GFS G4s Plc

Final Results GROUP 4 SECURICOR plc Preliminary Results Announcement 1 January 2004 - 31 December 2004 Group 4 Securicor, the international security solutions group, today announces its preliminary results for the twelve months to 31 December 2004. RESULTS HIGHLIGHTS Organic turnover growth of 6.2% Group Turnover of continuing businesses up 2% to �3.80 billion (7% at constant exchange rates) EBITA of continuing businesses up from �196.3 to �216.5m, an increase of 10% (16% at constant exchange rates) Margin up from 5.3% to 5.7% Operating cash flow 102% of operating profit Recommended final dividend of 1.85p (DKK 0.1981) Merger integration proceeding ahead of plan Overall strong performance in 2004 and good base for 2005 Lars Norby Johansen, Group Chief Executive, commented: "Following the merger last July, the new group has delivered a good trading performance. Organic turnover growth has been strong and there have been good margin improvements. Integration of the two businesses, with the consequent synergy benefits, is running ahead of plan. Our cashflow is particularly pleasing. We have established a solid base for future development and we expect continued good progress in 2005." The statutory figures for 2004 shown on pages 3 to 12 represent a combination of a full year's trading for the ex-Group 4 Falck businesses and trading from 20 July to 31 December 2004 for the ex-Securicor businesses. Because of this unusual position, we have also shown pro forma figures on pages 1 and 2 to represent trading for all businesses for the full year and to provide guidance for investors and analysts of the financial performance for the enlarged group. Reconciliation of pro forma to statutory figures Pro forma EBITA on continuing business 216.5 Less pre merger Securicor EBITA and discontinued activities (47.8) Statutory EBITA 168.7 Goodwill amortisation (49.8) Interest/tax and minority interests (73.6) Exceptional items (net of tax) (147.1) Loss for the year (101.8) For further enquiries, please contact: Lars Norby Johansen +44 (0) 1293 554400 Nick Buckles Trevor Dighton Debbie McGrath Media Enquiries: Patrick Toyne-Sewell +44 (0) 7973 672649 Sarah Gestetner Notes to Editors: Group 4 Securicor is an international security solutions group, formed by the merger of Securicor plc and the security businesses of Group 4 Falck which was completed in July 2004. The group operates in over 100 countries throughout the world and employs over 340,000 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 it operates. For more information on Group 4 Securicor, visit http://www.group4securicor.com/. Presentation of Results: A presentation to investors and analysts is taking place today at 0900 at the London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS. A telephone dial-in facility is also available on 020 7162 0181 if dialling from within the UK and +44 20 7162 0181 if dialling from outside the UK. Annual General Meeting The company's annual general meeting will be held in London on 30 June 2005. FINANCIAL SUMMARY Results Group 4 Securicor is the result of the merger of the security businesses of Group 4 Falck and Securicor on 19 July 2004. The statutory figures for 2004 shown on pages 3 to 12 represent a combination of a full year's trading for the ex Group 4 Falck businesses and trading from 20 July to 31 December 2004 for the ex-Securicor businesses. Because of this unusual position, we have also shown pro-forma figures on pages 1 and 2 to represent trading for all businesses for the full year and to provide guidance for investors and analysts. Group 4 Securicor shares were listed on the London and Copenhagen Stock Exchanges on 20 July 2004. Group Turnover 2004 2003 Turnover of Continuing Businesses �m �m Turnover at constant exchange rates* 3,807.5 3,547.2 Exchange difference 179.6 Total continuing business turnover 3,807.5 3,726.8 * converted at the average exchange rate for 2004. Organic turnover growth at constant exchange rates was 6.2% on continuing businesses. The impact of changes in exchange rates, in particular the US$ / � rate, produces a 2% increase in continuing business turnover. When adjusted for the inclusion of discontinued businesses, there was a slight reduction in group turnover. Group Profit 2004 2003 EBITA of Continuing Businesses** �m �m EBITA at constant exchange rates* 216.5 186.1 Exchange difference 10.2 Total continuing business EBITA 216.5 196.3 * converted at the average exchange rate for 2004 ** including share of associates EBITA at constant exchange rates increased by 16% and, after adjusting for exchange differences, the increase was 10%. The EBITA margin increased from 5.3% to 5.7%. Cashflow and financing 2004 2003 Cashflow �m �m Operating Cash Flow 213.1 151.2 Operating Cash Flow / EBITA 102% 79% Operating cash flow was very strong in the year, representing 102% of operating profit. This was achieved through low levels of capital expenditure and strong controls on working capital. Net borrowings at the end of the year were �595.8m. DIVISIONAL ANALYSIS Manned Security Turnover*** EBITA** Margins �m �m 2004 2003 2004 2003 2004 2003 At constant exchange rates* 2690.4 2512.6 154.5 143.4 Exchange differences 154.7 8.9 At actual exchange rates 2690.4 2667.3 154.5 152.3 5.7% 5.7% * converted at the average exchange rate for the year to 31 December 2004 ** includes share of joint ventures and associates *** excludes share of joint ventures Organic turnover growth was 5.8%. Margins were constant at 5.7%. EUROPE Turnover*** EBITA** Margins �m �m 2004 2003 2004 2003 2004 2003 At constant exchange rates* 1307.7 1261.0 75.4 70.6 Exchange differences 22.2 1.0 At actual exchange rates 1307.7 1283.2 75.4 71.6 5.8% 5.6% * converted at the average exchange rate for the year to 31 