£ 57m asylum blow for G4S

G4S has warned it faces a further £ 57million bill following a surge in asylum seekers it is contracted to look after.

The security giant, which is responsible for housing, feeding and transporting 18,000 asylum seekers under a deal with the Home Offi ce running to next year, has revised up its expected loss on the contract by £ 20million to £ 31million.

It experienced a “signifi cant increase” in the number of new asylum seekers between last November and January, resulting in a 9.6 per cent jump in those in its care compared with a year earlier. Numbers are about 50 per cent higher than the original assumptions, but if the Government extends the contract for a further two years, G4S estimates its bill could rocket by another £ 57million.

G4S chief executive Ashley Almanza said there were no plans to exit the contract early, while “robust controls” have been established for new major contracts.

He said: “We have no intention of getting out. We are there, we are working extremely closely and I think, well with the customers, to deliver this contract in extremely challenging conditions.” G4S’s bottom- line annual profi t plunged to £ 8million from £ 145million last time after £ 65million of onerous contract provisions which include a PFI deal entered into in 2005, £ 44million restructuring costs and £ 40million losses on businesses being sold or closed. Revenue increased by 4 per cent to £ 6.4billion, led by 8.6 per cent growth across emerging markets and 5.8 per cent in North America, while the UK was down 3 per cent.

Almanza said “substantial progress” had been made over the past year in transforming the business as it seeks to rebuild its reputation following the prisoner tagging scandal and its failure to supply adequate security for the London Olympics in 2012.

G4S expects to exit a number of businesses with combined revenues of about £ 400million over the next two years. These include G4S Israel and US youth justice services as well as UK utility services and UK children’s services. Its shares fell 25 ¾ p to 187p.