G4S to incur 35-50m pound loss on Olympic contract

Under pressure security solutions firm G4S estimates that it will incur a loss on its Olympics Games contract of 35-50m pounds after failing to provide the number of staff for the event that it had committed to.

During the past week, the company has grabbed the headlines after admitting that the size of the workforce would be lower than expected, prompting organisers to call in as many as 3,500 troops from the military.

"We have recently encountered significant difficulties in processing applicants in sufficient numbers through the necessary training, vetting and accreditation procedures. As a result, we will be unable to deliver all of the necessary workforce numbers," the company said on Monday.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

"We are grateful for the additional military support. We do not underestimate the impact on the military personnel and their families and express our appreciation to them."

The company said it accepts responsibility for the additional cost of the increased military deployment resulting from the shortfall in workforce delivery. It is also incurring other "significant" costs as it tries to meet the contract challenges.

"Whilst it is not possible to gauge the precise financial impact, it is estimated that the company will incur a loss on the contract in the range of £35m - £50m, all of which will fall in the current financial year."

G4S will conduct a full review of its performance on delivering the contract when the Games are over.

Chief Executive Officer Nick Buckles said: "We are deeply disappointed that we have not been able to fully deliver against our contract with LOCOG and that it has been necessary to call upon the additional military personnel.

"In partnership with the military and LOCOG, we are working flat out around the clock to resolve the situation. We are determined that together we will deliver a successful and secure Games."

BC