LONDON (Reuters) - G4S (GFS.L), the world’s largest security firm, said it is regaining customers’ confidence after its high-profile staffing blunder during the London Olympics left its reputation in tatters and its main client seething.
The prospect of losing out on British government work has been the main cause of analysts’ concerns ever since G4S failed to provide a promised 10,400 guards at last year’s Olympics. The failure embarrassed Britain, a client responsible for around 10 percent of the company’s expected 8 billion pound 2011/12 turnover, and wiped over 600 million pounds off its marketcap at the time.
In July, G4S group chief executive Nick Buckles appeared before a hostile parliamentary committee, to admit his handling of the security scandal had embarrassed the British government and severely damaged his company’s reputation.
Since the Olympics, financial wrangling with Games organisers, parliamentary hearings, reports and senior management exits have kept G4S in the headlines.
Its new UK chief executive insists strong work prospects in 2013 have been boosted by assurances across government - including its core Ministry of Justice client - that if it has the best bid, it will win contracts, Richard Morris told Reuters in his first interview in the role.
“We have never been in a position - and I don’t expect us to be in a position - where we are regarded as a high-risk supplier to government,” said the man G4S promoted after the Olympics to replace David Taylor-Smith.
”I think it is easy to overstate the impact of the Olympics on our relationship with government.
“If we were at risk of being blacklisted we would know about it because the process for doing that is extremely transparent. It can’t happen behind closed doors,” Morris, who rose through G4S’ justice arm to UK CEO in September 2012, added.
Shares in the firm were up 1.5 percent to 280.15 pence at 12:57 p.m. on Tuesday, recovering from a low of 237.3 pence in July, and valuing the business at around 3.9 billion pounds.
To speed up its recovery it has created a government outsourcing manager role to focus on British relations, and invested in training sales teams to deal with client’s Olympic related questions and concerns.
Its appointment on a contact centre services framework for the Department for Work and Pensions in December, as well as electronic tagging deals in Scotland and France have indicated G4S is putting its Olympics fiasco behind it. Customer retention levels have also been high across the group.
“We have had a good start to the year and I think as an organisation we are getting over the events of last summer,” Morris said.
He added the company had been named preferred bidder on deals with the Home Office and National Health Service and expected to announce soon two large-scale commercial contract renewals.
But it hasn’t all gone the way of G4S, a firm which historically has had a key role in UK government outsourcing, including running Britain’s first private prison.
In November G4S, which is focused on growing its emerging markets revenue from 30 to 50 percent by 2019, missed out on new deals to run British prisons and lost an existing contract to the public sector.
Last month three UK police forces also decided against jointly outsourcing services to the firm.
The group is also yet to announce a financial settlement with Games organisers. It has guided to a 50 million loss on the deal, although it is expected to be closer to 100 million.
Morris said that Britain’s police forces continued to show an appetite for outsourcing operations like custody suites, IT and HR, while more widely 2013 would see high bidding activity, split evenly between commercial and government markets.
Probation work, prison services like maintenance and cleaning, and energy deals are all expected to come to market ahead of a mid-2014 slowdown as the UK general election nears.
For G4S one of 2013’s biggest tests will come in a few months time when it learns if it has beaten rivals Serco (SRP.L) and Capita (CPI.L) to a 300 million pound electronic tagging contract in England and Wales.
Editing by Mike Nesbit