Under pressure: Nick Buckles’ firm lost £50 million in the Games
28 August 2012
G4S chief executive Nick Buckles today conceded for the first time that his job is at risk in the wake of the Olympic security bungle that cost the company £50 million.
While some shareholders have publicly backed him in the wake of the fiasco, citing his track record in growing the business, the views of chairman John Connolly are less clear.
Connolly joined the board only in June and is said by some to have been alarmed at how quickly the Olympics issues spiralled out of control, damaging the reputation of the company in the process.
An internal review headed by Connolly will report back in a few weeks.
Asked if his job was safe, Buckles replied today: “The review is under way. It will complete in the second half of September. It would be premature to comment on that. I hope my job is safe, I have been here for 28 years. But that is a decision for the board and the shareholders.”
The Olympics issue aside, the half-year results were reasonably strong.
Revenues for the six months to June were up 5.8% to £3.9 billion, while profit was dead flat at £236 million. G4S is able to hold the interim divi at 3.42p.
The £50 million figure for the Olympics is at the top end of the scale of losses the company had warned it would lose for failing to recruit and train enough of the guards it had promised for the event.
G4S have already axed 1100 jobs, of which 100 are in the UK, although this was not related to the Olympics debacle. It hopes for cost savings of £30 million from the move.
Whether G4S will still win government contracts in the future is not clear.
Seymour Pierce analyst Caroline de la Soujeole said: “We will gain a better idea of the UK government’s position towards G4S when the first wave of prison outsourcing is announced in the autumn [eight prisons are due to be awarded with G4S bidding on three of them]. Before then, the next significant event is another appearance by Nick Buckles in front of the Home Affairs Committee on September 11.”
Buckles added: “We are deeply disappointed that we had significant issues with the London 2012 Olympics contract and are very grateful for the military and the police for their support in helping us to deliver a safe and secure Games.”
G4S pledged that the same mistakes would not be repeated at the Paralympic Games.
Buckles told the Standard: “There are significantly fewer venues and the staff are already in place. We are pretty confident that we are there. We have got the venues covered. We are in much better shape this time.”
The shares plunged from 290p to 240p as the crisis unfolded, but have since recovered a little. Today they were down 6.4p at 259.8p. That leaves the company valued at £3.66 billion.