G4S suffers £55m profit hit over failed bid

The group, which abandoned the £5.2bn swoop for Denmark’s ISS in November following shareholder pressure, reported pre-tax profits fell 17 per cent to £279m in 2011, including the cost of the bid. But the group expects to grow revenues in 2012 as it has a major contract to provide security at the Olympic Games and has been boosted by ground-breaking deals as austerity-driven authorities look to outsource more work.

During the year, it started running Birmingham prison and is due to run Oakwood prison in Wolverhampton from April, while a contract to design and run a station for Lincolnshire Police will start in May. The £20m contract, which includes running cells, administering drug tests and managing the force’s vehicle fleet, is the first of its kind.

In Yorkshire, its operations include running HMP Wolds near Brough in East Yorkshire and security for the region’s Crown and Magistrates’ courts.

G4S also won a contract to manage transport and accommodation of asylum seekers for the UK Border Agency, including in Yorkshire and the Humber. The West Sussex-based group announced an eight per cent hike in its dividend as a sign of its confidence.

Chief executive Nick Buckles said he was encouraged by the outsourcing trends in the UK but warned the outlook for the developed markets cash solutions and continental Europe security businesses was “muted”.

He added: “Overall, we are confident about the outlook for 2012 when we expect to deliver organic revenue growth higher than 2011 together with the additional contribution from the Olympic and Paralympic Games contract.”

On an underlying basis, G4S reported a 2.1 per cent increase in profits to £531m, which means it has grown every year since the group was formed in 2004.

Despite the failure of the ISS bid, G4S said it would spend some £200m on acquisitions in 2012.