- Daily Zen
Just back in August 2012, G4S Plc informed that the contract for the London Olympic Games had a negative impact on the company’s profit. G4S, the world’s largest security company, also estimated that its Olympic failure would cost as much as £50 million. On the 12th of February, G4S informed, however, that losses over London 2012 contract would amount to £88 million, much more than initially estimated.
The London 2012 contract did not turn out to be a gold-mine as G4S had expected. As the world’s largest security company failed to fulfill the contract, its officials informed that it would post a £88 million loss on the Olympic failure.
It took a long time to finally get the final amount of the loss, but after several months of hard negotiations, G4S finally agreed to settle with Games organizers Locog. It was underlined by the world’s largest security company that it incurred extra costs of approximately £18 million, including roughly £11 million charge for charitable donations and external fees, and as much as £7 million for sponsorship and marketing.
However, some analysts note that £88 million loss on the Olympic failure is a rather small amount. Many experts believe that the total cost would be ranging from £100 million to even £110 million. What is more, Nick Buckles, chief executive officer at G4S, noted the discontinuation of the issue was essential as: “The UK Government is an important customer for the group and we felt that it was in all of our interests to bring this matter to a close in an equitable and professional manner without the need for lengthy legal proceedings.”
Just a few weeks before the London Olympic Games began, G4S informed that it was not able to provided 10,400 guards in accord with the contract. The army was called in to deal with the security issues. As the company did not fulfill its commitments, several directors had to leave G4S.
But the company at least acknowledged its own Olympic failure and thanked the army and police for stepping in. The truth is that the Olympic failure of G4S had a massive impact on the company’s profit. But the London 2012 contract had also other follow-ups as profound as £88m losses, just to mention the company’s decision not to take part in bidding for contracts at the 2016 Olympics in Brazil. Analysts note that the decision was well-thought-out as the second failure of the same caliber would be too severe for G4S which is the world’s largest security company.
However, some analysts, including JP Morgan, are strongly convinced that the Olympic failure of G4S has already damaged the reputation of the company. In contrast, Richard Morris, Regional CEO – UK & Ireland at G4S Plc, believes that the world’s largest security company has been winning back customers. G4S is confident that its position and reputation might be rebuilt.