Future uncertain for G4S-report
The Botswana Stock Exchange listed security giant G4S Botswana Limited recently posted lacklustre results for the ﬁnancial year ended Dec 2012.
Though revenue went up by 14.2 percent relative to the previous ﬁ nancial year, this could not offset the upsurge in operating expenses.
According to Stockbrokers Botswana summary report released last week, the future is still uncertain for G4S and the newly acquired FMG is not expected to contribute to growth in earnings for some time. However, “the competitive advantage that PS cleaning has in the cleaning services industry might help boost performance in the long term. The presence of international security companies such as Brinks security and Malca Amit further intensiﬁ es the already competitive security services industry. The latter, Brinks and Malca Amit have been able to clinch a deal at the Diamond Technology Park, a sign that they are reaping the beneﬁ ts from the relocation of DTC headquarters to Botswana,” states the report.
G4S Botswana paid a total dividend of 14.74 thebe per share part of which was dug out from the reserves. According to Stockbrokers, this may help boost shareholder conﬁdence in the company and based on management’s pledge to return to proﬁtability in ﬁnancial year 2013, G4S will have to walk a ﬁne line between managing investor expectations and reversing the declining trend in proﬁ t growth.
With cost containment measures, the pipeline of new business, the newly acquired business and an anticipated increase in the footprint of the business, the Directors of G4S are conﬁ dent that 2013 provides good prospects for growth and proﬁtability. “ The Asset Management and Tracking product isset to continue to grow in the market and has a strong pipeline in the Manned Guarding division. In addition, the FMG acquisition broadened product range increasing the beneﬁts of integrated outsourced solutions that the group will offer to its existing and potential customers,” reads part of the G4S ﬁnancial statement.
Meanwhile, the ﬁ nancial results indicated that operating costs were mainly driven up by the acquisition of Facilities Management Group (FMG) for P12.1 million during the ﬁnancial year. The acquisition of the chemical, cleaning services and estate agent group was aimed at diversifying the portfolio and cushioning the competitive security sector but has put operating income under pressure particularly in the second half of the year where it declined by 66.6 percent.
Since 2010, when proﬁ t after tax shot up by 74 percent year-to-year, proﬁ ts have been on a downward trend. The 2010 results saw proﬁts soaring due to the sale and lease back of G4S headquarters to Primetime Holdings.