December 2004 ** includes share of associates *** excluding share of joint ventures Organic growth was 3.7% and margins increased from 5.6% to 5.8%. Performance in UK manned guarding, the business most affected by the integration, was good with organic growth of 3.7% and 0.4% margin improvement from the combined businesses. Customer retention was good and the business is well prepared for the implementation of the new UK security industry regulations. Justice Services in the UK had an excellent year, especially with the tagging contract which had very high volume increases. We were pleased to win three of the five new regions for the new UK tagging contract although the margin on this contract will be lower than the margin we have previously achieved. Even though the margins will be lower, the extended regional coverage puts us in a very strong position. In Netherlands manned guarding there is still a tight market and our inability to merge the two businesses (European Commission ruling) disrupted activity. We experienced a slight reduction in turnover although margins were maintained. We also successfully retained the Justice Services contract under re-bid. Elsewhere in Europe, Germany stabilised and improved performance, France achieved good growth and an increased margin and Belgium had a very good year. There was also good growth in Ireland, Luxembourg, Greece and the Baltic States. Sweden was a disappointment, as we had negative growth and margin deterioration, mainly due to the loss of a large contract and other operational issues. We now have a new local management team in place and we expect a stronger performance in 2005. NORTH AMERICA Turnover EBITA** Margins �m �m 2004 2003 2004 2003 2004 2003 At constant exchange rates* 1002.6 920.7 53.1 48.8 Exchange differences 107.1 5.6 At actual exchange rates 1002.6 1027.8 53.1 54.4 5.3% 5.3% * converted at the average exchange rate for the year to 31 December 2004 ** includes share of associates Organic growth was 7.2% and margins were maintained at 5.3%. In the US Wackenhut continued to grow strongly with 11% organic growth across all business lines. A number of new national accounts were won and services with existing customers were expanded. Even though the market is competitive, margins were maintained. Healthcare and State and Federal employment taxes were higher than previous years but we continue to manage this cost increase to protect margins. Cognisa continues to operate at a slight loss but did win some transportation contracts during the year. In Canada the loss of aviation security work affected the 2004 performance but there was good growth and margin performance outside the aviation area. NEW MARKETS Turnover EBITA** Margins �m �m 2004 2003 2004 2003 2004 2003 At constant exchange rates* 380.1 330.9 26.0 24.0 Exchange differences 25.4 2.3 At actual exchange rates 380.1 356.3 26.0 26.3 6.8% 7.4% * converted at the average exchange rate for the year to 31 December 2004 ** includes share of associates There was good progress in New Markets with 10% organic growth. The EBITA margin declined a little to 6.8%, due mainly to South Africa, where the loss of some higher margin contracts and an unforeseen statutory wage award in July had a significant impact. Turnover was also flat in South Africa as it was in Hong Kong, although the rest of Africa and Asia showed good growth. India continues to grow very strongly, as do most of the smaller countries, in particular Kuwait, UAE and Kazakhstan. Apart from South Africa, margins have held up well in most countries and continue to be high in these markets. Security Systems Turnover EBITA** Margins �m �m At constant exchange rates* 2004 2003 2004 2003 2004 2003 Europe 317.9 306.5 25.5 18.3 8.0% 6.0% North America 1.8 1.2 0.2 0.1 9.3% 11.7% New Markets 29.5 14.4 2.9 1.0 9.7% 7.2% Exchange differences 10.0 0.4 At actual exchange rates 349.2 332.1 28.6 19.8 8.2% 6.0% * converted at the average exchange rate for the year to 31 December 2004 ** includes share of associates The division performed well, with organic growth of 7.8% and margins increasing to 8.2% from 6.0% in the previous year. There was strong growth in the UK, Norway, Germany and the Netherlands with UK Technology returning very good results. Both the Swedish and Danish markets are currently flat, although we have seen some recent improvement in the top line. There was strong margin improvement across most businesses with some good productivity measures and focus on contract profitability. Cash Services Turnover EBITA** Margins �m �m At constant exchange rates* 2004 2003 2004 2003 2004 2003 Europe 635.1 604.3 44.7 46.4 7.0% 7.7% North America 64.3 63.3 3.9 2.1 6.1% 3.4% New Markets 68.5 44.8 11.0 6.2 16.0% 13.9% Exchange differences 15.0 0.9 At actual exchange rates 767.9 727.4 59.6 55.6 7.8% 7.6% * converted at the average exchange rate for the year to 31 December 2004 ** includes share of associates There was good progress overall, with organic growth of 6.5% and margins increasing slightly, to 7.8%. In the UK there was an overall strong performance with excellent customer service levels and good productivity improvements. We completed the integration of Cash Centres and Cash Services successfully and started the Abbey cash centre contract in October. In Germany growth remains flat and the business was loss-making in the year. Major turnaround initiatives are well underway in combination with the merging of the two businesses. In France and Sweden we achieved strong growth and Belgium had good margin improvement although turnover was flat. The Netherlands had a modest growth year, but returned good levels of profit and won a major contract to start early this year. OTHER FINANCIAL ISSUES Exceptional Items There were a number of