Olympics debacle hits G4S shares

Beleaguered security firm G4S has suffered further share price falls amid fears that the Olympics debacle will damage its reputation.

Its shares fell 3% on top of similar falls on Thursday, meaning more than £200 million has been wiped off its value since the staffing problems emerged.

Any hit to revenues from the estimated £284 million Olympic contract is not expected to "significantly" hit the company's revenues or profits.

But worries that the group's reputation has been tarnished were fuelled after a senior politician accused the group of letting the country down and Surrey Police suspended privatisation plans for some of its services following the embarrassment.

Meanwhile, there are fears that chief executive Nick Buckles, who will be hauled before MPs next week, will be forced out.

He survived the collapse of a £5.2 billion takeover deal for Danish cleaning giant ISS last year after a shareholder rebellion scuppered the move, but the latest developments have put his position under renewed pressure.

Seymour Pierce analyst Caroline de La Soujeole said: "In terms of numbers, the Olympics won't make much difference to people's full-year forecasts. Financially, it's nothing significant. People are not worried about numbers but about impact on reputation, which is hard to quantify."

G4S's revenues hit £7.5 billion last year, while underlying profits grew 2% to £531 million and analysts said any shortfall from the Olympics contract would not hurt the company.

Ms de La Soujeole believes the company's growth prospects remain strong because it is set to benefit from the public sector's austerity drive as more authorities look to outsource work.

Last year, for example, G4S started running Birmingham prison, and a contract to run Oakwood prison in Wolverhampton started in April. And G4S won a ground-breaking £200 million contract to design and run a station for Lincolnshire Police, including running cells, administering drug tests and managing the force's vehicle fleet.