GLOBALFOUNDRIES Annual Report 2012

FY2012 Annual Report · GLOBALFOUNDRIES
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Securing 
Your 
World

G4S plc
Annual Report 
and Accounts 2012

Inside this report

Overview

02  G4S at a glance

04  Our business characteristics

06  Chairman’s statement

Strategic review

08  Chief Executive’s interview

12 

Key performance indicators

14  Marketplace

16  Our business model

18  Delivering enhanced growth

21 

30 

Key business objectives

Resources and relationships

Performance

32  Operational review

42 

Financial review

46  Our risk assessment and management process

48  Corporate Social Responsibility

Governance

54 

58 

62 

Board of directors

Executive management team

Report of the directors

65  Corporate governance statement

72  Directors’ remuneration report

Financial statements

82 

83 

Statement of directors’ responsibilities

Independent auditor’s report

84  Consolidated income statement

85 

 Consolidated statement of comprehensive income

86  Consolidated statement of changes in equity

87  Consolidated statement of ﬁnancial position

88  Consolidated statement of cash ﬂow

89  Notes to the consolidated ﬁnancial statement

132  Parent company balance sheet

133 

 Parent company reconciliation of movements  
in equity shareholders’ funds

134  Notes to the parent company ﬁnancial statements

Shareholder information

142  Notice of Annual General Meeting

146 

 Recommendation and explanatory notes relating 
to business to be conducted at the Annual General 
Meeting on 6 June 2013

148  Group ﬁnancial record

150  General information

Performance highlights

Group turnover* 
£bn

£7.3bn

PBITA** 
£m

£516m

6.5

6.6

6.8

7.3
+8.1%

458

483

487

516
+6.0%

5.5

391

2008

2009

2010

2011

2012

2008

2009

2010

2011

2012

Adjusted EPS+ 
pence

21.2p

Dividend 
pence per share

8.96p

20.2

21.6

20.5

21.2
+3.4%

16.7

7.18

6.43

8.53

7.90

8.96
+5.0%

2008

2009

2010

2011

2012

2008

2009

2010

2011

2012

Operating 
cash ﬂow***

95% of PBITA

£492m

Organic 
turnover growth*

6.9%

(2011: 5.1%)

Revenue
2011

6,750

169
47
6,966

2012

7,297

–
204
7,501

PBITA
2011

487

12
3
502

2012

516

–
–
516

7.1%

7.2%

At constant exchange rates
excluding Olympics
Exchange difference
Olympic Games contract
Total continuing at actual rates
PBITA margin at constant rates 
excluding Olympics

The revenue and PBITA from the Olympic Games contract has been excluded 
from the tables on pages 1 to 40. The contract loss and additional costs 
resulted in a total loss of £88m which was booked as an exceptional item.

* 

 2011 and 2012 at constant (2012) exchange rates, adjusted for disposals and 
discontinued businesses and excluding Olympics contract. 2008–2010 as reported 
excluding US Government Solutions

**   PBITA is deﬁned as proﬁt before interest, taxation, amortisation of acquisition-related 

intangible assets, acquisition-related costs and exceptional items

***  As deﬁned by management, see Financial review, page 44
+ 

 2011 and 2012 at constant (2012) exchange rates, adjusted for disposals and 
discontinued businesses and excluding Olympics contract. 2008–2010 as reported. 
EPS attributable to equity shareholders of G4S plc was 3.4p in 2012 and 12.9p in 2011. 
For 2012 EPS attributable to equity shareholders includes items of £88m related to 
the Olympic Games contract, £45m of restructuring costs and a £63m loss related to 
discontinued items. For a full reconciliation, see page 104 

 
 
Overview

G4S is the world’s leading international security 
solutions group, which specialises in secure 
outsourcing in countries and sectors where 
security and safety risks are considered a 
strategic threat.

We make a difference by helping people to 
operate in safe and secure environments 
where they can thrive and prosper and we 
believe this role can only grow in importance.

G4S is the largest employer on the London 
Stock Exchange, with operations in more than 
125 countries and over 620,000 employees.

In this annual report we feature the important 
work carried out by our employees across 
our 125 countries. We are proud of the role 
they play in securing your world.

G4S plc Annual Report and Accounts 2012  01

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Overview
Overview

G4S at a glance

Our vision

Our operating segments

Our vision is to be recognised as the 
global leader in providing secure 
outsourcing solutions, to help customers 
to achieve their own strategic goals and 
to deliver sustainable growth for G4S 
and long-term value for shareholders.

We assess and manage security and 
safety risks for buildings, infrastructure, 
materials, valuables, people and society. 

We segment our services into two key service lines – 
secure solutions and cash solutions.

Secure solutions
Integrated security solutions for commercial organisations 
in areas such as risk consulting, manned security and 
security systems and a range of services including 
protection of critical national infrastructure, care and 
justice services, integrated facilities services and border 
protection for governments.

Cash solutions 
Outsourcing of cash cycle management for central banks, 
ﬁnancial institutions and retailers.

Find out more on pages 32 to 40 for a review 
of secure solutions and cash solutions

Turnover by segment 2012*
%

18% Cash solutions

23%  Secure solutions

– government

* excluding Olympic Games contract

59%  Secure solutions
– commercial

02  G4S plc Annual Report and Accounts 2012

 
 
Our key sectors and customers

Our broad geographic reach

Our two key customer groups 
are commercial businesses and 
governments. In the commercial sector 
we have a broad customer base with 
thousands of commercial customers 
ranging from small local companies to 
large multinational corporations.

The duration of customer contracts vary, from high-
proﬁle annual contracts for securing sporting or 
entertainment events to 25-year government contracts 
for the construction and management of prisons. 
In practice, many of our customer relationships are 
long-term and result in contracts being renewed regularly, 
resulting in high customer retention rates that are above 
90% averaged across the group annually.

G4S has a unique global footprint 
with operations in over 125 countries, 
including a strong presence in higher 
growth developing markets.

Find out more on page 15

Turnover by region 2012*
%

19% North America3

48%  Europe1

Find out more on our customers and key sectors 
on pages 32 to 40

33%  Developing markets2

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Turnover by sector 2012*
%

Major corporates and industrials
 28%

Government

 23%

Financial institutions
19%

Retail
9%

Private energy and utilities

8%

Ports and airports

4%

Consumers
4%

Transport and logistics

3%

Leisure and tourism

2%

* excluding Olympic Games contract

* excluding Olympic Games contract

1 UK, Ireland and Continental Europe
2 Middle East and Gulf States, Latin America and the Caribbean,
  Africa, South Asia and Asia Paciﬁc
3 USA and Canada 

100%

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G4S plc Annual Report and Accounts 2012  03

 
 
 
Overview

Our business characteristics

Our key strengths

Our key strengths are what differentiate us in the market.

Integrated security solutions
G4S is able to design and manage security solutions that 
bring together its capabilities in project management, 
risk consultancy, secure facilities management, physical 
security, intelligent systems and high quality security-
trained personnel to address the security challenges 
faced by a broad range of customers around the world. 

Strong developing markets presence 
G4S’s global presence, market share and experience of 
working in developing markets constitute key strengths. 
Relatively high levels of GDP growth in certain 
developing markets, increasing demand for security 
services and G4S’s ability to export its experience 
from its operations in more developed markets drive 
positive revenue and margin trends for the group in 
developing markets. 

Cash solutions expertise 
Understanding and managing cash cycles is one of the 
group’s core skills. Central banks, commercial banks 
and retailers outsource their cash management to 
G4S as the group has the capability and experience 
to drive substantial efficiencies in the system and 
achieve better returns for its customers over 
the longer term.

Solutions approach
Each individual area of the business is a driver of value 
for the group. But it is when they come together 
that they truly make a difference. Exporting G4S’s 
government expertise to new countries, leveraging 
its cash solutions model across developing markets 
and using its global risk management and security 
capabilities to protect some of the world’s best known 
brands across international markets, drive even greater 
value for the group.

Government partnerships 
Government outsourcing is a strong, long-term source 
of growth as public sector spending remains under 
pressure and governments turn to the private sector to 
provide a number of outsourced services. Government 
contracts, which represented approximately 23% of 
group revenues for the year ended 31 December 
2012, tend to be long-term strategic partnerships, 
with recurring revenues.

04  G4S plc Annual Report and Accounts 2012

Our investment attributes

G4S creates shareholder value as a result of a number of core investment attributes.

Growth
(cid:116)(cid:1) Organic revenue growth
(cid:116)(cid:1) Developing markets exposure
(cid:116)(cid:1)  Major position in UK 

Government outsourcing
(cid:116)(cid:1) A GDP + growth business
(cid:116)(cid:1) Disciplined M&A

G4S has delivered strong organic growth since its creation in 2004, 
performing well above global GDP growth despite recent pressure on 
the economic environment. We are able to do this as a result of our 
signiﬁcant and increasing exposure to higher growth developing markets 
and leading market positions in key growth markets such as the UK 
Government outsourcing sector, where growth is strong and expected 
to continue. Organic growth is supplemented by disciplined reinvestment 
of free cash ﬂow in acquisitions focused on extending our developing 
markets presence in key growth countries and adding capability to help 
address the needs of customers in growing sectors.

Resilience
(cid:116)(cid:1) Well diversiﬁed business
(cid:116)(cid:1) Defensive services
(cid:116)(cid:1) Structural growth through the cycle
(cid:116)(cid:1)  High customer retention and 

visibility of earnings

Our business is well diversiﬁed across more than 125 countries and 
numerous customer sectors, with no over-reliance on any single area. 
Security is at the core of our service proposition and is one of the areas 
on which governments and commercial customers focus for cost-savings  
and reductions during economically challenging times, creating opportunities 
for outsourcing. We have a growing number of long-term contracts coupled 
with excellent customer relationships and a customer service culture which 
result in strong customer retention rates and good earnings visibility.

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Strong ﬁnancial disciplines
(cid:116)(cid:1)  Operational efficiency and 

margin expansion

(cid:116)(cid:1)  Free cash ﬂow generation/ 

cash conversion

(cid:116)(cid:1)  Disciplined and coherent M&A/ 

capital return policy

Our track record of delivery has been achieved within a framework 
of strong ﬁnancial discipline focusing on operational efficiency to drive 
margin expansion and a continual focus on high levels of cash generation. 
We look to achieve an appropriate balance in our capital structure 
between investment in acquisitions and investment returns through 
a progressive dividend policy.

These attributes, combined with the growing reputation of G4S as the world’s 
leading security solutions provider, should result in superior returns for our investors 
over the longer term.

G4S plc Annual Report and Accounts 2012  05

 
 
 
Chairman’s statement
Building on strong foundations for the future

This is my first statement in a G4S annual report, 
having taken over from Alf Duch-Pedersen as 
chairman of the board in June last year. Neither 
Alf nor I appreciated then the extent of the 
challenges the group would have to face during 
the second half of 2012. However, although my 
first few months in office were something of a 
baptism of fire in some respects, I am pleased to 
say that we have come through these difficulties 
and have learned a lot as well. It is important 
to keep a sense of perspective too. The group 
operates in so many parts of the world, providing 
vital services to thousands of customers and doing 
so to the very highest standards. This underlying 
strength in depth is reflected in the company’s 
results for 2012.

As part of my planned introduction to the role of 
chairman, I have had the opportunity to visit a variety 
of the group’s operations in different parts of the world 
and have met with many of its senior leaders in a range 
of forums. I have been extremely impressed by the 
enthusiasm and professionalism of the group’s managers.

I have also been able to meet most of the company’s 
larger shareholders. Keeping in touch with investors is an 
essential part of my role and I intend to maintain regular 
contact with them in future.

Financial performance
The macroeconomic conditions in many of our markets 
continue to be difficult. In much of Europe, growth is non-
existent and the problems with US Government spending 
are well known. Against this backdrop, the group’s results 
in 2012 are strong, with good organic growth overall 
and excellent cash conversion. Our wide geographical 
spread and involvement in developing markets with 
higher GDP growth has stood us in good stead and in 
developed markets where outsourcing trends are strong, 
we continue to make good progress. In the light of this 
performance and in view of our confidence in the group’s 
strategy, the directors propose a final dividend of 5.54p 
(DKK 0.473) per share, payable on 14 June 2013. With 
an interim dividend of 3.42p (DKK 0.322) per share paid 
on 19 October 2012, the total dividend for the year will 
amount to 8.96p (DKK 0.795) per share. This represents 
a 5% increase on the total dividend for 2011.

Reputation and risk management
No consideration of the company’s performance in 2012 
can ignore the Olympics contract. It made headlines and 
brought us to the public’s attention, especially in the UK, 
and for all the wrong reasons. With help from PwC, the 
board conducted a thorough review of the circumstances 
surrounding the group’s performance on delivering the 
Olympics contract to ensure that the reasons for the 
problems were properly understood and so that any 
necessary remedial actions could be identified and taken. 
It was very important to me as the new chairman, and 
to the whole board, that we took whatever steps were 
necessary to learn these lessons, no matter how painful 
this process might be.

We are satisfied that there was no systemic problem in 
the way that the group operated its business and that it 
was the unique nature of the Olympics contract and the 
compressed timeframe in which it had to be delivered 
which were at the heart of the group’s failure to deliver all 
that it should have done on this occasion. Nevertheless, 
we have introduced stronger mechanisms for reviewing 
risks in general and contract risk in particular, including 
lowering the value threshold for contracts requiring 
board approval. 

06  G4S plc Annual Report and Accounts 2012

015660_G4S_AR12_p1-p19.indd   6

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2004–2012 total shareholder return performance
Value (p)

(cid:81) G4S    (cid:81) FTSE 100 index     (cid:81) Peer group

8.96p

Total dividend per share up 5%

400

300

200

100

2004

2005

2006

2007

2008

2009

2010

2011

2012

The new, strengthened, Risk Committee will be a focus 
for this activity and a newly created chief operating 
officer role will increase the ability of the executive team 
to ensure that risk management is at the heart of key 
business decisions. 

The board review also concluded that there had been no 
signiﬁcant shortcomings in Nick Buckles’ performance, nor 
any serious failings attributable to him in connection with 
the Olympics contract. Consequently the board decided 
it was in the company’s and its stakeholders’ best interests 
that he should remain as our CEO. I was and remain 
entirely conﬁdent that this was the right decision.

Away from the media frenzy in the UK in the summer, 
hundreds of thousands of the group’s employees continued 
to provide outstanding service levels in what can sometimes 
be difficult and occasionally dangerous circumstances. Any 
objective assessment of the group’s capabilities should of 
course be based on the excellent work which the group has 
always provided and continued to provide throughout 2012. 
We understand though that reputations are hard won and 
sometimes too easily lost, so we are determined to repair 
the damage the group suffered in the summer by continuing 
to do what we do best and doing it well. Rebuilding the 
trust and conﬁdence of the UK Government in G4S is an 
essential part of that process of course and the settlement 
with the organising committee of the Olympic Games and 
recent contract awards by UK public bodies are indeed 
good news.

The board
2012 saw change on the board, with the retirement of Alf 
Duch-Pedersen and my appointment as his replacement. 
I would like to thank Alf for his service to the group, both 
as chairman since 2006 and before that as a director of 
the company and its predecessors. Continually refreshing 
a board is not just a corporate governance nicety, it is also 
vitally important if a board is to function as effectively 
as possible. The Nomination Committee has therefore 
considered carefully the range of skills and experience 

which the board needs and has taken account of the fact 
that, over time, we will lose the skills and experience 
of some of our current board members as they retire 
or move on.

I am delighted therefore that we have been able to recruit 
Paul Spence and Adam Crozier and that we will shortly 
be joined by Tim Weller. Their qualities will be invaluable 
to the board and to the group as we continue to develop 
the business.

At the conclusion of this year’s AGM, and having served 
for nine years, both Paul Condon and Bo Lerenius will 
retire from the board. The whole board will be sorry to 
see them go and I am very grateful for their support in the 
short time we have worked together.

As usual, the board conducted a review of its own 
performance in 2012. Taking account of the conclusions 
of that review, the board has set itself a number of clear 
objectives for 2013 and I intend to report in future on 
how the board has performed in relation to them.

The future
2013 will be a time of both change and consolidation for 
the group. There have been a number of changes at both 
board and group executive committee level and there 
will be new challenges involved in making our new risk 
management processes a seamless part of the way we 
operate and in ensuring that our services always meet 
or exceed our customers’ expectations. 

The group will however continue to grow and develop 
and I have learned in the short time that I have been 
involved with the company that, in this aim, it is well 
served by dedicated and professional employees all over 
the world. 

John Connolly
Chairman

G4S plc Annual Report and Accounts 2012  07

 
 
 
 
Strategic review

Chief Executive’s interview
Looking forward with conﬁdence

How would you sum up the group’s 
trading for 2012?

Despite continued economic challenges in Europe, the 
overall business has performed well with an acceleration 
in organic growth to 6.9% from 5.1% in 2011.

Group revenues were up by 8.1% on the prior year and 
the key highlights of the year were the strong growth 
in the UK government and US commercial businesses 
and the continued strong performance in developing 
markets. Our developing markets activities achieved 
organic growth of 10% and they now make up 33% of the 
group's revenue. 

Despite the economic challenges of low GDP growth and 
the impact of low interest rates in developed markets 
on our cash solutions business, we managed to maintain 
margins overall through continuing to focus on keeping 
costs under control and cash ﬂow generation. 

What were the main highlights of 
the year?

There were a number of signiﬁcant highlights during 2012, 
which either contributed to our performance in the year or 
laid the foundations for future growth and success.

Overall, we have performed strongly with organic growth 
of nearly 7% against a difficult trading environment 
and the distractions of the Olympics contract in the 
summer. We worked hard to implement substantial 
cost savings during the ﬁrst half of the year, signiﬁcantly 
reducing our overhead costs to help counter the current 
margin headwinds, particularly in Europe, resulting in us 
maintaining our margins at 7.1%.

Despite signiﬁcant economic challenges, our US 
Commercial business grew particularly strongly in 2012, as 
a result of a ﬁrm focus on customer service and retention, 
the expansion of a number of existing contracts and a 
number of new business wins such as Google, Gallagher 
Bassett and Iberdola. Overall the US commercial business 
grew by 11% in the year.

In 2012, we achieved our eighth consecutive 
year of underlying revenue, PBITA and dividend 
growth. This demonstrates that, despite ongoing 
economic uncertainty in 2012 and the challenges 
of delivering the London 2012 security contract, 
the underlying business has performed well and 
the positive trading momentum is expected 
to continue.

We are conﬁdent in the future and expect  
to continue our track record of growth whilst 
maintaining our discipline on margins and  
cash generation.

08  G4S plc Annual Report and Accounts 2012

One of the key achievements during the year was the 
mobilisation of a number of major contracts in the 
UK. We began the facilities management of more than 
340 court buildings across the Midlands, Wales and 
the North of England in February this year on behalf 
of the UK Ministry of Justice. We opened Oakwood 
Prison, one of the largest in the UK, providing places 
for over 1,600 prisoners in the West Midlands during 
April, and commenced the provision of transport and 
accommodation for asylum applicants across four regions 
of the UK in June. In April, we also successfully mobilised 
the ﬁrst major support services contract with Lincolnshire 
Police Authority where we provide a wide variety of back 
office functions to allow the force to concentrate more 
resources on front line policing services – reducing the 
Police Authority running costs by around 16% in the ﬁrst 
nine months of the contract.

Our developing markets businesses performed well 
in the year and we continue to focus on developing 
markets for future growth. We expanded our presence 
in the high growth Brazilian market in the second half 
of 2012 through the acquisition of Vanguarda, one of 
the country’s leading security providers, to complement 
the acquisition of Interativa which was completed late 
in 2011. These acquisitions provide us with an excellent 
platform for growth in one of the world’s leading 
economies and help to strengthen our service offering 
and capabilities across the region to include security, 
facilities management and technology. 

We have made excellent progress during the year in 
establishing our product-speciﬁc service excellence 
centres which are focused on ensuring long-term 
operational efficiency, high quality service standards, 
the development of technology to support service 
delivery and the sharing of best practice across our 
main service lines. These service excellence centres 
have already had a signiﬁcant impact on the businesses 
through reduction in attack losses in the cash solutions 
business and assisted nine countries in identifying proﬁt 
improvement opportunities.

It is also important to recognise the efforts of our 
managers and ﬁnance teams in terms of keeping the 
focus on generating cash throughout the year, particularly 
against a difficult economic environment where customers 
have been looking to extend payment terms and hang 
on to their cash for as long as possible. Delivering 95% of 
PBITA as cash in 2012 was a signiﬁcant achievement.

