LONDON -- Right now I'm trawling through the FTSE 100 and double-checking for blue chips that may be flattering their profits.

You see, many companies these days report "underlying" earnings, which are calculated by excluding costs the company deems to be "exceptional." The trouble is that some companies are more cavalier than others when it comes to sweeping awkward expenses away from the headline figures.

Today I'm looking at G4S (ISE: GFS.L) to see if its reported earnings have been distorted significantly by exceptional, one-off, or unusual items. I've extracted the following statistics courtesy of S&P Capital IQ:

 

2007

2008

2009

2010

2011

Profit Before Unusual Items (millions of pounds) 216 263 303 339 349
Merger Charges (millions of pounds) - - - (4) (57)
Impairment of Goodwill (millions of pounds) - - - - (13)

While annual figures can provide some insight into how a business has performed, I reckon looking back over several years provides a better view of possible problems in relation to one-off costs. So, between 2007 and 2011, my stats tell me G4S reported cumulative profits before exceptional items and tax of about 1.5 billion pounds. However, aggregate exceptional costs came to 74 million pounds -- equivalent to 5% of cumulative underlying profits.

Despite GFS's track record of building its business by acquisition, its accounts are remarkably free from one-off items. The only charge of note came in 2011 and was due to its aborted 5 billion pound acquisition of ISS. Shareholders were unimpressed by both the deal itself and the proposed 2 billion pounds rights issue that was to partly fund it.

Despite its relatively clean accounts, investors should pay close to G4S's 2012 results to see how its recent Olympic problems have been classified and whether it has precipitated any restructuring charges.

Somebody who always studies earnings numbers in detail is Neil Woodford, the U.K.'s leading equity income fund manager, who also happens to be a G4S shareholder. Woodford's portfolios thrashed the FTSE 100 during the 15 years to 2011, and this exclusive Motley Fool report -- which can be downloaded free today -- reviews his favorite blue-chip shares for 2013 and beyond.

The article A Very Quick Look at G4S's Earnings originally appeared on Fool.com.

Stuart does not own any share mentioned in this article. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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