G4S sees profits slump as it settles lawsuit

SECURITY FIRM G4S posted a 63 per cent drop in profits on higher costs related to settlement of a lawsuit and a charge for pension equalisation regulation.

It comes after the company warned last November that revenue would be lower than forecast and that earnings were not expected to grow in 2018.

G4S made a pre-tax profit of £143m in 2018 compared with £387m the previous year.

This includes a £100m provision for settlement of a class action lawsuit in California related to labour conditions, and a £35m charge for equalising benefits for historical pension obligations between men and women in the UK.

Revenue fell 4 per cent to £7.5bn, which the company said was due to the “relative strengthening” of the pound and disposal of several businesses in Hungary, Israel, the United Arab Emirates and North America.

However, on an underlying basis, pre-tax profits fell just 1.1 per cent to £272m and revenue increased by 1.1 per cent to £7.3bn, led by its Secure Solutions division.

Revenue from the Cash Solutions division fell 9.3 per cent following the mobilisation of a large contract in 2017.

G4S is to separate its Cash Solutions business from the group and is aiming to start the process in the second half of the year, which may need shareholder approval.

It said it has received unsolicited expressions of interest to acquire the business.

The company is in the midst of an efficiency plan aimed at delivering up to £100m in recurring cost savings by 2020, which will be reinvested in the business and expected to boost the bottom line.

Chief executive Ashley Almanza was positive about the group’s outlook.