Proactive Investors - Run By Investors For Investors

G4S profits plunge as it forks out £100mln to settle California lawsuit

More than 13,000 security guards claimed they weren’t provided with meal and rest breaks between 2001-2010
g4s security guard
The £100mln charge is G4S’s “best estimate” of what the California lawsuit bill will be

Profits plunged at G4S PLC (LON:GFS) last year after the security services giant was forced to set aside £100mln to settle a class action lawsuit in California.

Back in January, judges in Los Angeles ruled that thousands of security guards had been underpaid for a nine-year period between 2001 and 2010.

The decision means that G4S will have to shell out between £75-100mln to settle the claim, although it has decided to take a provision of £100mln as its “best estimate” of the total costs.

READ: G4S to pay at least US$100mln to settle class action lawsuit

Revenue fell 4% to £7.51bn in the 12 months ended 31 December (2017: £7.83bn), while earnings plunged 65% to £82mln (2017: £237mln).

The drop-off in profitability reflected the California settlement and a £35mln charge for pension equalisation regulation in the UK.

“Our Secure Solutions business delivered underlying revenue growth of 3% and profit margins rose from 6.2% to 6.5% reflecting the benefits of commercial discipline, growth in the sale of technology-enabled security and productivity gains,” said chief executive Ashley Almanza.

“As expected, this was offset by the effect of challenging trading conditions in a number of Cash Solutions markets and a strong comparative performance in Retail Cash Solutions in 2017. Overall, the group delivered underlying earnings in line with the previous year”.

He added: “Our sales wins in the second half of 2018 have underpinned a good start to the year and this, together with growing technology-enabled services in both our cash and security businesses, supports a positive outlook for 2019.”

G4S shares fell 3.3% to 201.5p at the opening bell on Tuesday.

View full GFS profile View Profile

G4S Timeline

Related Articles

Wind turbines
November 06 2018
Formerly known as Strat Aero, the company is now focusing squarely on remote monitoring of rotating shafts after acquiring a controlling stake in software firm GyroMetric
Drilling rig
January 10 2019
Since its first half results in August, the drilling services firm has secured two key contract extensions as well as a new delineation drilling contract in Côte d'Ivoire
Interviewees
August 07 2018
The offer values Nash at £98.7mln and DBAY already controls 26.1% of Harvey Nash shares

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use