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Security Firm G4S Says Olympic Woes Will Cost $79 Million

Aug. 28, 2012 - 08:51AM   |  
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LONDON — British security giant G4S said Aug. 28 that its failure to provide enough guards for the London Olympics would cost about 50 million pounds as it struggles to recover from the fiasco.

The company announced in a results statement that it had booked the loss — equivalent to $79 million or 63 million euros — as an exceptional item in the first half. The provision was at the top end of its prior forecast.

G4S added that pre-tax profits slumped 60 percent to 61 million pounds in the six months to the end of June, hit also by restructuring costs after it slashed 1,100 jobs worldwide. Net profits tumbled 74 percent to 30 million pounds.

Just two weeks before the Olympic Games began, G4S revealed it could not completely fulfill its 284-million pound contract to provide 10,400 security staff for Olympic venues.

It triggered a political firestorm, and the British government was forced to deploy an extra 4,700 troops to cover the shortfall.

Under-fire chief executive Nick Buckles admitted Aug. 28 he was “deeply disappointed” about the problems with the Olympics contract.

“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,” Buckles said.

“The overall business has performed well in achieving a similar underlying profit as the first half of last year despite economic challenges, particularly in Europe, and weakness in the U.S. government market.”

Speaking on a conference call, Buckles added that he needed to prove to investors that he deserved to keep his job.

“I hope I keep my job,” he told reporters.

The London-listed firm is carrying out an Olympic contract review that will be completed next month.

G4S meanwhile reassured investors that it would have enough staff to cover the Paralympics, which will start in London on Aug. 29.

“We continue to work with our partners to ensure that the games are safe and secure,” it said.

“We are confident that we have an assured security work force for the Paralympic Games and do not anticipate any work force shortfall issues to arise.”

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