G4S reveals loss on Olympic security failures
- 28 August 2012
- From the section Business
Security firm G4S has said the contract to provide security for the London 2012 Olympic Games has cost it £50m.
The figure is at the top end of the scale of losses the company had warned it would bear, after it failed to recruit and train enough of the guards it had promised for the event.
The government was forced to turn to the military for the extra staff, for which G4S confirms it will pay.
G4S chief executive Nick Buckles has apologised for the debacle.
G4S revealed the cost along with its interim results, where it said half-year pre-tax profits had fallen from £151m to £61m.
The company's contract was worth £284m and included the supply of 10,400 security guards to the 100 Olympic sites across the country. However, the company was unable to recruit enough in time.
Less than a month before the opening ceremony, it told the government it would not be able to provide enough staff.
G4S said in a statement that it had had 8,000 staff on the ground over the course of the Olympics and it had delivered 83% of contracted shifts.
It added that in many cases, the military were able to withdraw from specific sites.
Its statement said its board was reviewing the contract with the help of the consultants PricewaterhouseCoopers. One of its aims was to examine why failures relating to the Olympic contract were not identified "in a more timely manner".
G4S said there would be no similar staffing issues for the Paralympics, whose opening ceremony is on Wednesday.
The company is cutting 1,100 jobs, largely relating to its operations in continental Europe.
G4S employs more than 650,000 staff in 125 countries worldwide and gains more than a quarter of its income from government contracts.
The company's chief executive Nick Buckles, told MPs last month that the staffing crisis had been a "humiliating shambles".
He is due to appear in front of MPs a second time to talk about the Olympics contract next month.
G4S's statement repeated it was "deeply disappointed that it had significant issues" with the contract and said it was "very grateful" to the military and the police for their support.
Mr Buckles has been with the company for 28 years, 10 of these as chief executive.
There had been calls for Mr Buckles to resign, but many shareholders want him to stay in place.
However, Simon Lord, managing director at the investment bank Altium, says there is a question mark over whether the company can continue to be run as it has been.
"There is no doubt that the reputational risk of what's gone on at the Olympics far outweighs the direct financial impact of the contract," he told the BBC.
"In the five days post the announcement, about £700m was wiped off the value of the shares for the incident, which cost £50m. A number of UK government contracts are up for tender in the second half of this year and stakeholders will be watching these very closely."