G4S PLC G4s Plc: G4s To Resume Dividend For 2021 With Clear Potential For Significant Further Cash Returns To Shareholders

 
TIDMGFS 
 
 
   NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, 
INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A 
VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION. 
 
   FOR IMMEDIATE RELEASE 
 
   25 November 2020 
 
   G4S TO RESUME DIVID FOR 2021 WITH CLEAR POTENTIAL FOR SIGNIFICANT 
FURTHER CASH RETURNS TO SHAREHOLDERS 
 
   G4S plc ("G4S" or the "Company") has today published its Second Defence 
Circular ("Circular") in relation to the unsolicited Offer for G4S made 
by Garda World Security Corporation ("GardaWorld"). 
 
   Highlights: 
 
 
   -- G4S is a global leader in security services 
 
   -- Continued strong trading performance for 2020 
 
   -- Momentum for 2021: 73% of revenue growth covered by new contracts already 
      won 
 
   -- Confidence in achieving financial targets, including: 
 
          -- Revenue growth of 4-6% per annum 
 
          -- Profit(1) margin expansion to 7% in the medium term(2) 
 
          -- Free cash flow in excess of GBP1bn from 2021-2025(2) 
 
          -- Leverage of 2.0-2.5x 
 
   -- Resume dividend for 2021 and beyond 
 
   -- Clear potential for significant further cash returns to shareholders 
 
   -- Potential for significant re-rating 
 
 
 
   John Connolly, Chairman of G4S, said: 
 
   "G4S has a bright future as an independent company with significant 
value upside for shareholders. 
 
   The Board believes that G4S has significant potential to re-rate as a 
result of its above-market growth outlook, higher margins from 
integrated security services and the material value upside in Retail 
Cash Solutions. 
 
   The Company's resilient performance and positive outlook enables it to 
resume the dividend for 2021 and provides clear potential for 
significant further cash returns to shareholders. 
 
   The GardaWorld Offer does not remotely reflect G4S's fundamental value, 
let alone its value to GardaWorld and BC Partners.  We urge shareholders 
to take no action in relation to GardaWorld's Offer." 
 
   Ashley Almanza, Chief Executive Officer of G4S, said: 
 
   "G4S has fundamentally refocused and repositioned its business and is 
today a global leader in security services with an unmatched market 
footprint and industry-leading capabilities. Our sustained focus on 
technology and high value integrated security clearly differentiates G4S 
in the marketplace and has delivered robust results in the first nine 
months of this year with strong cash flow and underlying earnings ahead 
of last year. Our momentum remains very good with contracts won and 
retained year to date that have an annual value of GBP2.5 billion. 
 
   G4S is now well-positioned to accelerate sustainable profitable growth, 
and we are  confident that we will deliver our financial targets 
including free cash flow in excess of GBP1 billion from 2021 to 2025.(2) 
That confidence is reflected in our intention to resume dividends for 
2021." 
 
   The Circular can be accessed via 
https://www.globenewswire.com/Tracker?data=-il3ccr3RvGsrauhY-MVis63jPqo6Q-WzMkdXCDLC2iae26uBg1ud4r1SMKG6qDOATUR0148ttC0AD0XZ8wSFA6tJcqPtd_JJIdxeSEyJscDeikpMsFlzTwk_VBUn5pm 
www.g4s.com/seconddefence and has been submitted to, and will be 
available from, the National Storage Mechanism.  A copy of this 
announcement will be available at 
https://www.globenewswire.com/Tracker?data=-il3ccr3RvGsrauhY-MVii_8mc5GxwQmfMQsic1_kQiiQFg7zvodpFI0DKdTNM9x9E1GT5SpHhsQgUWahMxpZW9CunlhCEoVvg-nGqijdfVF5emngMhx0zlgaCgyT8O5 
www.g4s.com/gardaresponse. 
 
   The letter from the Chairman of the Board of G4S to G4S shareholders, 
set out in the Circular, is extracted below. 
 
   LETTER TO G4S SHAREHOLDERS FROM THE CHAIRMAN OF G4S 
 
   G4S plc 
 
   5th Floor 
 
   Southside 
 
   105 Victoria Street 
 
   London 
 
   SW1E 6QT 
 
   T:[phone] 
 
   25 November 2020 
 
   Dear Shareholder, 
 
   I wrote to you on 29 October 2020, setting out the reasons why the Board 
of G4S unanimously rejected GardaWorld's wholly inadequate Offer of 190 
pence per share on the basis that it significantly undervalues G4S and 
is not in the interests of shareholders and other stakeholders. I am 
writing to you today to update you on the Company's position, 
performance and prospects. We continue to urge you to reject 
GardaWorld's Offer. 
 
