Restructuring turns around G4S fortunes
Keikantse Lesemela | Friday August 22, 2014 13:32
In his commentary on the published financial results, G4S managing director Michael Kampani said the good growth was achieved across all products on the backdrop of significant growth in the cash business and a healthy recovery of the facilities management business. The growth in earnings was driven by the success of turnaround drive in achieving improved revenue growth and significant cost efficiencies.
“Cost efficiencies resulting from a restructuring of the business in the last quarter of 2013 and various other cost containment initiatives including bad debts and recovery of facilities management business contributed to the significant growth in profitability,” he stated. The company’s profits declined in the past two years after the acquisition of Facilities Management Services in 2011. Last year it recorded a 37, 8 percent decline in profits to P4.82 million and a marginal revenue growth of 0.7 percent for the year ended 31 December 2013.
This came after the company recorded a 45.7 percent drop in profits to P7.18 million in the first half of 2012 due to high costs in the acquisition of FMG. G4S Botswana acquired 100 percent shares in FMG for a purchase consideration of nearly P12.2 million in June 2012. The acquisition resulted in G4S getting a 70 percent stake in PS Cleaning Services.
Kampani said as the turnaround drive continues, revenue growth and profit improvement measures will increase in the second half of the year.
“Good cash management prospects, including the rollout of innovative cash management products and continued investment in fleet and other operating infrastructure and equipment are expected to entrench operational stability, strengthen operational capabilities, enhance contract retention and stimulate revenue growth,” he said. Kampani also explained that the company will continue with efforts towards a general improvement in service delivery and customer service as positive benefits continue to emerge from the recent investments in alarm monitoring software upgrade and the implementation of incident management systems, among others.
“The business is now stable and continues to build on the gains made this far. With these initiatives and prospects, it is expected that the current run rate will continue into the second half of the year,” he said.