Thursday, September 24, 2020

G4S weathers the storm, wading out of the recession

Like any other business operating in a recessionary environment, G4S Security Service has not been spared from knocks, but its management says it plans to manage the recession so that it stays afloat to dribble possible liquidation that threatens smaller companies.

This week, the company that is the only security outfit listed on the local bourse put smiles on the faces of its shareholders after it released results that showed profits after tax going up by 54 percent.

Speaking to Sunday Standard after the presentation of the results for the six months ended June, Percy Raditladi, the Managing Director of G4S revealed the P10 million fleet renewal programme will go ahead.

“We need to manage the recession in the short term. We must stay on course with our strategy and we need to replace our fleet. Old vehicles cost you,” he stated.

In May 2009, the company warned its peers that it will splash cash to replace its ageing fleet as it repositions itself to be the market leader.

If it were not for the tough conditions, the company had planned to spend P10 million this year on new vehicles to replace the ageing fleet.

An additional P700,000 was to be spent on upgrading the information technology (IT) systems to replace servers, introduction of fleet monitoring technology and refurbishment of the control room.

Raditladi anticipates that there will be lower organic growth because of the GDP and inflation numbers, which requires the company to revamp its business.

G4S has a significant presence in cash services, guarding, systems monitoring and guarding.

The company has managed to generate P24 million in cash reserves that can take it through the economic difficulties.

“I think weak competitors are going into liquidation because they do not have money in the bank. It is only the fittest that will survive. In the next six months we need to manage our overheads and we will not have a wage increase,” revealed Raditladi.

He added that they will need to reduce capital expenditure, which is around P10 million for fleet renewal while focusing on debt collection.

In the past, the company was forced to write off millions of Pula as bad debt and this has impacted negatively on the company’s profits.

Raditladi identified the biggest problem as debt on the alarm business saying the threat was to cut off customers and the company ended up writing off P3m of debt.

The company has now decided to opt out of alarm systems which compelled customers to reconnect and that led to the company recovering millions of Pula from the exercise.

“My philosophy is that if a customer does not pay, he or she is not a good customer. This year, we will continue to do that and these are individuals and big clients. We have taken a lot of clients from competitors and allowed the non payers to go to the competitors,” Raditladi quipped.

The company also plans to focus on high margin customers, simultaneously analysing high risk profile customers.

He also revealed that they will also be looking at Palapye, which will be a home to the Botswana International University of Science and Technology (BIUST).

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