G4S, the international secure outsourcing group, has announced today that it has agreed a financial settlement with the London Organising Committee of the Olympic Games and Paralympic Games (“LOCOG”) in respect of the provision of the security workforce for the London 2012 Olympic & Paralympic Games (“the Games”).
The terms of the settlement mean that G4S will incur an overall loss on the contract of approximately £70 million. The group has also incurred additional costs of approximately £11 million, relating to charitable donations and external fees and a further £7 million relating to the cost of sponsorship and marketing.
All of these costs will be taken in the 2012 accounts as an exceptional charge (£50 million having been provided for at the half year based on the previous contract loss estimate). The main difference between the previous estimate and the final settlement is an agreement to waive a larger proportion of the project management charge.
Commenting on the settlement, Nick Buckles, CEO of G4S said:
“The Olympic and Paralympic Games were a great success for the UK and we would like to reiterate our thanks to the military and the police for their support. We would also like to thank the 16,000 men and women of G4S who played their part in securing the Games despite the challenges faced by the group.
Whilst we are extremely disappointed to find ourselves in this position, we are pleased to have concluded these negotiations with LOCOG.
We have accepted responsibility for the security workforce issues and, as a result of the settlement terms which we have announced today, have ensured that the overall cost to the taxpayer has been reduced significantly against the planned cost.
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.”