Yahoo Finance G4S Takes £70m Hit After Olympics Fiasco
Security company G4S (LSE: GFS.L - news) has said its loss on the London Olympic security contract would stretch to £70m after finally agreeing a settlement with Games organisers.
The world's biggest security firm's reputation was badly tarnished when it admitted just weeks before last year's Olympics it could not provide 10,400 guards for the Games, forcing British troops to fill in.
G4S, which was subsequently hauled before MPs to explain the debacle, had previously estimated its hit on the contract - worth around £240m - to be around £50m.
Two G4S directors - chief operating officer David Taylor-Smith and Ian Horseman Sewell, who was head of global events - resigned in the wake of the independent review.
However, chief executive Nick Buckles, stayed in his post.
The group said it had also incurred additional costs of approximately £11m, relating to charitable donations and external fees and a further £7m relating to the cost of sponsorship and marketing.
All of these costs will be taken in the 2012 accounts as an exceptional charge.
The London Organising Committee of the Olympic (BSE: OLPCL.BO - news) and Paralympic Games (Locog) said taxpayers would not lose out because of G4S's shortcomings.
Its chief financial officer Neil Wood said the overall agreement reduced the payment due to G4S by £85m, comprising £48m to cover step-in costs by police and military and £37m primarily for project management failures.
He added: "The savings arising from this settlement brings the total savings to the public purse from the Locog venue security budget to £102m compared to the position in December 2011."
Commenting on the settlement, Mr Buckles, said: "We have accepted responsibility for the security workforce issues and, as a result of the settlement terms which we have announced, have ensured that the overall cost to the taxpayer has been reduced significantly against the planned cost."
He added: "We would like to reiterate our thanks to the military and the police for their support.
"We would also like to thank the 16,000 men and women of G4S who played their part in securing the Games despite the challenges faced by the group."
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