G4S hit by twin Olympic blows

By PETER RANSCOMBE
Published on 26/08/2012 00:00

SECURITY contractor G4S is expected to reveal a double-blow after its bungled Olympics contract forced Prime Minister David Cameron to draft in troops to protect the London Games.

Chief executive Nick Buckles will use Tuesday’s interim results to confirm G4S has lost £50 million on the £284m contract, which it will book as an exceptional item.

But analysts at Panmure Gordon fear the disastrous deal could also have damaged the firm’s underlying profits by up to £4m. The City is worried about damage to the firm’s reputation following a raft of negative headlines in the run-up to the Olympics.

UBS analysts believe G4S pulled out of bids for other government contracts as managers’ attention was diverted to the fiasco. They said: “We wonder if there has been any further fallout in terms of bidding activity?”

Sheridan Admans, investment research manager at the Share Centre, said: “Investors will be looking for evidence that the problems over the 
Olympic contract are history to a certain extent.

“Management needs to restore confidence in the group and is likely to emphasise the global spread of the business, especially the growth in emerging markets. News of any contracts won would certainly be well received.”

Panmure Gordon analysts added that the UK difficulties should not detract from G4S’s prospects elsewhere in the business. They said: “G4S remains an emerging markets growth story.”