G4S slumps to annual loss after writedown weighs on profits

G4S, one of the world’s biggest private security firms, has slumped to an annual loss after writing down the value of its UK cash-handling business.

The British firm, which supplies services in more than 90 countries, reported a £91m loss for 2019, compared with a profit of £81m the previous year, after taking a hit of £291m on its cash unit.

The writedown on the division, which provides vans and guards to transport money, reflects the general decline in cash usage in recent years. However the business, which has contracts with large retail banks, remains profitable.

Shares in the FTSE 250-listed company fell by more than 26% to 98p at midday on Wednesday.

In Britain, G4S’s main business is security services, followed by cash handling and a care and justice unit, which includes running four prisons and providing non-emergency patient transport and other health services. G4S sold its children’s care homes business, which also ran two youth prisons, three years ago, after damning footage emerged of its staff using excessive force on children.

The outsourcing firm has been embroiled in a number of scandals in recent years, and was stripped of its contract to run Birmingham prison last April after the government seized control of the failing jail.

Last month, the rival outsourcing firm Serco won the contract to manage the Brook House and Tinsley House immigration removal centres. G4S decided in September it would not re-bid for the contract and ended its involvement in the immigration and asylum sector, after a scandal at Brook House prompted a government inquiry.

Instead the firm will focus on running prisons – despite the Birmingham failure – and seek further contracts after Boris Johnson promised 10,000 new prison places.

A 2017 BBC Panorama programme showed undercover footage of a detainee being throttled by a member of G4S staff at Brook House, Gatwick airport, and raised claims of systematic abuse.

While a 2019 report by HM Inspectorate of Prisons found no evidence of an abusive culture, it noted that incidents of self-harm had significantly increased and that detainees spent too much time locked in their cells.

In 2014, G4S had to pay the UK’s Ministry of Justice £109m plus VAT for overcharging on electronic tagging of offenders and was briefly barred from new public sector contracts in the UK.

Norways’s sovereign wealth fund blacklisted G4S shares in November, citing “unacceptable” risks that the company is violating the rights of its 30,000 migrant construction workers in Qatar and the United Arab Emirates. G4S said in a statement at the time that migrant workers deserved to be treated with dignity and respect, and said it had hired a migrant worker coordinator to address the issues raised by the fund.

G4S employs more than half a million people worldwide. The firm started stockpiling face masks in January in response to the coronavirus outbreak, and has scaled back operations in mainland China, where it has 75 employees, and in Hong Kong and Macau. It does not operate in Italy, Iran, Germany or South Korea.

The group has also begun a programme to test potentially affected employees and only one, in Singapore, has tested positive so far.

Ashley Almanza, the G4S chief executive, said: “While there is clearly near-term uncertainty about the impact of the coronavirus on the global economy, the effect on the group has, to date, been immaterial.”

Source: Read Full Article