What were the biggest challenges of 
the year and how did they impact 
the group’s performance?

The most signiﬁcant challenge of 2012 was handling the 
issues associated with our failure to provide the contracted 
number of security personnel for the Olympic Games. 
The Games was a huge success for Britain and as a British 
company which has been an important part of British 
society for over 75 years, we wanted to play our part in 
delivering a great Games for Britain.

The realisation as the Games approached, that the 
workforce numbers we believed to be in place would not 
materialise, was a big shock for us all and was the start of 
one of the toughest periods in the group’s history.

On the plus side, I was impressed with the way that 
colleagues across the group – from both the UK and 
overseas – stepped in to help resolve the issues as 
soon as they came to light. This meant that, in the end, 
we were able to recruit around 16,000 security staff 
and around 8,000 of them worked at the Games on 
the peak day. Overall we delivered around 82% of the 
contracted requirement and all of the security workforce 
requirements for the transition period between 
the Olympics and Paralympics and throughout the 
Paralympic Games.

Reputationally, the group faced extreme scrutiny, 
particularly from politicians and the media, which took 
an enormous amount of effort and resource to manage. 
The detailed ﬁnancial implications are highlighted 
elsewhere in this report, but the overall impact was that 
rather than making a modest proﬁt on the contract, we 
will make a loss on the contract of £70m having agreed 
to refund a signiﬁcant proportion of the management 
fee as a gesture of goodwill to the UK Government – 
an important customer for the group. We also incurred 
additional costs of £11m relating to external fees and a 
further £7m in sponsorship and marketing costs. This all 
equates to a total loss of £88m.

Whilst the overall situation was extremely disappointing 
for us, I am proud of the way our staff worked together 
with the military and police to ensure that the Games 
was safe and secure. Having reached agreement on the 
settlement, we hope that in 2013 we can put the issue 
behind us and continue to demonstrate that G4S is a great 
company which plays an important role in societies all over 
the world through the efforts of our over 620,000 loyal 
and dedicated employees. 

G4S plc Annual Report and Accounts 2012  09

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service and delivery. Recruitment for this role is well 
underway and we hope to announce an appointment 
during the ﬁrst half of this year.

Elsewhere, we have continued to focus on keeping 
costs down and reviewing our overhead structures and 
resources to make sure we are in good shape to weather 
the ongoing economic storm.

What are the key elements of the 
strategy for 2013 and the future?

There is no change to the group strategy for 2013 – 
security is at the core of our offer and, although we may 
move into related services in speciﬁc markets should 
opportunities take us there, we will remain true to our 
security heritage. 

We will continue to focus on developing long-term 
relationships with businesses and governments in 
countries and sectors where security and safety risks 
are considered a strategic threat and where we can help 
customers achieve their own strategic objectives.

With limited medium-term opportunities for growth 
in Continental Europe, we will continue to look to 
developing markets for enhanced growth opportunities 
and to build on our market-leading positions in many of 
these markets. We will aim to export the knowledge and 
expertise which we have in more developed markets to 
these higher growth regions. 

We will drive secure solutions and cash solutions markets 
through the various phases of development to encourage 
greater outsourcing and focus our attention on larger, 
more complex bids for new business. We will also focus 
on effectively managing any risks associated with these 
contracts by implementing enhanced contract risk 
management and assessment processes.

We will maintain our focus on service excellence, 
on retaining and growing our business with existing 
customers and winning new business across a wide range 
of markets and sectors. Our sector-focused strategy in 
areas where security and safety are of vital importance is 
a key differentiator for us and it has proved successful in 
the last 12 months. We will continue to focus our skills in 
enhanced risk management and safety and security in key 
sectors such as ports and maritime, aviation, oil and gas, 
and mining industries.

We are constantly looking to develop and refresh our 
talent pipeline and we will continue to do this in the 
coming year through the development of our people 
to build their skills, knowledge and behaviours and to 
ensure that we have robust succession plans in place for 
the key roles across the group.

Strategic review 
Chief Executive’s interview continued

In November, we were faced with what seemed like 
a signiﬁcant change of policy by the UK Government 
when the Ministry of Justice announced that it would 
not outsource a number of prisons to the private sector 
and would be taking an existing outsourced prison back 
under the control of the Prison Service. Whilst this was 
disappointing to us and to the market at the time, there 
does appear to be some positive news as a result of the 
developing UK prison policy, which will include a substantial 
amount of outsourcing of services such as rehabilitation, 
facilities management and other related services. We are 
in a good position to bid for these contracts which are 
estimated to be worth around £1bn per annum.  

2012 was a challenging year for our US Government 
Solutions business as a result of a signiﬁcant reduction 
in the US Federal Government spending in both the US 
domestic government sector and in contracts for overseas 
landmine clearance. We introduced a number of cost-
saving measures during the year to mitigate the challenges 
in this market and have recently announced our intention 
to divest the business to a parent which would be able 
to add or create more value than we are able to, being 
a foreign parent with limited control over the business 
strategy and restricted access to important commercial 
data and limited ability to manage the business and share 
best practice.

Elsewhere, trading conditions, particularly in Continental 
Europe continued to be tough with increasing margin 
pressure on contract renewals across many developed 
markets. Early in 2012 we began our programme of 
overhead cost saving measures which have helped to protect 
our margins in the latter half of the year and should provide a 
good basis on which to move forward in 2013.

What lessons have you learned 
during the year and what will you do 
differently in the future as a result?

We commissioned a thorough review of our performance 
on the London 2012 Olympic security contract with the 
assistance of PwC and the ﬁndings were published in 
September 2012. The review concluded that the failures 
were speciﬁc to the very special nature of the contract, but 
we decided to take a number of actions to ensure that best 
practices are applied consistently across the entire group. 

With that in mind, we are implementing a more rigorous 
risk assessment for new contracts and improving contract 
take-on processes and project management. Board 
oversight of new contracts is also being enhanced including 
review and approval of large or complex contracts.

We are also strengthening the Group Executive team 
with the appointment of a chief operating officer, whose 
responsibilities will include a speciﬁc focus on operational 
procedures, risk management and quality of customer 

10  G4S plc Annual Report and Accounts 2012

How do mergers and acquisitions ﬁt 
into your future strategy?

Acquisitions continue to be an important part of the 
strategy, particularly in developing markets where we can 
either improve our market share or where an acquisition 
can act as a catalyst to drive outsourcing opportunities. 
Overall, we expect to spend around £200m on 
acquisitions each year.

We believe there are substantial growth opportunities in 
these markets and we are targeting 50% of our revenues 
to come from developing markets by 2019. 

We will also continue to be more active in terms of 
divestments where a service line is not core to the group, 
where a business could result in material reputational 
damage to the group or it is unable to reach the group 
minimum targets within a set period of time under our 
ownership or where an alternative parent could add or 
derive more value from a business. 

What targets or goals are you 
setting for 2013?

Overall, our key business objectives for 2013 are to drive 
organic growth, deliver margin improvement, optimise 
our organisational development and to build and protect 
our reputation.

Key Business Objectives:

Drive 
organic 
growth

Deliver 
margin 
improvement

Optimise
organisational
development

Build and 
protect 
reputation

Find out more on pages 21 to 29

More speciﬁcally, we will focus on continuing to improve 
our organic growth performance through customer 
service, contract retention and expansion and through 
winning new business in key target areas. 

We are aiming to increase the proportion of our revenues 
generated in developing markets with a six-year target 
of 50% of the group total as key security markets such as 
Brazil and China open up to foreign investment and where 
we can import our expertise from more developed 
markets in order to raise standards, deliver operational 
best practice and help our customers to achieve their own 
strategic objectives.

We will maintain our discipline on margins through good 
cost control and sharing of operational best practice as 
the service excellence centres continue to gain further 
traction across the operation and as we keep the cost 
base under constant review. 

We will aim to upgrade our approach to contract risk 
management through the development of new processes 
for monitoring major contracts and increasing board 
and senior management visibility of contract issues. 
The addition of a new chief operating officer to the Group 
Executive team will be a key element of this focus. 

We are targeting strong EPS growth and believe we can 
deliver that as a result of structural growth trends in 
the security industry and outsourcing trends, our strong 
developing markets presence and continued focus on 
margins and cash generation and are maintaining our 
overall target of generating at least 85% of PBITA as cash 
during the year.

How would you summarise the 
outlook for the group?

Despite the disappointment of the Olympics contract 
in 2012, the underlying trading across the majority of 
the group remains strong. The economic pressure is 
continuing to be challenging in Continental Europe. 
However, I am conﬁdent about the prospects for the 
group in 2013 based on our market leading businesses, 
broad customer base and contract pipeline. We continue 
to see good opportunities from outsourcing in key sectors 
such as government, ﬁnancial institutions, aviation, oil 
and gas, mining and ports. The breadth of our portfolio 
in over 125 countries continues to present many new 
growth opportunities.

Nick Buckles
Chief executive officer

G4S plc Annual Report and Accounts 2012  11

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Strategic review

Key performance indicators
Driving business improvement

Financial KPIs

The key ﬁnancial performance indicators (KPIs) for the group and G4S operational 
management across both the secure solutions and cash solutions businesses are 
organic growth, cash conversion (operating cash ﬂow as a percentage of PBITA) 
and PBITA margin.

Organic turnover growth*
%

6.9%

Cash conversion*
%

9.5

85

90

87

84

95%

95

6.9

5.1

3.7

2008

2009

2.1

2010

2011

2012

2008

2009

2010

2011

2012

Organic growth is used as the best measurement of 
growth inherent within a business, and it is widely 
accepted as such. 

Cash conversion is used to measure the cash generation of 
the group and how successful the business is at managing its 
operating capital. 

G4S revenues grew 6.9% organically excluding the 
Olympics contract in 2012, up from 5.1% in 2011. Organic 
growth was assisted by strong growth across most 
regions, particularly in developing markets. Our long-term 
aim is to achieve organic growth above GDP. Depending 
on contract phasing and the economic environment, we 
target to grow between 6% and 8% per annum in the 
long term.

See pages 21 and 22 for more detail on our 
plans to drive organic growth as one of our key 
business objectives.

Gross margin 

For 2013, a new KPI of gross margin has been introduced 
for operational management. Gross margin is used to 
measure the proportion of revenue the business retains 
after incurring the direct costs associated with providing 
services to customers.

* Excluding Olympics contract and adjusted for disposals and 
discontinued operations

12  G4S plc Annual Report and Accounts 2012

Through continual analysis of all aspects of the operating 
cash cycle to improve cash collections, we exceeded our 
cash conversion target of 85% of PBITA in 2012. 

PBITA margin*
%

7.1%

7.0

7.1

7.2

7.2

7.1

2008

2009

2010

2011

2012

PBITA margin is used as a measure of success in controlling 
the cost base relative to sales. 

The operating margin for secure solutions (82% of 
revenues) was slightly lower at 7.0% in 2012 from 7.2% in 
2011 due to UK Government contract phasing, whilst the 
cash solutions margin was maintained at 10.5%, resulting in 
the overall margin performance for the year of 7.1%.

See page 24 for more detail on our plans to improve 
margins as one of our key business objectives.

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Non-ﬁnancial KPIs

HR standards and KPIs

Managers across the group are also 
targeted to achieve additional objectives 
which are agreed on an individual basis 
and will usually be linked to business plan 
milestones. 

Some examples of non-ﬁnancial KPIs achieved in 
2012 include:

We believe strong employee relationships 
help deliver excellent customer 
service. To ensure that G4S delivers 
on its commitments to its employees, 
businesses are required to report 
monthly on key metrics relating to:

(cid:116)(cid:1)  acquisition of a manned security business and a security 

Health and safety

licence in Brazil

(cid:116)(cid:1)  formation of a joint venture in China and security 

licence approval

(cid:116)(cid:1) development of a group human rights policy

All objectives and targets are focused on driving the 
business performance forward and delivering the group’s 
solutions strategy over the longer term. 

Employee turnover and stability 

Industrial relations

Recruitment rates

See pages 48, 51and 52 for some of our key 
CSR KPIs and our progress against them in 2012. 
More detail can also be found in the 2012 G4S 
CSR report.

G4S plc Annual Report and Accounts 2012  13

 
 
 
Strategic review

Marketplace
Building on our leading market positions

The global security market 

The “business to business” global security market is estimated to generate revenues of 
around £96bn per annum.

Security industry growth
£bn

Total: 190

Total: 138

8

14

15

35

28

38

Total: 96

5

9

10

21

23

28

20

12

22

54

33

49

2011

2016

2021

North America

Western Europe

Asia Paciﬁc

Latin America

Eastern Europe

Africa/Middle East

Global security market by service
£m

120,000

100,000

80,000

60,000

40,000

20,000

0

Manned
Security

Security
Systems

Cash
Services

Prison
Outsourcing

Other

2011

2016

2021

Based on the latest published market 
research (Freedonia Report on World 
Security Services, January 2013), and 
G4S analysis, G4S estimates that 
the global security market will grow 
by around 7% per year from 2011 
to 2021. 

As an integrated security provider, 
we are active in all types of security 
and according to the Freedonia 
report, the market in 2011 was split 
by service type as shown on the chart 
to the right. Looking at the Freedonia 
forecasts, the split by service type is 
not expected to be very different ten 
years later in 2021.

50%

of the global security market is expected 
to be in developing markets by 2016 

14  G4S plc Annual Report and Accounts 2012

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G4S major markets

Competitive environment

With operations in more than 125 
countries, G4S is a truly global security 
services provider. 
Total security market size

The charts below show the size of the major markets in 
each region for G4S.

UK and Ireland
UK 

Ireland 

Europe 
Netherlands  

Belgium  

Sweden 

Austria  

Turkey  

Africa
South Africa 

Kenya  

Morocco 

Nigeria 

North America
USA 

Canada 

Asia Middle East
India 

Saudi Arabia 

Australia 

China/HK 

Latin America
Brazil  

Argentina 

Colombia 

Mexico  

£6,000m

  £400m

£1,500m

£600m

£800m

£600m

£2,000m

£2,000m

£150m

£150m

£600m

£24,000m

£1,800m

£1,300m

£1,000m

£1,200m

£3,750m

£6,000m

£1,000m

£750m

£2,000m

The global security industry consists of a 
number of highly competitive markets, 
particularly in the manned security sector 
where markets can be fragmented. 

At a local level, G4S competes with local companies for 
the provision of individual service lines. At a global level 
G4S has no peer with which it competes directly in all 
service lines across all geographies. 

Company

Service lines

Competing 
geographies

Loomis

Cash solutions

UK, Finland

Securitas

Secure solutions

Brink’s

Cash solutions

Serco

Government 
outsourcing

ISS

Secure solutions

UK, Europe, 
North America

Canada, 
Asia, 
Small number 
in Europe

UK, Australia

UK, Southern Europe, 
Asia

Mitie

Secure solutions

UK

Global market shares – 2012
%

2% ADT

2% Brink’s

3% Prosegur
4% UTC

5% Secom

1% Serco Civil

7% Securitas

8% G4S

68% Others

£2.4bn 

Of revenues were generated by G4S in developing 
markets in 2012

10%

Organic growth was achieved by G4S in developing  
markets in 2012

G4S plc Annual Report and Accounts 2012  15

 
 
 
Strategic review

Our business model

The G4S business model is focused on 
developing partnerships with customers to 
move from a basic level of service delivery 
and excellence in each of our core services 
in phase 1, through to delivering analysis, 
expertise and design capability in phase 2 
and the design, project management and 
delivery of fully outsourced solutions for our 
customers in phase 3. 

As the service complexity and customer integration increases, so 
does the customer partnership and the longevity of the relationship. 
G4S becomes an integral part of the customer’s organisation 
helping them to achieve their own strategic objectives. A key goal 
is to encourage an increased proportion of customer relationships 
which are of the type described in phase 3 in the model here.

See pages 18 and 19 to see how the G4S business 
model is applied to our key markets and services 
to drive markets through the various phases of 
development from 1 to 3. 

16  G4S plc Annual Report and Accounts 2012

Strategic phases

3

Manage

Delivery of 
outsourced 
solutions

2

Analysis and Design

Delivery of expertise 
and design capability

1

Operate

Delivery of service 
excellence in each 
core service with 
supervisory overlay

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G4S delivery

Solutions designed to improve processes whilst reducing costs

Complex project management

Continuous improvement methodology

Technology integration – management information

Sector/subject matter expertise

Risk assessment and consulting

Solutions and bid design capability

Process re-design/cost reduction

Continuous improvement methodology

Supervision/Integration

Subcontractor management

Measurement and Reporting

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Care and justice

Customer needs analysis

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G4S plc Annual Report and Accounts 2012  17

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Strategic review

Delivering enhanced growth

By applying the G4S business model to our key markets and services, we can drive 
markets through the various phases of development from the provision of basic 
services to full outsourcing. As each market moves at a different pace, the current 
opportunities for delivery of the strategy are shown in the charts below. 

Secure solutions

Market development: In the secure solutions service line, commercial facilities management (FM) is only developed as 
an extension of government outsourcing or FM capability in developed markets, whereas it can often be a standalone 
service line created speciﬁcally for the commercial sector in developing markets.

Market development

Developed markets

Manned 
security

Security 
systems

Integrated 
security

Government 
outsourcing 
and facilities

Commercial 
facilities 
management

UK

Australia

Northern 
Europe

Southern 
Europe

US

Developing markets

Manned 
security

Security 
systems

Integrated 
security

Government 
outsourcing 
and facilities

Commercial 
facilities 
management

Brazil, India 
and China

Middle East

Eastern 
Europe

Other 
Developing 
Markets

 Current G4S service line   

 Current market opportunity   

 Future market development opportunity   

 No short to medium-term market opportunity

18  G4S plc Annual Report and Accounts 2012

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Cash solutions

Market development: The same market development 
model applies to the cash solutions service line. Market 
position in cash solutions is important in achieving and 
maintaining market leadership. We believe we are market 
leader in the majority of the 70 countries in which we 
operate cash solutions businesses.

Growth drivers
With strong market positions in developed and developing 
markets complementing global outsourcing trends, G4S has 
a sustainable growth strategy. The key drivers of growth 
are a combination of external drivers and G4S strengths. 

All G4S service lines: Growth drivers which are common 
to all G4S service lines are summarised below: 

Market development

Developed markets

Cash 
transport 
and 
processing

Enhanced 
ATM and cash 
processing 
services

ATM 
management 
and cash centre 
management

UK

Australia

Northern 
Europe

Southern 
Europe

US

Developing markets

Cash 
transport and 
processing

Enhanced 
ATM and cash 
processing

ATM 
management 
and cash centre

Brazil, India 
and China

Middle East

Eastern 
Europe

Other 
Developing 
Markets

 Current G4S service line   
 Future market development opportunity

 Current market opportunity 

(cid:116)(cid:1) Economic environment and GDP growth
(cid:116)(cid:1) Competitive environment
(cid:116)(cid:1) Regulation and regulatory environment
(cid:116)(cid:1) Level of customer relationship
(cid:116)(cid:1) Innovation or continuous improvement
(cid:116)(cid:1) G4S reputation and track record
(cid:116)(cid:1) Customer satisfaction and retention

Other growth drivers are speciﬁc to a particular service line:

Secure solutions service line: The key growth drivers 
are summarised below:

(cid:116)(cid:1) Customer attitude to risk management
(cid:116)(cid:1) G4S focus on high growth segments
(cid:116)(cid:1) Growth of international accounts
(cid:116)(cid:1)  Increasing infrastructure investment in 

developing markets

(cid:116)(cid:1) G4S ability to integrate manpower and technology
(cid:116)(cid:1)  Multi-service or service bundling trends in 

developing markets 

(cid:116)(cid:1) Customer focus on security
(cid:116)(cid:1) Customer propensity to outsource
(cid:116)(cid:1) Customer budgetary pressures

Cash solutions service line: The key growth drivers are 
summarised below:

(cid:116)(cid:1) Role and strategy of central banks
(cid:116)(cid:1) Development phases of the cash cycle
(cid:116)(cid:1) Appetite for outsourcing
(cid:116)(cid:1) Product innovation
(cid:116)(cid:1) Interest rates
(cid:116)(cid:1) Levels of crime

See pages 32 to 40 for more detail on the secure 
solutions and cash solutions services and customers. 

G4S plc Annual Report and Accounts 2012  19

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Magnus  
Port of Gothenburg 
Gothenburg, Sweden

I work as part of a 
team which checks 
and secures more than 
40 million tonnes of 
cargo and over 1.5 
million people that pass 
through Scandinavia’s 
largest port each year.

