G4S Botswana has reported a significant financial decline for the first half of 2024, prompting its board to withhold an interim dividend. While the company experienced a year-on-year revenue increase of 5.4 percent, its losses widened considerably, resulting in a reported loss before tax of P8.1 million, compared to a profit of P1.2 million during the same period last year.
For the six months ending June 30, 2024, revenue reached P115.8 million, up from P109.9 million in 2023. This growth was primarily driven by improvements in the Manned Security Services (MSS) division, which benefited from a price increase related to a 23.5 percent statutory wage hike that took effect in February 2024. However, the gains in MSS were overshadowed by underperformance in other areas, particularly in the Cash Services and Electronic Security Services (ESS) divisions.
The company’s gross profit fell sharply, declining 17.5 percent from the prior year, dropping from P24.6 million in 2023 to P20.3 million in 2024. G4S cited several factors contributing to this decline, including rising labor costs and a reduction in Deposita sales within the Cash Services division. Demand for Deposita machines, which facilitate quick and efficient cash deposits, notably decreased compared to the same period in 2023, when the company secured a major sale to a key banking client. This decline, along with cost pressures from wage increases, directly impacted overall profitability.
In the six months ending June 2023, G4S Botswana reported a modest profit of P1.1 million, instilling a sense of optimism. However, the company’s fortunes quickly took a downturn, culminating in a staggering loss of P11.1 million by the end of the year—a sharp reversal from its mid-year performance. This alarming trend indicates ongoing struggles with rising costs and deteriorating profitability across its service lines.
As of June 2024, G4S finds itself once again in a loss-making position, reporting a pre-tax loss of P8.2 million and a total comprehensive loss of P8.5 million. With full-year results still pending, there are growing concerns that losses could deepen further by year-end, potentially exceeding the previous year’s figures. The pattern of mid-year profitability followed by significant year-end losses highlights the persistent challenges G4S faces in stabilising its financial performance.
The 23.5 percent wage hike has proven to be a significant burden, necessitating adjustments to severance and leave provisions. These changes resulted in higher costs in the first half of the year, compounding the already tight margins across service lines. The wage increase occurred amid national inflation of only 3.9 percent, further exacerbating the financial strain on the company. Despite these challenges, G4S emphasised improved performance in the MSS division on a year-on-year basis.
G4S also faced substantial impairments in its financial assets, with net impairment losses rising to P6.7 million, up from P2.2 million during the same period in 2023. This increase was attributed to lower debt collections in the first half of the year and changes in the company’s credit loss estimation models. Notably, the 2023 model assumed a longer collection period of 60 months, compared to 36 months in 2024, resulting in a higher impairment charge.
In a statement accompanying the financial results, the company disclosed that administrative expenses remained largely stable, increasing by just 1 percent year-on-year. However, this modest increase was insufficient to offset mounting losses elsewhere in the business, leading to an overall loss of P8.5 million for the six months ending June 30, 2024.
Most notably, G4S’s latest financial report includes the board’s decision not to declare an interim dividend. The board stated that it assessed the group’s solvency and liquidity and concluded that it was not in a position to distribute dividends at this time. “Despite an increase in revenue year-on-year, the Group is still in a loss position for the current period,” the board noted, adding that the dividend proposal would be revisited based on full-year results, pending a recovery in financial performance.
Despite this loss-making position, G4S maintained a relatively strong balance sheet. As of June 30, 2024, the company reported total assets of P154.8 million, down slightly from P174.7 million in the same period in 2023. Cash and cash equivalents improved, rising to P14.2 million from P12.7 million in 2023.
However, trade and other receivables saw a sharp decline, dropping from P40.2 million in 2023 to P29.7 million in 2024. This decrease reflects the company’s ongoing efforts to enhance its debt collection processes, identified as a key priority for the remainder of the year.
Another area of concern is G4S’s goodwill, which was impaired to P8.9 million from P9.7 million in the previous year. The impairment was driven by weaker–than–expected performance in the MSS line, which is the main contributor to the company’s goodwill. While the company’s balance sheet remains relatively robust, these impairments, coupled with the mounting operational challenges, suggest that G4S may continue to face financial headwinds in the near future.
The remainder of 2024 will be critical for G4S as it seeks to stabilise its operations and address the financial challenges that have plagued its performance in the first half of the year. Management has outlined several initiatives aimed at improving debt collection and controlling costs, but the company remains cautious about its outlook.
In its statement, the board reiterated that the dividend decision would be revisited at the end of the year, pending a recovery in financial performance. However, with rising costs and impaired profitability, the path to recovery remains uncertain.
