Integrated Report 2016

Insight
Innovation
Integration

Our enduring strategic aim is to demonstrate the values and performance that make G4S the company of choice for customers, employees and shareholders.

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Chief Financial Officer

STRATEGY -
TRANSFORMING G4S

"Since 2013, the year in which we commenced the transformation of G4S, the Group’s continuing businesses have grown revenues by 15% and EPS by 45% while generating operating cash flow of £1.9 billion."
Ashley Almanza, Chief Executive Officer

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Chairman

GOOD GOVERNANCE IN SUPPORT
OF SUSTAINABLE GROWTH

"We recognise the value of a healthy corporate culture, which supports our strategic objectives and is not only an enabler and a differentiator, but also protects and generates value."
John Connolly, Chairman

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Financial Highlights

Continuing businesses

RevenueKPI

£6.8bn+6.3%

(2015: £6.4bn)

PBITAKPI

£454m+9.7%

(2015: £414m)

EPSKPI

15.9p+16.5%

(2015: 13.7p)

Operating cash flowKPI

£638+61.5%

(2015: £395m)

G4S at a glance

G4S is the world’s leading, global, integrated security company specialising in
the provision of security and related services across six continents.

OUR VALUES AND 'ONE G4S'

Our people and values underpin everything we do. Our 'One G4S' model brings all areas of our business together and is designed to ensure that the way we go about our business is consistent across our global operations and is strongly aligned with our strategy and our values.

We believe that this approach will generate significant benefits for our customers, employees and shareholders.

Secure Solutions (83% of revenues)

Security Services and Systems (78%)

Care and Justice Services (5%)

Cash Solutions (17% of revenues)

Cash Solutions

OUR MARKET

G4S operates an integrated security business in more than 90 countries across the globe. The global security market is highly fragmented; there are few international suppliers and our competitors are typically smaller local and regional companies.

OUR APPROACH

We design, market and deliver a wide range of security and related services and our global footprint provides valuable access to a highly diversified customer base in markets around the world. We aim to differentiate G4S by providing industry leading security solutions that are innovative, reliable and efficient.

Our scale and focus on productivity supports our cost competitiveness and our sustained investment in professional staff, technology, software and systems enables us to provide innovative and reliable solutions for our customers on a stand-alone or integrated basis.

OUR SOLUTIONS

OUR MARKET

G4S’s Care and Justice services are concentrated in the UK and Australia.

The care and justice market is fairly consolidated with a small number of large providers. Larger companies are usually better equipped to deliver the highly specialised services in this sector.

OUR APPROACH

G4S will only offer custody, detention, rehabilitation and care services where we can maintain a qualified talent pool and where the political, legal, human rights and regulatory framework is consistent with our Group values and results in acceptable operational, commercial and reputational risk.

OUR SOLUTIONS

OUR MARKET

G4S Cash Solutions is one of a small number of large, global cash businesses and is the market leader or number two in 41 of its 44 markets. Each market is highly regulated, often by central banks, and the business requires significant infrastructure and expertise. G4S competes with local, national and a small number of international competitors. Cash usage in most developed markets is mature, with flat or gradually declining volumes at an aggregate market level. Cash usage continues to increase in emerging markets.

OUR APPROACH

We transport, process, recycle, securely store and manage cash and we provide secure international logistics for cash and valuables. Our strategy is designed to enable us to accumulate volumes through cost leadership and product and service differentiation. To do this, we invest in technology and develop and sell proprietary cash management systems which combine skilled professionals with software, hardware and operational support in an integrated managed service.

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.

OUR SOLUTIONS

Strategy and Performance

Our strategy addresses the positive, long-term demand for security and related services and 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 and outstanding service to our customers, by providing engaging and rewarding work for employees and by generating sustainable growth and returns for our shareholders. These aims are underpinned by the key programmes in our strategic plan:

PEOPLE AND VALUES

We recruit, develop and deploy the best people in our industry

7.1% Reduction in voluntary employee turnover in 2016

Progress and performance

Our financial performance is underpinned by recruiting, developing and deploying the best people. To do this we invest in building robust recruitment, screening, vetting and training processes to underpin our commitment to delivering consistent service excellence and high standards of ethical and legal compliance. Since 2015, over 3,000 managers have completed H&S training modules.

