Security firm G4S slumps on annual loss after $375 million charge

(Reuters) - G4S GFS.L, one of the world's largest private security firms, took a 291 million pound charge in 2019 mainly related to its UK cash business, pushing it to an annual statutory loss and sending its shares tumbling to a 16-year low.

FILE PHOTO: Flags fly outside HMP Birmingham after the British government took over its running from G4S, in Birmingham, Britain August 20, 2018. REUTERS/Darren Staples

The non-cash charge, much of which relates to goodwill on a merger dating back to 2004, overshadowed a relatively upbeat update from the group, which said the impact of the coronavirus outbreak on its business so far had been “immaterial”.

G4S employs more than half a million people in 90 countries, a third of them in Asia, and a majority of its employees are in frontline roles such as security guards for companies, government agencies, sporting and entertainment events.

The British company, which is contracted to provide security in stadiums and for players and officials during the Indian Premier League cricket tournament in the next few weeks, said it had cut back operations in high risk areas such as Hong Kong, Macau and China to mitigate the spread of the virus.

However, the firm has limited exposure to Mainland China, where the virus emerged, and no operations in Italy and Iran, where recently there has been a spike in number of cases.

G4S, which has been restructuring its business for the last few years following various setbacks, reported a full-year statutory loss of 91 million pounds due to the charge, compared with a profit of 81 million pounds a year earlier.

Last month, the company sold a majority of its cash transportation business to U.S. rival Brinks BCO.N for 727 million pounds, including debt, while retaining its payment and cash technology business.

G4S also held on to its entire cash business in the United Kingdom, where G4S’ vans and guards transporting boxes of money are a familiar sight.

The company, which traces its history to a Danish guarding company from 1901, rolled out the G4S brand in the early 2000s after the merger of Britain’s Securicor and Group 4 Falck’s security businesses to form Group 4 Securicor.

The non-cash charge largely related to a “good deal” of goodwill on that merger in 2004, Chief Executive Ashley Almanza said in a media call.

Shares of the FTSE 250 company, which have lost a quarter of their value in the stock market rout of the last two weeks, had fallen as much as 19% to 107 pence as of 1008 GMT.

Almanza said there had been one confirmed case of the coronavirus at its business in Asia, adding the employee was recovering from the illness.

Reporting by Yadarisa Shabong in Bengaluru; Editing by Bernard Orr and Mark Potter