* H1 profit rises to 185 mln stg vs 177 mln forecast
* Firm to sell/close another 15 small businesses
* Emerging markets revenue up 12 pct
(Writes through, adds shares, CEO, analyst comments)
By Neil Maidment
LONDON, Aug 13 G4S, the world's biggest
security company, posted a better-than-expected 6.3 percent rise
in first-half profit as new Chief Executive Ashley Almanza's
overhaul began to pay off following a string of high profile
The reputation of the British firm, whose operations range
from transporting cash to running prisons and protecting ships
from pirates, has been battered in recent years due to a failed
merger and a number of contract scandals at home and abroad.
"The transformation of G4S is clearly underway," Almanza,
who replaced the long-serving Nick Buckles in June last year,
told reporters on Wednesday.
"There's much more hard work to be done to capture the full
potential of our strategy and to strengthen the group's
performance, but the good news is there is a lot to go for."
In 2012 G4S failed to provide enough guards for the London
Olympics, and its relationship with the British government
worsened last year when it was banned for around nine months
from new work after being found to have charged for tagging
criminals who were dead, in prison or never tagged.
Overseas the firm has faced issues over the management of a
prison in South Africa and operations in Israel, and it has been
involved in an Australian probe into deadly clashes at a
detention centre in Papua New Guinea where it provided security.
In the past year, Almanza has overhauled G4S management to
improve its focus on contract risks and has restructured its
British business to better serve government, whose work
generates almost 10 percent of its turnover. Its ban was lifted
in April and the firm has won government contracts since.
More widely, Almanza's moves to strengthen the company's
finances, clean up its sprawling portfolio, reduce costs such as
IT and invest in strong emerging markets growth helped the firm
post an underlying operating profit of 185 million pounds ($311
million) for the six months to June 30, ahead of a consensus
forecast of 177 million.
Its group margin rose 10 basis points to 5.5 percent. The
firm said it had won 1.2 billion pounds of contracts in the half
and had 4.9 billion pounds of new work to bid for as of June 30.
"These results show the first signs that Almanza's recovery
initiatives are having a positive impact on earnings, cash and
return on invested capital," said Jefferies analyst Kean Marden,
who has a 'buy' rating on the stock.
G4S shares were up 2.1 percent to 265.3 pence by 1011 GMT,
valuing it at around 4 billion pounds.
BRITAIN, EMERGING MARKETS
G4S results came a day after British rival Serco,
which was also caught in the tagging scandal, reported a 59
percent drop in first-half adjusted operating profit due to the
fallout from the fiasco and poor performance on a range of other
Like G4S, Serco has brought in new management to overhaul
the group and restore its reputation in Britain, but the effort
is more recent and a recovery is some way off, analysts say.
Serco makes about half of its sales in Britain.
Both firms are under investigation by the Serious Fraud
Office for the tagging scandal, but Almanza said G4S had made
much progress in rebuilding relations with government, although
more was to be done.
On Wednesday, G4S continued a portfolio review announced in
November, saying it had sold six businesses in the past year for
a total of 160 million pounds and would sell or close a further
15 small units, which represent less than 1 percent of group
turnover and "barely break even".
It declined to identify those units, other than to say it
would sell a manned security business in Uzbekistan.
G4S said it was also in detailed talks with a potential
buyer for its up-for-sale U.S. government solutions business,
which provides services such as security, fire protection and
Revenue grew 4.1 percent to 3.4 billion pounds in the six
months, led by a 12 percent rise in emerging markets, versus a
flat performance in developed markets, where growth in North
America offset a decline in Europe.
Almanza is focused on expanding its services in emerging
markets, which make up almost 40 percent of group revenue and
where growth is stronger.
The group said it had hired 263 business development and
sales staff in the past year as part of a 15 million pound
annual investment to win more work in a "very long list" of
emerging markets such as Kenya, South Africa and the United Arab
(Editing by Erica Billingham and Jane Baird)