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G4S upbeat as profits return
SCANDAL-HIT outsourcing firm G4S swung back into profit today and said it hoped to grow its UK business by winning new Government contracts, four months after a Whitehall ban was lifted.
Earnings last year had been hammered by the impact of a £108.9 million settlement after it emerged the group overcharged taxpayers for the electronic tagging of offenders, as well as by costly restructuring.
But pre-tax profits for the first half of 2014 were £85 million, up from a £94 million loss for the same period the year before.
They were also up 12% on an underlying basis - stripping out one-off charges for the previous period - to £124 million.
Chief executive Ashley Almanza, who took over from Nick Buckles last summer following the emergence of the tagging scandal as well as its previous debacle over the Olympics security contract, said G4S had made good progress in the first half.
He said the group had won new contracts with a total value of £1.2 billion.
But he added: "There remains much to be done to capture the full potential of our strategy and to strengthen the group's performance."
G4S reported a pre-tax loss for 2013 of £186 million and had been banned from bidding from Government contracts until April when the embargo was lifted following its settlement over the tagging scandal.
The company's UK and Ireland revenues for the first half of this year were down 2% to £790 million as a result of the loss of the tagging contract, offset by improved performance from its cash transit operations.
But it was chosen by the Department for Work and Pensions to manage community work placements for the long-term unemployed.
G4S said that Government had given a "positive assessment of the steps taken to rebuild its confidence in the group's services" and that its shake-up of the UK operation, as part of a wider change of the whole business, was making progress.
"The priorities now are to deliver outstanding service on existing contracts and to grow the business by competing for new Government services in areas where the region has proven expertise and capability," the company said.
Revenues also fell in G4S's European arm but on an underlying basis, for the group as a whole they climbed 4% to £3.37 billion, bolstered by double digit growth in Africa, Asia and the Middle East, and Latin America, as well as better performance in the US.
Mr Almanza said: "Demand for our services was robust, particularly in emerging markets. We are restructuring and rebuilding our business in UK and Ireland and in Europe. We have seen growth return to the North American market."
The results come a day after rival Serco slumped to a £7.3 million loss as it was dragged lower by the costs of dealing with its own tagging scandal, and restructuring.
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