30 April 2020 – trading update

A trading update has been provided covering the first quarter.  Organic growth in revenues was 2.5% but unsurprisingly the company has had to take significant action in response to the Covid-19 pandemic.  G4S’ services have been designated as essential in all of of its major markets and there has been the provision of additional services in some areas.  Some sectors will be adversely impacted by the pandemic so steps have been taken to reduce costs.  Including the annual savings of £20m expected following completion of the sale of the conventional cash businesses, direct and indirect cost savings of around £100m have been identified for 2020.  The US federal social security tax deferral programme is expected to provide a net cash flow benefit of around £50m.  The company remains confident in its long term future.  This is a solid business and deserves a BUY rating at the current price.