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Olympics security problems cause G4S shares to plunge

Olympics security provider’s stock falls 9 per cent.

The firm admitted after the market closed on Friday that it faced a £50m loss on the £284m contract after its failure to provide enough security guards for the Olympics. Shares in the outsourcing company fell 10 per cent in early trading on Monday. The future of G4S chief executive Nick Buckles was increasingly in doubt as he prepared to meet the company’s major shareholders. Chairman John Connolly has suggested that senior positions are at risk.

Stockbroker Seymour Pierce has reduced its “buy” rating on the firm to a “hold” and reduced its profits forecast by £60m.

Analysts are particularly concerned over the reputational damage that G4S faces. “Our biggest concern is the impact it could have on other outsourcing contracts with the UK government, which is a sizeable (more than 20 per cent) and growing part of its bid pipeline”, observed broker Panmure in a research note.

Nick Buckles, who has said that he will not receive his bonus, faces the Commons Home Affairs Select Committee on Tuesday. Over the weekend he admitted he was “bitterly disappointed” over G4S’ recruitment failure.

The government has been forced to draft in 3,500 soldiers to cover the shortage.

Shadow home secretary Yvette Cooper MP was granted the right to table an “urgent question” in the Commons on Tuesday afternoon, concerning “security arrangements for the Olympic Games in light of the inability of G4S to deliver its contract”.

It has emerged that Greater Manchester Police were involved in security at an Olympic team hotel in Salford after less than half the scheduled staff turned up. A statement from G4S admitted that security work in certain venues was being temporarily “supported by police in the short-term while the private security workforce is being mobilised”.

En Liang Khong is an arts writer and cellist.

Follow on twitter @en_khong