Tuesday, October 27, 2020

New Trade Act ‘secures’ a bite on G4S Botswana revenue

Multinational security company – G4S Botswana has expressed worries relating to the country’s new Trade Act and has blamed it for its fall in revenues. 

The revised Trade Act which was implemented at the beginning of June 2020 impose restrictions on participation by foreign entities on certain business including cleaning services which G4S Botswana has been a player in. While it is listed at the BSE and has some local shareholders, G4S Botswana is not wholly owned by citizens. 

The UK originating company now says the effect of the Trade Act as well as growing market sentiment that impose citizen ownership on the industry will hinder the business to grow particularly in the manned guarding and cleaning management space. 

G4S Botswana management says while the statutory environment is putting pressure on the group margins, the company has adopted an approach of growing its business by increasing volumes and expanding service offering to the market as a whole, rather than increasing prices. 

The group says it will further focus on growing revenue in second half of the year as well as recovering long outstanding debts to bolster cash reserves. 

“The group’s strategic initiative will remain the acceleration of integrated security solution deployments with a long term view of risk partnering with our customers on all fronts. This will assist with customer retention as well as expanding on the already existing relationships with our customer base”, says Mokgethi Magapa – G4S Botswana Managing Director. 

Apart from Facility management G4S Botswana, which also trades its stock at the Botswana Stock Exchange (BSE) also provide security services including cash solutions and manned security. 

For the interim period ending June 2020 G4S posted a 7 percent fall in revenue and 18 percent decrease administrative expenses. The Group’s Manned Guarding Revenue increased by 17 percent while Manned Guarding Profit before Tax increased by 217 percent.  Owing to P9 million which was received from the Government as wage subsidy for the Covid 19 pandemic for three months, the group’s Other Income increased by 94 percent.

Meanwhile the G4S Botswana board of directors have said that taking into consideration the impact of the COVID-19 pandemic and the business and financial uncertainty the company will not pay out dividend to shareholders for the interim period. 

“The Board notes a reduction in revenue and profitability year on year, exclusive of the wage subsidy received from Government, and is therefore of the view that a prudent approach should be adopted to resource management at this point in time”. 

Despite not declaring interim dividend, G4S Botswana management says the company has liquid resources of P94 million as at 30 August 2020 based on the latest available management accounts. 

“Notwithstanding this strong financial position, there is unprecedented uncertainty in respect of the global economy and therefore the dividend proposal will be revisited based on the full year results”, reads part of the statement accompanying the Group’s interim financials released this past week. 

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The Telegraph October 28

Digital edition of The Telegraph, October 28, 2020.