G4S Botswana Managing Director Mokgethi Magapa has assured shareholders that the multinational security company is running a solid business despite tight competition and pressure from existing and emerging competitors. “From a business point of view we are running quite a solid business and we are quite comfortable and are not under any illusions,” he said. Speaking during the presentation of the company’s results for the year ended 31 December 2016, Magapa said that he believes G4S is still a market leader, albeit reduction in market share due to new entrants. He nonetheless noted that despite this, due to its high quality global standard the company still managed to retain new customers and attract a number of new contracts. Though electronic security portfolio took a dive, the company was able to achieve growth in revenue thanks to its balanced portfolio offering and supported by new contracts acquired in Facilities Management and Cash Solutions, including strong uptake on deposita. G4S, which has a market capitalisation of P320 million, says its strategic priority to drive a balanced top line growth by enhancing service delivery offering through innovative mediums is bearing results. Growth is mainly driven by cleaning services which achieved growth of 19.8 percent while strong growth continues to be seen in manned security and cash solutions which registered growth of 6.4 percent and 3.5 percent respectively due to major contact renewals. The Deposita product has seen growth according to G4S, from seven devices in 2015 to 78 in 2016. “It is quite a unique facility which G4S is currently the only service provider in. We believe by the time our competitors try to catch up with us on it, we will be already onto something else,” said Magapa.
The company has hence announced a capital investment of P9.9 million, of which P5.3 million will be for vehicles purchase relating to cash business while P3.3 will be invested in Deposita business. According to Magapa, the company plans to segment the market to see what is important to them and where they are likely to grow steadily. This, he said, is important for both customer retention and attracting new customers. Magapa said customers’ relationship management has been identified as one of the focus and priority areas, together with business process re-engineering due to the fact that the business landscape changes every day. He said another focus area is growth and innovation whereby they plan to reposition systems business and focus on cash solutions while repositioning cleaning and FMS business lines. G4S Botswana will drive recovery of electronic security and also other segments of the group which include cleaning services. Though the listed company’s annual results for the year ended December 2016 showed an improvement in revenue (up by 2.8 percent) its Finance Director, Peter Kgomotso, said they could have done better. Last year the company’s revenue went up by 6 per cent.
According to Kgomotso, the disparity is largely due to the fact that they sold less in so far as the once off business is concerned. This, he said, relates to equipment such as alarms and cctvs sales and installation. New entrants in the market whose focus is on alarm sales and installation perhaps at a lesser price are, according to Kgomotso, a large contributory factor to this. “So customers only come to us to ask for the monitoring response side of it,” he said. He also noted that as some competitors continue to price down there is no opportunity for G4S to raise prices on existing contracts despite high costs and because of that margins go low. “That is why I am saying our performance in as far as the bottom line is concerned, is based on the cost space, the revenue decline and hence the compression in margins because we are not able to price up,” he said. Despite trading conditions remaining subdued, G4S is confident of its business and excellent long-term prospects with the outlook for the year in both revenue and profit said to be positive and promising.