G4S takes £50 million hit from fiasco of Olympics contract
Security firm G4S, at the centre of a political and media storm over its failure to provide enough guards for the London Olympics, said the fiasco would cost it £50 million and it was fighting to rebuild its reputation.
Under-fire boss Nick Buckles, hauled before British lawmakers last month to explain why troops had to be drafted in to fill the shortfall, yesterday pledged there would be no repeat problems at the Paralympics, starting today.
He also said there were no signs the company was losing contracts or not winning new ones and, with £3.8 billion of work per year in its pipeline, it should bounce back.
Not all analysts were convinced, pointing to the company’s decision to freeze its interim dividend, and G4S shares were down over two per cent in morning trade.
“The unchanged interim dividend suggests some caution from management, with a number of key government contract decisions coming up during H2 2012,” said Panmure’s Mike Allen.
Over half of G4S’s British revenue comes from government contracts, with more than 20 per cent of its pipeline also stemming from that market, including deals to run prisons and some police services later this year.
Seymour Pierce analyst Caroline de La Soujeole said Mr Buckles’s appearance before Parliament’s Home Affairs Committee on September 11 could be crucial before the first wave of prison contracts in the autumn.
G4S, with 657,000 staff in over 125 countries, said the findings of a board review into the Olympic contract failure would be available in late September. British lawmakers are also holding an inquiry into the debacle.
The firm said it estimated the £50 million for paying military and police personnel drafted in to cover the shortfall in guards, over potential penalties and liabilities.