exceptional items in the statutory accounts. These arose for several reasons: As part of the assessment of goodwill in the new group, certain of the � individual company goodwill balances relating to the ex Group 4 Falck 51.2m businesses have been impaired and the impairment is treated as an exceptional item. Harmonisation of accounting estimates across the group and a complete � review of all balance sheets have given rise to adjustment to the 57.9m carrying value of certain assets and liabilities. Examples include revisions of depreciation rates, bad debt policy alignment and stock provisions. The eventual cost of achieving the �30m of targeted annual synergies � has been estimated at �45m. By the end of 2004 a total amount of � 37.2m 37.2m had either been spent or was sufficiently identifiable to be provided against. The enforced disposal of Falck Netherlands is expected to generate a � loss of �34.5m, and this is treated as an exceptional item. The 34.5m disposal of Securicor Luxembourg and the Cash Services business in Scotland which was completed in early March, generated a profit of � 12.0m. This is accounted for as a fair value adjustment to the Securicor acquired assets and is part of the calculation of acquired goodwill. Pensions The calculation of the funding level of our UK final salary pension schemes produced the following: SSAP 24* FRS 17* 2004 2003 2004 2003 Surplus / (deficit) of assets over liabilities - �m �m �m �m Before tax Securicor scheme 4 (21) (154) (135) Group 4 scheme (2) (4) (39) (47) 2 (25) (193) (182) After tax Securicor scheme 4 (15) (108) (94) Group 4 scheme (1) (3) (27) (33) 3 (18) (135) (127) * 2003 comparatives are 30 September for Securicor and 31 December for Group 4. Although the value of the assets in the funds increased by �64 million since 2003 numbers, this was counteracted by a reduction in bond rates, which are used to discount liabilities for FRS17 purposes. The 2003 rates used were 6.2% on the Securicor fund and 5.6% for the Group 4 fund. A rate of 5.9% was used for both funds for the 2004 calculations. In view of the continuing level of deficit, the board has approved an additional payment to the scheme of �15m (�10.5m after tax) in 2005. The level of subsequent payments will be reviewed on an annual basis. These payments will not impact the profit and loss. The accounting treatment is that they accumulate on the balance sheet as a deferred debtor. Financing To finance the merged group a �1 billion multicurrency revolving credit facility was entered into on 1 June 2004. �800 million of this facility is a five-year committed revolving facility and �200 million is a 364-day committed revolving facility with the ability to convert (at the company's option) into a term loan for a further 12 months. The group has other facilities available of �265 million which results in total borrowing facilities of �1.26 billion. Dividend The Directors recommend a final dividend of 1.85 pence per share (DKK 0.1981) payable on 12 July 2005. Integration update The integration of the two groups is now well on the way, with no major issues. The key integrating businesses are: UK Security Germany - Security and Cash Services During the integration process, we have been particularly focused on business retention and this has been very successful in all businesses. The Group 4 Falck head office in Copenhagen was closed on 28 February 2005. Disposal of two of the three businesses, as required by the European Commission for competition reasons, was completed on 4 March. The third disposal, Falck Netherlands, is at final offer stage and should be completed shortly. We are on track for the annual synergy benefit target of �30m and we expect to have all the savings in place by the end of 2005, with a benefit of approximately �18m anticipated for 2005. Board changes At the time of the merger between Securicor and the security businesses of Group4 Falck, it was announced that the chairman, Jorgen Philip-Sorensen, would retire in September 2005 and that his successor would be appointed on the recommendation of the company's Nomination Committee. It was further announced that Nick Buckles, deputy chief executive and chief operating officer, would succeed Lars Norby Johansen as chief executive at the appropriate time. The board now believes that, with the businesses performing well, integration on track, and the new management team working together successfully, Mr Buckles (44) should assume the chief executive role this summer. The board has therefore agreed with Mr Norby Johansen that he will step down as chief executive and leave the board after the annual general meeting on 30 June. It has also already been announced that Lord Sharman, joint deputy chairman and senior independent director, will retire from the board later this year. An announcement as to his successor as senior independent director will be made in due course. The board believes that, given the changes noted above, it would be beneficial for the chairman to remain on the board for longer than was originally envisaged. Accordingly, it is pleased to announce that Mr Philip-Sorensen has agreed to remain as chairman for a further nine months, until the annual general meeting in June 2006. The board has agreed, following a recommendation from the Nomination Committee, that Alf Duch-Pedersen (59), currently joint deputy chairman, should succeed Mr Philip-Sorensen as chairman at the annual general meeting in June 2006. Mr Duch-Pedersen, who was a non-executive director of Group 4 Falck from 2000 until the merger, is currently chief executive of the Danish company, Danisco A /S, a position from which he will be retiring in August 2006. The board is pleased to announce that Grahame Gibson (52), divisional president for Americas & New Markets, will join the board as an executive director on 1 April 2005. Mr Gibson joined Group 4 in 1983. He was finance director (UK) from 1983 to 1987, deputy managing director (UK) from 1987 to 1989, vice president (corporate strategy) from 1989 to 1992, vice president (finance and administration) from 1992 to 1996, vice president (operations Central & South Eastern Europe and UK) from 1996 to 2000 and chief operating officer of Group 4 Falck from 2000 until the merger. In relation to his appointment, no information is required to be disclosed under paragraph 6.F.2(b) to (g) of the Listing Rules. REVIEW and OUTLOOK The new group has delivered a good trading performance. Organic turnover growth has been strong and there have been good margin improvements. Integration of the two businesses, with the consequent synergy benefits, is running ahead of plan. Our cashflow is particularly pleasing. We have established a solid base for future development and we expect continued good progress in 2005. 14 March 2005 Group 4 Securicor plc Combined unaudited pro forma financial information For the year ended 31 December 2004 Basis of preparation As explained in note 1 on page 7, the statutory results for Group 4 Securicor for the year to 31 December 2004 include the full year of trading of the security businesses of the former Group 4 Falck A/S and the trading of the businesses of Securicor plc for the period from 20 July 2004 to 31 December 2004. However, the directors consider that it is of assistance to shareholders to show pro forma financial information of the combined entities for the full year. The exchange rates used to translate the pro forma financial information are as stated on page 13. Combined pro forma EBITA 2004 2003 2004 2003 �m �m DKKm DKKm Turnover Total turnover 3,897.6 4,136.9 42,745.5 44,455.2 Less share of Manned Security joint venture (Europe) (8.2) (7.2) (89.9) (77.4) Less share of Distribution joint venture (discontinued) - (216.7) - (2,328.7) Group turnover 3,889.4 3,913.0 42,655.6 42,049.1 Continuing operations 3,807.5 3,726.8 41,757.4 40,048.2 Discontinued operations 81.9 186.2 898.2 2,000.9 Group turnover 3,889.4 3,913.0 42,655.6 42,049.1 Earnings before interest, taxation, goodwill amortisation and exceptional items (EBITA) Continuing operations 207.3 188.0 2,273.5 2,020.3 Discontinued operations 2.4 2.3 26.3 24.7 Group EBITA 209.7 190.3 2,299.8 2,045.0 Share of joint ventures and associates Continuing operations 9.2 8.3 100.9 89.2 Discontinued operations - 4.2 - 45.1 Total EBITA 218.9 202.8 2,400.7 2,179.3 Combined pro forma operating cash flow 2004 2003 2004 2003 �m �m DKKm DKKm Cash flow from operating activities Group EBITA 209.7 190.3 2,299.8 2,045.0 Depreciation 79.7 75.8 874.1 814.5 Profit on sale of fixed assets (1.1) (1.5) (12.1) (16.1) Decrease/(increase) in working capital and provisions 12.7 (12.2) 139.3 (131.1) Net cash flow from operating activities 301.0 252.4 3,301.1 2,712.3 Net cash flow from capital expenditure (87.9) (101.2) (1,060.5) (1,087.5) Operating cash flow 213.1 151.2 2,240.6 1,624.8 Combined pro forma net debt 2004 2003 2004 2003 �m �m DKKm DKKm Net debt 595.8 623.1 6,534.2 6,695.8 Combined unaudited pro forma financial information For the year ended 31 December 2004 Combined pro forma business sector and geographical analysis 2004 2003 2004 2003 �m �m DKKm DKKm Turnover Manned Security Europe 1,315.9 1,290.4 14,431.6 13,866.7 North America 1,002.6 1,027.8 10,995.7 11,044.7 New Markets 380.1 356.3 4,168.6 3,828.8 Total Manned Security 2,698.6 2,674.5 29,595.9 28,740.2 Security Systems Europe 317.9 315.2 3,486.5 3,387.1 North America 1.8 1.3 19.7 14.0 New Markets 29.5 15.6 323.5 167.7 Total Security Systems 349.2 332.1 3,829.7 3,568.8 Cash Services Europe 635.1 611.0 6,965.2 6,565.8 North America 64.3 66.1 705.2 710.3 New Markets 68.5 50.3 751.3 540.5 Total Cash Services 767.9 727.4 8,421.7 7,816.6 Total turnover Europe 2,268.9 2,216.6 24,883.3 23,819.6 North America 1,068.7 1,095.2 11,720.6 11,769.0 New Markets 478.1 422.2 5,243.4 4,537.0 3,815.7 3,734.0 41,847.3 40,125.6 Less Manned Security joint venture (Europe) (8.2) (7.2) (89.9) (77.4) Continuing operations 3,807.5 3,726.8 41,757.4 40,048.2 Discontinued operations 81.9 186.2 898.2 2,000.9 Group turnover 3,889.4 3,913.0 42,655.6 42,049.1 EBITA Manned Security Europe 75.4 71.6 826.9 769.4 North America 53.1 54.4 582.3 584.6 New Markets 26.0 26.3 285.2 282.6 Total Manned Security 154.5 152.3 1,694.4 1,636.6 Security Systems Europe 25.5 18.6 279.7 199.9 North America 0.2 0.1 2.2 1.1 New Markets 2.9 1.1 31.8 11.8 Total Security Systems 28.6 19.8 313.7 212.8 Cash Services Europe 44.7 46.5 490.2 499.7 North America 3.9 2.2 42.8 23.6 New Markets 11.0 6.9 120.6 74.2 Total Cash Services 59.6 55.6 653.6 597.5 Total EBITA Europe 145.6 136.7 1,596.8 1,469.0 North America 57.2 56.7 627.3 609.3 New Markets 39.9 34.3 437.6 368.6 242.7 227.7 2,661.7 2,446.9 Head office costs (26.2) (31.4) (287.3) (337.4) Continuing operations 216.5 196.3 2,374.4 2,109.5 Discontinued operations 2.4 2.3 26.3 24.7 Discontinued joint venture operations - 4.2 - 45.1 Total EBITA 218.9 202.8 2,400.7 2,179.3 Group 4 Securicor plc Preliminary results announcement for the year ended 31 December 2004 Consolidated profit and loss account For the year ended 31 December 2004 Exceptional Before Exceptional items exceptional items Before items exceptional (Note 4) Total items (Note 4) Total 2004 2004 2004 2003 2003 2003 Notes �m �m �m �m �m �m Turnover Total turnover 3,178.4 - 3,178.4 2,569.5 - 2,569.5 Less share of joint (4.5) - (4.5) - - - ventures Group turnover 2 3,173.9 - 3,173.9 2,569.5 - 2,569.5 Continuing operations 2,507.8 - 2,507.8 2,455.1 - 2,455.1 Acquisitions 602.5 - 602.5 - - - Discontinued 3 63.6 - 63.6 114.4 - 114.4 