20  G4S plc Annual Report and Accounts 2012

Strategic review

Key business objectives
Drive organic growth

Context 

1

3

2

4

In normalised market conditions, our business should be able to grow ahead of global GDP growth. Depending on 
contract phasing and the economic environment, we target organic growth of between 6% and 8% per annum in the 
long term. 

Key objectives and progress

Drive outsourcing in all markets
A key element of our business model is to drive 
outsourcing in all of our markets, whether it be in secure 
solutions or cash solutions or with commercial customers 
or governments. This leads to G4S becoming integral to 
its customers’ success, increased customer partnerships 
and longer term contracts, resulting in greater visibility of 
future revenues.

See pages 18 and 19 for more detail on 
outsourcing opportunities by geographic region 
and by business segment.

Aviation sector
Revenue 
£m

CAGR
+14%

240

202

275

298

Focus on high growth markets where 
security and safety are key
By focusing on speciﬁc sectors where a greater emphasis 
is placed on security and safety we are able to provide 
expertise which is relevant to the speciﬁc needs of the 
market which enables us to differentiate the G4S offer 
from that of our competitors. This has proved successful 
in a number of key sectors such as aviation, ports, oil & gas 
and mining as shown in the charts below which give the 
compound annual growth rates (CAGR).

Ports sector
Revenue 
£m

CAGR
+30%

33

37

73

58

2009

2010

2011

2012

2009

2010

2011

2012

Oil and gas sector
Revenue 
£m

CAGR
+20%

172

Mining sector (new in 2012)
Revenue 
£m

CAGR
+51%

338

112

287

230

74

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2011

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G4S plc Annual Report and Accounts 2012  21

 
 
 
Strategic review
Key business objectives
Drive organic growth continued

Investment in international accounts
Our continued investment in global account management 
for international customers and a global business 
development programme allows us to leverage our unique 
footprint and service offering. In 2012, as well as retaining 
all managed international accounts, our international 
accounts revenue grew by 12% through a combination of 
existing accounts and some new wins. 

Achieve strong customer retention
Our focus on account management and retention has 
resulted in halving the rate of large customer contract 
losses since 2010. Overall the group contract retention 
rate is around 90% per annum. We will continue to use 
our customer account management programme allied 
to driving service consistency and standards to deliver 
industry-leading customer retention levels.

Target acquisitions which can accelerate 
organic growth potential
Our acquisition strategy focuses on acquiring businesses 
which can help build share in key markets (particularly 
in high growth developing markets), improving market 
positions in the cash solutions services lines where this is 
a critical success factor and adding capability which helps 
to expand and extend contracts with existing customers 
as well as winning new business. All of these factors are 
signiﬁcant contributors to long-term growth.

Increased focus on 
government outsourcing
As part of our market development strategy, we aim to 
encourage more governments to outsource services to 
the private sector, enabling them to reduce costs and in 
many cases deliver a better service as a result of increased 
commercial competition. Government contracts, which 
represented approximately 23% of group revenues in 
2012, tend to be long-term strategic partnerships with 
recurring revenues.  

Global service delivery frameworks for 
service consistency
One of the roles of the service excellence centres is to 
ensure best practice and consistent service are delivered 
to our customers. This should ensure high levels of 
customer retention.

Increased focus on large bids and 
long-term customer partnerships
We continue to invest in recruiting and training high 
calibre business development resource at a country, 
regional and global level. The deployment of multinational 
bid teams on our largest and most complex bids has 
been successful such as those with DP World and Shell 
and we will continue to invest in our strategic account 
management programme as part of the G4S Way. 

See page 26 for more detail on the G4S Way.

Roll out of best practice sales, bidding and 
account management processes
We introduced Salesforce.com during 2011 and 2012 
to ensure global collaboration on international accounts 
and help retain customers through best practice account 
management processes. Salesforce.com gives visibility 
around the contract pipeline so we can deploy the 
best resources to the biggest opportunities and drive 
productivity of the sales organisation. 

22  G4S plc Annual Report and Accounts 2012

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Shiva
Abu Dhabi, UAE

As part of the event 
security team for the 
Abu Dhabi Grand Prix, 
I help to ensure the 
safety and security of 
40,000 fans who enjoy 
this major motor sports 
event each year.

G4S plc Annual Report and Accounts 2012  23

 
 
 
Strategic review

Key business objectives
Deliver margin improvement

Context

1

3

2

4

We target a long-term group PBITA margin of around 7%, depending on the business and geographic mix. The group 
has minimum operating margin targets for the various service lines in different types of markets. 

In developed markets, we target margins of 5% for manned security businesses and 10% for businesses providing 
security systems, cash solutions, justice services and risk management and consultancy services. 

In developing markets, margin targets are higher, with a target of 8% for manned security and facilities management 
and 12.5% for all other service lines. 

Key objectives and progress

Deliver procurement beneﬁts
Managing costs is a key element of our strategy and in 
some cases our businesses procure similar products 
and services across multiple markets. During 2012 we 
undertook a major review of procurement, addressing 
around £500m of external spend across areas such as 
vehicles, uniforms, communications and travel.

Ensure overheads are appropriate to 
economic conditions
A key element of the overhead review process which was 
conducted in 2012, was to ensure that, whilst we needed 
the right resources and skills in the right places of the 
organisation, we were able to better manage our costs, 
particularly in markets which continue to face pricing and 
margin pressures.

See page 26 for more detail on the overhead 
savings achieved during this process.

Deliver service excellence and operational 
best practice
In 2012, we invested around £10m in sales and marketing 
and establishing a series of service excellence centres 
(SECs), created to focus on service standards, operational 
best practice and the best use of technology to manage 
our business efficiently and effectively. This effort is 
focused on retaining customers through high quality 
service, but is also key to us improving our gross margins 
across the business. In recent years, during the economic 
downturn, gross margins have come under increasing 
pressure, primarily in the manned security businesses across 
Continental Europe. 

24  G4S plc Annual Report and Accounts 2012

Conduct effective business reviews and 
have in place strong ﬁnancial controls
We have a standardised monthly trading review process 
across the whole group which goes down to branch level 
and we continually review the group ﬁnance manual to 
enhance the business monitoring processes and to ensure 
that ﬁnancial controls are optimised.

Divestment strategy for non-core or 
non-value creating businesses
Whilst the group continues to acquire businesses which 
can add scale in key markets, drive outsourcing trends 
or add key sector or service capabilities, we also have an 
active policy of divesting businesses which do not meet 
key ﬁnancial or strategic targets or if better value can be 
derived from an alternative parent. Since 2006, we have 
divested businesses in France, Germany and Poland and 
speciﬁc service lines such as cash solutions in Taiwan and 
Sweden, and a home alarms business in Norway. We 
also announced in March this year that we are divesting 
our US Government Solutions business as we felt an 
alternative parent would not face the same challenges as 
a non-US parent such as G4S.

Target increased growth in higher 
margin businesses
We focus on key geographies, sectors and services 
which have higher margin potential. For example, we are 
targeting an increase in our business in developing markets 
where margins are higher than more commoditised 
developed markets. We focus on key commercial 
sectors such as ports and oil and gas where security is 
a key requirement and where we can add value to our 
customers’ business. We encourage outsourcing in areas 
such as cash management and facilities management 
where we can take greater responsibility for a broader 
range of services and increase the number of long-term 
customer partnerships where we are more able to 
control costs and drive continuous margin improvements. 
Targeting increased growth in speciﬁc higher margin 
businesses such as these, enables us to continue to 
improve group margins over the longer term.

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Andreza
Menino Jesus Hospital, 
São Paulo, Brazil

I provide specialist 
hospital cleaning 
services to protect 
400 young patients  
from superbugs and 
infections – supporting 
their return to health.

G4S plc Annual Report and Accounts 2012  25

 
 
 
Strategic review

Key business objectives
Optimise organisational development 

Context

1

3

2

4

We see organisational development as key to achieving the strategy – both in terms of making sure we have the 
right skills, capabilities and experience and we are developing our talent in line with strategic objectives, and also 
ensuring that business units are structured appropriately and have the right resource to deliver for our customers.

Key objectives and progress

Ensure appropriate organisational design 
for strategy delivery
During 2012 we reviewed our organisation from top 
to bottom, trying to ensure we have the right level of 
overheads at each level within the group structure – this 
resulted in a reduction in group and regional overheads 
of approximately 1,500 positions, reﬂecting an annual 
cost saving of around £35m. As part of that process, we 
integrated the former cash solutions division into our 
regional structure to ensure a greater focus on customers 
at a local market level and to achieve certain back office 
synergies. We will keep overheads under constant review 
to ensure that we have the appropriate organisational 
design to deliver on the group’s key business objectives.

Target optimum business unit design 
and overheads
We conducted an exercise during 2012 to compare 
similar businesses operating in markets with comparable 
characteristics. This enabled us to assess current 
operational and cost structures and recommend what the 
appropriate structures should be for these businesses. 
This enabled us to create a series of best practice 
operational models for businesses against which they 
can assess their structures and relative performance. 
In 2013, we will look to drive further operational 
standardisation and “right-sizing” through the next phase 
of this programme.

Embed the G4S Way across the country 
operating model
As our cash solutions and secure solutions businesses 
have different business models and market development 
phases (see pages 16 to 19), we report their ﬁnancial 
performance separately. Our primary operational model 
is based on a country model, however there are a number 
of important group level standards and practices which 
we expect businesses to adopt everywhere. 

The so-called “G4S Way” incorporates a number of key 
standards and practices which are shown below. Each 
element of the G4S Way is owned and championed by a 
member of the Group Executive team.

The six standards and practices of the G4S way:

(cid:116)(cid:1) Service excellence – service standards and best 

operational systems

(cid:116)(cid:1)Business review processes and ﬁnancial controls
(cid:116)(cid:1)Sales and business development processes
(cid:116)(cid:1) Senior talent management and human 

resources processes

(cid:116)(cid:1)Legal frameworks and approvals processes
(cid:116)(cid:1)Ethical standards, reputation and crisis management

26  G4S plc Annual Report and Accounts 2012

Constantly improve employee stability 
and satisfaction
Ensuring that our employees are fully engaged and 
involved in their work is key to delivering high levels of 
customer service and customer retention. Managing 
labour turnover is an important factor in ensuring a 
stable workforce. About 70% of our workforce has 
over one year of service with the group and we aim to 
keep employee stability at or above this level through a 
variety of engagement initiatives which include training, 
employee communications, appraisals, regular feedback 
from employees and various forms of interaction with 
employee representatives. We have well established 
HR standards that our businesses must meet in their 
management of employees. These help to drive a culture 
of respect and trust.

Focus on recruiting and retaining the 
best people
We take great care to ensure that we only employ the 
best people for our business through the use of rigorous 
recruitment, selection and screening techniques. We are 
always aiming to improve the efficiency and effectiveness 
of these processes and technology and social media is used 
increasingly to attract and engage with suitable candidates. 
We recruited over 260,000 employees in 2012.

See page 51 of the 2012 CSR Report for more 
detail on Securing our People.

Transfer expertise from more developed 
markets into developing markets
We have an unrivalled geographic footprint which has 
been developed over many years and is unique amongst 
its peers. Our service standards and expertise are also 
usually superior to those of local competitors. This means 
we are a trusted partner for our customers, which are 
keen to secure their people and assets and comply with 
local standards and regulations. This has meant that the 
range of services supplied to customers has broadened to 
a multi-service offering, covering manned security, security 
systems, cash solutions, systems integration, monitoring 
and response and facilities services.

Ensure high standards of HR, succession 
planning and talent management
Attracting and developing the right talent is key to our 
success. We have co-ordinated processes for identifying 
high potential employees and plan suitable career paths 
for their development and movement into more senior 
positions. Our aim is to ﬁll 70% of line management 
positions internally and in 2012 we ﬁlled a vacancy at Group 
Executive team level through an internal promotion from 
our talent pool.

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G4S plc Annual Report and Accounts 2012  27

 
 
 
Surender 
Delhi, India

Every day I help more 
than half a million 
people to travel safely 
on the Delhi Metro.

28  G4S plc Annual Report and Accounts 2012

Strategic review

Key business objectives
Build and protect reputation

Context

Our standards of ethics and integrity are core to the philosophy of the group and are a key differentiator, 
particularly in less developed markets. The business we are in means that we can be exposed to physical and 
ﬁnancial risks and we work hard to make sure that we have in place actions to mitigate risks to the group’s 
performance and reputation.

1

3

2

4

Key objectives

Ensure high standards of business ethics 
and group policy compliance
We play an important role in societies across the world and 
we believe it is important that the impact we have in those 
societies is a positive one. We have in place high ethical 
standards which we expect our managers and employees 
to achieve across the group. Those standards and policies 
are reinforced at every opportunity and we monitor 
compliance with those standards through rigorous business 
review, audit and whistle-blowing processes. 

Have in place strong legal frameworks and 
approval processes
In order to ensure contractual compliance, risk 
mitigation and legal compliance, we have in place strong 
legal frameworks and approval processes across our 
businesses. The legal framework and approval processes 
are implemented by the regional legal teams applying 
group legal policies and guidelines which are monitored by 
regular reporting and review by group internal audit.

Focus on risk management and mitigation 
As an international business sometimes operating in 
complex environments, risk management and mitigation 
is a key focus for the group. Risk committees exist at a 
country, regional and group level and at the heart of our 
risk management philosophy we have a risk assessment, 
control and self-evaluation process which enables managers 
to identify key risks and to ensure that processes are put 
in place to avoid unnecessary risks or to deal with risks 
should they occur. In 2013, we are further developing our 
approach to risk management through a new board level 
risk committee, which will become the responsibility of the 
newly-created COO role.

See pages 46 and 47 for a more detailed discussion 
of our risk assessment and management process.

Ensure robust crisis response processes 
and procedures are in place
We have a comprehensive crisis response process in place 
which is adopted by all countries. This ensures that in the 
event of a crisis, be it physical or reputational, we are 
able to react promptly and appropriately to minimise any 
impact on the business or its reputation.

Engage with key stakeholder groups to 
build awareness of, and loyalty towards, 
the organisation
Engagement with key internal and external stakeholders 
helps us to improve our business, attract and retain more 
customers, keep and motivate our staff and ultimately 
be more successful. We engage with employees through 
local and global surveys as well as through day-to-day 
interaction with supervisors and managers. We have 
strong relationships with unions and other employee 
representative groups and work hard to ensure that we 
collectively raise standards in the industry. We focus on 
customers through strong account management and 
operational interfaces in addition to independent surveys. 
We participate in industry and business associations and 
trade bodies to improve markets and raise standards. 
We have regular dialogue with ethical and other 
investment groups to ensure that the business is clearly 
understood and that we can attract the right investment 
for the future growth of the business. We build 
partnerships with experts who can help us to develop our 
strategies and processes in key areas such as human rights 
and health and safety. 

See page 31 for a more detailed discussion on 
stakeholder relationships and engagement.

G4S plc Annual Report and Accounts 2012  29

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Strategic review

Resources and relationships

Organisational structure

Employees

G4S is managed through a regional 
structure, led by four regional 
CEOs and a Regional President. 
The regional CEOs are members 
of the Group Executive team. 

At a strategic level, the CEO and CFO monitor the group’s 
investments and performance across the two main service 
lines of secure solutions and cash solutions, which have 
different business models. At an operational level, our 
business is managed on a geographic basis. 

Regional performance is reviewed by the group CEO 
and CFO on a monthly basis and a business review 
process is implemented throughout each region to ensure 
good visibility of business performance and issues on an 
ongoing basis. 

Our structure enables us to deliver our strategic 
objectives, maintain a strong governance framework, 
develop integrated solutions, target key regional markets 
and build long-term customer relationships.

See pages 58 to 61 for Group Executive 
team biographies.

Revenue by region
%

7% Africa

17%  Asia Middle East

28%  Americas

24%  Europe

24%  UK and Ireland

30  G4S plc Annual Report and Accounts 2012

G4S has more than 620,000 employees 
and operations in over 125 countries.

As at the end of December 2012, G4S employees were 
located as follows:

By geographical segment
Europe
North America
Asia
Middle East
Africa
Latin America and Caribbean
Total average number 
of employees

124,100

58,600

207,800

44,500

111,400

74,100

2012

20%

9%

34%

7%

18%

12%

620,500

100%

Of the total workforce, approximately 90% are employed 
in front-line positions delivering services to customers 
with the remainder working in management, supervisory 
and support roles.

G4S has set standards to ensure that all employees are 
treated with respect, dignity and fairness. These standards 
cover issues such as health and safety, diversity and 
inclusion, transparent and fair procedures for dealing with 
disciplinary matters, grievances and redundancies, reward 
and recognition, and labour relations and freedom of 
association. Local line and human resources managers are 
responsible for ensuring compliance with these standards.

See pages 48 to 52 or the G4S 2012 CSR Report 
for more information on employee representation 
and engagement.

The G4S brand
The group was created in 2004 through the merger of the 
security business of Group 4 Falck and Securicor. Today, 
just nine years later, the G4S brand is widely recognised as 
a leader in security solutions. 

This is particularly the case in our major developed 
markets and in some key developing markets where we 
are one of the few international security companies with a 
local presence. 
Financial resources
The group continues to have strong cash ﬂow generation, 
equivalent to 95% of PBITA in 2012, well above the target 
of 85%, and this is one of the key performance indicators 
for G4S management. In addition, the group’s funding 
position is strong, with sufficient headroom and available 
committed facilities to ﬁnance current investment plans.

See the Financial review on pages 42 and 45.

 
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Grahame Gibson
Regional CEO 
Americas

Dan Ryan
Regional CEO 
Asia Middle East

Willem van de Ven
Regional CEO 
Europe

Richard Morris
Regional CEO 
UK and Ireland

Our role in society

Stakeholder relationships

G4S plays an important role in society. 
We make a difference by helping 
people to operate in safe and secure 
environments where they can thrive 
and prosper and we believe this role 
can only grow in importance.

Furthermore, managing our relationships with customers, 
employees and communities, and mitigating our impact on 
the environment is fundamental to our strategy because 
it reinforces employee loyalty and helps us attract new 
employees. It helps us secure new customers and retain 
existing ones. Investors expect high standards of ethics and 
responsible business practices.

Our values

Customer focus
We have close, open relationships with our 
customers that generate trust and we work 
in partnership for the mutual beneﬁt of 
our organisations

Expertise 
We develop and demonstrate our expertise 
through our innovative and leading-edge approach 
to creating and delivering the right solution

Performance 
We challenge ourselves to improve performance 
year-on-year and to create long-term sustainability

Best people 
We always take care to employ the best people, 
develop their competence, provide opportunities 
and inspire them to live our values

Integrity 
We can always be trusted to do the right thing

Teamwork and collaboration 
We collaborate for the beneﬁt of G4S as a whole

G4S engages with multiple 
stakeholders on a variety of issues.

Customers
The very nature of G4S’s business requires its 
management and employees to understand its 
customers’ business issues and risks and provide 
appropriate solutions. Customer engagement also 
helps to improve customer service and to develop new 
services to help customers achieve their own goals.
Employees and their representatives
As a service business, G4S is judged on its service delivery 
and the difference it can make for customers – it is essential 
that employees understand their role in service delivery, are 
trained well, rewarded appropriately, have the right tools 
for the job and are motivated to deliver a quality service. 
A third of the group’s employees are represented by a union 
or collective bargaining method. G4S works with unions, 
union federations and other employee representatives to 
improve standards for employees and to make sure any 
issues are dealt with appropriately and consistently.

See the 2012 CSR report for more detail.

Investors
Attracting appropriate investment in the group enables 
G4S to develop its business and to continue to invest in its 
growth strategies. Ensuring that its strategies and practices 
are aligned to investor needs and principles is a core 
element of developing investor conﬁdence and ensuring 
that the group continues to attract the investment 
it requires.

See page 68 for more detail.

Industry bodies
As an international leader in its sector G4S willingly takes 
on responsibility for establishing strong benchmarks 
wherever it operates, and plays a pivotal role in raising 
standards in the wider industry and society as a whole. 
Many G4S managers and employees play an active role in 
industry bodies and associations across the world.
Governments and legislators
In addition to creating and implementing legislation, 
governments are also some of the group’s largest customers 
and are therefore an important stakeholder for the group. 
G4S supports regulation which is designed to improve 
standards and proactively encourages it where possible. 
It is important to ensure that legislative developments 
do not create unfair competitive environments or 
unnecessary burdens on business activities.
Experts
Experts on speciﬁc topics help the group to ensure that 
its policies and practices are aligned with best practice in 
many areas such as its environmental impact, health and  
safety and human rights.

