G4S, the sole security firm listed on the Botswana Stock Exchange (BSE), dug into its deep pockets to set its shareholders in a pre-Christmas fanfare mood as it announced double-digit growths, largely backed tighter controls at the height of global economic down-turn .
Revenue for the six-months to June 30, 2010 swung-up 10.6 percent to P 73 million against the 18.2 percent like-on-like in the previous period. Profit before tax was┬á 17.2┬á percent better┬á at P 15.6 million as management cheered on the sides.
The company┬á recommended an interim dividend of 223.70 thebeÔÇöwith 150 thebe┬á of that figure being a special divided.
“We are pretty confident about the future developments of the company despite challenges,” Acting Managing Director, Molefe Matlhape said.
Over the last six months G4S two main products guarding and security systems┬á came under pressure due to a variety of reasons but Matlhape was bullish that they will confront the challenges head on by introducing┬á new products among others.
However, cash service system was the only sterling performer jumping up 72 percent during the period under review.
‘We have been faced with a mushrooming of new entrants┬á on the┬á system and manned security side. These can be understood because getting in the market on these two areas is easy. All what you need is just to register a company,” he said, adding that on the system side most of the competitors are briefcase operators with less overheads.
The manned security system is facing an upheaval as government has introduced new measures stipulating that for it to get support┬á from the Enclave it has to be wholly citizen owned. Though the┬á decision┬á appears to be geared towards citizen economic empowerment seem to punish┬á companies that are quoted on the exchange┬á with a strong view┬á of empowering┬á a wider base of citizens.
“We are going to engage government on this because the law┬á came long after┬á we started operation in this country. At least we should have been exempted,” said Matlhape, adding that┬á this┬á “is not a process that is intended to go to court”.
If government does not change its position from the┬á current situation, the┬á move┬á might be read differently by foreign direct investors in the country and that could dent government efforts of diversifying the economy.
The┬ámanned security business┬á has a strong potential going forward as government is trying to┬á jump out of┬á certain sectors of the economy ÔÇô including security ÔÇô and hand it over to the private sector. That could have some benefits to┬á G4S ÔÇô an internationally renowned security firm.
At the moment, G4S has a market share of about 10 percent in the manned security┬ásystem with┬á60 percent┬áattributed to┬ásecurity systems (alarms) while┬á it takes 85 percent of the cash business that includes ATMs.
Further, G4S is expected to launch some new products into the markets aimed at┬á repositioning itself against┬á competitors. Some of the moves will involve the┬á rolling-out of the armoured┬á vehicles into the market to┬á tighten its grip on its cash in transit business and the introduction of motorbike┬á response division to deal with the┬á ever congested Botswana roads.
One of the most innovative moves that will hit the market within the next eight weeks involves┬á the phasing out of the┬á alarm system connection fees that has┬á badly affected the business in the┬á last six months.
The product will be rolled-out┬á either in September or October at the latest. It closed the week up┬á 10 thebe on Friday at 2810 thebe and the proposed dividend is payable┬á on September 3 to investors who┬á before August 27.