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G4S profits surge 14% as outsourcing giant recovers from series of security scandals

Shares in outsourcing giant G4S jumped as much as 9 per cent after it reported surging full-year profits following an overhaul parked by a series of high profile scandals.

The firm hailed “significant progress” after underlying profits jumped 13.9 per cent to £352m in 2016.

Revenues grew 6.3 per cent in the year after the group’s turnaround and restructure plan appeared to be bearing fruit.

In 2013 the security contractor faced heavy criticism after it charged the Government for electronically tagging prisoners who were actually dead.

That came only a year after the Army had to step in after the company failed to provide the security it had promised for the 2012 London Olympics.

Since then G4S has sold 29 businesses since and another 27 are earmarked for sale or closure.

In December, G4S reached a deal to sell its controversial Israeli operations after sustained pressure from campaigners who said the division was complicit in human rights abuses.

“Whilst there remains much to do to realise the full potential of our strategy, the group has made significant progress over the past three years,” Ashley Almanza, chief executive of G4S said.

The company won £2.5bn of new contracts in 2016 and has a pipeline of new business worth £6.8bn a year.

But the results confirmed another hit of up to £4m after a loss-making Home Office contract to house surging numbers of asylum seekers was extended by another two years in December.

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The five-year contract had already cost the group a £31m write-down in 2015’s results.

Shares in G4S have been rising steadily in recent months as its recovery plan has been bearing fruit, while it is also seen as a likely beneficiary of the new US administration’s pledge to boost military spending.

US President Donald Trump plans to boost defence spending by a record $54bn, while G4S could also pick up new contracts to help with America’s immigration policy changes.

Additional reporting by Press Association

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Article source: http://www.independent.co.uk/news/business/news/g4s-profits-rise-14-per-cent-outsourcing-security-provider-private-prisons-scandals-a7617996.html

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