G4S plc Annual Report and Accounts 2012  31

 
 
 
Performance

Operational review
Secure solutions

The secure solutions businesses provide a broad range of solutions to both 
commercial and government customers. They use their risk management, security 
and sector expertise to encourage greater outsourcing of the security needs of 
commercial and government facilities in markets such as ports, airports, retail, 
ﬁnancial institutions and the oil and gas sector, and for government departments 
such as justice, police, health, foreign affairs and border control. Secure solutions 
accounted for 82% of group revenue and 76% of PBITA for the year ended 
31 December 2012. 

Services
The secure solutions segment covers a wide range of security services, including:

Manned security services

Trained and screened security officers

Security systems

Access control, CCTV, intruder alarms, ﬁre detection, video analytics and security 
and building systems integration technology

Monitoring and response 
services

Key holding, mobile security patrol and response services and alarm receiving and 
monitoring facilities

Secure facilities services

Integrated facilities services for entire sites or estates for commercial customers 
and governments

Risk management and 
consultancy services

Risk management consultancy services including mine detection and 
clearance services

Electronic monitoring of 
offenders

Police services

Electronic tagging and monitoring of offenders at home or in the community

Back office support functions for police forces, support for front line policing 
including the provision of custody suite services and forensic medical services

Management of juvenile and 
adult custody centres

Management of all aspects of a facility and those held within the facility – similar 
centres are also used for the detention of asylum applicants

Prisoner escorting

Transportation of prisoners and asylum applicants between courts, police stations 
and custody centres

32  G4S plc Annual Report and Accounts 2012

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Contracts and relationships
G4S has a very diverse contract portfolio which is not 
dependent on any particular customer or sector. The 
duration of contracts varies from high proﬁle annual 
sporting events such as the tennis championships at 
Wimbledon and the Ryder Cup, to 25-year private prison 
contracts. However, even when the contract terms are 
short, in practice many relationships become long term 
and result in contracts being renewed year after year. 
This is demonstrated in our customer retention rates 
which average above 90% across most regions.

2012 Secure solutions revenue by customer type
%

4% Consumers

3% Transport and logistics

Key Performance Indicators

Turnover* – secure solutions
£m

5,116

5,264

5,498

6,007

4,325

2008

2009

2010

2011

2012

Organic growth* – secure solutions
%

32% Major corporates
and industrials

8.0

5.1

27%  Government

8.6

2.8

3.5

5% Ports and airports

5% Leisure and tourism

6% Retail

9% Private energy
and utilities

9% Financial institutions

Strategy

We aim to:

(cid:116)(cid:1) Use our expertise and geographic presence to 

differentiate our business 

(cid:116)(cid:1) Drive outsourcing and minimise commoditisation of 

traditional security services 

(cid:116)(cid:1)Offer an integrated security solution to customers 

Key operational highlights

(cid:116)(cid:1)Continued strong growth in developing markets
(cid:116)(cid:1) Excellent organic growth in North America commercial 

and UK Government sectors

Risks and mitigation
A full summary of key risks and mitigations can be found 
in the risk assessment and management section on pages 
46 and 47.

2008

2009

2010

2011

2012

PBITA* – secure solutions
£m

346

373

293

397

418

2008

2009

2010

2011

2012

PBITA margin – secure solutions
%

6.8

6.8

7.1

7.2

7.0

2008

2009

2010

2011

2012

*2011 and 2012 at constant (2012) exchange rates excluding the 
Olympic Games contract and adjusted for divestments and discontinued 
businesses. 2008–2010 as reported adjusted for divestment of US 
Government Solutions.

G4S plc Annual Report and Accounts 2012  33

 
 
 
 
Performance
Operational review
Secure solutions continued

2012 performance

The secure solutions business performed 
well with excellent organic growth of 
8%, assisted by strong UK government, 
US commercial and developing markets 
growth. Margins were down slightly at 
7.0% due to the effect of UK Government 
contract phasing.

UK and Ireland
There was excellent organic growth of 8% in the UK and 
Ireland with the main growth drivers being the integrated 
services business, which provides facilities services to 
UK Government and a growing number of commercial 
organisations, and the utilities services business which is 
consolidating its position as a leading meter reading and 
smart meter installation business.

Organic growth in the UK Government sector was 13% 
and included major contract wins and extensions such as: 

(cid:116)(cid:1) Total facilities management for the Ministry of Justice 
at more than 340 court buildings across the Midlands, 
Wales and the North of England which was mobilised in 
February 2012

(cid:116)(cid:1) The provision of transport and accommodation for 

asylum applicants for the UK Border Agency for two 
regions – the Midlands and the East of England and 
the North East, Yorkshire and Humberside which 
completed the transition from previous suppliers in 
December. This is a signiﬁcant achievement as it was a 
complex mobilisation involving multiple stakeholders

(cid:116)(cid:1) Outsourcing services for Lincolnshire Police – the 
ﬁrst contract of its kind to be awarded by a British 
Police Authority. This contract mobilised in April 2012 
and the transition has gone extremely smoothly with 
excellent service delivery and will result in savings of 
£28m over ten years as well as enabling investment in 
new technologies. The Lincolnshire contract includes a 
framework agreement for ten other police forces and 
G4S is continuing to have discussions with a number of 
police forces regarding similar outsourcing propositions
(cid:116)(cid:1) The opening and ongoing management of the newest 

and one of the largest prisons in the UK, HMP Oakwood 
which opened in April 2012 and which now holds over 
1,200 prisoners

G4S has been selected by the Department of Work & 
Pensions to join only a handful of companies eligible to 
compete to deliver contact centre services across the 
UK. In addition, a ﬁve-year contract to provide electronic 
monitoring in Scotland starts in April this year and 

34  G4S plc Annual Report and Accounts 2012

G4S was recently granted a two-year extension on the 
Medway Youth Training Centre contract until March 2015. 
G4S Integrated Services has been awarded its largest FM 
contract in the healthcare sector for the Pennine Acute 
Hospitals NHS Trust in Greater Manchester and the Care 
& Justice Services business was awarded a contract to 
supply electronic monitoring equipment to the Ministry 
of Justice in France. The pipeline of UK Government 
outsourcing opportunities remains strong, particularly in 
areas such as rehabilitation, facilities management, police 
and health sectors. 

The UK commercial business won extensions to contracts 
with major corporates such as British Airways and Shell, 
the latter of which has awarded G4S security contracts at 
50 additional sites and seven new countries in 2012. G4S 
Utility Services also won a number of signiﬁcant smart 
meter installation and data management contracts for 
British Gas and other major utility providers. The pipeline 
of new major commercial contracts remains strong in the 
UK, particularly within the media and ﬁnancial sectors.

Trading conditions in Ireland remained challenging in 2012 
but the bidding pipeline, especially in the area of security 
systems, looks encouraging for the remainder of the year. 

Continental Europe
The Continental Europe region performed reasonably 
against an uncertain economic backdrop. Overall organic 
growth was 2%. The European parliament contract 
in Belgium ended in May 2012 but G4S Luxembourg 
was successful in winning the security contract for the 
European parliament in Luxembourg in April 2012. 
Margins were down slightly due to challenging economic 
conditions throughout the region. To counteract this, 
a number of efficiency initiatives were implemented 
which reduced direct and overhead employee headcount 
numbers by around 250, alongside a number of location 
closures throughout Europe. This will help support 
margins in Europe over the next 18 months. 

Revenues for the security systems business, which 
accounts for around 20% of Continental European secure 
solutions revenues, were similar to the prior year. 
There were some notable strong performances in the 
region – in Sweden, G4S won a secure solutions contract 
with AB Volvo from April 2012 for three years and the 
security systems business grew strongly. In addition there 
were contract wins in Belgium, Norway, Finland, Austria 
and Denmark for customers in the government, retail, 
transportation and telecoms sectors. The business in 
Greece has performed well despite the challenges of the 
economic crisis and several new contracts have started 
recently with organisations such as the US Embassy and 
Hellenic Petroleum. 

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Organic growth in most Eastern European markets has 
now stabilised to the low single-digit level overall, but 
there have been declines in Hungary and the Czech 
Republic offset by excellent growth in Ukraine and 
Uzbekistan. A signiﬁcant contract has been won with 
a major steel manufacturer in Ukraine and contracts 
have also been won recently in Slovakia for companies 
in sectors such as manufacturing, electronics and retail. 
The group divested its businesses in Poland in July.

North America
Organic growth in North America was strong at 11%, 
assisted by a strong performance in the US commercial 
business and the start-up of the CATSA aviation contract 
in Canada. Margins were lower compared to the prior 
year due to a decline in major infrastructure system 
projects. The US security systems business worked on 
a number of systems integration projects for Tampa 
Airport, Iberdrola, and the Port of Tacoma and has a 
record order book representing more than 12 months’ 
work in hand.

In the United States the commercial sector had its 
strongest year on record with a continuing positive 
outlook and a strong visible sales pipeline. Recent 
contract awards have been in the technology, healthcare, 
distribution, chemical, manufacturing and retail sectors. 
G4S commenced the provision of security solutions for 
a major automotive company from January 2012 valued 
at $70m per annum for three years. The group’s largest 
commercial contract with Bank of America was extended 
until 2014 and G4S North America has been awarded 
a secure solutions contract with Google for some of its 
locations in the United States and data centres in Belgium 
and Finland. 

Additional examples of major contract awards include: 
worldwide security services for GE – building on a 
long-standing service relationship – and compliance 
and investigations services for Gallagher Bassett, where 
G4S will staff and manage the Special Investigations 
Unit responsible for investigating fraudulent workers’ 
compensation claims.

The group has already taken steps to mitigate the cost 
impact of the Patient Protection and Affordable Care 
Act (PPACA) during 2013 and is evaluating the most 
effective way to mitigate the increase to our cost base 
thereafter. Most of the health plans currently provided to 
G4S employees already meet the current requirements of 
the PPACA and so it is not expected to have a signiﬁcant 
impact on US margins.

2012 was a challenging year for the group’s US 
Government Solutions business as a result of a signiﬁcant 
reduction in US federal government spending in both 
the US domestic government sector and in contracts for 

overseas landmine clearance. The group has announced it 
has decided to divest the business to a parent able to add 
or create more value than G4S is able to, being a foreign 
parent with limited control over the operations of the 
business and restricted access to the data required to run 
the business successfully.

In Canada, the organic growth rate was more than 30% 
driven mainly by the CATSA aviation security contract 
which started on 1 November 2011. The contract is for 
security at 21 airports in the Paciﬁc region of Canada and 
has expected revenue of more than CAD$ 400m over 
the initial ﬁve-year term.

Developing markets
In Developing markets, revenue growth was 15% and 
organic growth was excellent at 10%, with margins 
maintained overall. 

Organic growth in Asia was 9% and margins were up from 
5.5% to 5.8% due to improved business performance in a 
number of countries. There was strong organic revenue 
growth in Thailand, Philippines, China and Indonesia. The 
business in India, the largest market in the region for the 
group, has refocused its activity on high growth, higher 
margin contracts and achieved a good performance with 
double-digit revenue growth and strongly improved 
margins. In China, a new joint venture has been awarded 
the group’s ﬁrst manned security licence in the province 
of Zhejiang following a change in the law to allow foreign 
ownership of manned security companies. The group 
plans to offer a premium security service to serve 
its broad multinational customer base located in the 
province and penetrate the substantial local Chinese 
business opportunities. The group exited Pakistan during 
October 2012.

A manned security contract with the United Nations in 
Papua New Guinea started in August. There was modest 
revenue growth in Australia with recent wins including 
DP World and Bechtel and a new immigration contract 
offsetting the loss of the Western Australia prisoner 
transportation contract and there is positive growth 
momentum in Australia going into 2013. The offender 
monitoring contract in New Zealand was extended to the 
end of 2013. 

In the Middle East, organic growth was 5% helped by 
double-digit growth rates in Lebanon and Egypt but this 
was offset by weakness in some systems businesses in the 
region. Margins improved compared to the prior year 
due to one-off government legislated payments made in 
Saudi Arabia in H1 2011. Recent contract wins include an 
electronic monitoring contract in Saudi Arabia and in UAE 
for the Abu Dhabi Educational Council and Dubai Airport. 

G4S plc Annual Report and Accounts 2012  35

 
 
 
 
Performance
Operational review
Secure solutions continued

The group exited the US Embassy contract in Kabul, 
Afghanistan in July. 

Africa performed strongly with organic growth of 9% 
particularly in Kenya, Morocco and DRC. Margins were 
lower at 8.1%, due to contract losses in Nigeria however 
the business appears to have stabilised there. New 
contracts won or renewed are mainly in key strategic 
sectors such as automotive, aviation, mining, oil and gas 
and foreign embassies, including the US embassy in the 
Ivory Coast. The current bidding pipeline in Africa is 
very strong – particularly in ﬁnancial services, mining and 
embassies, with increasing numbers of both multi-country, 
pan-African and larger scale bids. 

The Latin America and Caribbean region has performed 
well with organic growth of 14% and improved margins as 
a result of strong performances across most countries. 

There have also been a number of strategic contract 
wins, for example in the ﬁnancial services, government, 
mining and oil and gas sectors. In September, the group 
announced the extension of its presence in Brazil with 
the acquisition of Vanguarda, a leading security solutions 
provider which provides G4S with a manned security 
licence in Brazil. The group was also successful in bidding 
for security systems contracts in Brazil, winning a 
signiﬁcant contract with Telebras and a contract for the 
Manaus football stadium. 

Total

Europe*
North America*
Developing markets*
Total secure solutions*

Exchange differences

At actual exchange rates

Europe

UK and Ireland*
Continental Europe*
Total Europe*

North America

North America*

Developing markets

Asia*
Middle East*
Africa*
Latin America and Caribbean*
Total developing markets*

*At constant exchange rates.

Turnover 
£m
2011*

 2,583

1,182

1,733

5,498

127

5,625

Turnover 
£m
2011*

1,200

1,383

2,583

Turnover 
£m
2011* 

1,182

Turnover 
£m
2011*

615

371

326

421

2012 

2,705

1,311

1,991

6,007

–

6,007

2012 

1,312

1,393

2,705

2012 

1,311

2012 

671

381

357

582

1,991

1,733

PBITA 
£m
2011*

192

73

132

397

8

405

PBITA 
£m
2011*

116

76

192

PBITA 
£m
2011* 

73

PBITA 
£m
2011*

34

31

31

36

132

2012

7.0%

5.8%

7.6%

7.0%

2012

8.8%

5.4%

7.0%

2012

5.8%

2012

5.8%

8.7%

8.1%

8.8%

7.6%

Margins 
%
2011*

7.4%

6.2%

7.6%

7.2%

Margins 
%
2011*

9.7%

5.5%

7.4%

Margins 
%
2011*

6.2%

Margins 
%
2011*

5.5%

8.4%

9.5%

8.6% 

7.6%

2012 

190

76

152

418

–

418

2012 

115

75

190

2012 

76

2012 

39

33

29

51

152

Organic growth 
%
2012

5%

11%

10%

8%

Organic growth 
%
2012

8% 

2%

5% 

Organic growth 
%
2012

11%

Organic growth 
%
2012

9% 

5%

9% 

14%

10%

36  G4S plc Annual Report and Accounts 2012

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Nanet
Vancouver Airport, 
Vancouver, Canada

By providing airline passenger 
screening services, I help to 
ensure that the 17 million 
passengers who travel through 
Vancouver airport each year 
reach their destinations safely 
and securely.

G4S plc Annual Report and Accounts 2012  37

 
 
 
Performance

Operational review
Cash solutions

The cash solutions businesses manage cash primarily for ﬁnancial institutions 
and retailers. G4S’s detailed understanding of the cash cycle ensures that cash 
is managed efficiently in an economy, allowing G4S’s customers to focus on their 
core businesses. Cash solutions accounted for 18% of group revenues and 24% 
of group PBITA for the year ended 31 December 2012. 

Services
Cash solutions covers a wide range of services including:

Cash transportation

Secure transportation of cash using high security vehicles, fully screened and trained 
personnel and purpose-built technology to transport, protect, count and reconcile the cash 
to customer records

Cash management

Management of cash on behalf of ﬁnancial institutions which includes cash transportation, 
the design, build and management of purpose-built high security cash centres, counting and 
reconciling cash, ﬁtness sorting of notes for use in ATM machines, counterfeit detection 
and removal and redistribution of cash to bank branches, ATMs and retail customers – all 
managed within strict security guidelines and timescales in order to maximise the efficiency 
of the cash cycle. Cash management is also used for counting and reconciling cash from 
non-ﬁnancial institution customers

Cash consulting

Provision of consultancy services to central banks and commercial banks on overall 
cash management strategy, bank note production and security and all aspects of cash 
cycle efficiency

ATM management

Managing ATMs on behalf of banks, retailers and independent ATM providers – including 
cash forecasting, cash transportation and reconciliation services, ﬁrst-line maintenance and 
ATM engineering services

Retail cash 
management

Provision of systems and hardware, such as CASH360, which provide an automated cash 
office for retail sites to improve security of cash, electronic audit trails of takings and a real 
time view of retail cash balances

Secure international 
transportation of cash 
and valuables

Bespoke international transportation and insurance of currency, gems, precious metals and 
other valuables

38  G4S plc Annual Report and Accounts 2012

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Contracts and relationships
The duration of contracts in the cash solutions service 
line vary, with most being on an annual basis and those 
contracts requiring a higher capital intensity, such as cash 
processing, being usually ﬁve years’ duration. 

However, even when contract terms are short, in practice 
many relationships become long term, rolling over from 
one year to the next. This is demonstrated in our annual 
customer retention rates which average above 90% across 
most regions.

Key sectors 

2012 Cash solutions revenue by customer type
%

Key performance indicators

Turnover* – cash solutions
£m

1,341

1,193

1,289

1,252

1,290

2008

2009

2010

2011

2012

Organic growth* – cash solutions
%

(1)

2

3

5

13

64%  Financial

institutions

2008

2009

2010

2011

2012

PBITA* – cash solutions
£m

16% Other

20%  Retail

Strategy

We aim to:

(cid:116)(cid:1) 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 

134

152

151

132

135

(cid:116)(cid:1) Use our developed market cash cycle expertise and 
track record to encourage central bank and ﬁnancial 
institution outsourcing in developing markets 

(cid:116)(cid:1) Continue to implement innovative technology such as 

CASH360 

Key operational highlights

(cid:116)(cid:1)Continued strong performance in developing markets
(cid:116)(cid:1) Continued difficult economic environment of 

low interest rates in developed markets

(cid:116)(cid:1)Improved margins in North America

Risks and mitigation
A full summary of the key risks and mitigations can be 
found in the risk assessment and management section on 
pages 46 and 47.

2008

2009

2010

2011

2012

PBITA margin – cash solutions
%

11.2

11.3

11.7

10.5

10.5

2008

2009

2010

2011

2012

*2011 and 2012 at constant (2012) exchange rates, excluding the Olympic 
Games contract and adjusted for divestments and discontinued businesses. 
2008–2010 as reported.

G4S plc Annual Report and Accounts 2012  39

 
 
 
 
Performance
Operational review
Cash solutions continued

2012 performance

The cash solutions business delivered 
a solid performance overall with 
organic revenue growth of 3% despite 
the continuation of low interest rates 
having a negative impact on developed 
markets growth opportunities. Overall 
margins were maintained at 10.5%, with 
improvements in North America and 
Developing markets margins offset by 
the impact of contract phasing in the UK.

Europe
Organic growth in Europe declined by 1%. In the UK 
and Ireland, revenues declined by 1% as a result of 
the loss of two ATM contracts in the middle of 2011 
which also impacted margins. Performance began to 
improve towards the end of the year as three major new 
contracts commenced and as a result of a cost reduction 
programme in Ireland. The new contracts are for ﬁnancial 
institutions providing outsourcing of cash processing and 
cash machine replenishment and engineering at bank 
branches and remote sites. The engineering is provided on 
a full 24/7 basis – an industry ﬁrst. The outlook for 2013 is 
also positive with a solid pipeline of outsourcing contracts. 

Outside the UK, margins improved through strong 
underlying business performance and cost cutting 
measures. In Sweden, the cash solutions business was sold 
in February 2012. Elsewhere in Continental Europe, organic 
growth was positive, helped by product development in 
the Netherlands, strong performances across all services in 
Belgium, and productivity improvements in Finland. Serbia 
achieved double-digit growth.

