Our investment proposition is to provide shareholders with long-term growth in earnings, cash flow and dividends.
Underlying operating cash flow
Dividend per share
Chief Executive's Review
Increase in underlying earnings in 2015
"During 2015 we made substantial progress with the strategic and operational transformation of G4S. Our portfolio management programme combined with our investment in sales, innovation and re-structuring is reflected in the results of our underlying operations where the group's revenues rose by 4% and earnings rose by 14%."
In November 2013 we set out our strategy to transform G4S and build a business capable of delivering sustainable, profitable growth. During 2015 we made substantial progress implementing this strategy and the G4S group now has three distinct components:
- Businesses sold or to be sold or closed under the portfolio programme;
- Legacy contracts to be managed to an effective conclusion; and
- Continuing businesses, which are making tangible strategic, operational and financial progress as we implement G4S's strategy.
The first two components do not form part of the long-term future of G4S, whereas the continuing businesses form the core of G4S today and in the future. Each of these components of the group is described in further detail in my review.
Against a backdrop of global economic uncertainty, demand for our services remained resilient and growth accelerated in the second half of 2015, providing good support for further operating and financial progress in 2016. In the current economic environment we expect medium term demand for our services to grow by around 4-6% per annum.
Finally, I would like to thank all of our colleagues across the world whose expertise and dedication to our customers and our group is reflected in the substantial progress made by G4S in 2015.
Strategy and Performance
G4S is the world's leading global, integrated security company specialising in the delivery of security and related services to customers across six continents.
Our strategy addresses the positive, long-term demand for our services and we differentiate the G4S brand through our values and by investing in our customers, our people and our services. We build valuable, long-term relationships with our customers by combining a deep understanding of their businesses with our expertise in designing and delivering industry-leading, innovative services that protect and create value for their organisations. Our strategic priorities are: investing in people, customers, service innovation and growth, operational and service excellence and disciplined financial management. Our investment proposition is to provide shareholders with sustainable, long-term growth in earnings, cash flow and dividends.
Multiple sources of value
During a time of great positive change for the company, we have prioritised areas that deliver real momentum and create value. We've come a long way and today we have a better, stronger business.
One of the strengths of our strategy is that there are multiple sources of value - organic opportunities to drive revenue growth and opportunities to improve PBITA margins through productivity improvements and portfolio management. Our financial and risk management processes have been strengthened and we are implementing a "cash matters" culture.
Our multiple sources of value include:
- People & values
- Service excellence
- Operational excellence
- Financial discipline
At a Glance
G4S plays an important role in society – our 610,000 employees deliver services that create a safer and better environment in which millions of people live and work. The breadth of our services and geographic coverage provides both resilience and growth opportunities.
Security and facilities management (FM) services is by far the largest business segment in G4S, representing 58% of group revenues. The 84 markets in which we provide these services are usually highly fragmented.
We differentiate the G4S brand by investing in service innovation, employee selection, training, supervision, service delivery and customer service and relationship management.
An important long-term element of our strategy is to offer our broad range of services on a stand-alone basis or in conjunction with other services to provide customers with an integrated and more valuable security solution.
The secure solutions business covers a wide range of services, including:
- Risk services and consultancy
- Monitoring and response
- Secure facilities management services
- Manned and mobile security services
Security systems and technology represented around 8% of group revenue in 2015.
Our technology strategy seeks to market core products and services that are increasingly developed globally and configured locally to meet each region's unique requirements.
In our security systems service line, we promote outsourcing and enhance the value of traditional security services through greater use of technology.
Security systems and technology includes:
- Security installation and maintenance – CCTV and video and image analytics software, advanced access control systems
- System software and integration – RISK360, GIS, TravelAware
Care and justice services represented around 9% of group revenue in 2015.
Larger companies are usually better equipped to deliver such highly specialised services. G4S will only offer custody and detention 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.
G4S's larger scale care and justice services are concentrated primarily in the UK and Australia, and on a smaller scale in a number of European markets.
Care and justice services offers highly specialised services to central and local governments and government agencies and authorities:
- Adult custody and rehabilitation
- Prisoner escorting
- Immigration services
- Electronic monitoring
Based mainly in the UK, G4S offers a range of outsourcing services, which together accounted for around 11% of group revenues in 2015.
These services include back office support and custody suites to UK police forces and utility services (data collection and smart meter programmes).
We aim to offer innovative and cost-effective solutions to customers, leveraging our scale and expertise.
Specialist services include:
- Police services
- Employment services
- Utility services
- Secure health services
Cash solutions & secure logistics
The cash solutions business accounted for around 14% of group revenue in 2015.
Wherever possible our cash solutions business shares facilities and back office processes with our secure solutions businesses. The market is highly regulated, often by central banks, and the business requires complex infrastructure and significant expertise. Our strategy assumes that digital payment technology will continue to grow in developed markets and gain traction in emerging markets in the medium term.
We aim to:
- position G4S as a reliable, innovative low cost operator that helps our customers to reduce their cash handling costs and increase the ease of use of cash for their customers
- play a key role in the management of the cash cycle on behalf of central banks, commercial banks and retailers, allowing them to focus on their core business
- use our developed market cash cycle expertise and track record to encourage central bank and financial institution outsourcing in emerging markets
- continue the expansion of innovative technology such as CASH360™/ Retail Solutions for retail customers.
The cash solutions business covers a wide range of services including:
- Cash management outsourcing
- Cash consulting
- ATM management
- Retail cash management (CASH360™) / Retail Solutions
- International transportation
Delivering sustainable value
Our strategy addresses the positive long-term demand for our services and our strategic priorities are the safety and security of our customers and our people, sustainable growth, productivity and disciplined financial management.
Our business model is how we execute that strategy through providing a broad range of security products and services and through our six regions covering around 85 countries.