G4S, the country’s leading security company, said its full year results are expected to beat market expectations, shrugging off the effects of the global economic downturn that dominated corporate news in the past year.
“Revenue is expected to grow by 8.3 percent, while profit after tax is expected to be between 70 percent ÔÇô to- 75 percent higher than in FY09,” the company said in a trading update.
It added: “Management attributes the increase in profit to a once-off profit realised on the disposal of the company’s head office in Gaborone under a sale and leaseback transaction.”
The Botswana Stock Exchange (BSE) listed outfit recorded a double-digit growth┬áin its┬ásix months to June 30┬álast year that was largely┬áattributed to┬átighter┬ábudgetary controls during the period.
In the half year results,┬árevenue swelled 10.6 percent to P 73 million against the 18.2 percent like-on-like┬áwhile profit before tax┬á ballooned by 17.2┬á percent┬á to┬á P 15.6 million.
The┬á┬áfull year results, due on February 25, will also be powered by a raft of measures aimed at lifting up its┬áprofit┬ámargins that include the rolling-out of new products and services┬áin the market.
“I think the┬ánew products that were introduced last year will give the company a competitive edge over its peers,” a researcher at Motswedi Securities, Garry Juma said on Monday, adding that┬á overall, he expects modest growth on the operational side due to unfavourable economic condition.┬á
He said competition was tight over the year as the market saw the mushrooming of new entrants┬áin the┬ásystem and manned security side. That prompted G4S to come up with a raft of┬ánew products and services aimed at repositioning itself in the market.
Among them are initiatives that 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┬áresponse division to deal with the┬áever congested Botswana roads.
It also phased out of the┬áalarm system connection fees that has badly affected the business┬áby deterring┬ápotential customers to enter into contracts with the company.
The other new developments include government’s initiatives that will see non core business┬áactivities being farmed out to the private sectorÔÇô including the manned security services.
┬áThe┬ámanned security business┬áhas a strong potential going forward as government is trying to┬ájump out of┬ácertain sectors of the economy ÔÇô including security ÔÇô and hand it over to the private sector. That could have some benefits to G4S ÔÇôan 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┬áit takes 85 percent of the cash business that includes ATMs.
┬áHowever, at the time of going to press on Monday the issue of G4S qualifying┬áfor┬ágovernment’s outsourcing of manned security was┬ástill fraught in some controversy as new guidelines pointed out that┬áit was only reserved for wholly citizen companies.
“It is very tricky to qualify under that criteria,” Juma said, pointing out that the new measure says that┬áthat is reserved for citizen companies.