operations Group turnover 2 3,173.9 - 3,173.9 2,569.5 - 2,569.5 Operating profit/ (loss) Continuing operations 84.4 (109.1) (24.7) 77.6 (15.3) 62.3 Acquisitions 27.5 - 27.5 - - - Discontinued 3 1.3 - 1.3 4.5 - 4.5 operations Group operating 2 113.2 (109.1) 4.1 82.1 (15.3) 66.8 profit/(loss) Share of operating profit in joint ventures and associates Continuing operations 2.4 - 2.4 1.7 - 1.7 Acquisitions 3.3 - 3.3 - - - Total operating profit before goodwill amortisation and operating exceptional items 168.7 - 168.7 118.4 - 118.4 Goodwill amortisation (49.8) - (49.8) (34.6) - (34.6) Operating exceptional - (109.1) (109.1) - (15.3) (15.3) items 4 Total operating 118.9 (109.1) 83.8 (15.3) 68.5 profit/(loss) 9.8 Costs of a 4 - - - - fundamental restructuring (37.2) (37.2) (Loss)/profit on sale or closure of discontinued operations 4 - (37.3) (37.3) - 2.2 2.2 Profit/(loss) on ordinary activities before interest and 2 taxation 118.9 (183.6) (64.7) 83.8 (13.1) 70.7 Net interest: Group 5 (15.8) - (15.8) (20.4) (7.3) (27.7) Joint ventures and 5 (1.6) - (1.6) 0.2 - 0.2 associates (17.4) - (17.4) (20.2) (7.3) (27.5) Profit/(loss) on ordinary activities before taxation 101.5 (183.6) (82.1) 63.6 (20.4) 43.2 Taxation 6 (49.3) 36.5 (12.8) (30.6) (15.8) (46.4) Profit/(loss) on ordinary activities after taxation 52.2 (147.1) (94.9) 33.0 (36.2) (3.2) Minority interests (6.9) - (6.9) (6.5) - (6.5) Profit/(loss) for the 45.3 (147.1) (101.8) 26.5 (36.2) (9.7) year Dividends 7 (23.5) (3.3) Retained deficit (125.3) (13.0) (Loss)/earnings per 8 share Basic loss per share (10.5)p (1.3)p Diluted loss per (10.5)p (1.3)p share Normalised earnings per share 9.7p 8.0p Consolidated balance sheet At 31 December 2004 2004 2003 Notes �m �m Fixed assets Goodwill 1,117.9 531.2 Tangible assets 341.7 159.8 Net investment in joint ventures: - Share of gross assets 76.6 - - Share of gross liabilities (67.4) - 9.2 - Investment in associated undertakings 18.2 2.6 1,487.0 693.6 Current assets Stocks 34.1 29.6 Debtors 755.0 523.6 Investments - liquid resources 7.1 6.5 Investments - other 89.9 46.6 Cash at bank and in hand 184.1 62.7 1,070.2 669.0 Creditors - amounts falling due within one year Borrowings (121.6) (72.2) Corporation tax (21.6) (12.0) Proposed dividends (23.5) (3.6) Other (687.6) (427.5) (854.3) (515.3) Net current assets 215.9 153.7 Total assets less current liabilities 1,702.9 847.3 Creditors - amounts falling due after more than one year Borrowings (665.4) (379.4) Other (16.0) (17.4) (681.4) (396.8) Provisions for liabilities and charges (103.5) (126.9) Net assets 918.0 323.6 Capital and Reserves Called up share capital 11 316.1 180.4 Reserves 571.4 118.4 Equity shareholders' funds 887.5 298.8 Equity minority interests 30.5 24.8 Capital employed 918.0 323.6 Statement of total recognised gains and losses For the year ended 31 December 2004 2004 2003 �m �m Loss for the year (101.8) (9.7) Translation adjustments taken to reserves net of tax 7.4 15.7 Total (losses)/gains recognised for the year (94.4) 6.0 Note of historical cost profits and losses For the year ended 31 December 2004 There is no material difference between the reported profit shown on page 3 and the profit for the year restated on an historical cost basis. Reconciliation of movement in equity shareholders' funds For the year ended 31 December 2004 2004 2003 �m �m Loss for the year (101.8) (9.7) Dividends (23.5) (3.3) Retained deficit (125.3) (13.0) Other gains and losses recognised in the year 7.4 15.7 Fair value of shares issued on acquisition of Securicor plc 710.4 - Consideration paid for purchase of own shares - (0.4) Consideration received on sale of own shares 5.4 0.6 Dividends received from demerged businesses of the former Group 4 Falck A/S - 11.5 Movement in other demerger related balances with demerged businesses of the former Group 4 Falck A/S - 12.7 Movement arising from acquisition of minority shareholders of the former - Group 4 Falck A/S (10.0) Movement arising on Employee Benefit Trust reserve 0.8 - Net increase in shareholders' funds 588.7 27.1 Equity shareholders' funds at 1 January 2004 298.8 271.7 Equity shareholders' funds at 31 December 2004 887.5 298.8 Consolidated cash flow For the year ended 31 December 2004 2004 2003 �m �m Net cash flow from operating activities (note 10a) 157.5 140.5 Net cash flow from returns on investments and servicing of finance (note 10b) (21.2) (19.3) Taxation (30.3) (44.7) Net cash flow from capital expenditure (note 10b) (92.7) (71.0) Net cash flow from acquisitions and disposals (note 10b) (39.9) 43.7 Net movement in funding balances with demerged businesses of the former Group 4 Falck A/S (48.9) 22.4 Dividends paid (3.3) (3.3) Cash flow before use of liquid resources and financing (78.8) 68.3 Net cash flow from use of liquid resources (0.6) (2.2) Financing: Share issue 0.2 - Net sale of own shares 5.4 0.2 Proceeds on closure of foreign exchange contract - 22.4 Capital element of finance lease rental payments (4.5) (4.1) Increase/(decrease) in borrowings 210.8 (60.0) Net cash flow from financing 211.9 (41.5) Increase in cash in the year 132.5 24.6 Reconciliation of net cash flow to movement in net debt (note 10d) Increase in cash 132.5 24.6 Increase in liquid resources 0.6 2.2 (Increase)/decrease in debt and lease financing (206.3) 64.1 Change in net debt resulting from cash flows (73.2) 90.9 Borrowings acquired with subsidiaries (163.2) (0.3) New finance leases (4.9) (1.2) Movement in net debt in the year (241.3) 89.4 Translation adjustments 27.9 15.2 Net debt at 1 January 2004 (382.4) (487.0) Net debt at 31 December 2004 (595.8) (382.4) Notes to the preliminary announcement 1. Basis of preparation and accounting policies The financial information set out in this announcement does not constitute the company's