North America
In North America, the performance of the cash solutions 
business in Canada was improved through stronger 
alignment in key sectors with the Canadian secure 
solutions business in the ﬁrst half of 2012. This has resulted 
in contract awards and extensions with key customers in 
the retail and ﬁnancial services sectors. 

Developing markets
Organic growth in Developing markets was good at 
10% and margins improved slightly overall due mainly 
to an improved performance in the Middle East cash 
solutions businesses. In particular the businesses in Saudi 
Arabia and UAE achieved an improved performance 
and excellent growth. Strong margins were achieved 
in Hong Kong, aided by successfully negotiating price 
increases with a number of key customers. In Ecuador, 
three leading ﬁnancial institutions – Banco Bolivariano, 
Banco Internacional and Produbanco – have selected G4S 
to provide cash-in-transit services to more than 250 bank 
branches around the country. With services set to begin 
in May 2013, the seven-year contract has an overall value 
of £26m. In South Africa, in January 2013, G4S acquired 
Deposita, the South African market leader in cash devices 
and related cash-in-transit, cash processing and insurance 
services for the retail sector. The Deposita technology will 
broaden the G4S Cash360 technology offering especially 
in other Developing markets. 

Total

Europe*
North America*
Developing markets*
Total cash solutions*

Exchange differences

At actual exchange rates

*At constant exchange rates.

Turnover 
£m
2011*

785

106

361

1,252

42

1,294

2012 

780

114

396

1,290

–

1,290

PBITA 
£m
2011*

83

2

47

132

5

137

2012 

78

5

52

135

–

135

Margins 
%
2011*

10.6%

1.9%

13.0%

10.5%

2012

10.0%

4.4%

13.1%

10.5%

Organic growth 
%
2012

-1%

8% 

10% 

3%

40  G4S plc Annual Report and Accounts 2012

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Bart-Jan
Nieuwegein, 
near Utrecht, 
Netherlands

Each week I service 
more than 250 ATM 
machines across central 
Holland to make sure the 
one million people using 
them have round-the-
clock access to their cash.

G4S plc Annual Report and Accounts 2012  41

 
 
 
Performance

Financial review

Basis of accounting
The ﬁnancial statements are presented in accordance 
with applicable law and International Financial Reporting 
Standards, as adopted by the European Union (“adopted 
IFRSs”). The group’s signiﬁcant accounting policies are 
detailed in note 3 on pages 89 to 94 and those that are 
most critical and/or require the greatest level of judgement 
are discussed in note 4 on page 95.

Operating results
The overall results are commented upon by the chairman 
in his statement and operational trading is discussed in the 
operating review on pages 32 to 40. Proﬁt from operations 
before amortisation and impairment of acquisition-related 
intangible assets and exceptional items (PBITA) amounted 
to £516m, an increase of 2.8% on the £502m in 2011 and an 
increase of 5.3% at constant exchange rates.

Acquisitions and acquisition-related 
intangible assets
Investment in acquisitions in the year amounted to £93m, 
all paid in cash during the year. This investment generated 
goodwill of £76m and other acquisition-related intangible 
assets of £31m. In addition, the group incurred acquisition 
costs of £7m which have been expensed.

The group undertook several acquisitions in the current 
year, the most signiﬁcant of which was the purchase of the 
entire share capital of Vanguarda, a security personnel, 
security systems and monitoring services provider in Brazil.

The group undertook several acquisitions in the prior 
year, the most signiﬁcant of which were the purchase 
of the entire share capital of Interativa, a facilities 
management business in Brazil., Munt Centrale B.V., a coin 
management service company based in the Netherlands, 
and The Cotswold Group Limited, the UK’s market 
leader in surveillance, fraud, analytics, intelligence and 
investigations services.

In 2011 the group also acquired the offender monitoring 
technology operations of Guidance Limited and certain 
contracts from Chubb, both in the UK, and the group 
purchased the remaining non-controlling interest in its 
security business in Turkey.

The contribution made by acquisitions to the results of the 
group during the year is shown in note 17 on pages 105 
and 106.

During the prior year the group incurred £55m of aborted 
acquisition and legal costs. The aborted acquisition costs 
related to the proposed acquisition of ISS A/S which 
was terminated on 1 November 2011 and included debt 
underwriting fees, ﬁnancing and hedging costs.

The charge for the year for the amortisation of acquisition-
related intangible assets other than goodwill amounted 
to £86m. Goodwill is not amortised. Acquisition-
related intangible assets included in the balance sheet at 
31 December 2012 amounted to £2,123m goodwill and 
£204m other.

Financing items
Finance income was £94m and ﬁnance costs £209m, giving a 
net ﬁnance cost of £115m. Net interest payable on net debt 
was £101m. This is an increase of 2% over the 2011 cost of 
£99m due principally to the increase in the group’s average 
gross debt. The group’s average cost of gross borrowings in 
2012 was 4.3% compared to 4.9% in 2011. The cost based 
on prevailing interest rates at 31 December 2012 was 3.9% 
compared to 3.8% at 31 December 2011.

Also included within ﬁnancing are other net interest costs 
of £6m (2011: net income £4m), and a net cost of £8m 
(2011: net income of £3m) in respect of movements in the 
group’s net retirement beneﬁt obligations.

42  G4S plc Annual Report and Accounts 2012

Restructuring costs
During 2012 the group undertook a detailed review of 
the overhead structure across all reporting levels and 
geographies in order to maximise efficiency and eliminate 
duplication. Restructuring generated a headcount reduction 
of over 1,500 positions. This resulted in an exceptional cost 
of £45m in the year as follows:

The total consideration from business disposals received in 
2012 was £19m.

The loss from discontinued operations of £63m (2011: £6m) 
relates to the post-tax trading of discontinued businesses 
and losses and associated costs relating to business disposals 
completed during the years as well as the write down of the 
US government solutions business’s assets.

UK

Continental Europe

North America

Developing markets

Head Office

Total

Headcount 
reduction

People 
costs
£m

Other 
costs
£m

Total 
costs
£m

58

257

132

1,019

48

1,514

3

12

4

10

2

31

–

8

–

3

3

14

3

20

4

13

5

45

This restructuring will result in annualised cost savings of 
around £35m, whilst an additional £10m has been invested 
in the Service Excellence Centres. The group plans to 
achieve further cost savings in the medium term through 
procurement efficiencies and business process redesign.

Taxation
The taxation charge of £90m provided upon proﬁt from 
operations before amortisation of acquisition-related 
intangible assets, acquisition-related expenses and 
exceptional items, represents an effective tax rate of 22%, 
consistent with 2011. The cash tax rate is 22.9% compared 
to 18.5% in 2011. 

The group’s target is to maintain the effective tax rate in 
the short term. The amortisation of acquisition-related 
intangible assets gives rise to the release of the related 
proportion of the deferred tax liability established when 
the assets were acquired, amounting to £25m. 

Disposals and discontinued operations
The group disposed of its cash solutions business in Sweden 
in February 2012, its businesses in Poland in September 
2012, its electronic monitoring businesses in North America 
in April 2012 and its security solutions business in Pakistan in 
October 2012.

During the prior year the group disposed of its business-to-
consumer alarms business in Norway in December 2011, 
and of its interest in an SPV in the UK in December 2011.

Businesses classiﬁed as held for sale at 31 December 2012 
related mainly to the US government solutions business 
which the group expects to sell during 2013. The assets of 
this business have been written down to their recoverable 
value by way of a £35m impairment charge to goodwill.

Businesses classiﬁed as held for sale at 31 December 2011 
included the secure solutions and cash solutions businesses 
in Poland and the cash solutions business in Sweden. 
The Afghanistan-based business of UK Risk Assessment 
Services was classiﬁed as a discontinued business in the 2011 
accounts. However, following the retention of the UK Kabul 
embassy contract in 2012 the business has been classiﬁed as 
continuing as at 31 December 2012.

The contribution to the turnover and operating proﬁt of 
the group from discontinued operations is shown in note 6 
on pages 96 to 99 and their contribution to net proﬁt and 
cash ﬂows is detailed in note 7 on page 99.

Proﬁt for the year
Proﬁt for the year was £70m, compared to £198m in 2011, 
due primarily to the following movements in the year:

PBITA

Amortisation and impairment

Acquisition-related expenses

Total loss on Olympics

Restructuring costs

Aborted acquisition costs

Net ﬁnance costs

Total tax charge
Loss from discontinued 
operations

Proﬁt for the year

2012

516

(86)

(7)

(88)

(45)

–

(115)

(42)

(63)

70

2011 Movement

502

(96)

(2)

–

–

(55)

(92)

(53)

(6)

198

14

10

(5)

(88)

(45)

55

(23)

11

(57)

(128)

The total loss on the Olympics contract of £88m consists 
of an overall loss on the contract of £70m, additional costs 
relating mainly to charitable donations and external fees of 
£11m, and further sponsorship and marketing costs of £7m, 
all of which were taken as an exceptional charge in 2012.

Non-controlling interests
Proﬁt attributable to non-controlling interests was £22m 
in 2012, an increase on £17m for 2011, as non-controlling 
partner shares in the group’s organic and acquisitive growth 
increased during the year.

Earnings per share
Basic and diluted earnings per share from continuing and 
discontinued operations were 3.4p compared to 12.9p 
for 2011. 

Adjusted earnings, as analysed in note 16 on page 104, 
excludes the result from discontinued operations, 
amortisation of acquisition-related intangible assets, 
acquisition-related costs, exceptional items and retirement 
beneﬁt obligations ﬁnancing items, all net of tax, and better 
allows the assessment of operational performance, the 
analysis of trends over time, the comparison of different 
businesses and the projection of future performance. 
Adjusted earnings per share was 21.2p, compared to 21.3p 
for 2011 or 20.5p at constant exchange rates.

G4S plc Annual Report and Accounts 2012 43

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Performance
Financial review continued

Dividends
The directors recommend a ﬁnal dividend of 5.54p (DKK 
0.4730) per share. This represents an increase of 8% upon 
the ﬁnal dividend for the year to 31 December 2011 of 5.11p 
(DKK 0.4544) per share. The interim dividend was 3.42p 
(DKK 0.3220) per share and the total dividend, if approved, 
will be 8.96p (DKK 0.7950) per share, representing an 
increase of 5% over the 8.53p (DKK 0.5624) per share total 
dividend for 2011.

The proposed dividend cover is 2.4 times (2011: 2.7 times) 
on adjusted earnings. The group’s intention is that dividends 
will continue to increase broadly in line with normalised 
adjusted earnings.

Cash ﬂow
The primary cash generation focus of group management is 
on the percentage of operating proﬁt converted into cash. 
The group’s target conversion rate is 85%. Operating cash 
ﬂow, as deﬁned for management purposes, was as follows:

PBITA
Depreciation and amortisation of 
intangible assets other than acquisition-
related
Movement in working capital and 
provisions 
Net cash ﬂow from capital expenditure
Operating cash ﬂow
Operating cash ﬂow as a percentage of 
group PBITA

2012 
£m

516

2011 
£m

502

140

126

(27)
(137)
492

(73)
(134)
421

95%

84%

Overall operating cash generation for the year was 
excellent, as a result of the maintenance of ﬁnancial 
discipline across the organisation.

The management operating cash ﬂow calculation is 
reconciled to the net cash from operating activities as 
disclosed in accordance with IAS7 Cash Flow Statements 
as follows:

Cash ﬂow from operating activities 
(IAS7 deﬁnition)
Net cash ﬂow from capital expenditure
Discontinued operations and 
exceptional items
Add-back additional retirement beneﬁt 
contributions
Add-back tax paid
Operating cash ﬂow (G4S deﬁnition)

2012 
£m

287
(137)

220

37
85
492

2011 
£m

372
(134)

66

40
77
421

The group’s free cash ﬂow, as deﬁned by management, 
is analysed as follows:

Operating cash ﬂow
Net interest paid
Tax paid
New ﬁnance leases
Free cash ﬂow

2012 
£m

492
(111)
(85)
(21)
275

2011 
£m

421
(102)
(77)
(11)
231

44  G4S plc Annual Report and Accounts 2012

Free cash ﬂow is reconciled to the total movement in net 
debt as follows:

Free cash ﬂow
Discontinued operations and 
exceptional items 
Additional retirement beneﬁt 
contributions
Net cash outﬂow on acquisitions
Net cash inﬂow from disposals
Net cash ﬂow from associates
Dividends paid to non-controlling 
interests
Transactions with non-controlling 
interests
Share issues less share purchases
Dividends paid to equity holders of 
the parent
Other
Movement in net debt in the year
Foreign exchange translation 
adjustments to net debt
Net debt at 1 January
Net debt at 31 December

2012 
£m

275

2011 
£m

231

(220)

(42)

(37)
(86)
16
3

(19)

6
(6)

(120)
2
(186)

(40)
(159)
–
4

(10)

(18)
(13)

(114)
–
(161)

–
(1,616)
(1,802)

(29)
(1,426)
(1,616)

Net debt represents the group’s total borrowings less cash, 
cash equivalents and liquid investments. The components of 
net debt are detailed in note 39 on page 128.
Financing and treasury activities
The group’s treasury function is responsible for ensuring 
the availability of cost-effective ﬁnance and for managing 
the group’s ﬁnancial risk arising from currency and interest 
rate volatility and counterparty credit. Treasury is not a 
proﬁt centre and is not permitted to speculate in ﬁnancial 
instruments. The treasury department’s policies are set by 
the board. Treasury is subject to the controls appropriate to 
the risks it manages. These risks are discussed in note 33 on 
pages 116 to 119.

The group’s funding position is strong, with sufficient 
headroom against available committed facilities with no 
signiﬁcant debt maturing before 2016.

The group’s primary sources of bank ﬁnance are a £1.1bn 
multicurrency revolving credit facility provided by a 
consortium of lending banks at a margin of 0.95% over 
LIBOR and maturing 10 March 2016. 

On 1 March 2007 the group completed a $550m private 
placement of unsecured senior loan notes, maturing at 
various dates between 2014 and 2022 and bearing interest 
at rates between 5.77% and 6.06%. The ﬁxed interest rates 
payable have been swapped into ﬂoating rates for the term 
of the notes, at an average margin of 0.60% over LIBOR.

On 15 July 2008, the group completed a further $514m and 
£69m private placement of unsecured senior loan notes, 
maturing at various dates between 2013 and 2020 and 
bearing interest at rates between 6.09% and 7.56%. The 
proceeds of the issue were used to reduce drawings against 
the revolving credit facility. $265m of the US dollar receipts 
have been swapped into £134m ﬁxed rate sterling for the 
term of the notes.

On 13 May 2009 the group issued a £350m note bearing an 
interest rate of 7.75% and maturing in 2019.

On 2 May 2012 the group issued a euro 600m note bearing 
an interest rate of 2.875% and maturing in 2017. Euro 
325m was swapped into £266m ﬁxed rate sterling and the 
interest rate on euro 90m was swapped to a ﬂoating rate 
linked to 6 month EURIBOR.

On 6 December 2012 the group issued a euro 500m note 
bearing an interest rate of 2.625% and maturing in 2018. 
Euro 350m was swapped into £284m ﬁxed rate sterling and 
the interest rate on euro 120m was swapped to a ﬂoating 
rate linked to 6 month EURIBOR.

The group’s net debt at 31 December 2012 was £1,802m. 
The group headroom at 31 December 2012 was £856m. 
The group has sufficient capacity to ﬁnance current 
investment plans.

Credit rating
On 9 March 2009, the group obtained a BBB Stable credit 
rating from Standard & Poor’s. This credit rating supported 
the group’s access to funding from the public bond, the 
private placement and the bank markets.

Following the G4S board Olympics contract review, Standard 
& Poor’s, on 5th November 2012, downgraded the credit 
rating of G4S plc to BBB- with a Stable outlook. The board 
intends that the group should continue as an investment 
grade entity and will keep the rating under review.

Interest rates
The group’s investments and borrowings at 31 December 
2012 were at a mix of ﬁxed rates of interest and ﬂoating 
rates of interest linked to LIBOR and EURIBOR. The 
private placement notes in March 2007 and July 2008 and 
the public notes in May 2009, May 2012 and December 
2012 were all issued at ﬁxed rates, whilst its investments 
and bank borrowings were all at variable rates of interest 
linked to LIBOR and EURIBOR. The group’s interest risk 
policy requires treasury to ﬁx a proportion of its interest 
exposure on a sliding scale in US dollars, sterling and euro, 
using the natural mix of ﬁxed and ﬂoating interest rates 
emanating from the bond and bank markets and by utilising 
interest rate and cross currency swaps. The proceeds of 
the private placement notes issued in March 2007 and part 
of the public notes issued in May 2012 and December 2012 
were swapped to ﬂoating interest rates and accounted for 
as fair value hedges, with a net gain at 31 December 2012 of 
£73m. The market value of the pay-ﬁxed receive-variable 
swaps and the pay-ﬁxed receive-ﬁxed cross-currency swaps 
outstanding at 31 December 2012, accounted for as cash 
ﬂow hedges, was a net gain of £21m.

Foreign currency
The group has many overseas subsidiaries and associates 
denominated in various different currencies. Treasury 
policy is to manage signiﬁcant translation risks in respect of 
net operating assets using foreign currency denominated 
loans, where possible. The group no longer uses foreign 
exchange contracts to hedge the residual portion of net 
assets not hedged by way of loans. The group believes 
cash ﬂow should not be put at risk by these instruments in 
order to preserve the carrying value of net assets, given 
the changed liquidity environment following the global 
credit crisis. At 31 December 2012, the group’s US dollar 
and euro net assets were approximately 85% and 60% 
respectively hedged by foreign currency loans.

Exchange differences on the translation of foreign 
operations included in the consolidated statement 
of comprehensive income amount to a loss of £95m 
(2011: £65m). 

Cash management
To assist the efficient management of the group’s interest 
costs and its short-term deposits, overdrafts and revolving 
credit facility drawings, the group operates a global cash 
management system. At 31 December 2012, more than 
140 group companies participated in the pool. Debit and 
credit balances of £360m were held within the cash pool 
and were offset for reporting purposes.

Retirement beneﬁt obligations
The group’s primary deﬁned beneﬁt retirement beneﬁt 
scheme operates in the UK, but it also operates such 
schemes in a number of countries, particularly in Europe 
and North America. The latest completed full actuarial 
assessment of the three sections of the UK scheme was 
carried out as at 5 April 2009. The full actuarial assessment 
as at 5 April 2012 is in progress. The three sections of 
the UK scheme are the Group 4 scheme (approximately 
8,000 members), the Securicor scheme (approximately 
20,000 members) and the GSL scheme (approximately 
2,000 members) acquired in 2008. This assessment and 
those of the group’s other schemes have been updated to 
31 December 2012. The group’s funding shortfall on the 
valuation basis speciﬁed in IAS19 Employee Beneﬁts was 
£436m before tax or £335m after tax (2011: £295m and 
£212m respectively).

The net pension obligation has increased by £141m since 
31 December 2011 mainly due to a net actuarial loss as a 
result of the decrease in the discount rate used from 5.0% 
to 4.5%, although this was partly offset by an increase in 
inﬂation assumptions. Additional company contributions of 
£37m were paid into the scheme.

The group believes that, over the very long term in which 
retirement beneﬁts become payable, investment returns 
should eliminate the deﬁcit reported in the schemes in 
respect of past service liabilities. However, in recognition 
of the regulatory obligations upon pension fund trustees to 
address reported deﬁcits, the group’s deﬁcit recovery plan 
will see additional cash contributions made to the scheme 
of approximately £38m in 2013. Future contributions will be 
agreed with the trustees when the 2012 actuarial valuation 
is completed.

Corporate governance
The group’s policies regarding risk management and 
corporate governance are set out in the Corporate 
governance statement on pages 65 to 71.

Going concern
The directors are conﬁdent that, after making enquiries and 
on the basis of current ﬁnancial projections and available 
facilities, they have a reasonable expectation that the 
group has adequate resources to continue in operational 
existence for the foreseeable future. For this reason they 
continue to adopt the going concern basis in preparing the 
ﬁnancial statements.

Trevor Dighton 
Chief ﬁnancial officer

G4S plc Annual Report and Accounts 2012  45

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Performance

Our risk assessment and 
management process

The group operates around 160 businesses spread over 
more than 125 countries and across a range of product 
areas. Most of the risks identiﬁed below are market 
speciﬁc and so the diversity of the group’s operations 
means any particular issue should have a limited impact. 

