Security services G4S has had its share of woes over the last few years. A botched contract at the Olympics, a £109m fine for overselling electronic tagging and a temporary ban on tendering for government contracts all made for a pretty miserable time – and a lot of red ink in its accounts.
There are signs of hope, however. Today, the firm announced pre-tax profits of £148m, compared to a loss in 2013 of £190m. Revenues, meanwhile, were up 3.9% to £6.8bn. It might be a little premature for boss Ashley Almanza to pop the champagne cork just yet, however.
Turnover actually contracted by 1% in the UK to £1.6bn, largely as a result of losing the electronic tagging contract in March. The picture wasn’t much better in the rest of Europe, where revenues fell 0.6% to £1.4bn following the Dutch Department of Justice’s ‘insourcing’ one of its contracts. That really shouldn’t be a word...
To make matters worse, the firm had to increase the amount put aside to pay for underperforming UK government contracts by £45m, in a sign that the legacy of 2012-13 still lingers.
G4S may not be out of the woods entirely then, but it did have encouraging results in the US, where revenues were up 6.9% to £1.4bn, and in emerging markets, where they were up 8.9% to £2.4bn. Almanza is also clearly making progress in his efforts to cut costs, having divested no fewer than eight businesses since taking over in mid 2013, for £248m. Another 20 have been sold or have ceased.
‘There remains much to be done to realise the full potential of our strategy and we expect to make further progress in 2015,’ Almanza said, the sweet talker.
Investors reacted fairly positively, with the share price rising 1.8% to 296p, so G4S can be pleased with itself, even if its results were mixed. Besides, it’s still doing better than Serco, which suffered a 30% fall in profits in November.