12th Mar 2014 08:41
LONDON (Alliance News) - Troubled outsourcing company G4S PLC Wednesday said it swung to a loss in 2013 as it booked GBP386 million in charges and restructuring costs related to its issues with UK government contracts, but new Chief Executive Ashley Almanza said the company was already looking to the future.
G4S and rival Serco PLC were placed under investigation by the UK government last July and all their government contracts were placed under review, after details from an audit emerged showing that they had been over-charging on criminal tagging contracts, claiming for people who were dead, who had never been to prison, or never tagged in the first place. In November, the Serious Fraud Office opened a criminal investigation into the tagging contracts.
In December, two G4S court facilities management contracts were also referred to the SFO.
Serco has since agreed a settlement with the UK government, which has endorsed its restructuring programme and said it can bid once more for government contracts after a six month ban.
However, G4S has yet to come to the same deal with the government. It has put aside provisions to cover the potential costs for the tagging contract after offering to refund GBP24.1 million for overcharging. However, that offer has been rejected by the government.
In its statement, it said it is continuing to to have "constructive discussions" with the government and remains "committed to resolving all matters relating to the electronic monitoring contracts."
Like Serco, G4S has also been going through a restructuring programme in the wake of the contract issues.
It said it had booked GBP136 million in charges for a global review of contracts, including a provision for the UK tagging contract, a charge of GBP182 million following a review of its assets and liabilities, and a GBP68 million for accelerating its restructuring programme.
That pushed it to a pretax loss of GBP170 million for 2013, compared with a profit of GBP158 million in 2012. Its net loss was GBP362 million, compared with a GBP40 million profit.
Excluding the charges, its closely-watched profit before interest, tax and amortisation was down 6% at GBP442 million, while the figure was up 2.8% at constant currencies. Its revenues rose to GBP7.43 billion, from GBP7.24 billion.
Despite this, Almanza said the company was already looking to the future.
"This has been an extremely challenging year for G4S. We have taken clear action to address longstanding issues and have introduced wide ranging changes to strengthen our business. We can now look to the future with increasing confidence, focusing on the growing demand for G4S services that underpins our plans to deliver sustainable, profitable growth," the new CEO said in a statement.
"That confidence is reflected in the Board's recommendation to maintain the dividend."
G4S kept its final dividend unchanged at 5.54 pence, meaning the total dividend for the year was also flat at 8.96p.
Still, its shares were down 3.1% at 237.9 pence early Wednesday, one of the biggest declines on the FTSE 100.
By Steve McGrath; [email protected]; @SteveMcGrath1
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