Risk committees

Management 
meetings

Risks identiﬁed  
and escalated 
based on 
materiality

Group

Regions 
(and clusters)

Company 
(and business functions)

Risk reporting system

Price competition 

Risk and potential impact to KPI
The security industry comprises a number of very 
competitive markets. In particular, manned security markets 
can be fragmented with relatively low economic barriers 
to entry and the group competes with a wide variety of 
operators of varying sizes. Actions taken by the group’s 
competitors may place pressure upon its pricing, margins 
and proﬁtability.

Mitigation
Group management continually monitors competitor 
activity to ensure that the group can react quickly to 
any competitor actions which would directly affect the 
group’s results.

Poor operational service delivery 
and crisis management 

Risk and potential impact to KPI
Failure to meet the operational requirements of its 
customers and/or failure to respond to a crisis could 
signiﬁcantly impact the group’s reputation, contract 
retention and growth.

Mitigation
Group-wide operational procedures and standards for 
crisis management and communication are in place and 
adherence to them is tested in all business units. There 
is also a robust supervision structure which allows 
management to monitor the progress and delivery 
of the group’s contracts and customer relationships.

All business plans and strategic planning includes competitor 
and SWOT analysis and the pricing strategy for contracts is 
managed through business unit and regional price approval 
levels. Signiﬁcant price reductions require group capex 
committee approval.

The group crisis communications process is 
reviewed regularly.

Inappropriate sourcing of staff

Risk and potential impact to KPI
Poor selection processes when recruiting staff could 
have material implications given the critical nature of the 
services undertaken by the group. There could also be 
risks associated with any failure to carry out periodic 
re-screening of existing employees. 

Mitigation
Minimum group staff vetting standards maintained and 
regularly reviewed and updated.

46  G4S plc Annual Report and Accounts 2012

Major changes in market dynamics

Financing 

Risk and potential impact to KPI
Such changes in dynamics could include new technologies, 
government legislation, political or economic volatility or 
customer consolidation and could, particularly if rapid or 
unpredictable, impact the group’s revenues and proﬁtability. 
Security can be a high proﬁle industry. There is a wide 
and ever-changing variety of regulations applicable to 
the group’s businesses across the world, with a recent 
development being an increase of restriction of foreign 
ownership in some countries. Failure, or an inability, to 
comply with such regulations may adversely affect the 
group’s revenues and proﬁtability.

Mitigation
The group performs strategic and business planning 
at group, region and business unit level to ensure that 
speciﬁc local regulation requirements are met. Monthly 
business unit trading reviews ensure that market changes 
are identiﬁed quickly and actions taken to maintain 
performance and ensure that business objectives continue 
to be achieved.

The group also monitors local markets and engages with 
governments around the world to ensure adherence to 
regulatory requirements, to identify any restrictions that 
could adversely impact the group’s activities and take 
appropriate actions.

Cash losses

Risk and potential impact to KPI
The group is responsible for the cash held on behalf of 
its customers. Increases in the value of cash lost through 
criminal attack may increase the costs of the group’s 
insurance. Were there to be failures in the control and 
reconciliation processes surrounding customer cash, these 
could also adversely affect the group’s proﬁtability.

Mitigation
The group has formal systems and policies in place 
documenting physical security procedures and directives 
and adheres to a security framework to help reduce the 
risk of cash losses.

The group also operates a captive insurance business unit to 
mitigate against the ﬁnancial risk of losses and attacks.

All transactions are subject to strict authorisation limits and 
regular reconciliations of cash balances are performed for 
both cash in ATMs and cash held on customers’ behalf. In 
addition there is regular reporting of any cash losses/attacks 
and audits of security are performed in branches.

The group has in place regional cash reconciliation managers 
to increase the focus on cash reconciliations globally.

Risk and potential impact to KPI
If, due to adverse ﬁnancial market conditions, insufficient or 
only very costly ﬁnancial funding were available, the group 
might not be in a position to implement its strategy or 
invest in acquisitions or capital expenditure. This includes 
possible bank insolvency loss of headroom particularly from 
movement of exchange rates, unavailability of bank, bond 
or other sources of ﬁnancing and downgrading of the G4S 
credit rating. These could adversely impact G4S revenue 
growth and proﬁtability.

Mitigation
The group treasury department monitors and follows 
policies to mitigate against liquidity, reﬁnancing and 
currency/exchange rate risks. Refer to note 33 to the group 
accounts for more details.

The group’s historical main source of funding has been 
a revolving bank facility of £1.1bn which was renewed in 
March 2011 until 2016. The group has sought to diversify its 
sources of ﬁnance by issuing a number of private placement 
bonds in the US and public bonds in the UK and Europe.

These have spread out the reﬁnancing requirements 
over the next ten years to ensure the group has access to 
sufficient funds to meet its business and strategic plans.

IT

Risk and potential impact to KPI
Cyber attacks and incidents on G4S and client systems and 
services, especially around critical national infrastructure 
could result in ﬁnancial loss, breach of contract, legal action 
and reputational damage.

Mitigation
The group employs IT specialists at all levels and has in 
place mandatory minimum security controls (relating to 
35 speciﬁc controls). In addition penetration testing of 
networks and systems is performed regularly to ensure that 
key systems are robust.

Onerous contractual obligations

Risk and potential impact to KPI
The group could commit to sales contracts specifying 
disadvantageous pricing mechanisms, unachievable service 
levels, unacceptable operational feasibility or delivery 
risk or excessive liability. This could impact its margins 
and proﬁtability.

Mitigation
Any new contracts entered into are subject to a deﬁned 
approval process. Standard contracts are used where 
practicable. Non-standard contracts which expose the 
group to material risk are subject to risk assessment and 
depending on the level of risk exposure are referred for 
regional or group legal department review.

G4S plc Annual Report and Accounts 2012  47

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Performance

Corporate Social Responsibility

G4S plays an important role in society. We make a difference by helping people 
to operate in safe and secure environments where they can thrive and prosper 
and we believe this is a role that can only grow in importance.

CSR performance in 2012

Strategic developments
(cid:116)(cid:1)Increased membership of the CSR Committee
(cid:116)(cid:1)Development of a new human rights policy and 

guidance framework for all G4S businesses and employees, 
based upon the UN Guiding Principles on Business & 
Human Rights

(cid:116)(cid:1)Active commitment to the Principles of the 

UN Global Compact and alignment of our CSR and 
UN Global Compact “Communication on Progress” 
reporting requirements

(cid:116)(cid:1)Continued participation in the development of 
the International Code of Conduct for Private 
Security Providers

Safeguarding our integrity
(cid:116)(cid:1)Performed 150 business-completed risk audits and 
a further 146 on-site internal risk control audits

(cid:116)(cid:1)Following implementation of anti-bribery controls, we 
have completed 37 business ethics compliance audits

(cid:116)(cid:1)Completed implementation of “Safe2Say” the group’s global 

24 hour freephone whistle-blowing hotline

Securing our people
(cid:116)(cid:1)Reduced work-related fatalities by 22% from 76 to 59
(cid:116)(cid:1)Made good progress in the implementation of action plans 

from Critical Country Reviews of health and safety

(cid:116)(cid:1)Formation of a road safety steering group and development 

of an action plan to reduce accidents

(cid:116)(cid:1)Representation of women in management increased from 
21% to 22.5% and in front line roles from 10.7% to 12.5%
(cid:116)(cid:1)Development of new induction, training and appraisal tools 
to improve engagement with employees and provide better 
feedback to managers

Securing our environment
(cid:116)(cid:1)The total carbon footprint of G4S in 2012 was 

612,000 t/CO2e

(cid:116)(cid:1)Achieved overall reduction in carbon intensity of 4.3% 

in 2012

(cid:116)(cid:1)Achieved a 16% reduction in carbon intensity between 

2009 and 2012 against a target of 13%

Securing our communities
(cid:116)(cid:1)Invested over £2 million in charitable community 

programmes and welfare of employees facing health 
or ﬁnancial hardship 

(cid:116)(cid:1)Through the G4S 4teen programme, we successfully helped 
ﬁve young athletes to achieve their ambition of competing 
at the London 2012 Olympic Games

48  G4S plc Annual Report and Accounts 2012

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Why CSR matters to G4S

CSR management

Reﬂecting the value we place on CSR and on our 
reputation, our CSR Committee has been a full board 
committee since 2011, comprising a number of experienced 
non-executive directors who meet regularly to discuss 
CSR-related matters. The committee is chaired by Mark 
Elliott, a G4S plc non-executive director with extensive 
experience of CSR issues from his 40 years in international 
business. Elements of our CSR strategy are also a regular 
subject for discussion at group executive and board 
meetings.

Duties of the CSR Committee include:

(cid:116)(cid:1)Review, agree and establish the company’s CSR strategy 
to ensure that it remains an integral part of the group’s 
overall strategy

(cid:116)(cid:1)Develop and recommend for acceptance by the board, 

policies on all aspects of CSR

(cid:116)(cid:1)Receive reports and review activities from executives and 

specialist groups managing CSR matters

(cid:116)(cid:1)Monitor compliance with the CSR policies and review 

performance against targets

(cid:116)(cid:1)Review the integration of CSR processes with 
risk management programmes and reputation 
management priorities

(cid:116)(cid:1)Develop and encourage effective two-way communication 

concerning CSR issues

(cid:116)(cid:1)Ensure CSR-related issues are considered during acquisition 

due-diligence

(cid:116)(cid:1)Review best practice and benchmark where appropriate

G4S is one of the world’s largest private employers, and 
the nature of our business and the countries and markets 
in which we operate mean that we form an important part 
of many societies and impact the lives of millions of people 
all over the world – it is our responsibility to make sure that 
the impact is a positive one.

There are many beneﬁts of having an embedded 
CSR strategy and operating to high ethical standards. 
CSR helps to attract and retain staff, helps to win business 
in a competitive environment where we need to stand out 
from others, it helps to attract investment to support the 
growth of the company and, most of all, it helps to generate 
pride in the company from everyone connected to it. 
Ultimately CSR enables us to do better business.

“CSR is an important part of the culture 
of the company and I have been proud 
to be associated with its development 
through the CSR Committee.”

Mark Elliott 
Non-executive director and chairman of the 
CSR Committee

Our CSR strategy

We have conducted a CSR materiality exercise to assess 
the views of senior managers within G4S and those of 
external stakeholders to ensure that we focus on the most 
important issues for the group. 

Recognising the nature of G4S’s business, our large 
workforce and our geographic diversity, it is understandable 
that the materiality exercise highlighted business ethics 
(including anti-corruption), human rights, employee 
engagement and health and safety as priorities for the 
group, as these are the areas which would have the most 
material effect on business performance or reputation if 
they were not managed carefully.

Our CSR strategy includes a much broader range of 
topics, but these are the areas where management and 
the CSR Committee focus the majority of their efforts. 
The CSR Committee will regularly review these issues in 
light of changing circumstances and stakeholder priorities.

G4S plc Annual Report and Accounts 2012  49

 
 
 
Performance
Corporate Social Responsibility continued

Engaging stakeholders

We continuously work to improve our communication and 
engagement with key stakeholder groups to ensure that 
our strategy is aligned to their needs and that, as our CSR 
programmes develop, we seek input and advice from those 
around us. In 2012 we:

(cid:116)(cid:1)Sought input from leading independent human rights 

experts including NGOs and SRI analysts to advise on the 
development of our new global human rights policy and 
guidance framework

(cid:116)(cid:1)Continued our involvement in the development of the 
International Code of Conduct for Private Security 
Providers, which sets out principles for security operations 
in so-called “complex environments”

(cid:116)(cid:1)Continued to receive customer feedback through account 
management, operational reviews and customer surveys

Safeguarding our integrity

Integrity is one of the group’s core values – being a 
responsible business partner, employer, customer or 
supplier is an important part of our strategy and forms an 
essential foundation on which we carry out our business.

What we’re doing
Business ethics
To ensure that our employees understand how they can 
play their part in delivering high ethical standards across 
the group, we continue to enforce a group-wide Ethics 
Code that sets out how we expect our employees to 
behave in order to “live” our value of integrity. The code is 
supplemented with a Business Ethics Policy which provides 
a more detailed summary of the group’s ethical standards 
of operation. The code and policy are reviewed each year, 
incorporating evolving legislation and evaluating any risks to 
the group’s integrity. To ensure compliance with the code 
and policy we also ask businesses, as part of the G4S risk 
assessment process, to assess their business ethics risks and 
compliance with the ethics policy.

Human rights
We recognise the growing importance of human rights as 
a material business issue and we believe that G4S can play a 
positive role in respecting human rights around the world. 
Our businesses can contribute positively to the realisation 
of human rights by the range of services we offer to protect 
people and enable them to enjoy their rights. We also 
recognise that we have a duty to ensure that we are not 
at risk of violating human rights through the services we 
provide, the customers we work with and the suppliers we 
use and through the fair and appropriate treatment of our 
own employees and others who are in our care.

50  G4S plc Annual Report and Accounts 2012

Last year we began a project to evaluate the human rights 
landscape in relation to the G4S businesses and to develop 
a policy and guidance for managers which set out clearly 
the group’s expectations of managers and employees in 
upholding human rights standards.

Following extensive internal and external consultation, we 
completed the new human rights policy and guidance for 
managers and launched them early in 2013 as part of our 
annual process of renewing and refreshing our Business 
Ethics Policy. 

Looking forward, our next challenge is to ensure that the 
policy and guidance are embedded across the organisation 
at every level. We are approaching that challenge in a 
number of ways, from the introduction of an awareness 
programme to make sure everyone is aware of the key 
human rights issues and their responsibility to uphold 
standards, to the introduction of a systematic approach 
to human rights analysis, due-diligence and monitoring.

How we’re performing
(cid:116)(cid:1) Completed 150 business risk assessments and 146 on-site 

internal risk control audits

(cid:116)(cid:1)Conducted external extended assurance work on ﬁnancial 

controls in six of our UK businesses

(cid:116)(cid:1)Completed 37 country audits to measure compliance with 

G4S business ethics controls

(cid:116)(cid:1)Completed implementation of “Safe2Say”, the group’s 

global whistle-blowing hotline

(cid:116)(cid:1)Implemented a local hotline service in India, serving our 

129,300 employees across the country

Internal audit activity

150

146

4

6

1

1

No of investigations
and off-site reviews

No of ﬁnancial
reviews

No of internal
control audits

2011

2012

Priorities for 2013
(cid:116)(cid:1)Critically review risk assessment process to ensure it 

continues to meet our requirements

(cid:116)(cid:1)Improve overall co-ordination of corporate audit with 

other auditors across the Group

(cid:116)(cid:1)Further enhance reporting of combined audit and 

assurance activities to management

(cid:116)(cid:1)Implement any additional audit requirements in relation to 

new human rights policy and guidelines

(cid:116)(cid:1)Continue to promote whistle-blowing facilities to all 

staff through multiple channels

(cid:116)(cid:1)Introduce grading system for calls received 

to the whistle-blowing facility and ensure they are 
investigated appropriately

Securing our people

Work-related fatalities in 2011 and 2012

As a service provider, our customers rely on us to have a 
motivated and healthy workforce. Keeping our employees 
safe, looking after their interests and treating them fairly is 
therefore vital to our ongoing success.

31

22

25

21

What we’re doing
Health and safety
The protection of our people remains a paramount 
concern. Employees on the front line often face risks to 
their health and wellbeing which we are constantly seeking 
to reduce, remove or regulate. The most prevalent risks 
to the health and safety of our employees continues to 
be from work-related attacks and road traffic incidents. 
Although the total number of work-related fatalities has 
reduced since 2011, our aim is to eliminate them altogether.

Employee engagement
We see the role of our ﬁrst line managers as critical in 
increasing levels of employee engagement. During 2012 
we introduced new training materials relating to the 
PRIDE model to develop their skills in this important 
area. Gathering feedback from employees on the factors 
impacting their levels of engagement is vital in shaping 
our plans. Work is ongoing following the global employee 
engagement survey in 2011 and in 2013 we will conduct 
our next survey.

Protect their basic needs
Respect them as individuals
Involve them in the business
Develop their skills and potential
Engage them fully

How we’re performing
(cid:116)(cid:1)A 22% reduction in work related fatalities from 76 in 

2011 to 59

(cid:116)(cid:1)Establishment of an online forum for health and safety 

practitioners to gather knowledge and share best practice

(cid:116)(cid:1)Good progress with the implementation of the action 
plans from the Critical Country Reviews of health and 
safety (CCRs)

(cid:116)(cid:1)A reduction in work-related fatalities in eight of the 

13 countries where CCRs were conducted

(cid:116)(cid:1)Improvement in the representation of women in 
management from 21% to 22.5% and in front line 
roles from 10.7% to 12.5%

(cid:116)(cid:1)An increase in the number of senior management vacancies 

ﬁlled through internal promotion to over 50%

(cid:116)(cid:1)Maintenance of an employee stability rate of 72% towards 

retention of our employees 

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Africa

Asia
Middle East

North 
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Latin America 
& Caribbean

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2012

Work-related fatalities by category

3

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Europe

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UK
and Ireland

76

59

28

18

18

20

30

21

Attack

Non-attack

Road traffic

Total

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2012

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(cid:116)(cid:1)Gathering of lost time incident data to identify and respond 

more proactively to potential health and safety risks
(cid:116)(cid:1)Further health and safety Critical Country Reviews and 

monitoring of action plans to ensure continued reduction 
of work-related fatalities

(cid:116)(cid:1)Implementation of the road safety action plan in 

priority countries

(cid:116)(cid:1)Review of training content and methodology for 

middle managers

(cid:116)(cid:1)Work with speciﬁc businesses to improve representation 
of women in supervisory positions in the talent pipeline
(cid:116)(cid:1)Conduct our third global employment engagement survey
(cid:116)(cid:1)Continue to develop constructive union relationships 

across our business

   For further KPIs on our people, see the “resources 
and relationships” section on page 30

G4S plc Annual Report and Accounts 2012  51

 
 
 
Performance
Corporate Social Responsibility continued

Securing our environment

Securing our communities

Our customers and employees demonstrate increasing 
concern for environmental issues. Whilst our environmental 
impacts are not signiﬁcant relative to other businesses of 
comparable size, it remains important to us to be efficient 
in our use of resources such as energy and, in doing so, 
curtailing our greenhouse gas emissions.

What we’re doing
Carbon and energy
Since we launched our Climate Action Strategy in 2009, 
our carbon intensity has decreased by 16% per £1m of 
revenue. This reduction in carbon intensity translates 
to a real reduction of 1.5% in carbon emissions against 
a 13% growth in the business during the same period, 
much of which includes carbon emissions from services 
which our customers have outsourced to G4S. This is a 
positive achievement which recognises the efforts made to 
introduce energy efficiency measures across the business.

The most signiﬁcant contributory factor to our carbon 
footprint is our ﬂeet of more than 30,000 vehicles. To help 
mitigate this impact, we have since 2009 introduced a range 
of fuel efficiency measures into our ﬂeet management. 
These range from eco-driver training and real-time satellite 
tracking and monitoring of driver behaviour, to investment 
in new technologies such as solar cells to power ancillary 
vehicle systems and the introduction of new and more 
efficient vehicle types into our ﬂeet.

How we’re performing
(cid:116)(cid:1)The G4S 2012 total carbon footprint equates to some 

612,000 t/CO2e

(cid:116)(cid:1)Achieved an overall reduction in carbon intensity of 

4.3% in 2012

(cid:116)(cid:1)Exceeded our target for reduction of carbon intensity, 

with a 16% reduction from 2009 to 2012

Carbon intensity 

2009

2010

2011

2012

Carbon intensity (tonnes 
CO2e per £m) turnover

88.3

82.3

77.5

74.2

Priorities for 2013
(cid:116)(cid:1)Continue to implement energy efficiency strategies to 
reduce carbon intensity by 20% between 2009 to 2014

(cid:116)(cid:1)Continue to develop our measurement of waste and water 

consumption and introduce targets for reduction

We recognise that our ability to provide a safe and 
secure environment around the world depends on the 
relationships we have with the communities and people 
with whom we work. We are therefore committed to 
working with charity and community partners to tackle 
issues which affect local communities, especially relating to 
health, education and welfare of children and young people. 
We have a long history of investing in the communities in 
which we live and work and to which we provide services, 
and we recognise the importance of this role.

What we’re doing
We seek to make a positive impact on the local 
communities in which our employees, customers and 
suppliers live and work. The social and economic impact 
reaches well beyond our working environment and touches 
the lives of millions around the world.

