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CORRECTED-UPDATE 2-G4S chief quits after series of embarrassments
May 21, 2013 / 11:01 AM / 5 years ago

CORRECTED-UPDATE 2-G4S chief quits after series of embarrassments

(In paragraph nine, changes job title to manager of the equity income fund and company name to Premier Asset Management)

* CEO Nick Buckles to step down at end of May

* Will be replaced by CFO Ashley Almanza

* Two big shareholders say they support the move

* Shares down 0.4 percent

By Christine Murray and Neil Maidment

LONDON, May 21 (Reuters) - G4S, the world’s largest security group, is replacing its chief executive after a series of failures including a staffing fiasco at the 2012 London Olympics culminated in a recent profit warning.

Nick Buckles, 52, who has led the company for eight years, will be succeeded at the end of the month by Chief Financial Officer Ashley Almanza, a former executive of oil and gas firm BG Group who joined in March.

Although G4S shares have outpaced the FTSE 100 index of blue-chip companies during Buckles’ tenure, he will likely be remembered for mistakes over the last 18 months that have rattled investors.

These include a squeeze on margins that led to the profit warning earlier this month and a failed takeover bid for rival Danish cleaning firm ISS, as well as the Olympics contract which Buckles said at the time had left the company’s reputation in tatters.

Shares in G4S have fallen by 12 percent since Buckles announced the proposed $8 billion takeover of ISS in October 2011.

Two of G4S’s biggest shareholders welcomed his departure on Tuesday.

“I think we feel that the time is right for Nick (Buckles) to move on,” a leading shareholder who declined to be identified said.

“We’ve got a very high regard for Ashley Almanza, we know Ashley well from his time at BG, we think he’s an excellent appointment.”

Chris White, manager of the equity income fund at Premier Asset Management, the 30th biggest investor in G4S, said the move was positive and should accelerate the company’s restructuring.

G4S, whose rivals include Serco and Swedish security firm Securitas, wants to increase revenue from emerging markets to half the total from a third to soften the pressure on margins from government austerity drives in developed markets. It is looking for acquisitions in the Middle East and India.

The company warned earlier this month that its margins and profits would be lower in 2013, blaming a shake-up of the Dutch prison system, problem clients in Africa and lower volumes in its British cash and justice businesses.

That prompted a 14 percent fall in the share price, which analysts at Jefferies and Espirito Santo said on Tuesday may have been the catalyst for Buckles’ departure.

Buckles started at British security firm Securicor in 1985. That company merged with Group 4 Falck in 2004, where Buckles oversaw the transition into the current G4S brand after becoming CEO the following year.

Shares in G4S have risen 67 percent, outstripping a 31 percent rise in the FTSE 100 index under his leadership.

But his decision in late 2011 to launch a surprise takeover of ISS severely hit investor confidence, not least because of the 2 billion pound rights issue required to secure it. The deal collapsed after shareholders opposed it.

The following year, G4S failed to provide a promised 10,400 security guards just weeks before the London Olympics, forcing British Army troops to step in and sparking a barrage of public and political criticism.

Buckles was grilled by British lawmakers over the Olympics failure in public hearings, where is shaggy hairstyle caught the attention of Twitter users.

An internal review in September spared Buckles, who earned about 1.2 million pounds ($1.8 million) last year, after it concluded it did not find any significant shortcomings in his handling of the contract. Two managers left instead.

The company’s reputation with the British government took a further hit last week when the Ministry of Justice said it may have been overcharged by G4S and Serco on a contract to monitor offenders released from prison.

G4S said on Tuesday it had appointed Eddie Ashton from German postal firm DHL as chief operating officer. Stuart Curl, currently a regional chief financial officer, will become acting CFO until a replacement for Almanza can be found.

Shares in the firm were down 0.4 percent by 1055 GMT to 249.7 pence.

$1 = 0.6570 British pounds Editing Erica Billingham

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