statutory accounts and the audit opinion on the accounts for the year ended 31 December 2004 has not yet been signed. As a result of a Scheme of Arrangement of Securicor plc, which became effective on 19 July 2004, Group 4 Securicor plc became the ultimate holding company of the Securicor plc group of companies and, on the same date, and as the result of a recommended offer for its shares, acquired Group 4 A/S, the holding company of the former security businesses of Group 4 Falck A/S. In accordance with the provisions of Financial Reporting Standard 6: Acquisitions and mergers (FRS6) and, on the basis that the transaction has been effected by using a new parent, Group 4 A/S was identified as the acquirer, and the combination with Group 4 Securicor plc has therefore been accounted for under merger accounting principles. The acquisition of Securicor plc by Group 4 A/S has been accounted for under the acquisition method of accounting. The results of Group 4 Securicor plc for the year to 31 December 2004 therefore include the full year of trading of the security businesses of the former Group 4 Falck A/S and the trading of the businesses of Securicor plc for the period from 20 July 2004 to 31 December 2004. The comparative results for the year to 31 December 2003 are those of the security businesses of the former Group 4 Falck A/S. These were reported in the Listing Particulars for Group 4 Securicor plc of 4 June 2004 in accordance with the Companies Act 1985 and UK accounting standards applicable as at that date. The comparative results were stated in the Listing Particulars in Danish Krone and have been translated in this announcement into � sterling using the rates as reported in the Listing Particulars. The report on the Listing Particulars made by the reporting accountants of the security businesses of the former Group 4 Falck A/S businesses was unqualified. The financial information set out in this announcement has been prepared in accordance with the accounting policies adopted by the enlarged group. The directors have reviewed the impact of these accounting policies on the financial statements of the group, as previously reported, and are of the opinion that none of the adjustments arising are of such significance as to give rise to the need for a prior year adjustment. The directors have also reviewed the accounting estimates of the previous years and have harmonised these in the preparation of the financial statements. Due to its size, the financial effect of these revisions is disclosed as an exceptional item, within operating profit. 2. Segment analysis Continuing Acquisitions Discontinued Total Total Turnover operations operations 2004 2004 2004 2004 2003 �m �m �m �m �m By class of business Manned Security Europe 840.4 214.7 60.9 1,116.0 864.0 North America 899.0 47.1 - 946.1 911.6 New Markets 207.2 84.9 - 292.1 252.7 Total Manned Security 1,946.6 346.7 60.9 2,354.2 2,028.3 Security Systems Europe 313.6 2.3 - 315.9 314.5 North America 1.5 0.3 - 1.8 1.3 New Markets 19.8 6.8 - 26.6 15.6 Total Security Systems 334.9 9.4 - 344.3 331.4 Cash Services Europe 203.5 199.4 2.7 405.6 200.9 North America - 29.8 - 29.8 - New Markets 22.8 21.7 - 44.5 8.9 Total Cash Services 226.3 250.9 2.7 479.9 209.8 Total turnover 2,507.8 607.0 63.6 3,178.4 2,569.5 Less Manned Security joint venture (Europe) - (4.5) - (4.5) - Total group turnover 2,507.8 602.5 63.6 3,173.9 2,569.5 By geographical segment Europe 1,357.5 416.4 63.6 1,837.5 1,379.4 North America 900.5 77.2 - 977.7 912.9 New Markets Latin America and 52.1 Caribbean 68.1 22.0 - 90.1 Africa 47.3 47.2 - 94.5 48.1 Middle East & Gulf States 35.7 4.2 - 39.9 101.8 Asia and Pacific 98.7 40.0 - 138.7 75.2 Total turnover 2,507.8 607.0 63.6 3,178.4 2,569.5 Less Manned Security joint venture (Europe) - (4.5) - (4.5) - Total group turnover 2,507.8 602.5 63.6 3,173.9 2,569.5 Group turnover 2,507.8 602.5 63.6 3,173.9 2,569.5 Cost of sales (2,015.2) (446.1) (52.6) (2,513.9) (2,058.3) Gross profit 492.6 156.4 11.0 660.0 511.2 Administration expenses (375.0) (113.3) (8.7) (497.0) (394.5) Goodwill amortisation (33.2) (15.6) (1.0) (49.8) (34.6) Operating exceptional items (109.1) - - (109.1) (15.3) Group operating (loss)/ 66.8 profit (24.7) 27.5 1.3 4.1 Notes to the preliminary announcement (continued) 2. Segment analysis (continued) Earnings before interest, taxation, Continuing Acquisitions Discontinued Total Total goodwill amortisation and exceptional operations operations items (EBITA) 2004 2004 2004 2004 2003 �m �m �m �m �m By class of business Manned Security Europe 36.5 16.4 2.6 55.5 37.1 North America 51.3 0.9 - 52.2 52.7 New Markets 12.6 6.5 - 19.1 22.3 Total Manned Security 100.4 23.8 2.6 126.8 112.1 Security Systems Europe 25.9 (0.9) - 25.0 18.6 North America 0.2 - - 0.2 0.1 New Markets 2.9 0.1 - 3.0 1.1 Total Security Systems 29.0 (0.8) - 28.2 19.8 Cash Services Europe 5.6 17.3 (0.3) 22.6 4.4 North America - 2.1 - 2.1 - New Markets 4.8 4.0 - 8.8 1.3 Total Cash Services 10.4 23.4 (0.3) 33.5 5.7 EBITA before head office costs 139.8 46.4 2.3 188.5 137.6 Head office costs (19.8) - - (19.8) (19.2) Total EBITA 120.0 46.4 2.3 168.7 118.4 By geographical segment Europe 68.0 32.8 2.3 103.1 60.1 North America 51.5 3.0 - 54.5 52.8 New Markets Latin America and Caribbean 3.1 3.0 - 6.1 3.7 Africa 6.0 3.5 - 9.5 8.0 Middle East & Gulf States 2.6 0.5 - 3.1 4.7 Asia and Pacific 8.6 3.6 - 12.2 8.3 EBITA before head office costs 139.8 46.4 2.3 188.5 137.6 Head office costs (19.8) - - (19.8) (19.2) Total EBITA 120.0 46.4 2.3 168.7 118.4 Total EBITA 120.0 46.4 2.3 168.7 118.4 Goodwill amortisation (33.2) (15.6) (1.0) (49.8) (34.6) Operating exceptional items (note 4) (109.1) - - (109.1) (15.3) Operating (loss)/profit including share of profit in joint ventures and associates (22.3) 