G4S Integrated Report 2017
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Integrated Report and Accounts 2017 Securing Your World FOCUSED GROWTH Introduction G4S provides electronic monitoring equipment to justice departments in around 20 countries across the world Our enduring strategic aim is to demonstrate the values and performance that make G4S the company of choice for customers, employees and shareholders. We aim to do this by delivering industry‑leading, innovative solutions SECURING and outstanding service to our customers, by providing engaging and rewarding work for employees and by generating sustainable growth YOUR WORLD and returns for our shareholders. Strategic report Highlights and contents HIGHLIGHTS STRATEGIC REPORT STATUTORY RESULTS CORE RESULTSa Overview Highlights 1 Revenue Revenue KPI G4S at a glance 2 +3.1% +3.2% Strategy & Business Review Chief Executive’s review 4 £7.8bn £7.4bn Market-growth drivers 8 (2016: £7.6bn) (2016: £7.2bn) Business model 10 Stakeholder engagement 12 Adjusted PBITA Adjusted PBITA KPI Our strategy 14 +6.5% +4.2% Key performance indicators 32 CSR performance 34 Alternative Performance Measures 35 £491m £496m Chief Financial Offcer’s review 37 (2016: £461m) (2016: £476m) Regional and service line review 51 EPS Adjusted EPS KPI Risk management and our principal risks 60 +18.8% +5.9% 15.2p 17.9p GOVERNANCE REPORT (2016: 12.8p) (2016: 16.9p) Chairman’s statement 66 Board of directors 68 Operating cash fow Operating cash fow KPI Executive committee 70 -20.7% -16.7% Corporate governance report 72 Audit committee report 85 Directors’ remuneration report 93 £488m £527m Directors’ report 116 (2016: £615m) (2016: £633m) Directors’ responsibilities 119 Dividend per share Employee engagement survey KPI +3.1% FINANCIAL REPORT Independent auditor’s report 120 9.70p 84% Consolidated income statement 132 (2016: 9.41p) Favourable response in 2017 Consolidated statement of comprehensive income 133 Consolidated statement of changes in equity 133 Consolidated statement Visit: g4s.com for more information. of fnancial position 134 Consolidated statement The Chief Financial Offcer’s review of cash fows 135 is on pages 37 to 50. Notes to the consolidated fnancial statements 136 a. See page 44 for basis of preparation and Parent company statement defnition of core businesses and for a of changes in equity 202 reconciliation to statutory results. An explanation of Alternative Performance Parent company statement Measures is provided on page 35. of fnancial position 203 Notes to the parent company fnancial statements 204 Shareholder information Front cover: Group fnancial record 211 G4S provides technology and physical security services for the three consortia building the General information 212 Thames Tideway tunnel. G4S is securing the project as a fully-integrated partner for security across all 21 construction worksites. KPI Financial KPI The Thames Tideway tunnel is a £4.2 billion construction project, designed to stop London’s KPI Other fnancial and non-fnancial KPIs iconic River Thames from being polluted. A cleaner Thames and a more attractive riverside will help underpin London’s economic prosperity, attracting more tourists, and boosting the use of Please see pages 32 to 33 for river transport. It is also expected to help revitalise small local businesses and the commercial a description of the Group’s fshing industry, by encouraging healthy marine life. fnancial and non-fnancial KPIs and how they link to the Group’s strategic priorities. Integrated Report and Accounts 2017 G4S plc 1 G4S at a glance G4S is the world’s leading global, integrated security We offer a broad range of security products and company specialising in the delivery of security and services on a single, multi‑service and integrated basis. related services across six continents. We have been investing in technology, software and systems. The Group’s technology‑related security revenues were £2.45 billion* in 2017 (2016: £2.2 billion). * Technology-related security revenues are from the sale of security technology (£0.7 billion) and security solutions which combine our people with technology (technology-enabled security: £1.75 billion). OUR BUSINESSES SECURE SOLUTIONS SECURITY SERVICES AND TECHNOLOGY (77%) (84% OF CORE BUSINESS SECURING YOUR WORLD REVENUES) Market Our approach G4S operates an integrated security business in more Against the backdrop of growing demand, we design, than 90 countries across the globe. The global security market and deliver a wide range of security and related market has structural growth qualities (see page 8 for services and our global footprint provides valuable a description of the growth drivers) and is highly access to a highly-diversifed customer base in markets fragmented; there are few international suppliers