Mmegi Online :: Security company posts good results
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Last Updated
Monday 24 September 2018, 13:34 pm.
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Security company posts good results

Security company G4S posted good results for the year ended December 31, 2007 with top line growing by 14.7 percent to P90.3 million.
By Staff Writer Mon 24 Sep 2018, 14:28 pm (GMT +2)
Mmegi Online :: Security company posts good results








The growth was spearheaded by the cash services division which continue to dominate the contribution to pre-tax profits. The division accounted for 43 percent of the profits before taxation. It was followed by the alarms division at 37 percent and integrated services. A review of the results by Stockbrokers Botswana says that G4S volumes are likely to be driven by the recent civil service salary adjustments. The implementation of the public and private sector projects will also shore up business volumes.

"Management is of the view that the company's growth potential lies in the integrated services, especially manned guarding and cash services. This is going  to be done through product or service differentiation, and also through vigorous  participation in both public and private tenders. The major challenges to this, however, is inflation and lack of experienced supervisory skills as the division is management intensive," said the stockbrokers review report.

The review said inflation is expected to be on the upside in the short term because of administered prices. They may dampen earnings in the short term, especially in light of the price  sensitivity of the market in which the company operates, added the report.

The stockbrokers said the effect of high level inflation is a rise in the cost of sales.

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For G4S, these include fuel costs for the large fleet. "On the consumer side inflation reduces  disposable income and therefore we expect a reduction in the demand for luxury goods and services, alarms included.

"The integrated service division  is a major future driver. The challenge however, is that this market is dominated by  competitors and is a lower margin business.

"Despite this G4S has the advantage  that its service  has some add-on benefits which include the communication link  between the guard and the control room  for purposes of back up," said the report.

The company can therefore be expected to leverage on this competitive advantage in its marketing campaigns  especially to the high end of the market which might not be very price sensitive.

G4S realised a 24.5 percent jump in cost of sales in the review period, mainly from the continued rise in fuel prices pulling down gross margins in the process by 4.5 percent to 42.2 percent. Finance expenses went up 50 percent to P566,000, while finance income grew by 73.8 percent to P1.5 million.

The value of fixed assets for the company grew from P17.2 million from P15.9 million in 2006. Current assets are valued at P33.7 million. The growth in assets was driven by acquisitions.

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