In a bid to retain its status as a market leader, G4S (Botswana) Limited, the listed security outfit said it will undertake a raft of initiatives that will include rationalisation of operations, M&A opportunities and improvement in customer services after its half year results showed it lost business to competitors, especially guarding division.
The company’s results for six months ending June, 30, 2011 shows the top line was relatively flat as it registered a growth of 4.5 percent from P 73 million in the same period last year to P 76 million.
Growth was flat for manned security, which registered an organic growth of 2.5 percent; cash services saw growth of 2.4 percent while alarm monitoring was better as it grew by 8.3 percent.
G4S Managing Director, Moraki Mokgosana said the company faces challenges, especially manned security where entry requirements are not strict, which explains why there are 700 operators.
“We continue to experience pressure from manned security where barriers to entry are low. This results in aggressive pricing,” Mokgosana said.
Alarm monitoring was a star performer buoyed by the January price increases and the effects of Secupak free hardware promotion, which was introduced last September.
Growth trends are expected in the second half with the award of fleet management tenders for over 600 vehicles from one parastatal and an international listed company.
Mokgosana said they foresee future growth in this division in Francistown, Palapaye and Jwaneng and see opportunities in telecommunications sector with a pilot on Base Transceiver Station (BTS) security solution that commenced in July for one of the PTO’s.
Growth in the manned is also expected in the second half of the financial period due to major contracts that were won in the mining sector in Palapye and Jwaneng.
The cash services Mokgosana said the company experienced pressures on revenues due to depressed economic environment. This division is highly reliant on the financial services sector and G4S controls about 70 percent of the market on cash services.
The period also saw a new entrant in the market, which will compete with G4S for cash services.
As the industry gets more competitive G4S has been a given a go ahead by shareholders to make a name change from G4S Security Services (Botswana) Limited to G4S (Botswana) Limited so as to allow the company to expand to other sectors of the economy to unlock shareholder value.
The company is also looking at possibilities of streamlining operations so as to cut costs; a move which is likely to see Gaborone and Francistown being the major nerve centres of the company.
Mokgosana, however, said the rationalisation exercise will not mean closing the offices around the country although he did not rule outjob losses.
“We hope to improve our geographical presence,” he said.
G4S is one of the biggest private sector employers in the country as the security business requires human presence although Mokgosana sees opportunities sees automation which will include CCTVs.
“Any rationalisation of operations calls for tough decisions. We cannot rule out redundancies, but we do not want throw people into the streets,” he said of the muted rationalisation exercise.
G4S employs about 2000 people.
The results for the past six months showed that the company’s gross profit was up 3.1 percent from P30.1 million to P31.9 million. Profit before tax was P14 million and after tax profit stood at P13. 2 million, which was 13.1 percent better than the same period last year.
The rise in profit after tax was helped by the change in tax legislation, which meant that the effective tax went down, which translated to higher profits for the company.
The company’s capital expenditure went up by 22 percent because large amounts of cash were spent in improving the cash centre that will help the company improve its topline.