Key Risks

Our trained and skilled people are hired by competitors or other companies or do not behave in line with the Group’s values.

CUSTOMERS AND SERVICE EXCELLENCE

We build long-term customer relationships based upon trust and understanding of our customers’ business and objectives

c.90% Contract retention in 2016

Progress and performance

In 2016, we retained around 90% of all existing contracts and won new work with existing or new customers with a total contract value of £2.5bn.

Most of the Group’s businesses now use a standardised approach to measuring customer satisfaction using Net Promoter Score. We continue to invest in new products and services and look for ways to improve productivity without affecting service. 

Key Risks

Failure to understand customers’ changing needs or fall short of customer expectations.

GROWTH AND INNOVATION

We design, market and deliver innovative, industry-leading solutions that protect and add value for our customers wherever they operate

36% Increase in systems revenues from continuing businesses in 2016.

Progress and performance

Over the past three years through our technology centres of excellence we have invested in both the creation of new products and services and upgraded existing services. The benefits of this investment can be seen in increased sales of products and services such as Deposita, Retail Cash Solutions, Risk360 and Symmetry Connect.

Key Risks

Failure to market or deliver our services and technology effectively or fail to deliver adequate value for our customers.

OPERATIONAL EXCELLENCE AND PRODUCTIVITY

We have secure, safe, reliable and efficient operations

9.7% Increase in PBITA from continuing businesses in 2016

Progress and performance

Over the past three years we have invested in best-in-class operating and safety standards and subject matter experts for operations, security and safety. We have also invested in technology, IT and procurement and in business and process restructuring. The benefits of this investment can be seen in the improvements in the Group’s PBITA.

Key Risks

Failure to comply with our standards results in harm, loss of expertise and investment fails to deliver benefit.

FINANCIAL AND COMMERCIAL DISCIPLINE

We manage risk effectively and ensure we have profitable, cash-generative services

61.5% Increase in operating cash flow from continuing businesses in 2016

Progress and performance

A key part of the transformation of G4S in recent years has been as a result of greater financial discipline especially in the areas of capital investment, cash generation and working capital management.

Since 2013 we have been embedding a “cash matters” culture within the organisation and improved operating cash flow from continuing businesses by 61.5% in 2016. Our risk management programmes focus management attention on mitigating the critical risks within the business.

Portfolio management is also a key part of capital discipline and ensures focus and performance management for the Group. We divested 12 businesses in 2016, bringing the total number of businesses sold or exited to 29 since 2013 with proceeds raised of over £345 million with agreement for a further £88 million in 2017. 

Key Risks

Inefficient capital management and failure to comply with Group risk management standards.

OUR BUSINESS MODEL Delivering Sustainable Value

WHY CUSTOMERS CHOOSE G4S

The evolving security landscape continues to pose greater and more divergent challenges for governments, organisations and individuals across the world, supporting projected growth of the global security market by 5% to 6% p.a. to $270 billion in 2025. In addressing this demand, we aim to differentiate G4S by providing industry leading solutions that are innovative, reliable and efficient and which protect, and add value to, our customers organisations.

As the world's leading integrated security company, G4S is characterised by:

  • Global footprint We provide a broad range of products and services across more than 90 countries and throughout seven major regions. This scope provides us with a strong understanding and clear visibility of how security trends are evolving across the world. This insight is invaluable for positioning our solutions at the heart of customer needs.
  • Deep understanding We support our knowledge of global security trends with a deep understanding of our customers' unique needs. We have a strong heritage of more than 100 years in the security industry, helping to positively distinguish the G4S brand apart in our key markets around the world. Our dedicated sector experts, involvement in industry bodies and academic institutions, strategic customer relationships and customer service feedback mean that we can tailor our solutions to offer maximum value to our diverse set of customers.
  • Security professionals and expertise We recruit, screen and deploy over 150,000 new people each year. We have 558,000* employees whose unique skills and shared values are focused on delivering high-quality service to our many thousands of customers.

