G4S confirms £50m hit on Olympics contract

Security contractor confirms that the impact of the bungled Games contract is at the top end of expectations but reassures on Paralympics

Security contractor G4S has taken a hit of £50m on its bungled Olympics contract, at the top end of expectations, as the group reported a 60% fall in first-half profits.

Nick Buckles, G4S chief executive, said he was “deeply disappointed” with the London 2012 debacle, which saw the army called in to shore up security after G4S was able to provide only 7,000 of the required 10,400 guards.

“We were deeply disappointed that we had significant issues with the London 2012 Olympics contract and are very grateful to the military and the police for their support in helping us to deliver a safe and secure Games,” he said.

G4S said it has delivered 83% of the security shifts demanded under the contract and gave reassurances over the Paralympics, which start on Wednesday. “We are confident that we have an assured security workforce for the Paralympic Games and do not anticipate any workforce shortfall issues to arise,” the group said. G4S said it expected a review of the Olympic contract furore, by PricewaterhouseCoopers, to report back to the group’s board in the second half of September. Meanwhile, some shareholders have expressed support for Buckles while one major investor, Invesco Perpetual, has described the parlimentary haranguing of Buckles as like watching “a medieval persecution”.

The G4S figures for the six months to 30 June confirmed that the impact of the Games contract – which includes paying for the deployment of soldiers – will be at the upper end of an initial £35m-£50m estimate. The announcement came as G4S reported pre-tax profits of £61m for the period, down from £151m in the first six months of 2011. The profit drop was largely accounted for by the £50m Olympics loss and £24m in restructuring costs, which includes the cutting of 1,110 jobs from the group’s 657,000 strong global workforce with the majority of losses occuring outside the UK. More than half the cuts came from developing markets such as India, Thailand and South Korea, G4S said, with 58 lost in the UK.

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