G4S has taken an £88M ($138M) hit for its failure to provide enough security guards for the London Games after "striking a deal with the government in its long-running dispute over the management fee," according to Plimmer & Moules of the FINANCIAL TIMES. The world’s biggest security company "had expected to make" a £10M ($15.7M) profit on the £284M ($445M) contract. However, G4S CEO Nick Buckles said that this had turned to a £88M loss on Tuesday after it "agreed to cut the management fee" from £57M ($89M) to £31M ($48.5M) in the wake of "pressure from MPs and the public." The loss was higher than the estimate of £50M ($78M). However, G4S will be hoping the deal with LOCOG will "draw a line under the high-profile contract failure" (FINANCIAL TIMES, 2/12). The BBC reported G4S also said it had incurred extra costs of about £11M ($17M) "relating to charitable donations and external fees" and £7M ($11M) relating to sponsorship and marketing costs. Buckles said, "Whilst we are extremely disappointed to find ourselves in this position, we are pleased to have concluded these negotiations with LOCOG" (BBC, 2/12).
BETTER THAN EXPECTED: The PA reported Cantor Fitzgerald research analyst Caroline de La Soujeole said that the total cost of £88M was "better than her estimate" of between £100-110M ($156-172M). She added, "In our view, this draws a line under the Olympics situation and will enable the company to win more government outsourcing contracts." LOCOG said that the taxpayer's interests "have been fully protected in compensating for the difficulties experienced by G4S's shortcomings" (PA, 2/12).
