(Alliance News) - Shares in G4S PLC plunged Wednesday morning in London as profit for 2019 dropped sharply on impairment charges, despite solid growth in revenue.
The stock was 19% lower at 108.10 pence, making it the worst performer in the FTSE 250 index.
For the year, the London-based security services provider posted a pretax profit of GBP27 million, down more than 80% from GBP142 million in 2018, entirely due to a goodwill impairment charge amounting to a whopping GBP291 million.
G4S's 2018 profit also was hurt by one-off charges, though smaller, including GBP100 million related to a class-action lawsuit in California. The legal case involved claims made against one of its subsidiaries over meal and rest breaks under California employment law.
The 2019 impairment comprised of GBP205 million for the UK Cash Solutions business on the declining rate in cash volumes in the UK, GBP35 million for G4S's Brazil Secure Solutions, and GBP40 million from the Facilities Management business.
On an underlying basis, pretax profit rose by 4.3% to GBP383 million in 2019 from GBP367 million the prior year.
Revenue rose by 3.4% to GBP7.76 billion from GBP7.51 billion, driven by strong growth in Secure Solutions, where revenue rose by 4.7% to GBP6.57 billion on security services.
G4S declared a final dividend of 6.11 pence per share, bringing the total payout to 9.70p, in-line with the year before.
"Whilst 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. We will continue to closely monitor the development and impact of the coronavirus and take mitigating actions, as required," said Chief Executive Officer Ashley Almanza.
"The long-term, fundamental strength of the global security market, together with the competitive strength of our Secure Solutions and Retail Technology Solutions businesses, underpins our confidence in the outlook for the group," Almanza added.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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