   G4S is an outstanding business with excellent prospects. This document 
sets out why we have a high degree of confidence in our ability to 
deliver value for our shareholders and our other stakeholders: 
 
 
   -- We are confident in achieving our financial targets, including: 
 
          -- Revenue growth of 4-6% per annum 
 
          -- Profit(1) margin expansion to 7% in the medium term(2) 
 
          -- Free cash flow in excess of GBP1bn from 2021-2025(2) 
 
          -- Leverage of 2.0-2.5x 
 
   -- Reflecting our confidence in the Company's outlook, we intend to resume 
      dividends for 2021 and beyond 
 
   -- We are committed to disciplined capital allocation. There is clear 
      potential for significant further cash returns to shareholders, arising 
      from both strong free cash flow generation and any disposal proceeds. 
 
 
   As the equity market recovers from the pandemic, and as we successfully 
execute on our strategic and financial plan, we firmly believe that G4S 
is well positioned to re-rate, at least in line with the valuation 
multiple of Securitas, our closest peer. 
 
   We believe that GardaWorld and BC Partners have a clear understanding of 
the strengths of G4S and recognise that G4S is well positioned to 
generate substantial free cash flow for you, our shareholders. 
GardaWorld is seeking to use G4S's strong balance sheet and healthy cash 
flows to finance their purchase of your Company. Furthermore they are 
capitalising on the impact of COVID-19 on UK equities to make an 
opportunistic and wholly inadequate Offer. 
 
   We strongly urge shareholders to take absolutely no action in relation 
to GardaWorld's Offer. 
 
   G4S is an outstanding business 
 
   G4S is a global leader with a clear and compelling strategy. We have an 
unmatched global footprint and an excellent position in the growing 
market for security. The Group's global blue-chip customers provide a 
high quality revenue base and we continue to leverage technology and 
software alongside risk consulting and data analytics services to 
deliver integrated security solutions for our customers. We also have a 
unique, high margin, rapidly growing Retail Cash Solutions business 
which offers substantial value upside for shareholders. 
 
   We are immensely proud of our global workforce of over half a million 
people who work tirelessly to keep our customers and communities safe. 
 
   You own an outstanding business with a bright, independent future. 
 
   Confidence in achieving our financial targets 
 
   As a result of the fundamental repositioning of the Company and the 
strength of our competitive capabilities we are confident in our ability 
to meet our financial targets. The competitive strength of the Company 
is reflected in the excellent performance of the business in 2020 which 
has remained robust in the face of the global pandemic. Our underlying 
earnings for the 9 months to 30 September 2020 were ahead of the same 
period for 2019 and since then the Group has continued to trade well. 
This performance together with contracts won and retained, with an 
annual value of GBP2.5 billion, and a strong pipeline of additional 
opportunities provide us with substantial confidence in the outlook for 
2021. 
 
   Our highly competitive Integrated Security offering and our Retail Cash 
Solutions business provide us with confidence that we can grow revenues 
faster than the market, at 4-6% per annum. 
 
   We are confident about enhancing our PBITA margin with a clear path to 
7% in the medium-term(2) . This is underpinned by an increasing 
proportion of revenues coming from our higher margin G4S Integrated 
Security offering, which combines technology, consulting and data 
analytics; from operational leverage as we grow our business; and from 
cost saving programmes. 
 
   As a result, we are also confident in our ability to deliver more than 
GBP1bn of free cash flow from 2021-2025(2) . 
 
   Confidence in our ability to return significant cash to G4S shareholders 
 
   The positive outlook for free cash flow generation enables us to resume 
dividends for 2021, while targeting leverage in the range of 2.0-2.5x. 
Specifically: 
 
 
   -- Dividends to resume for 2021 onwards: the Board intends to resume 
      dividends from 2021 onwards, in line with its existing dividend policy of 
      attaining 2.0x cover; and 
 
   -- Allocation of surplus capital: we are committed to disciplined capital 
      allocation. There is clear potential for significant further cash returns 
      to shareholders, arising from both strong free cash flow generation and 
      any disposal proceeds. 
 
 
   G4S is well positioned for a significant re-rating 
 
   The Board believes that G4S has significant potential to re-rate, in 
particular: 
 
 
   -- G4S has been fundamentally repositioned and today is a focused global 
      leader in security; 
 
   -- Our Secure Solutions business (93% of revenues) has a large Integrated 
      Security business which is driving above market growth; 
 
   -- In Retail Cash Solutions we have created a substantial, high-growth 
      business with material value upside; 
 
   -- The Company's performance and prospects already compare very favourably 
      with its closest peer, Securitas, which has traded at a 3 year average 
      multiple of 10.5x LTM EBITDA pre COVID-19; and 
 
   -- The positive outlook for free cash flow generation supports significant 
      cash returns to shareholders. 
 
