Picture: REUTERS/Darren Staples
Picture: REUTERS/Darren Staples

Bengaluru — G4S will look at offers for all or part of its cash-transport business after its board approved hiving it off into a separate company in the first half of 2020.

The British security contractor's share price rose nearly 9% after Friday’s confirmation of the move to separate its cash operations, which have been hit in Britain by ATM and bank branch closures as digital payments become more common.

The company said it will evaluate third-party proposals for all or parts of the cash operation.

G4S, the world’s largest private security firm with more than 570,000 employees in 90 countries, is focusing instead on emerging markets for growth.

“One of the virtues of the separate cash company that we’re creating is that it has a quite exceptional emerging market footprint,” CEO Ashley Almanza said. “We’re still addressing positive demand for cash services in those markets.”

The business, which employs about 30,000 staff, had annual revenue of £1.2bn and accounted for a third of the company’s profit.

Although use of cash is declining, banks and retailers are increasingly outsourcing handling of notes and coins.

Value doubts

The move will enable G4S to focus on its core security business, which was hit by a series of high-profile failures, including not providing adequate security staff for the 2012 Olympic Games in London.

It also suffered a setback in April, when the British government said it would take over the running of a prison in Birmingham, central England, from G4S after inmate violence made the site unmanageable.

“The company has not delivered [share price or EPS momentum] over the last five years, and we continue to believe debt levels are too high,” analysts at RBC wrote in a client note.

“Whilst a potential cash services demerger would focus the group, we are not convinced it will create value,” the RBC analysts added, saying that they continue to prefer a sale of the cash unit over a demerger.

G4S said first-half adjusted profit before interest, tax and amortisation rose 1.7%% to £234m.

Revenue was also up 4.7% at £3.75bn, largely in line with analysts’ average consensus estimates compiled by the company.

The security business reported first-half revenue of £3.21bn, a 4.9% rise from a year earlier.

The company's share perice, which rose as much as 8.9%, was up 4.4% at 191.8 pence by midmorning.