G4S admits it is fighting to repair reputation
Security firm G4S has admitted that it is fighting to repair its battered reputation, as it wrote off £50 million in losses on its bungled London 2012 contract.
It fulfilled 83% of contracted shifts at the Games, failing to provide all of the 10,400 contracted guards and forcing the Government to step in with military personnel, the group confirmed.
G4S, which has already ruled itself out of bidding for the Rio 2016 Olympics security contracts, said it is confident that the Paralympic Games, starting tomorrow, will be fully staffed with a security workforce.
It is conducting an internal review after the Olympics debacle which saw troops plug a shortfall left by G4S just weeks before the event started.
Chief executive Nick Buckles said: "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.
"Clearly it is a big setback and we need to rebuild the brand over the coming months and years."
The £50 million expected loss on the Games contract is at the upper end of what the firm initial expected. G4S said the final amount could be higher because of contract penalties and with the actual cost to the Government of providing military personnel yet to be calculated.
The Government put another 4,700 personnel on standby, on top of 13,500 initially committed, after G4S admitted its shortfall in July. G4S said not all of these were used as it provided nearly 8,000 staff for the Games.
The £50 million hit contributed to a drop in half-year, pre-tax profits to £61 million from £151 million a year earlier, although underlying profits were the same as last year at £236 million as sales increased 5.8% to £3.9 billion.
Mr Buckles said no G4S contracts were lost after the bungled Olympics contract and insisted that the group will continue to play a major role in the public sector, with an overall £3.8 billion-a-year contract pipeline.
But he confirmed that the resources G4S put into sorting out the Games debacle meant it withdrew from bidding for a Department for Work and Pensions contract worth £20 million a year.
Mr Buckles is battling to save his career after the contract problems and a high-profile mauling by MPs, which left him agreeing that the Games staffing episode was a "humiliating shambles".
Reports in recent days suggest he has the support of major shareholders. He said: "I hope I keep my job. I have been with the company for 28 years and during the last 10 years as chief executive."
He is preparing for a second appearance in front of MPs on the Olympics contract next month, while the results of the internal review are due towards the end of September.
G4S - the largest employer on the London Stock Exchange with around 650,000 staff worldwide - also announced it has cut 1,100 jobs in a restructuring programme which started in December last year. Most of the cuts have been made across continental Europe and developing markets, with fewer than 100 roles axed in the UK.
G4S shares have fallen another 2% and analysts remain cautious about the group's outlook.
Caroline de La Soujeole, analyst at Seymour Pierce, said: "Restoring its reputation with the UK Government is crucial to G4S. Some 10% of group sales are generated from the UK's public sector and just under half (45%) of the UK's bidding pipeline is for government work."
The group is a major provider of government services, such as for police forces, prisons and probation, and also has a cash handling business.
Its secure solutions division saw turnover increase by 6% in the first half, excluding the Olympics deal, and revenues rose 3% at its cash solutions arm.
But a growing part of G4S's business comes from developing markets which account for 31% of group turnover in the half-year and produced 10% growth in revenues.
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