30.8 1.3 9.8 68.5 Costs of a fundamental restructuring (note 4) - (37.2) - (37.2) - (Loss)/profit on sale or closure of discontinued operations (note 4) - - (37.3) (37.3) 2.2 Total (loss/profit on ordinary activities before interest and taxation (22.3) (6.4) (36.0) (64.7) 70.7 By class of business Manned Security 31.5 (0.1) (35.7) (4.3) 79.4 Security Systems (15.5) (2.1) - (17.6) 11.8 Cash Services (14.6) 6.5 (0.3) (8.4) (0.2) Head office costs (23.7) (10.7) - (34.4) (20.3) (22.3) (6.4) (36.0) (64.7) 70.7 By geographical segment Europe (21.5) (5.6) (36.0) (63.1) 33.8 North America 30.9 2.0 - 32.9 34.2 New Markets Latin America and Caribbean 1.6 2.9 - 4.5 3.7 Africa (19.4) 1.7 - (17.7) 6.5 Middle East & Gulf States 2.4 0.4 - 2.8 4.7 Asia and Pacific 7.4 2.9 - 10.3 8.1 Head office costs (23.7) (10.7) - (34.4) (20.3) (22.3) (6.4) (36.0) (64.7) 70.7 Notes to the preliminary announcement (continued) 3. Discontinued operations Discontinued group operations for 2004 represent operations of Falck Nederland and its subsidiaries, and of Group 4 Cash Services UK. The disposal of operations in The Netherlands and the UK are required by the European Commission, and they have therefore been managed separately from the rest of the group and deconsolidated, from 20 July 2004. The operations of Falck Nederland are in the process of being disposed of, whereas the operations of Group 4 Cash Services UK were sold on 4 March 2005. In the year to 31 December 2003, turnover from discontinued operations amounted to �109.3m in Manned Security and �5.1m in Cash Services. Operating profits/(losses) from discontinued operations before exceptional items and goodwill amortisation in 2003 amounted to �5.2m in Manned Security and �(0.7m) in Cash Services. All discontinued operations arise in Europe. 4. Exceptional items 2004 2003 �m �m Charged to group operating profit/(loss) Impairment of goodwill in respect of businesses in Finland, Germany, Poland, South Africa, and Austria (51.2) - Adjustment to carrying value of assets and liabilities arising from harmonisation of accounting estimates (note 1) (57.9) - Restructuring costs incurred upon acquisitions - (0.7) Restructuring costs incurred in the establishment of a product-based (11.5) management structure - Loss in connection with the Euro conversion - (3.1) (109.1) (15.3) Costs of a fundamental restructuring Restructuring costs incurred in connection with the integration of Securicor plc into the combined group (37.2) - (Loss)/profit on sale or closure of operations Provision for loss on disposal of Falck Nederland (34.5) - Other (2.8) 2.2 (37.3) 2.2 Total exceptional items (183.6) (13.1) 5. Net interest 2004 2003 �m �m Interest receivable : group 4.6 5.6 Interest receivable : joint ventures and associates - 0.2 4.6 5.8 Interest payable : group Bank loans and overdrafts (18.6) (22.6) Other loans (0.3) (1.7) Interest on finance leases (1.5) (1.7) (20.4) (26.0) Interest payable : joint ventures (1.6) - Net interest payable and similar items (17.4) (20.2) Exceptional loss on interest rate swap - (7.3) (17.4) (27.5) 6. Taxation 2004 2003 �m �m UK taxation (11.1) (3.5) Overseas taxation (37.7) (27.1) Group's share of associated undertakings and joint venture taxation (0.5) - Total taxation charge before exceptional items (49.3) (30.6) Taxation credit/(charge) on exceptional items 36.5 (15.8) Total taxation charge (12.8) (46.4) Notes to the preliminary announcement (continued) 7. Dividends 2004 2003 �m �m Ordinary dividend Final (proposed) 1.85p, DKK0.1981 23.5 3.3 The final dividend will be paid on 12 July 2005 to shareholders on the register on 10 June 2005. The exchange rate used to translate the dividend into Danish Krone is that at 10 March 2005. The 2003 comparative is the final dividend declared by the former Group 4 Falck A/S for 2003 at the rate of DKK 0.40 per former Group 4 Falck A/S share equivalent to DKK 0.049 per Group 4 Securicor plc share. 8. (Loss)/earnings per share 2004 2003 �m �m Basic Loss after taxation (94.9) (3.2) Minority interests (6.9) (6.5) Loss attributable to shareholders (101.8) (9.7) Weighted average number of shares outstanding (m) 966.9 721.8 Basic loss per share (pence) (10.5) (1.3) Diluted Weighted average number of shares outstanding (m) 966.9 721.8 Diluted loss per share (pence) (10.5) (1.3) Normalised earnings before goodwill amortisation, discontinued operations and exceptional items Loss attributable to shareholders (101.8) (9.7) Exceptional items, goodwill amortisation and discontinued operations (all net of tax) 196.0 67.7 Adjusted attributable profit 94.2 58.0 Weighted average number of shares outstanding (m) 966.9 721.8 Normalised earnings per share (pence) 9.7 8.0 9. Acquisitions The principal acquisition during the year was the acquisition on 19 July 2004 of Securicor plc, a company listed in the UK. A summary of the net assets/ (liabilities) acquired and goodwill arising is given below. Provisional fair value Provisional Net assets fair value of assets acquired adjustments acquired �m �m �m Tangible fixed assets 159.7 (2.7) 157.0 Investments in joint ventures and associates 15.9 - 15.9 Current assets (excluding cash) 249.3 (6.6) 242.7 Net debt (102.6) - (102.6) Total creditors (232.7) (7.0) (239.7) Minority interests (7.3) 2.4 (4.9) Net assets 82.3 (13.9) 68.4 Goodwill 703.1 771.5 Satisfied by: Purchase consideration from issue of shares 710.4 Transaction costs 61.1 771.5 Notes to the preliminary announcement (continued) 10. Notes to the cash flow statement (a) Reconciliation of operating profit to operating cash flows 2004 2003 �m �m Group operating profit 4.1 66.8 Depreciation 61.2 39.5 Restructuring costs incurred upon the integration of Securicor plc (19.9) - Amortisation of intangible assets - 0.7 Amortisation of goodwill 49.8 