# G4S maintains a high level of business continuity throughout the pandemic

- Link: https://www.directorstalkinterviews.com/g4s-maintains-a-high-level-of-business-continuity-throughout-the-pandemic/412816784
- Published: 2020-04-30T08:11:13+01:00
- Author: Amilia Stone

**G4S plc **(LON:GFS) has today provided the following update for the three months
ended 31 March 2020. Unless stated otherwise, all figures and commentary relate 
to underlying results, are unaudited and stated at March 2020 exchange rates. All
comparisons are with the first quarter of 2019 unless otherwise stated and are presented
on a proforma basis that excludes all conventional cash businesses sold to Brink’s
on 26 February 2020.

> **Commenting on first quarter trading, G4S Group Chief Executive Officer, Ashley
> Almanza said:**
> “Organic growth in revenues was 2.5% compared with the first quarter of 2019.
> In response to the Covid-19 pandemic, we have taken significant action to reinforce
> health and safety measures for employees and customers, assure service delivery
> and to protect the company’s financial performance, cash flow and financial position.
> Following growth in the first two months, revenues were unchanged year-on-year
> for the month of March, principally reflecting the impact of the Covid-19 pandemic
> on the remaining conventional cash businesses.
> As our services have been designated as essential in all of our major markets 
> the overwhelming majority of our employees continue to support our customers, 
> including in the provision of additional services in some markets.
> As indicated in more detail below, there are some sectors which will be adversely
> impacted by the pandemic and considerable uncertainty remains about the level 
> and duration of the economic downturn in our major markets. We have therefore 
> taken significant steps to reduce our costs and to underpin our cash flows. Including
> the incremental restructuring savings of £20 million (annualised) that we are 
> targeting post the completion of the sale of our conventional cash businesses,
> we have, to date, identified direct and indirect cost savings of around £100 million
> this year.
> We have continued to make good progress with the completion of the sale of most
> of the Group’s conventional cash businesses and have to date completed around 
> 71% of the transaction, realising £518 million in cash proceeds.
> The US federal social security tax deferral programme is expected to provide the
> Group with a net cash flow benefit of around £50 million, most of which will crystallise
> in the second half of the year. Curtailing discretionary capital investment provides
> an additional opportunity to preserve financial flexibility.
> Despite the economic uncertainty, the Board is confident that the Group’s diversified
> revenue base, financial strength and liquidity provide the Group with substantial
> and sustainable resilience. With the sale of our conventional cash businesses 
> and the actions we are taking in response to the pandemic, we aim to emerge as
> a leaner and focused market leader in the global delivery of technology enabled
> security solutions”

**Performance in Q1 2020**

**Group revenues were 2.5% higher than the first quarter of 2019**, with 2.9% growth
in Secure Solutions and 2.3% decline in Cash Solutions. Revenues in March were broadly
unchanged year-on-year.

Throughout the period of the pandemic to date, G4S has maintained a high level of
business continuity and has only had to furlough employees in exceptional circumstances.
The most significant adverse impact of Covid-19 has been, as expected, in our Europe&
Middle East region across the events, leisure and tourism, aviation, ports and transport
and logistics security segments (these segments typically represent, in aggregate,
around 6% of Group revenues) and the UK cash solutions business (3% of Group revenues).

**Secure Solutions revenues were 2.9% higher** with growth in the Americas (+6.9%)
and Asia (+4.2%). Revenues in Africa were unchanged and our Europe & Middle East
region declined by 1.4%. Secure Solutions revenues for the month of March were up
1.4% compared with March 2019.

**Cash Solutions revenues declined by 2.3% in the quarter** and in March were 13.3%
lower year-on-year.

**Covid-19 pandemic**

G4S has taken a number of actions since the start of the pandemic including:

 * Implementing enhanced health and safety procedures, including the use of personal
   protective equipment, increased hygiene resources, social distancing and other
   measures to support the safe delivery of our services.
 * Using an employee welfare fund to provide additional assistance to employees.
 * Offering additional services to support customers.
 * Reducing direct and indirect costs by around £100 million this year, including
   the acceleration of previously announced programmes.
 * The Executive Directors and certain senior executives will not be paid bonuses
   for 2019, and are suspending their participation in the 2020 bonus programme 
   and 2020 annual salary increase.
 * Reducing LTIP awards for 2020 by 25%.
 * Suspending the final 2019 dividend of £95 million.
 * Deferring around £50 million tax payments to 2021 under a US federal social security
   programme.
 * Targeting discretionary capital investment savings of around £20 million.

**Liquidity**

The Group has adopted a prudent stance in relation to liquid resources. We have 
a favorable debt maturity model, and a strong liquidity profile, which are further
boosted by the proceeds being realised from the previously announced sale of conventional
cash business. Consistent with this prudent approach, the Board decided to suspend
the 2019 final dividend payment, and management has implemented robust cost and 
cash flow control measures.   

At 31 March 2020 the Group had liquid resources of £1.1 billion comprising cash,
cash equivalents and bank overdrafts of £0.6 billion and committed, unutilised credit
facilities of £0.5 billion.  This liquidity has been enhanced further subsequent
to the first quarter through the receipt of around £0.45 billion of disposal proceeds
in respect of the sale of the conventional cash businesses to Brink’s. On 31 March
2020, Standard & Poor’s re-affirmed the Group’s credit rating as BBB- with a stable
outlook.

**Supplementary information**

G4S results for the six months to 30 June 2020 will be published in August 2020.

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