G4S takes £88m hit to put an end to Olympic security fiasco

 
Marion Dakers
OUTSOURCING giant G4 has tried to draw a line under its botched Olympic security contract by taking an £88m financial hit.

The firm, which admitted it could not provide enough security staff just two weeks before last summer’s Olympic Games began, said yesterday it will book a £70m charge in its 2012 accounts, plus an £11m charitable donation and £7m in marketing costs.

This is higher than the £50m loss that G4S expected last year, but below some analyst forecasts of more than £100m.

Locog said G4S has agreed to pay around £48m to cover military, police and other costs linked to its failure to complete its contract, and cut its own fee by £37m.

As a result, the FTSE 100 firm was paid £171m for its security work, some £85m lower than agreed in the contract, Locog said.

G4S carried out just over 80 per cent of the shifts that it had agreed to cover during the Games. Several directors left the firm following a public outcry.

“The UK government is an important customer for the group and we felt that it was in all of our interests to bring this matter to a close in an equitable and professional manner without the need for lengthy legal proceedings,” said G4S chief executive Nick Buckles.

“In our view this draws a line under the Olympics situation and will enable the company to win more government outsourcing contracts,” said Cantor Fitzgerald analyst Caroline de la Soujeole in a note.