Security firm Group 4 Securicor yesterday said cost savings from its ground-breaking merger would beat initial estimates, but warned of tough trading in the UK.

The group - formed out of the tie-up of Securicor and Danish rival Group 4 Falck last July - said it now expected annual savings of £35 million against the £30 million previously thought, and said the integration had been completed "significantly" ahead of schedule.

It came as Group 4 posted a 20 per cent rise in underlying profits to £112 million for the first half of its financial year, despite challenging conditions in markets such as the UK.

Group 4 operates in more than 100 countries worldwide and employs more than 360,000 people. The bulk of its business consists of the provision of security guards and the movement of cash around countries under protection.

As expected, organic growth at the UK security guard operation was "slightly negative" due to the impact of the integration programme. New business was below expectations as customers delayed decisions on spending as they waited to see the impact of new licensing laws.

Overall, results from Group 4's European security guard arm were described as good, with Sweden, Norway and Poland all returning to profitability after reporting losses in the same period last year.

In the US the firm reported good performance in all three sectors - government, commercial and nuclear - but added that the market remained tight and there continued to be pressure on margins. Growth in France slowed to a modest level as the firm lost a number of contracts through aggressive price competition in the market.