'Significant progress' for G4S as turnaround plan bears fruit
Security and outsourcing giant G4S has hailed "significant progress" after posting a surge in annual profits following an overhaul.
Shares jumped as much as 9% higher after G4S reported a 13.9% hike in underlying pre-tax profits to £352 million for 2016 on revenues 6.3% higher.
The group said there was also further potential under its turnaround plan, which was launched three years ago after it was sent reeling by a prisoner-tagging scandal in 2013 and its failure to supply adequate security for the London Olympics in 2012.
Ashley Almanza, chief executive of G4S, said: "Whilst there remains much to do to realise the full potential of our strategy, the group has made significant progress over the past three years."
He added: "Our transformation strategy is expected to produce further performance improvements and underpins our aim of delivering sustainable, profitable growth."
G4S notched up £2.5 billion of new contracts in 2016 and said it had a pipeline of new business worth £6.8 billion a year.
Underlying pre-tax earnings lifted 9.7% for continuing operations to £454 million.
The group has offloaded 29 businesses since 2013, including four closed and 12 sold in 2016 alone, with another 27 earmarked for sale or closure.
In December, G4S reached a deal to sell its controversial Israeli operations to a local private equity fund for £88 million.
The group said revenues across the UK & Ireland grew by 1.5%, thanks largely to a new global security contract for a major bank.
But the results confirmed another hit of up to £4 million after a loss-making Home Office contract to house surging numbers of asylum seekers was extended by another two years in December.
The five-year contract had already cost the group a £31 million write-down in 2015's results.
Shares in G4S have been rising steadily in recent months as its recovery plan has been bearing fruit, while it is also seen as a likely beneficiary of the new US administration's pledge to boost military spending.
US President Donald Trump plans to boost defence spending by a record 54 billion US dollars, while G4S could also pick up new contracts to help with America's immigration policy changes.