 
   In addition, the recent positive movement in global equity markets, 
above all in relation to value stocks, reflects the improving macro- 
economic outlook. 
 
   GardaWorld's Offer does not remotely reflect G4S's fundamental value, 
let alone its value to GardaWorld and BC Partners 
 

   In 2019, BC Partners, now the majority shareholder of GardaWorld, paid a 
multiple of 11.2x LTM EBITDA for its acquisition of GardaWorld. The 190p 
Offer for G4S is very significantly below this value at 7.7x LTM EBITDA, 
despite G4S being a far superior business to GardaWorld. 
 
   GardaWorld would benefit immeasurably from the global scale that G4S 
would provide and from very significant operational and financial 
synergies. The Offer captures these benefits for BC Partners and 
GardaWorld, without providing you, the owners of G4S, with fair value. 
 
   Acquiring G4S at a significant discount to fair value would quite simply 
allow BC Partners and GardaWorld to acquire a global leader in security 
at your, our shareholders', expense. 
 
   TAKE NO ACTION 
 
   Your Board believes that G4S has a bright future as an independent 
company with significant value upside for G4S shareholders. 
 
   Your Board, which has been so advised by Citi, J.P. Morgan Cazenove, 
Goldman Sachs and Lazard (the "Financial Advisers") as to the financial 
terms of the Offer, believes that GardaWorld's Offer significantly 
undervalues G4S. In providing their financial advice to the Board, the 
Financial Advisers have taken into account the Board's commercial 
assessments. Lazard and Citi are providing independent financial advice 
to the Board for the purposes of Rule 3 of the Takeover Code. 
 
   Accordingly, the Board unanimously recommends that you should take no 
action in relation to the Offer and that you should not sign any 
document which GardaWorld or its advisers send to you. Your Directors 
will not be accepting GardaWorld's Offer in respect of their own 
beneficial shareholdings. 
 
   Yours sincerely, 
 
   John Connolly 
 
   Chairman of the Board of Directors 
 
   Unless otherwise stated, the words and phrases used in this announcement 
have the meanings given to the appendices of the Circular. For further 
details of the sources of information and bases of calculation of the 
numbers set out in this announcement please refer to "Bases and Sources" 
in the Circular. 
 
   (1) PBITA 
 
   (2) Aspirational target which should not be construed as a profit 
forecast under the Takeover Code or interpreted as such. 
 
 
 
 
 
  For further enquiries, please contact: 
 
Helen Parris        Director of Investor Relations   [phone] 
 
  Media enquiries 
Sophie McMillan     Head of Media                    [phone] 
Press office                                         [phone] 
 
   G4S Joint Lead Financial Advisers 
 
   Citigroup Global Markets Limited 
 
   J.P. Morgan Cazenove 
 
 
 
 
 
   G4S Financial Advisers 
 
   Lazard & Co., Limited 
 
   Goldman Sachs International 
 
   G4S Legal Advisers 
 
   Linklaters LLP 
 
   Media Advisers 
 
   Brunswick 
 
   Notes to Editors: 
 
   G4S is the leading global security company, specialising in the 
provision of security services and solutions to customers. Our mission 
is to create material, sustainable value for our customers and 
shareholders by being the supply partner of choice in all our markets. 
 
   G4S is quoted on the London Stock Exchange and has a secondary stock 
exchange listing in Copenhagen. After taking account of the businesses 
being sold in the year, G4S is active in more than 80 countries and has 
around 533,000 employees. For more information on G4S, visit 
www.g4s.com. 
 
   Important Notices 
 
   Citigroup Global Markets Limited ("Citi"), which is authorised by the 
Prudential Regulation Authority ("PRA") and regulated in the UK by the 
Financial Conduct Authority ("FCA") and the PRA, is acting exclusively 
for G4S and no one else in connection with the matters set out in this 
announcement and will not regard any other person as its client in 
relation to the matters in this announcement and will not be responsible 
to anyone other than G4S for providing the protections afforded to 
clients of Citi nor for providing advice in relation to any matter 
referred to herein. 
 
   J.P. Morgan Securities plc (which conducts its UK investment banking 
business as J.P. Morgan Cazenove) ("J.P. Morgan Cazenove") which is 
authorised in the United Kingdom by the PRA and regulated in the United 
Kingdom by the PRA and the FCA, is acting as financial adviser 
exclusively for G4S plc and no one else in connection with the matters 
set out in this announcement and will not regard any other person as its 
client in relation to the matters set out in this announcement and will 
not be responsible to anyone other than G4S plc for providing the 
protections afforded to clients of J.P. Morgan Cazenove or its 
affiliates, nor for providing advice in relation to any matter referred 
to herein. 
 
