• Revenue^a of £3.1 billion up 5.1%
• PBITA^a of £199 million up 8.2%
• Earnings^a of £102 million up 13.3%
• Operating cash flow^a of £293 million up 51.8%
• Net debt/EBITDA a fell slightly to 3.2x (December 2015: 3.3x) as the Group’s net cash flow covered the impact of sterling weakness
• Interim dividend of 3.59p per share (2015: 3.59p)

Six months ended 30 June 2016

	Continuing Businesses Constant Rates		Statutory Results b Actual Rates
	2016	2015c	2016	2015
Revenue	£3,086m	£2,936m	£3,532m	£3,421m
PBITA	£199m	£184m	£203m	£185m
Earnings	£102m	£90m	£69m	£48m
Operating Cash Flowd	£293m	£193m	£273m	£160m
EPS	6.6p	5.8p	4.5p	3.1p

 
Statutory Results:

• Revenue increased by 3.2% to £3.5 billion
• PBITA increased by 9.7% to £203 million
• Earnings of £69 million (2015: £48 million), 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

^a Results from continuing businesses exclude results from businesses identified for sale or closure and onerous contracts as set out on page 3. The basis of preparation of results of continuing businesses, along with an explanation of Alternative Profit Measures, is on page 9.

^b See page 21 for the basis of preparation of statutory results and for an explanation of prior period adjustments.

^c To aid comparability, 2015 results of continuing businesses are shown at June 2016 average exchange rates, except operating cash flow which is shown at actual rates.

^d Statutory operating cash flow represents net cash flow from operating activities of continuing operations as presented in the statutory cash flow on page 20. Statutory operating cash flow is reconciled to operating cash flow on page 33.

Ashley Almanza, Group Chief Executive Officer, commented:

“In the first half of the year the Group won new contracts with a total value of £1.4 billion and revenue from 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 debt remain our key priorities. The Board has declared an interim dividend of 3.59 pence per share.”

Over the past six months the Group has made substantial further progress with the ongoing transformation of G4S:

Growth and innovation: We won new contracts with an annual value of £0.7 billion (2015: £0.7 billion) and total contract value of £1.4 billion (2015: £1.4 billion) whilst, at the same time, replenishing our pipeline which had an annual value of £6.3 billion as at 30 June 2016. We continue to embed a more effective approach to sales operations and to improve early qualification of opportunities.

We continued to invest in product and service development and our sales in systems and technology solutions grew by 8% to £352 million (11% of group revenues). Over the next 12 months, we expect strong growth from our retail solutions businesses (cash recycling and management) and we currently have expected contract revenues of $0.8billion which is underpinned by commissioned services, firm contracts and orders in progress. In addition we have a substantial pipeline and considerable potential to grow this business rapidly.

Over the medium term we expect demand for our services to grow by around 4-6% per annum. In the current environment of heightened macro-economic uncertainty and lower global growth, our continuing businesses posted very strong revenue growth in the first half of 2016.

Productivity: The positive effects of our productivity programmes are reflected in the Group’s financial performance for the first half with the group PBITA margin increasing from 6.27% to 6.45%. The cash solutions PBITA margin increased to 12.7% from 11.8% and the secure solutions PBITA margin was slightly lower at 6.1% after 6.2% for the comparative period. We expect to extract further benefits going forward. 

The next phase of our productivity programmes focusses on lean end-to- end processes in our manned security business. Our aim is to provide efficient straight-through processing from order to cash and we are piloting the development of this system in Ireland and the UK manned security businesses. We firmly believe that this will improve the consistency of operational delivery and materially reduce the Group’s operating costs over time.

Portfolio management and financial discipline: Our portfolio programme is dramatically improving our strategic focus and since 2013 we have divested 25 businesses (with revenues of c.£900 million and PBITA of £14 million), realising proceeds of £288 million, and a further 38 businesses (with revenues of c.£610 million) are now being sold or exited. In the first six months of 2016, we sold seven businesses and realised proceeds of £32 million. We have a structured process and active buyer interest in our remaining businesses held for sale.

We continued to manage effectively onerous legacy contracts and costs were within established provisions.

Cashflow, net debt and pensions: Operating cash flow from continuing businesses increased by 51.8% to £293 million as our working capital management began to deliver substantial benefits. Net cash flow of £59 million after investment in the business, financing costs, taxation and dividends, covered the £59 million impact of sterling weakness. Net debt/EBITDA was slightly lower at 3.2x (3.3x at December 2015).