How we’re performing 
Building on the partnerships and investment that we have 
made in previous years, in 2012 we: 

(cid:116)(cid:1)Through the G4S 4teen programme, G4S successfully 
helped ﬁve young athletes to achieve their ambition of 
competing at the London 2012 Olympics

(cid:116)(cid:1)  Invested over £2m in charitable community programmes 
and welfare of staff facing health difficulties or ﬁnancial 
hardships in developing countries. 
Comprised of:
–  Provision of goods, services and ﬁnancial investment in 
to more than 360 community programmes across 60 
countries, with a combined value of almost £1,381,000

–  Increased investment of £641,000 into projects to 

support the long-term welfare and development of 
employees in developing countries

(cid:116)(cid:1)In addition we also donated £2.5m to military charities 
in the UK as a gesture of thanks for the support of the 
military in delivering the security of the London 2012 
Olympic Games

2012 

Corporate

Corporate donations of money

Corporate donations of goods and services

Employee

Employee and third party donations facilitated 
by G4S

Employee welfare and development

£921,700

£459,500

£72,000

£641,000

Priorities for 2013
(cid:116)(cid:1)Evaluate a new community-based programme for 2013 

to be launched in the second half of the year

(cid:116)(cid:1)Build on our wider community investment to demonstrate 

greater impact on the people we strive to support

(cid:116)(cid:1)Participate in an academic study of the direct and indirect 
social and economic impacts of G4S within a number of 
key markets, starting with the UK

52  G4S plc Annual Report and Accounts 2012

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Michael
Milton Keynes, UK

Every month, I install 
over 120 smart meters 
across three counties 
of England which 
help our customers 
manage their energy 
usage better.

G4S plc Annual Report and Accounts 2012 53

 
 
 
Governance

Board of directors

Nick Buckles 
Executive director

Chief executive

Member – Risk Committee

Key strengths: Long experience of the 
group and its predecessor companies with 
a background as a commercial manager 
before taking on line management roles 
and then divisional and group executive 
responsibilities. In addition to his board 
role, participates regularly in Nomination 
and Remuneration Committee meetings, 
chairs the Executive Committee.

Joined G4S board: May 2004

Previous experience: Joined Securicor 
in 1985. Became managing director of its 
UK cash solutions business in 1996, chief 
executive of its security division in 1999 and 
was appointed to the board of Securicor plc 
in 2000 before becoming its chief executive 
in 2002. He was the company’s deputy chief 
executive and chief operating officer from its 
formation in 2004 and was appointed chief 
executive in 2005. He also served as a non-
executive director at Arriva Group plc 
from 2005 until 2010.

Current external commitments: 
Chairman of the Ligue Internationale des 
Sociétés de Surveillance, the international 
association of leading security companies.

John Connolly
Non-executive director

Chairman of the board

Mark Seligman
Non-executive director

Deputy chairman 

Chairman – Nomination and Risk 
Committees

Chairman – Audit Committee

Member – Remuneration Committee

Key strengths: Extensive ﬁnancial and 
management experience having worked 
in the ﬁnancial services sector, with a 
particular focus on investment banking. 
Takes particular interest in the ﬁnancial 
performance of the company, including 
its ﬁnancing and transactional activity.

Joined G4S board: January 2006

Previous experience: Qualiﬁed as 
a chartered accountant with Price 
Waterhouse. Senior roles at SG Warburg 
& Co Ltd and Barclays de Zoete Wedd; 
Head of UK Investment Banking at 
CSFB; Chairman of UK Investment 
Banking at Credit Suisse; member of the 
Credit Suisse Global Investment Banking 
Executive Board and senior advisor 
to Credit Suisse Europe.

Current external commitments: 
Alternate member of the Panel on 
Takeovers and Mergers; member of the 
Regional Growth Fund Advisory Panel; 
non-executive director of BG Group 
plc and senior independent director of 
Kingﬁsher plc. 

Key strengths: Extensive experience of 
working in a global business environment 
and in sectors of strategic importance to 
the group. 

Strong relationships with major investors 
and wide involvement within G4S at group 
and regional meetings.

Developing the board and its governance 
of the group.

Joined G4S board: June 2012 

Previous experience: A chartered 
accountant, John spent his career until May 
2011 with global professional services ﬁrm 
Deloitte, was Global Chairman between 
2007 and 2011, and prior to that, Global 
Managing Director between 2003 and 
2007. He was Senior Partner and CEO 
of the UK partnership from 1999 until his 
retirement from the partnership.

Current external commitments: 
Chairman of AMEC plc and of a number 
of private companies; beyond commercial 
business roles, he is also on the Board of 
Governors of London Business School; a 
member of the CBI President’s Advisory 
Council and of the British American 
Business International Advisory Board. 
He is also chairman of the appeal board 
for The Centre for Children’s Rare 
Disease Research at Great Ormond 
Street Hospital.

54  G4S plc Annual Report and Accounts 2012

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Trevor Dighton 
Executive director

Chief ﬁnancial officer

Lord Condon
Non-executive director 

Grahame Gibson 
Executive director

Senior independent director 

Regional CEO – Americas

Member – Risk Committee

Chairman – Remuneration Committee

Key strengths: Wide knowledge of both the 
group and other service businesses as well 
as the accountancy profession. In addition 
to his board role, participates regularly in 
Audit Committee meetings as well as sitting 
on the Executive Committee.

Key strengths: Extensive experience of 
high proﬁle security issues, the workings 
of the public sector and law making. Has 
broad involvement with the UK businesses 
within the group, particularly those serving 
public sector customers. 

Joined G4S board: May 2004

Joined G4S board: May 2004

Previous experience: An accountant, he joined 
Securicor in 1995 having previously worked 
in the accountancy profession and in industry, 
including ﬁve years in Papua New Guinea, 
three years in Zambia and seven years with 
BET plc. After joining Securicor’s vehicle 
services division in 1995, was appointed 
ﬁnance director of its security division in 
1997 and became its deputy group ﬁnance 
director in 2001. Appointed to the board 
of Securicor plc as group ﬁnance director 
in 2002, he became the company’s CFO 
when it was formed in 2004.

Current external commitments: None

Previous experience: Senior 
appointments in the UK police force, 
including Chief Constable of Kent and 
Commissioner of the Metropolitan 
Police, as well as at the British Security 
Industry Association and the International 
Cricket Council’s anti-corruption unit. 

Current external commitments: Cross 
bench member of the House of Lords; 
occasional advisor on sports integrity to 
the International Olympic Committee and 
Deputy Lord Lieutenant for Kent. 

Key strengths: Extensive knowledge of 
the group and its predecessor companies in 
many different markets and in a number of 
executive functions. In addition to his board 
role, is also CEO of the Americas region.

Joined G4S board: April 2005

Previous experience: Joined Group 4 
in 1983, starting as ﬁnance director (UK) 
followed by a number of senior roles, 
including deputy managing director (UK), 
vice president (corporate strategy), vice 
president (ﬁnance and administration), 
vice president operations (central and 
south eastern Europe and UK) and 
chief operating officer of Group 4 Falck 
A/S. In 2004 he became the company’s 
divisional president for Americas and 
New Markets and became chief operating 
officer in 2005.

Current external commitments: Board 
member of the Ligue Internationale des 
Sociétés de Surveillance, the international 
association of leading security companies.

G4S plc Annual Report and Accounts 2012  55

 
 
 
Governance
Board of directors continued

Clare Spottiswoode 
Non-executive director

Adam Crozier 
Non-executive director

Paul Spence 
Non-executive director

Member – Remuneration and CSR 
Committees

Member – Audit and Nomination 
Committees

Member – Audit, CSR and Risk 
Committees

Key strengths: Considerable experience 
in the public sector, the energy markets 
and the ﬁnancial services sector as well 
as setting up and managing her own 
businesses. Has particular involvement 
with the group’s businesses in the UK 
and Africa region.

Joined G4S board: June 2010

Previous experience: A mathematician 
and economist by training, worked for the 
UK Treasury, director general of Ofgas, the 
UK gas regulator; policyholder advocate for 
Norwich Union’s with-proﬁts policyholders 
at Aviva; non-executive director of Tullow 
Oil plc; and a member of the Independent 
Commission on Banking and the Future of 
Banking Commission. 

Current external commitments: 
Chairman of Gas Strategies Group, 
Energetix Group and Magnox Limited; 
non-executive director of EnergySolutions 
Inc., Ilika plc, Enquest plc and RBC Europe 
Limited; and independent director of the 
Payments Council. 

Key strengths: Wide-ranging experience 
of business transformation in a number of 
public and private sector organisations in 
the media, logistics and retail sectors.

Joined G4S board: January 2013

Previous experience: Started his career 
with Mars before joining the Daily 
Telegraph followed by Saatchi and Saatchi, 
where he became joint chief executive. 
He then became chief executive of the 
Football Association and was subsequently 
appointed chief executive of the Royal 
Mail Group where he oversaw an 
extensive programme of modernisation 
and change to enable the business to 
compete in the UK and international 
marketplaces. Since April 2010 he has 
been chief executive of ITV plc and was a 
non-executive director of Debenhams plc 
until 2012.

Current external commitments: Chief 
executive of ITV plc.

Key strengths: In-depth knowledge 
of outsourcing in both the public and 
private sectors and extensive international 
experience in key developing countries 
such as India, China and Brazil.

Joined G4S board: January 2013

Previous experience: A graduate of 
the Wharton School at the University of 
Pennsylvania with a degree in economics and 
decision sciences; served a 30-year career 
with Capgemini and its predecessors. Having 
started in the US and become managing 
partner of mid-Atlantic information and 
technology for Ernst & Young, he went on 
to gain signiﬁcant international experience 
for 16 years as managing partner of Ernst 
& Young Consulting Australia, CEO of 
Capgemini Ernst & Young in Asia and CEO 
Capgemini Ernst & Young UK. He then 
spent eight years serving on Capgemini’s 
executive management committee during 
which time his roles included deputy 
group CEO and CEO of Capgemini Global 
Outsourcing Services.

Current external commitments: None.

56  G4S plc Annual Report and Accounts 2012

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Bo Lerenius
Non-executive director

Member – Audit and CSR Committees

Key strengths: Extensive international board 
and executive management experience. Has 
a great deal of knowledge of the ports sector 
and of many European markets.

Has particular involvement with the 
group’s businesses in Europe.

Joined G4S board: May 2004 

Previous experience: Chief executive of 
Ernstromgruppen AB, a Swedish building 
materials company; chief executive and 
chairman of Stena Line AB; group chief 
executive of Associated British Ports 
Holdings plc; non-executive director of 
Land Securities Group plc; non-executive 
director and chairman of Mouchel Group 
plc; non-executive director of Thomas 
Cook Group plc.

Current external commitments:  
Non-executive chairman of Knight 
Infrastructure II, holding company of 
Koole Tanktransport B.V.; non-executive 
chairman of Brunswick Rail Limited; and 
senior advisor to the infrastructure fund 
of Swedish venture capital group EQT; 
member of the board of the Swedish 
Chamber of Commerce for the UK;  
non-executive director of Bishop 
Infrastructure 11, holding company 
of Westway Group LLC.

Winnie Kin Wah Fok
Non-executive director 

Member – CSR and Remuneration 
Committees

Key strengths: International board and 
senior management experience with 
extensive knowledge of Asian markets 
and strong involvement in Scandinavia.

Has particular involvement in the group’s 
businesses in Asia. 

Joined G4S board: October 2010

Previous experience: An auditor by 
training, was involved in management 
positions in ﬁnance, audit and corporate 
advisory work and a wide range of roles 
in asset management ﬁrms investing with 
a focus in Asia. Senior partner of EQT 
and CEO of EQT Partners Asia Limited; 
managing director of CEF New Asia 
Partners Limited.

Current external commitments: Senior 
advisor to Foundation Administration 
Management Sweden AB; non-executive 
director of Volvo Car Corporation;  
non-executive director of AB SKF, Kemira 
Oyj and HOPU Investments Co Ltd.

Mark Elliott 
Non-executive director 

Chairman – CSR Committee

Member – Nomination and 
Remuneration Committees

Key strengths: Extensive international 
board and executive experience having 
held a number of senior management 
positions in IBM, including leadership of 
IBM’s operations in Europe, the Middle 
East and Africa with responsibility for 
operations in more than 110 countries.

Has particular involvement with the 
group’s businesses in the Americas region.

Joined G4S board: September 2006

Previous experience: General Manager 
IBM Global Solutions; Managing Director 
of IBM Europe, Middle East and Africa; 
member of the board of IBAX, a hospital 
software company jointly owned by IBM 
and Baxter Healthcare; chairman of 
the Dean’s Advisory council of the Kelly 
School of Business, Indiana University.

Current external commitments: 
Non-executive chairman of QinetiQ 
Group plc; non-executive director of 
Reed Elsevier PLC and chairman of Reed 
Elsevier’s remuneration committee. 

G4S plc Annual Report and Accounts 2012  57

 
 
 
Governance

Executive management team

Nick Buckles
Chief executive 

Trevor Dighton
Chief ﬁnancial officer

Søren Lundsberg-Nielsen
Group general counsel 

Nick has worked in the security industry 
for 28 years, focusing throughout this time 
on the commercial and strategic aspects 
of all areas of security services. 

After a variety of commercial roles 
throughout the group, he was 
responsible for driving signiﬁcant proﬁt 
improvements in many Securicor 
businesses throughout the 1990s as a 
business unit managing director and 
divisional chief executive of the security 
division. He was also instrumental 
in the development of Securicor’s 
security sector focus, becoming group 
chief executive in 2002, and in bringing 
together Group 4 Falck and Securicor to 
create the combined group. Nick became 
chief executive of G4S in July 2005. 

Nick is chairman of the Ligue 
Internationale des Sociétés de Surveillance, 
the international association of leading 
security companies. 

Trevor has worked in the security 
industry for 27 years. After several years 
in both the accountancy profession and 
commerce working in the ﬁnance function 
and general management, he joined BET in 
1986 as ﬁnance director of its security and 
communications division.

Trevor joined Securicor in 1995 and, 
following a number of years as ﬁnance 
director of the security division, he was 
appointed to the board of Securicor plc in 
June 2002 as group ﬁnance director. He 
became chief ﬁnancial officer of G4S in 
July 2004. 

Trevor is a Fellow of the Chartered 
Institute of Management Accountants. 

Søren began his career as a lawyer in 
Denmark and since 1984 he has had a wide 
range of legal experience as general counsel 
for international groups in Denmark, 
Belgium and the US before joining Group 4 
Falck in 2001 as Group General Counsel. 

Søren has been involved in a wide range 
of successful mergers and acquisitions 
during his career, including the acquisition 
of Wackenhut and the Group 4 Falck 
merger with Securicor. 

Søren has overall responsibility 
for all internal and external legal 
services for G4S as well as the group’s 
insurance programme. 

Søren is a member of the Danish Bar and 
Law Society, a member of the advisory 
board of the Danish UK Chamber of 
Commerce and author of the book 
“Executive Management Contracts”, 
published in Denmark.

58  G4S plc Annual Report and Accounts 2012

Irene Cowden
Group HR director

Irene has spent her career in 
HR management, specialising in 
employee relations, organisational 
development, talent management and 
compensation issues. 

She has been involved in major change 
projects including the cultural and 
integration aspects of mergers and 
acquisitions, as well as large scale 
organisational change involving workforce 
restructuring, working in partnership with 
major trade unions. 

Irene has worked in the security industry 
for 35 years and has held director level 
positions at business unit, divisional and 
corporate level. She was appointed to the 
board of Securicor plc in 2002 as group 
HR director. 

Irene is a Fellow of the Chartered Institute 
of Personnel and Development (FCIPD). 

Debbie Walker 
Group communications director 

Debbie is group communications director, 
heading the corporate communications 
team which focuses on the group’s key 
audiences – investors, media, government, 
employees and customers. Debbie is 
also responsible for the group’s CSR and 
human rights strategies.

Debbie has a broad range of experience 
in marketing, corporate communications, 
brand development and implementation, 
and crisis communications. Prior to 
the merger between Group 4 Falck 
and Securicor, Debbie was employed 
in a number of senior marketing and 
communications roles within the Securicor 
group from 1993 to 2004. 

Debbie is also vice chairman of the 
CBI South East Regional Council (the 
representative body for all CBI member 
companies based in the South East of 
England and the Thames Valley), having 
previously served as chairman for 
two years. 

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G4S plc Annual Report and Accounts 2012  59

 
 
 
 
 
Governance
Executive management team continued

Graham Levinsohn
Group strategy & 
development director

Graham has more than 19 years’ 
experience in the security industry, having 
joined Securicor Cash Services in 1994 as 
general manager – marketing. 

Since then, Graham has held a number 
of commercial and line management 
positions in both the cash and security 
lines of business. Graham was responsible 
for the creation of the UK cash centres 
outsourcing business in 2001 as managing 
director, before moving on to become 
divisional managing director for G4S Cash 
Services UK, and then regional president 
– Nordics. 

He became group strategy and 
development director in 2008 and joined 
the Executive Committee in 2010.

Grahame Gibson 
Regional CEO – Americas 

Richard Morris
Regional CEO – UK and Ireland

Grahame has been involved in the security 
industry for 30 years, having joined Group 
4’s UK operating company in 1983 as 
ﬁnance director. 

Since that time, Grahame has held a 
number of operational, management and 
board positions in the UK, USA, Denmark, 
the Netherlands and Austria. 

His broad experience of the security 
industry and management of businesses 
across a diverse range of cultures has 
been invaluable to the group throughout 
its development. 

Grahame joined the board of G4S plc in 
April 2005. 

Grahame is a board member of the Ligue 
Internationale des Sociétés de Surveillance. 

Richard joined Securicor in 2003 as a 
commercial director, after spending the 
early part of his career in a variety of 
accountancy roles within Royal Mail and 
subsequently the facilities management 
industry. He was appointed as a business 
unit managing director in 2007 and was 
responsible for driving signiﬁcant growth 
and proﬁt improvement.

In early 2011 Richard became group 
managing director for G4S Care and 
Justice Services. In October 2012 Richard 
was appointed regional CEO – UK 
and Ireland. 

Richard is an Associate of the Chartered 
Institute of Management Accountants. 

60  G4S plc Annual Report and Accounts 2012

Willem van de Ven
Regional CEO – Europe

Dan Ryan
Regional CEO - Asia Middle East

Willem has served G4S and its corporate 
predecessors in Holland for 20 years. 

He started out in the former Randstad 
group where he became regional director. 
Willem then served as HR director and 
managing director of the Netherlands 
security company Randon which was 
subsequently acquired by Securicor. 

In April 2003, Willem was appointed as 
Securicor’s regional managing director 
(Africa), becoming the regional president 
for G4S Africa (Sub-Sahara) in 2004. 

In July 2010, Willem was appointed 
Regional CEO – Europe. 

Dan joined G4S in August 2010, from 
global logistics and transportation 
company Neptune Orient Lines (NOL) 
where he held a number of senior 
management positions including regional 
president for Greater China for NOL’s 
APL and APLL divisions, regional president 
for the Middle East for the APL division 
and regional president for Europe for 
the group’s APL Logistics division. He 
was a member of the NOL group 
executive team. 

He also held various managing director 
positions for NOL including Middle East, 
Hong Kong/South China and Indonesia and 
was a regional head for the Middle East a 
during his 20-year career with the group. 

Dan is a charter member of the Middle 
East Logistics/Supply Chain Management 
Forum, Hong Kong Liner Shipping 
Association and the American Chamber 
of Commerce – Shanghai. 

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G4S plc Annual Report and Accounts 2012  61

 
 
 
Governance

Report of the directors

For the year ended 31 December 2012

The directors have pleasure in presenting their Annual Report 
together with the audited ﬁnancial statements of G4S plc and 
the consolidated ﬁnancial statements of that company and its 
subsidiaries, associated undertakings and joint ventures (“the 
group”) for the year ended 31 December 2012.

G4S plc has its primary listing on the London Stock Exchange 
and a secondary listing on the NASDAQ OMX exchange 
in Copenhagen.

1 Principal activities of the group
G4S plc is a parent company with subsidiaries, associated 
undertakings and joint ventures.

The principal activities of the group comprise the provision of secure 
solutions (including manned security services, care and justice services 
and security systems) and cash solutions (including the management 
and transportation of cash and valuables) as well as the undertaking 
of other outsourced business processes in sectors where security and 
safety risks are considered a strategic threat. 