and around the world. Some traditional security markets are our competitors are typically smaller local and regional commoditised and signifcant price competition exists companies. The security industry is seeing growing – we aim to differentiate G4S by providing industry- demand for technology-enabled and integrated security leading security solutions that are innovative, reliable and solutions (which combine people and technology) effcient. Our scale and focus on productivity support, to deliver cost-effective security, especially in our cost competitiveness and our sustained investment developed markets. in professional staff, technology, software and systems enable us to provide innovative and reliable solutions for our customers on a stand-alone or integrated basis. CARE & JUSTICE SERVICES (7%) Market Our approach G4S Care & Justice Services are concentrated in the We aim to achieve positive outcomes for those in the UK and Australia. The market for the private provision care and justice system. G4S will only offer custody, of care and justice services is fairly consolidated with a detention, rehabilitation and care services where we small number of large providers. Larger companies are can access a qualifed talent pool and where the usually better equipped to deliver the highly specialised political, legal, human rights and regulatory framework services in this sector, working with a diverse supply is consistent with our Group values and results in chain including the voluntary sector. In the UK the acceptable operational, commercial and reputational risk. market environment is mature with limited growth opportunities. In the short to medium term we expect the environment to be more positive in Australia. CASH SOLUTIONS CASH SOLUTIONS (16% OF CORE BUSINESS REVENUES) Market Our approach G4S Cash Solutions is one of a small number of large, We transport, process, recycle, store securely and global cash businesses and is the market leader or manage cash, and provide secure international logistics number two in 40 of its 42 markets. Each market is for cash and valuables. Our strategy is designed to highly regulated, often by central banks, and the business enable us to aggregate cash-handling volumes through requires signifcant infrastructure and expertise. G4S cost leadership and product and service differentiation. competes with local, national and a small number We invest in technology and sell proprietary of international competitors. Cash volumes in most cash-management systems which combine skilled developed markets are fat or gradually declining at an professionals with software, hardware and operational aggregate market level. Cash usage continues to increase support in an integrated, managed service. To support in emerging markets (see page 8 for cash usage trends). cost leadership we strive for a consistent operating The Group sees signifcant revenue-growth opportunities model and use shared services to maximise effciency. in providing technology solutions to reduce the cost and increase the ease of using cash for banks and retailers. We operate around the globe, focusing on markets where we are able to build and sustain a material market share in our key service offerings. Outside the traditional cash market, there remains signifcant opportunity for retail cash and bank branch automation – services that have mainly remained in-house until now. 2 G4S plc Integrated Report and Accounts 2017 Strategic report G4S plays a valuable and an important role in society. We provide direct employment for over half a million people around the world and make a difference by helping people to live and work in safe and secure environments. G4S takes a fully‑integrated approach to its strategy and Corporate Social Responsibility. This is refected in this report and please see page 18 for more information on our CSR approach and impact on society. OUR STRATEGY Our strategy addresses the positive, We aim to do this by delivering industry‑ long‑term demand for security and related leading, innovative solutions and services, and our enduring strategic aim is outstanding service to our customers, by Secure Solutions to demonstrate the values and performance providing engaging and rewarding work for that make G4S the company of choice for employees and by generating sustainable Integrated Managed customers, employees and shareholders. growth and returns for our shareholders. Services These aims are underpinned by the key Security Software & Hardware programmes in our strategic plan: Systems Integration Consultancy Services Monitoring & Response Integration Manned & Mobile Security, FM Margin Care & Justice Services PEOPLE AND VALUES CUSTOMERS AND TECHNOLOGY AND Monitoring technology SERVICE EXCELLENCE INNOVATION & Services Custody, Detention & Rehabilitation