News Column

G4S Turnaround Continues As It Swings Back To Profit

August 13, 2014

Steve McGrath

LONDON (Alliance News) - Security company G4S PLC Tuesday said it swung back to a profit in the first half of the year as revenue rose and it didn't repeat the write offs and impairments that weighed on last year's results, but Chief executive Ashley Almanza said the company's turnaround remains a work in progress.

The company is undergoing a revamp after it was revealed to have been overcharging on some of its UK government contracts, resulting in a ban on further UK government work for a period and a GBP108.9 million settlement payment, and ran into problems with some other contracts overseas.

That restructuring, which has included asset sales, restructuring of its UK and Ireland operations, and a focus on gaining new profitable contracts, particularly in emerging markets, is showing signs of paying off. The company swung to a pretax profit of GBP85 million in the six months to June 30, compared with a loss of GBP94 million a year earlier when it had booked GBP124 million of impairment charges after a review of its operations and a writedown on some unprofitable contracts.

Excluding those charges and restructuring charges, its profit before interest, tax and amortisation rose to GBP185 million, from GBP175 million, as revenue rose to GBP3.37 billion, from GBP3.25 billion.

It said new contract sales were up 26% on the year at GBP1.2 billion, driven by strong demand from emerging markets and as it returned to growth in North America.

However, CEO Almanza, who took the helm last year in the wake of the UK government contract issues, said his revamp of the company has a way to go.

"The group made good progress and delivered a satisfactory financial performance in the first six months winning new contracts with a total value of GBP1.2 billion and producing a 13.2% increase in earnings. There remains much to be done to capture the full potential of our strategy and to strengthen the group's performance," he said in the statement.

The company kept its interim dividend unchanged at 3.42 pence a share.

G4S shares were up 1.4% at 263.30 pence early Wednesday, one of the top gainers on the FTSE 100.

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Source: Alliance News

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