Overhaul at G4S to see 400 jobs go

SECURITY firm G4S yesterday revealed that it plans to shake up the weakest parts of its business and lay off up to 400 staff.

The company is trying to restore its reputation after a series of high-profile blunders.

Chief executive Ashley Almanza said he would sell or restructure 35 poorly performing businesses, which account for about one twentieth of group turnover.

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Any proceeds from the disposals would be earmarked for higher-growth emerging markets.

G4S, which, along with rival Serco, is being investigated by the Serious Fraud Office over electronic tagging contracts, acknowledged that it has suffered “significant reputational damage”.

The company, whose mistakes include its failure to provide enough staff for the 2012 London Olympics, last week denied an allegation that its employees had abused inmates at a prison it ran in South Africa.

G4S also said yesterday that trading in its fourth quarter was expected to remain challenging in Europe and the United States, sending its shares down in a slightly lower market.

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Mr Almanza, a former executive at oil and gas firm BG Group who was promoted from finance chief in June, said G4S had been damaged by its short-term focus and he would now manage the business for the long term.

It will be reviewing its regions on a monthly basis, and improving customer services and technology.

“G4S has strong fundamentals and these will be improved by changes to the way we manage the business,” he said.

There were significant opportunities to grow in emerging markets, which already make up more than 40 per cent of profit, he added.

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The 35 under-performing businesses to be reviewed in the next year made around £400m of G4S’s £7.3bn revenue last year, and have an average operating profit margin of three per cent, below the 5.5 per cent for the group at the half year ended June. Mr Almanza would not comment on where they were located.

The firm, which runs services at immigration centres and guards tennis players at Wimbledon, also said it would invest £15m to £20m in its operations to help achieve an annual organic growth target of five to eight per cent.

G4S, which issued a profit warning in May, said organic revenue rose by 4.8 per cent in the nine months to September 30, although margin pressure kept adjusted pre-tax profit in line with the same period a year ago.

In August, just a few months into his new role, Mr Almanza raised £348m through a share sale and earmarked more cash to come from disposals to help avoid a costly credit-rating downgrade, improve profit margins and fund expansion.

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He also announced a restructuring process at some European businesses and its UK and Ireland cash security arm.

Yesterday, he said the programme was progressing well with price rises agreed with major clients.

There will be branch closures and the removal of 250 to 400 UK posts over the next 18 months, G4S said.

The firm, whose business spans 120 countries, has around 45,000 staff in the UK.

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Speculation Mr Almanza’s overhaul might lead to a break-up of G4S cooled last week, when the firm rejected a $2.5bn offer for its cash security business, saying the unit was integral to its strategic plans.

G4S said it had brought six new directors on to the board since June last year and made five changes to its executive team in an effort to give clients more confidence in its ability to manage the business.

G4S employs nearly 2,600 people in Yorkshire and the Hum- ber.

It provides security at Headingley Cricket ground in Leeds.

G4S also provides electronic monitoring services of offenders on behalf of the Ministry of Justice across the region.