G4S in massive turnaround

SHARE   |   Sunday, 15 March 2015   |   By Kabelo Adamson
G4S MD, Michael Kampani G4S MD, Michael Kampani

• Profit before tax grows by 475 percent
• Net earnings up 498.5 percent
• Declares Dividend of 13. 32 Thebe per share

Just a year after posting unimpressive financial results, G4S this week released a set of results which are far much better than what was registered the previous year.
The uninspiring performance was by then blamed on the challenging market condition, leading to net earnings attributable to equity holders to reach more than 30 percent lower than for the previous corresponding period. This was said at the time to be the result of various factors such as an increase in the impairment of trade receivables, one-off costs associated with a restructuring of the business, and a decline in investment income following the acquisition of the Facilities Management business in 2012.
Thereafter, G4S under the leadership of the Board of Directors Chairman, Lebang Mpotokwane and Managing Director Michael Kampani promised a turnaround strategy with a view of improving performance.
The company management by then disclosed that profit improvement measures, which include a review of overheads and operating costs and enhanced focus on collection of trade receivables were in place. The company was further undertaking various initiatives, including adding new vehicles to the fleet to improve the service offering to drive revenue growth in 2014.
The latest results reflect improvement by G4S. During the year under review which ended on 31 December 2014, the company saw its revenue go up by 7 percent for which the management says it is due to the turnaround initiatives that were aimed at achieving operational stability, driving sales momentum, attracting new business, and contract retention.
Profit before tax for the period ending December 2014 has increased by 475 percent whereas net earnings are 498.5 percent higher than for the year ended 31 December 2013. “Achievement of this level of growth in earnings was due to the success of the turnaround drive in achieving growth in revenue and significant cost efficiencies,” the company said in a statement accompanying the financial results.
In addition, the profit improvement measures that the company committed to have paid off as they are attributed to the significant improvement in profitability. The results have instilled a sense of confidence in the company leadership as they believe the business in now stable.
“Strategic focus will continue to build on the gains made in order to ensure continued revenue growth and improved stability during the year 2015,” says the statement signed by both the chairman and the MD. G4S, which boasts of market capitalisation of P268 million, is gearing itself to undertake several cost efficiency programmes that are aimed at ensuring costs are well contained with a view of improving operating margins.
In 2014, G4S says it achieved growth across all products on the back of significant growth in the cash business and another growth in facilities management and systems business. These are some of the business sectors contained in G4S portfolio in addition to manned security, facilities management, fleet management and cleaning services.
Due to the company experiencing growth, shareholders have not been left behind. The company directors have declared a dividend of 13.32 Thebe per share, far better than the 3.53 Thebe declared in the previous year.

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