34.6 Exceptional impairment of goodwill 51.2 - Loss/(profit) on sale of fixed assets 1.1 (1.5) Exceptional impairment of fixed assets 8.2 - Decrease in stocks 1.6 0.4 Decrease in debtors 2.3 0.1 Increase/(decrease) in creditors 14.8 (0.1) Decrease in provisions (16.9) - Net cash flow from operating activities 157.5 140.5 (b) Analysis of cash flow headings netted in the cash flow statement 2004 2003 Return on investments and servicing of finance �m �m Interest received 4.5 5.3 Interest paid (20.4) (26.1) Proceeds on closure of interest rate swap - 3.9 Interest element of finance lease payments (3.0) (1.6) Dividends paid to minority interest (2.3) (0.8) Net cash outflow from returns on investments and servicing of finance (21.2) (19.3) 2004 2003 Capital expenditure �m �m Purchase of tangible fixed assets (97.9) (76.6) Purchase of intangible fixed assets - (1.6) Sale of tangible fixed assets 16.2 20.7 Purchase of investments (11.0) (13.5) Net cash outflow from capital expenditure (92.7) (71.0) 2004 2003 Acquisitions and disposals �m �m Purchase of subsidiary undertakings (93.3) (4.7) Purchase of interest in associated undertakings (5.9) - Net cash balances acquired 60.1 0.3 Sale of subsidiary undertakings (0.8) - Sale of operations and assets held for resale - 68.0 Settlement of deferred acquisition payments - (19.9) Net cash outflow from acquisitions and disposals (39.9) 43.7 (c) Cash flow relating to exceptional items 2004 2003 Within net cash flow from operating activities �m �m Restructuring costs incurred upon acquisitions - (3.8) Restructuring costs incurred in the establishment of a product-based (2.9) (8.3) management structure Loss in connection with the Euro conversion - (4.7) After net cash flow from operating activities Restructuring costs incurred upon the integration of Securicor plc (19.9) - Loss on interest rate swap closed - (1.5) (22.8) (18.3) Notes to the preliminary announcement (continued) 10 Notes to the cash flow statement (continued) (d) Analysis of net debt Cash Acquisitions (excluding cash Other non 2003 flow and overdrafts) Exchange cash 2004 �m �m �m �m �m �m Cash in hand and at 62.7 121.1 - 0.3 - 184.1 bank Overdrafts (25.3) 11.4 - - - (13.9) Increase in cash in 132.5 the year Debt due after more (374.9) (179.0) (126.7) 24.7 - (655.9) than one year Debt due within one (38.5) (31.8) (24.6) 2.6 - (92.3) year Liquid investments 6.5 0.6 - - - 7.1 Finance leases (12.9) 4.5 (11.9) 0.3 (4.9) (24.9) Total (382.4) (73.2) (163.2) 27.9 (4.9) (595.8) 11 Share capital On 19 July 2004, pursuant to the combination of the security businesses of the former Group 4 Falck A/S with Securicor plc, 655,834,513 ordinary shares of 25 pence each were issued to the 90.0% of the shareholders of the former Group 4 Falck A/S who accepted the initial offer and 542,222,079 ordinary shares of 25 pence each were issued to the shareholders of Securicor plc. On 4 October 2004, 65,970,476 ordinary shares of 25 pence each were issued to a further 9.1% of the shareholders of the former Group 4 Falck A/S who accepted the mandatory offer. The consolidated balance sheet shows the shares issued to the shareholders of the former Group 4 Falck A/S within the opening balance at 1 January 2004, in accordance with the treatment of this transaction as a merger as explained in note 1. Summary financial information in Danish Krone Basis of preparation The summary financial information is a simple translation of Group 4 Securicor's consolidated financial statements into Danish Krone at the stated rates of exchange. The financial information provided below is prepared under UK GAAP as used in the preparation of the Group 4 Securicor plc consolidated financial statements. It does not represent a restatement under Danish GAAP which would be different in significant respects. Exchange rates for translation Profit and Loss Balance sheet 2004 2003 2004 2003 Sterling to Danish Krone 10.967 10.746 10.507 10.580 Consolidated profit and loss account presented in Krone for illustrative purposes only For the year ended 31 December 2004 Before Before Exceptional exceptional Exceptional exceptional items items items items Total Total 2004 2004 2004 2003 2003 2003 DKKm DKKm DKKm DKKm DKKm DKKm Group turnover 34,808.6 - 34,808.6 27,611.8 - 27,611.8 Group operating profit/(loss) 1,241.5 (1,196.5) 45.0 882.2 (164.4) 717.8 Profit/(loss) on ordinary activities before taxation 1,113.2 (2,013.6) (900.4) 683.4 (219.2) 464.2 Taxation (540.7) 400.3 (140.4) (328.8) (169.8) (498.6) Profit/(loss) on ordinary activities after taxation 572.5 (1,613.3) (1,040.8) 354.6 (389.0) (34.4) Minority interests (77.9) 2.2 (75.7) (69.8) - (69.8) Profit/(loss) for the year 494.6 (1,611.1) (1,116.5) 284.8 (389.0) (104.2) Dividends (257.7) (35.5) Retained deficit (1,374.2) (139.7) (Loss)/earnings per share Basic loss per share DKK (1.15) (0.14) Diluted loss per share DKK (1.15) (0.14) Normalised earnings per share DKK 1.06 0.86 Consolidated balance sheet presented in Krone for illustrative purposes only As at 31 December 2004 2004 2003 DKKm DKKm Goodwill and Intangible assets 11,745.8 5,620.1 Tangible assets 3,590.2 1,690.7 Investment in joint ventures and associated undertakings 287.9 27.5 Fixed assets 15,623.9 7,338.3 Stocks 358.3 313.1 Debtors 7,932.8 5,539.7 Investments 1,019.2 561.8 Cash at bank and in hand 1,934.3 663.4 Current assets 11,244.6 7,078.0 Creditors - amounts falling due within one year (8,976.1) (5,451.9) Net current assets 2,268.5 1,626.1 Total assets less current liabilities 17,892.4 8,964.4 Creditors - amounts falling due after more than one year (7,159.5) (4,198.1) Provision for liabilities and charges (1,087.5) (1,342.6) Net assets 9,645.4 3,423.7 END DATASOURCE: GROUP 4 SECURICOR PLC

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