    *The Group has over 585,000 employees including 27,000 employees in portfolio businesses.
  • Technology (hardware and software) and Innovation We continue to invest in technology to meet the growing demand for integrated security solutions – which combine consultation, technology (hardware and software), installation, staffing and maintenance - and to drive the development of innovative new solutions for clients.
  • Customer service Excellent customer service is one of our core values and an area in which we continue to invest significantly. In the past three years, we have focused in particular on our capability, processes and performance measures to drive growth, customer retention and customer satisfaction.

Our customer approach

In order to grow our provision of security and related services, we use our unique industry and customer insight to deliver services that are innovative, efficient, effective and integrated.We do this in a stepwise process: 1. Assess, 2. Design, 3. Build and Integrate security solutions from our portfolio and 4. Manage. 

Manage

G4S designs, builds and manages global security operations centres (GSOC) for customers, both on a standalone basis and as part of an integrated offering. The GSOC receives, analyses and responds to all the security intelligence and data for a customer. Customers may outsource these activities to a G4S GSOC in order to obtain network benefits and access our security expertise. Knowledge gained through managing GSOCs reinforces our ability to assess, design, build and integrate new solutions.

G4S provides comprehensive Cash Solutions services encompassing key elements of the cash supply chain. Our managed services typically combine software, equipment and services in an integrated solution.

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Build and Integrate

In some markets, we are seeing a move towards integrated solutions where security or cash management services are delivered under one integrated solution. G4S will continue to invest in building its capability and breadth in many of these areas.

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Design

We employ our growing resource and capability to design a solution to meet our customers’ requirements, protecting and/or adding value to their organisation. This may involve a single service, bundled services (two or more services including facilities services in selective markets) or an integrated security solution from the G4S portfolio.

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Assess

We combine our understanding of our customers’ business and objectives, with our security expertise to assess the customers’ security risks and requirements.

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Value Creation and Performance Measurement

  • Customers Through understanding our customers’ needs we can offer them value-added, innovative, cost-effective security solutions and build enduring relationships – ensuring we have a sustainable business model. KPIs include customer and contract retention and customer satisfaction.
  • Shareholders Our business model seeks to deliver sustainable, profitable growth for shareholders. Since 2013 we have increased continuing business sales by 15%, grown EPS by 45% and generated operating cash flow of £1.9 billion.

    As a service company, the majority of our business has a relatively low level of capital intensity, but when capital investment is required – in areas such as Cash Solutions, we have the financial discipline and processes in place to allocate capital in a disciplined manner. 
  • Employees Our employees are critical to our service delivery and by engaging with our employees fairly and ensuring they have the right training and skills to undertake their roles, we can attract and retain the right people. We have a zero harm goal for the health and safety of our employees.
  • Suppliers We have a responsible procurement policy consistent with our business ethics policy. All our suppliers must be respectful of human rights and respect established environmental standards.
  • Society As the world’s leading security company we believe that our 585,000* employees help to keep society safer. Please see the 2016 CSR report for a more detailed discussion of G4S’s role in society.

MARKET GROWTH DRIVERS

The world continues to face a series of divergent and emerging threats. Governments and companies require holistic approaches to ensure the security of their people and assets both at home and abroad.

Global Security market by region

5-6% Expected market growth from 2015 to 2025 per annum*

Security 500 Top Trends

In November 2016, Security Magazine published some of the key concerns and priorites of the top 500 chief security officers in the United States:

  • Asset protection, theft and investigations

    Workplace violence

    Terrorism

    Business continuity

    Global Security Operations Centre management
  • Budget and funding

    Training and employee retention, hiring

    Technology management

    Secure executive and employee travel

    Cyber security
Security

CSR Highlights

3.6%

Reduction in carbon intensity since 2015

13

“Top Employer” certifications in countries across Africa

402

Cases reported and managed via our global whistleblowing system Speak Out during 2016

7

Deep dive reviews of safety in high-priority countries

4

Human rights risk assessments of major business opportunities

3,000

Managers have completed online health and safety training modules

View CSR Website

Download CSR Report