK GAAP to IFRSFor the six months ended 30 June 2004 2004 IFRS 2004 UK GAAP adjustment IFRS ‚£m ‚£m ‚£mRevenue Manned SecurityEurope 643.1 - 643.1North America 447.1 - 447.1New Markets 182.9 1.9 184.8Total Manned Security 1,273.1 1.9 1,275.0Security SystemsEurope 151.5 - 151.5North America 0.8 - 0.8New Markets 10.2 - 10.2Total Security Systems 162.5 - 162.5Cash ServicesEurope 306.7 - 306.7North America 31.3 - 31.3New Markets 28.0 3.4 31.4Total Cash Services 366.0 3.4 369.4Total revenueEurope 1,101.3 - 1,101.3North America 479.2 - 479.2New Markets 221.1 5.3 226.4 1,801.6 5.3Less Manned Security joint venture (3.5) 3.5(Europe) 1,798.1 8.8Discontinued operations 100.8 (100.8)Group Revenue 1,898.9 (92.0) 1,806.9 PBITA Manned SecurityEurope 32.9 (0.7) 32.2North America 24.2 - 24.2New Markets 14.7 - 14.7Total Manned Security 71.8 (0.7) 71.1Security SystemsEurope 10.2 - 10.2North America 0.1 - 0.1New Markets 1.0 - 1.0Total Security Systems 11.3 - 11.3Cash ServicesEurope 19.2 - 19.2North America 1.5 - 1.5New Markets 3.6 - 3.6Total Cash Services 24.3 - 24.3Total PBITAEurope 62.3 (0.7) 61.6North America 25.8 - 25.8New Markets 19.3 - 19.3 107.4 (0.7) 106.7Head office costs (13.4) 0.2 (13.2) 94.0 (0.5)Discontinued operations 2.2 (2.2)PBITA 96.2 (2.7) 93.5ENDGROUP 4 SECURICOR PLCRelated Shares:
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