Financial News

  • 13 March 2014, 10:15

Security Firm G4S Takes £386m Annual Charge

The world's biggest security firm, G4S, has confirmed it took a £386m accounting hit in 2013 - another tough year for the company in the wake of the London Olympics fiasco.

G4S, which was publicly humiliated after it failed to provide enough staff to cover the Games in 2012, suffered further woes last year when it was banned from winning new Government work after it was found to have overcharged on a contract to tag offenders.

It said later on Wednesday, after announcing the charge, that it had agreed a repayment settlement, which Sky News reported on Tuesday was looming, with ministers of £108.9m relating to the tagging scandal.

The deal, which followed months of negotiations, was much higher in cash terms than the £24m G4S had offered in November.

Its share price tumbled when the figure was released.

In its earlier annual results statement, G4S admitted the last 12 months had been "challenging", with its recent troubles over Government contracts pushing it into the red.

It confirmed a loss before tax of £170m for 2013, compared to profits of £150m the previous year.

Revenues rose 3% to £7.4bn amid stronger growth in overseas markets.

But part of its £386m charge - £136m of it - was down to a review of a large number of global contracts.

In May last year, Nick Buckles stood down as chief executive after the company issued a profits warning.

His replacement, Ashley Almanza, has moved fast to try and revive its credibility, increasing scrutiny on contract risks and strengthening management.

He had made a settlement agreement with the Government a priority and hopes the deal will again open the door to the possibility of new Government work.

Serco, another public sector outsourcing giant, paid £68.5m in December as a settlement for its role in the overcharging for electronic monitoring services.

In addition, it incurred millions of pounds in additional costs associated with the inquiries.

The scandal also remains the focus of an investigation by the Serious Fraud Office.

Shares in the firm, which runs other services from cash transportation and airport security to guarding tennis players at Wimbledon, fell 3% on opening on the FTSE 100.

:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

Advertisement