G4S, the country’s leading security company said it will embrace technology to retain its dominance and grow shareholders value as it faces a deluge of price wars and unfavourable┬ácompetition in the┬ágovernment’s planned farming out of┬ánoncore┬ábusinesses.
The┬ácompany’s┬áfull year revenue┬áto December 31, 2010 shot up 8.3 percent P148 million┬áwhile profit after tax ballooned 74 percent to P 41 million albeit under difficult trading conditions.
Over the period,┬ásharp competition arose from manned security as the sectors saw the mushrooming of firms positioning themselves for government’s dispensation. Further, the mushrooming of the new firm prompted┬áone of the most intense price wars in the history of the industry.
“In the manned security, we grew by 12.5 percent. And you must understand that┬áthe bulk of this is retail market which is price sensitive,”┬áMolefe Matlhape┬ásaid.
“During the period under review (under this segment)┬áwe were faced with price wars coming from new competitors. However, we managed these price wars through the introduction of┬átechnology,” he added.
“We managed to package our guard beyond the human being by introducing┬águarding technology. This has resulted in a situation where we had to reduce the number of┬ásupervisors and we have┬áreports as and when┬áat real time,”┬áMatlhape added.
Matlhape, however, stated that they have not resolved the issues that might┬áend up with┬áG4S participating┬áin the┬ágovernment’s planned privatisation process in the lucrative┬ámanned guard security.
Finance and Development Minister, Kenneth Matambo, announced during the national budget speech that government will be farming out the noncore activities in the coming┬áfiscal year
The government fiscal year starts┬áat the beginning of next month.
But the┬ánagging issue is that the┬ámanned security issues were said to be reserved for┬ácompanies that are wholly citizen owned.
“We have not resolved that issue,” he said, “the 12.5 percent that┬áwe achieved has no government business. We had to look elsewhere while still waiting to resolve that issue.
“We will very much continue to engage government on the issue,” he added.
At the moment G4S has a market share of about 10 percent in the manned security system with┬á60 percent┬áattributed to┬ásecurity systems (alarms) while┬áit takes 85 percent of the cash business that includes ATMs.
The┬ácompany further indicated that it is buoyed by the┬árolling-out┬áof ATMs by the┬átop four┬ácommercial banks. The┬ácompany has contracts with all the four top bank and ad hock arrangements with the other smaller commercial banks.
The Botswana Stock Exchange (BSE) quoted outfit said part of its strong performance came from┬áa once-off profit realised on the disposal of the company’s head office in Gaborone under a sale and leaseback transaction.
Further,┬áthe┬ábalance-sheet was partly┬áimpacted by┬áa raft of┬ánew products and services aimed at repositioning itself in the market.
Among the initiatives included the introduction of the armoured┬ávehicles into the market to┬átighten its grip on its cash in transit business and the introduction of motorbike response division to deal with the ever congested Botswana roads.
It also phased out of the┬áalarm system connection fees that have badly affected business┬áby deterring┬ápotential customers to enter into contracts with the company.
The┬ácash-rich company┬ádeclared a final dividend of 235.10 thebe per share that will be paid to shareholders┬áregistered as of March 11, 2011.