GROUP 4 SECURICOR has come a long way since it was derided for losing prisoners it was transporting. In fact, under chief executive Nick Buckles, its activities have become deadly serious.

The £44m acquisition of Armor Group by G4S, as it likes to be known these days, was completed last week. From cash handling and security guards, it takes the company into the world of kidnap insurance, bodyguarding and soldier training in trouble spots such as Iraq and Afghanistan.

It’s risky stuff, not least because a cutback in spending on private security firms by the American government prompted the profit warning that laid Armor Group low.

Undaunted, Buckles wants more of the same. He believes the future for the company is closer links with governments that can offer long-term, reliable contracts. At the moment, some 30% of his business is built round agreements that run for more than five years.

Less appealing are commodity operations such as manned guarding, where pricing is under pressure in mature western markets. Divisions in France and Germany will be sold.

Bang in line with his thinking but more confusing, perhaps, was the £355m deal to buy GSL – which operates prisons and transports prisoners and patients. That deal has also just been signed and sealed. It brought back into the G4S fold a business that was sold to private-equity backers three years ago to simplify the merger of Group 4 with Securicor.

Expect more acquisitions to come. Net debt is forecast to be £1.2 billion at the year-end and G4S has a £1.95 billion borrowing facility in place. The plan is for the company to turn itself into something approaching Serco or Capita, with the higher share rating those stocks trade on. The buzz phrase is “secure logistics”, which even stretches to include operating the Romanian postal service.

A trading update on Tuesday should confirm that Buckles is moving in the right direction. For the current financial year ending in December, G4S shares are trading on 14 times earnings, compared with 20 times for Serco.

Will G4S be able to bridge the gap? Not in its current state, but there is no reason why it should not be able to do so eventually.

Invensys

SHARES in the engineering group took a pounding last year as investors ran for the hills from any company that seemed to have exposure to recession-bound America. Invensys suffered, along with companies like Enodis, GKN and Bodycote.

Since then there has been something of a revaluation. Closing on Friday at 302¼, the shares have outperformed the FTSE All-Share by 13% over the past three months, but are 4% down on the index if you take a 12-month view.

This week Invensys has full-year results. Expect more steady improvement, with ebitda (earnings before interest, tax, depreciation and amortisation) of about £243m, marginally ahead of last year. There is also an exceptional one-off payment of £95m to the company as a result of the early termination of its contract with Metronet, the London Underground contractor.

When the share price was in the doldrums last year, many hoped for a bid from a rival, with Siemens most frequently mentioned as the likely buyer. It may yet come, but at the moment the Germans are dealing with a bribery inquiry, and Invensys has something of an in-built poison pill in the shape of its hefty pension scheme.

It is fairly well funded – it has a deficit of some £240m – but has gross liabilities of £5.2 billion. The latest three-yearly valuation is expected in September, and any big takeover may have to wait on that.

james.ashton@sunday-times.co.uk

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