   Lazard & Co., Limited ("Lazard"), which is authorised by the PRA and 
regulated in the United Kingdom by the FCA and the PRA, is acting 
exclusively as financial adviser to G4S and no one else in connection 
with the matters set out in this announcement and will not be 
responsible to anyone other than G4S for providing the protections 
afforded to clients of Lazard nor for providing advice in relation to 
the matters set out in this announcement. Neither Lazard nor any of its 
affiliates owes or accepts any duty, liability or responsibility 
whatsoever (whether direct or indirect, whether in contract, in tort, 
under statute or otherwise) to any person who is not a client of Lazard 
in connection with this announcement, any statement contained herein or 
otherwise. 
 
   Goldman Sachs International ("Goldman Sachs"), which is authorised in 
the United Kingdom by the PRA and regulated in the United Kingdom by the 
PRA and the FCA, is acting exclusively for G4S and no one else in 
connection with the matters set out in this announcement. Goldman Sachs 
will not be responsible to anyone other than G4S for providing the 
protections afforded to clients of Goldman Sachs nor for providing 
advice in relation to any matter referred to herein. 
 
   Disclosure Requirements 
 
   Under Rule 8.3(a) of the Code, any person who is interested in 1% or 
more of any class of relevant securities of an offeree company or of any 
securities exchange offeror (being any offeror other than an offeror in 
respect of which it has been announced that its offer is, or is likely 
to be, solely in cash) must make an Opening Position Disclosure 
following the commencement of the offer period and, if later, following 
the announcement in which any securities exchange offeror is first 
identified. An Opening Position Disclosure must contain details of the 
person's interests and short positions in, and rights to subscribe for, 
any relevant securities of each of (i) the offeree company and (ii) any 
securities exchange offeror(s). An Opening Position Disclosure by a 
person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm 
(London time) on the 10th business day following the commencement of the 
offer period and, if appropriate, by no later than 3.30 pm (London time) 
on the 10th business day following the announcement in which any 
securities exchange offeror is first identified. Relevant persons who 
deal in the relevant securities of the offeree company or of a 
securities exchange offeror prior to the deadline for making an Opening 
Position Disclosure must instead make a Dealing Disclosure. 
 
   Under Rule 8.3(b) of the Code, any person who is, or becomes, interested 
in 1% or more of any class of relevant securities of the offeree company 
or of any securities exchange offeror must make a Dealing Disclosure if 
the person deals in any relevant securities of the offeree company or of 
any securities exchange offeror. A Dealing Disclosure must contain 
details of the dealing concerned and of the person's interests and short 
positions in, and rights to subscribe for, any relevant securities of 
each of (i) the offeree company and (ii) any securities exchange 
offeror(s), save to the extent that these details have previously been 
disclosed under Rule 8 of the Code. A Dealing Disclosure by a person to 
whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London 
time) on the business day following the date of the relevant dealing. 
 
   If two or more persons act together pursuant to an agreement or 
understanding, whether formal or informal, to acquire or control an 
interest in relevant securities of an offeree company or a securities 
exchange offeror, they will be deemed to be a single person for the 
purpose of Rule 8.3 of the Code. 
 
   Opening Position Disclosures must also be made by the offeree company 
and by any offeror and Dealing Disclosures must also be made by the 
offeree company, by any offeror and by any persons acting in concert 
with any of them (see Rules 8.1, 8.2 and 8.4 of the Code). 
 
   Details of the offeree and offeror companies in respect of whose 
relevant securities Opening Position Disclosures and Dealing Disclosures 
must be made can be found in the Disclosure Table on the Takeover 
Panel's website at www.thetakeoverpanel.org.uk, including details of the 
number of relevant securities in issue, when the offer period commenced 
and when any offeror was first identified. You should contact the 
Panel's Market Surveillance Unit on [phone] if you are in 
any doubt as to whether you are required to make an Opening Position 
Disclosure or a Dealing Disclosure. 
 
   Rule 26.1 Disclosure 
 
   In accordance with Rule 26.1 of the Code, a copy of this announcement 
will be available at www.g4s.com, by no later than 12 noon (London time) 
on the business day following this announcement. The content of the 
website referred to in this announcement is not incorporated into and 
does not form part of this announcement. 
 
 
 
 

(END) Dow Jones Newswires

November 25, 2020 02:00 ET (07:00 GMT)

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