2 Group results
The consolidated result for the year is shown in the consolidated 
income statement on page 84.

Details of the development and performance of the group’s 
business during the year, its position at the year end, future 
developments, principal risks and uncertainties and prospects of 
the group and other information which fulﬁls the requirements 
of a management report for the purpose of DTR 4.1.8R are 
contained on pages 8 to 47 and are incorporated in this report 
by reference. The Corporate Governance Statement set out on 
pages 65 to 71 is also incorporated in this report by reference. 
The group’s ﬁnancial risk management objectives and policies in 
relation to its use of ﬁnancial instruments, and its exposure to 
price, credit, liquidity and cash-ﬂow risk, to the extent material, 
are set out in note 33 to the consolidated ﬁnancial statements on 
pages 116 to 119.

3 Dividends
The directors propose the following net dividend for the year:
(cid:116)(cid:1) Interim dividend of 3.42p (DKK 0.3220) per share paid on 

19 October 2012

(cid:116)(cid:1) Final dividend of 5.54p (DKK 0.4730) per share payable on 14 June 2013
Shareholders on the Danish VP register will receive their dividends 
in Danish kroner. Shareholders who hold their shares through CREST 
or in certiﬁcated form will receive their dividends in sterling unless 
they prefer to receive Danish kroner, in which case they should apply 
in writing to the Registrars by no later than 15 May 2013.

4 Signiﬁcant business acquisitions, 
disposals and developments
In February 2012, G4S Cash Solutions (Sverige) AB was disposed 
of in Sweden. 

In April 2012, the pedestrian meter reading business and assets of 
Utility Metering Services Ltd were acquired in the UK.

In April 2012, the automated meter reading business of Utility 
Metering Services Ltd was acquired in the UK.

In April 2012, DML Fire Systems Limited was acquired in Ireland.

In April 2012, G4S Justice Services LLC and certain intellectual 
property assets and other personal property assets from G4S 
Justice Services (Canada) Ltd were disposed of in North America.

In May 2012, a €600million, 2.875% bond maturing in May 2017 
was issued by G4S International Finance plc.

In June 2012, The Facilities Management Group (Pty) Limited 
(FMG) was acquired in Botswana.

In June 2012, Inzetbaar B.V. was acquired in the Netherlands.

In September 2012, Vanguarda Segurança e Vigilância Ltda was 
acquired in Brazil.

In September 2012, the group’s businesses in Poland were 
disposed of.

In October 2012, Wackenhut Pakistan (Pvt) Limited was 
disposed of in Pakistan.

In October 2012, Antwerp Safety Centre NV and ASC Safety 
Services BVBA were acquired in Belgium.

In December 2012, a €500million, 2.625% bond maturing in 
December 2018 was issued by G4S International Finance plc. 

In January 2013, Deposita Systems (Pty) was acquired in 
South Africa. 

In February 2013, a settlement agreement was entered into with 
LOCOG in the UK in relation to the Olympics contract. 

5 Capital
The authorised and issued share capital of G4S plc at 
31 December 2012 is set out on page 126 (note 37 to the 
consolidated ﬁnancial statements). There were 1,410,668,639 
shares in issue as at 12 March 2013. 

Resolutions granting the directors power, subject to certain 
conditions, to allot and make market purchases of the company’s 
shares will be proposed at the company’s annual general meeting. 
The resolutions are set out in the Notice of Meeting on pages 142 
to 145 and further explanation is provided on pages 146 and 147. 
At 31 December 2012 the directors had authority in accordance 
with a resolution passed at the company’s annual general 
meeting held on 7 June 2012 to make market purchases of up to 
141,066,000 of the company’s shares.

62  G4S plc Annual Report and Accounts 2012

The company does not hold any treasury shares as such. However 
the 7,589,853 shares held within the G4S Employee Beneﬁt 
Trust (“the Trust”) and referred to on page 127 (note 38 to the 
consolidated ﬁnancial statement) are accounted for as treasury 
shares. The Trust has waived its right to receive dividends in 
respect of the company’s shares which it held during the period 
under review.

6 Research and development expenditure
Research in connection with the development of new services and 
products and the improvement of those currently provided by 
the group is carried out continuously. Research and development 
written-off to proﬁt and loss during the year amounted to £5m 
(2011: £6m). 

The group employs disabled people and offers the same 
opportunities for training, development and promotion, making 
reasonable adjustments where necessary to support new 
employees or those who have become disabled during the course 
of their employment with G4S.

Further information on the group’s employment policies and 
practices can be found in the group’s 2012 CSR report.

9 Political and charitable contributions
The group remains committed to the support of charities, the 
community, job creation and training. Charitable contributions 
by the group during the year amounted to £2,887,000 
(2011: £344,000). 

7 Payment of suppliers
It is the company’s and the group’s policy to pay suppliers in accordance 
with the payment terms negotiated with them. Thus, prompt payment 
is normally made to those suppliers meeting their obligations. The 
company and the group do not follow any formal code or standard 
on payment practice.

Charitable contributions made by the group in the UK amounted 
to £2,624,000. The purposes for which such contributions were 
made and the amount donated to each purpose were: child 
welfare: £8,000; health and medical: £21,000; local communities: 
£51,000; poverty relief: £4,000; environment: £1,000; prisoner 
welfare: £9,000; sports: £30,000; and army welfare: £2,500,000.

Transactions with trade creditors are processed through the 
company’s wholly-owned subsidiary, G4S Corporate Services 
Limited. Therefore, at 31 December 2012 the trade creditors of the 
company represented nil days (2011: nil days) of annual purchases.

At 31 December 2012 the consolidated trade creditors of the 
group represented 42 days (2011: 39 days) of annual purchases.

8 Employees
With over 620,000 employees worldwide, employee engagement 
is a crucial driver of business success which helps improve employee 
stability and increase employee motivation to deliver excellent service 
to customers, leading in turn to better business performance.

To ensure that levels of employee engagement are a constant 
focus for managers, key performance indicators like employee 
turnover, stability and health and safety are measured and 
monitored on a monthly basis. In 2012, ﬁrst line management 
training and development materials were aligned to the group’s 
employee engagement model, PRIDE (Protect, Respect, Involve, 
Develop and Engage). These materials provide managers with the 
tools and knowledge to put the PRIDE model into practice.

In support of the group’s engagement strategy, the involvement of 
employees is sought in a number of ways. In 2013 the third global 
employee engagement survey will be completed and all employees 
will be invited to participate, share their views on the group’s 
performance against the PRIDE model, and provide suggestions 
on how the business can improve further.

About a third of employees are covered by the terms of a 
collective agreement. Bespoke partnership agreements such 
as the Ethical Employment Partnership help to create a stable 
operating environment and provide another important avenue 
for employee involvement, consultation and feedback. 

Bringing new talent into the organisation is vital for the group’s 
future growth and success. To attract, recruit and retain the 
best people from the widest pool of applicants, the group’s 
employment policies do not discriminate. Instead they are 
intended to promote an inclusive working environment where 
people from all backgrounds can share their perspectives, new 
ideas and help foster stronger relationships with customers. 

In addition, businesses throughout the group are encouraged to 
play their part in engaging with and helping to improve their local 
communities. In 2012, the group completed its second annual 
measurement of its regional and country managed community 
investment activity around the world. These reviews have 
helped understand the true level of G4S community investment, 
identifying more than 360 community programmes across 60 
countries supporting health, education, welfare and development 
of children and young people in those communities. Further 
details regarding community programmes can be found in the 
group’s 2012 CSR report.

The company and its subsidiaries have made no contributions 
during the year to political parties carrying on activities, or to 
candidates seeking election within the EU, nor anywhere else 
in the world.

10 Substantial holdings
The company had been notiﬁed under DTR 5 of the following 
interests in the ordinary capital of G4S plc:

As at 31.12.2012

Invesco

Prudential plc group of companies

BlackRock, Inc

Harris Associates LP

Legal & General Group plc

Between 1.1.2013 and 12.3.2013

198,966,277 (14.10%)

89,325,538 (6.33%)

70,812,109 (5.02%)

69,584,044 (4.93%)

42,320,310 (3%)

Invesco

212,071,075 (15.03%)

11 Auditor
A resolution to re-appoint KPMG Audit Plc, chartered accountants, 
as auditor to the company and for their remuneration to be ﬁxed 
by the directors will be submitted to the Annual General Meeting. 

12 Directors
The directors, biographical details of whom are contained on 
pages 54 to 57, held office throughout the year with the exception 
of John Connolly, who was appointed to the board on 8 June 2012, 
and Adam Crozier and Paul Spence who were both appointed to 
the board on 1 January 2013. Alf Duch-Pedersen retired from the 
board on 7 June 2012.

G4S plc Annual Report and Accounts 2012  63

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Governance
Report of the directors continued

Mr Lerenius and Lord Condon have announced their intention to 
retire from the board after the Annual General Meeting due to 
take place on 6 June 2013.

Tim Weller will join the board on 1 April 2013. An accountant 
by training, Mr Weller joined KPMG in 1985 where he gained 
signiﬁcant experience of the energy sector before joining Granada 
plc as director of ﬁnancial control in 1997. Between 2002 and 
2010, Mr Weller held chief ﬁnancial officer (CFO) positions with 
Innogy (one of the UK’s leading integrated energy companies at 
the time), RWE Thames Water (the world’s third largest water 
and wastewater service company) and United Utilities Group PLC, 
a UK-based water and wastewater service company. He was CFO 
of Cable & Wireless Worldwide plc between 2010 and 2011 and 
is currently CFO of Petrofac Limited, the FTSE100 international 
oil and gas service provider and a non-executive director of BBC 
Worldwide and the Carbon Trust.

In accordance with the code provisions on re-election of directors 
in the UK Corporate Governance Code 2010, each of the 
directors continuing in office will offer themselves for re-election 
(or, in the case of John Connolly, Adam Crozier, Paul Spence 
and Tim Weller, election). The board believes that the directors 
standing for re-election possess experience and expertise 
relevant to the company’s operations; that they continue to be 
effective; that they are committed to the success of the company; 
and that they should be re-elected at the Annual General Meeting. 

Messrs Connolly, Crozier, Spence and Weller have or will have 
been appointed to the board since the last Annual General 
Meeting and so they would, in any event, be required to retire 
in accordance with the company’s articles of association. Being 
eligible, they offer or will offer themselves for election. The board 
believes that Mr Connolly’s extensive experience of working 
in a global business environment and in sectors of strategic 
importance to group; Mr Crozier’s wide-ranging experience 
of business transformation in a number of public and private 
sector organisations in the media, logistics and retail sectors; 
Mr Spence’s in-depth knowledge of outsourcing in both the 
public and private sectors and extensive international experience 
in key developing countries such as India, China and Brazil; and 
Mr Weller’s broad knowledge of the energy and utilities sectors 
together with his experience of leading complex projects in strong 
international businesses, will add signiﬁcant value to the board and 
therefore recommends that each of them is elected at the Annual 
General Meeting.

The contracts of service of the executive directors have no 
unexpired term since they are not for a ﬁxed term. They are 
terminable at 12 months’ notice. None of the non-executive 
directors has a contract of service. 

The company has executed deeds of indemnity for the beneﬁt of 
each of the directors in respect of liabilities which may attach to 
them in their capacity as directors of the company. These deeds are 
qualifying third party indemnity provisions as deﬁned by section 234 of 
the Companies Act 2006 and have been in effect since 3 November 
2006 for each of the directors other than Ms Spottiswoode and Ms 
Fok (whose indemnities have been in effect since 14 June 2010 and 
1 October 2010 respectively), Mr Connolly (whose indemnity has 
been in effect since 8 June 2012) and Messrs Spence and Crozier 
(whose indemnities have been in effect since 1 January 2013). A deed 
of indemnity will be entered into with Mr Weller with effect from 
his appointment as a director on 1 April 2013. Copies of the forms 
of indemnity are available on the company’s website. In addition, 
indemnities have been granted by the company in favour of certain of 
the directors of certain of the group’s subsidiaries in Germany and the 
Netherlands. The company has maintained a directors’ and officers’ 
liability insurance policy throughout the year under review.

Details of directors’ interests (including their family’s interests) 
in the share capital of G4S plc and of the directors’ remuneration 
are set out on pages 72 to 81.

The directors who held office at the date of approval of this 
directors’ report conﬁrm that, so far as they are each aware, there 
is no relevant audit information of which the company’s auditor is 
unaware and each director has taken all the steps that he or she 
ought to have taken as a director to make him or herself aware of 
any relevant audit information and to establish that the company’s 
auditor is aware of that information.

None of the directors had a material interest in any contract 
signiﬁcant to the business of the group during the ﬁnancial year.

By order of the board

Peter David
Secretary
12 March 2013

The Manor
Manor Royal
Crawley
West Sussex RH10 9UN

64  G4S plc Annual Report and Accounts 2012

 
Corporate governance statement

“Ensuring that our businesses are governed effectively, with 
strong controls, but without being constrained unnecessarily, 
is the challenge we set ourselves. It is vital that we ensure 
this philosophy operates throughout the group. Creating 
an effective board is part of that process and if the board 
is to do its job well it needs to reﬂect the diversity of the 
organisation it governs, it must continually refresh and renew 
itself through planned succession and it must measure its own 
performance as well as monitoring the performance of the 
group. In line with these principles, a number of steps have 
been taken. Two non-executive directors are due to retire 
after the company’s Annual General Meeting on 6 June 2013 
and the board has welcomed new members. The committees 
and their memberships have been reviewed and changes made. 
In addition, the Risk Committee has been made a full board 
committee. This report explains how the principles of the UK 
Corporate Governance Code are applied as part of the way in 
which we seek to achieve these aims.”  

John Connolly, Chairman

Compliance with the UK Corporate 
Governance Code
The board’s statement on the company’s corporate governance 
performance is based on the UK Corporate Governance Code published 
in June 2010 (“the Code”) which is available on the Financial Reporting 
Council’s website (https://www.frc.org.uk/our-work/publications/
corporate-governance/the-uk-corporate-governance-code.aspx).

The Listing Rules require companies to disclose how they apply 
the Code’s main principles and report how they have done so. 
The Code recognises that alternatives to following its provisions 
may be justiﬁed in particular circumstances if good governance 
can be achieved by other means, provided the reasons are 
explained clearly and carefully. In such cases, companies must 
also illustrate how their actual practices are consistent with the 
principle in question and contribute to good governance.

The company complied throughout the year under review with 
the provisions of the Code. This section of the report sets out 
how the company has applied these provisions.

Our governance framework

G4S plc board

CEO

CFO

Risk
Committee  

Remuneration
Committee  

Audit
Committee  

CSR
Committee  

Nomination
Committee  

Regional Risk
Committees

Group
Internal Audit

Executive
Committee

Capex
Committee

Regional
Finance

Regional
Management

The board sits at the top of the company’s governance framework, 
setting broad strategic targets, monitoring progress, approving proposed 
actions and ensuring appropriate controls are in place and effective. 

Management decisions, development of strategies and policies and 
implementation of board decisions fall to the executive committee.

Regional management teams have responsibility for businesses within 
their regions and are tasked with implementing policies and controls 
at business levels, as well as ensuring they meet agreed ﬁnancial goals. 

The presence of a majority of independent non-executive directors 
on the board ensures objectivity, challenge and debate. It is the 
primary responsibility of the board to provide effective leadership 
for the group and this is done by, amongst other things, ensuring that 
decision making is conducted throughout the group within a strong 
internal control framework – and by setting values and standards.

There is a detailed schedule of matters reserved to the board which 
is set out under 12 separate categories: strategy and management; 
structure and capital; ﬁnancial reporting and controls; internal 
controls; contracts; communication; board membership and other 
appointments; remuneration; delegation of authority; corporate 
governance matters; policies; and other. By way of example, 
board approval is required for: major investments, including the 
acquisition or disposal of any business worth more than £5m; 
entering into a sales contract where annual revenue is to be 
more than £50m; any changes to the group’s long-term objectives 
and commercial strategy; and the annual operating and capital 
expenditure budgets.

The board fulﬁls a number of its most important functions through 
its committees. Descriptions of the work of four of these committees 
are set out elsewhere in this report.

G4S plc Annual Report and Accounts 2012  65

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Governance
Corporate governance statement continued

In addition, the board has constituted a new Risk Committee, 
which reports to both the chief executive and to the board, has 
non-executive director representation and is chaired by the 
chairman of the board. Its activities will be reported on in greater 
detail in the company’s 2013 annual report.

The terms of reference of the above committees are available on 
the company’s website. www.g4s.com

Board balance
Board composition
The board comprises the non-executive chairman (John Connolly), 
eight other non-executive directors, the chief executive (Nick Buckles), 
the chief ﬁnancial officer (Trevor Dighton) and the chief executive 
for the Americas region (Grahame Gibson). The board considers 
all the non-executive directors to be independent. The senior 
independent director is Lord Condon. 

The directors bring a wide range of skills and experience to the board. 
This experience and their roles on the board is described in more 
detail on pages 54 to 57.

Succession
John Connolly succeeded Alf Duch-Pedersen as chairman on 
8 June 2012. Adam Crozier and Paul Spence were appointed to 
the board as non-executive directors with effect from 1 January 
2013. Tim Weller, who has a broad knowledge of the energy and 
utilities sectors together with his experience of leading complex 
projects in strong international businesses, will join the board, also 
as a non-executive director, with effect from 1 April 2013. Tim 
is an accountant by training and was a partner at KPMG before 
joining Granada plc as director of ﬁnancial control. Thereafter, 
he held CFO positions with Innogy, RWE Thames Water, United 
Utilities Group PLC and Cable & Wireless Worldwide plc. He is 
currently CFO of Petrofac Limited, the FTSE 100 international oil 
and gas service provider.

Having completed nine years’ service as non-executive directors, 
Lord Condon and Bo Lerenius will retire from the board at 
the conclusion of the company’s AGM in 2013, at which time 
Mark Elliott will take on the role of senior independent director.  
The board will then comprise three executive directors, the 
non-executive chairman and six other independent non-
executive directors.

The process for selecting the new chairman was conducted by 
the Nomination Committee led by Lord Condon and assisted by 
an external recruitment consultant (Zygos). Mr Duch-Pedersen 
was not involved directly in the selection process for his successor. 
The process for selecting the three other new non-executive 
directors was also conducted by the Nomination Committee 
assisted by a different external recruitment consultant (Spencer 
Stuart). Mark Seligman, as deputy chairman, was co-opted 
onto the committee for the purposes of both exercises. 

Director re-election
The company’s articles of association require that all continuing 
directors are subject to election by shareholders at the next 
Annual General Meeting following their appointment and that 
they submit themselves for re-election at least every three 
years and that at least one-third of the directors not standing 
for election for the ﬁrst time stand for re-election at each 
Annual General Meeting. However, in accordance with the Code 
provision on re-election of directors, all the continuing directors 
will stand for re-election at that meeting.

66  G4S plc Annual Report and Accounts 2012

Conﬂicts of interest
Each of the directors has disclosed to the board any situations 
which apply to them as a result of which they have or may have an 
interest which conﬂicts or may conﬂict with the interests of the 
company. In accordance with the company’s articles of association, 
the board has authorised such matters. The affected directors 
did not vote when their own positions were considered. Where 
the board deemed it appropriate, such authorisation was given 
subject to certain conditions. The board reviews such matters 
on a regular basis.
Board meetings, information ﬂow, development 
and induction
Meeting attendance in 2012

Scheduled 
meetings 

Unscheduled 
meetings

Executive directors
Nick Buckles (CEO)
Trevor Dighton (CFO)
Grahame Gibson (COO)
Non-executive directors
4/4
Alf Duch-Pedersen (chairman)
John Connolly (chairman)
3/3
Mark Seligman (deputy chairman) 7/7

7/7
7/7
7/7

Lord Condon (senior 
independent director) 
Mark Elliott
Winnie Fok
Bo Lerenius
Clare Spottiswoode

7/7
7/7
7/7
7/7
7/7

5/5
5/5
3/5

1/1
4/4
5/5

5/5
5/5
4/5
4/5
5/5

Board meetings and information ﬂow
Seven scheduled board meetings were held during the year ended 
31 December 2012 and there were a further ﬁve additional full 
board meetings. These additional meetings were mostly called 
at short notice and it was not always possible for all directors to 
attend. Because of the circumstances surrounding the Olympic 
Games contract, a number of other conference calls and meetings 
were attended by many of the directors, albeit such meetings did 
not constitute full board meetings.

One of the scheduled board meetings was an extended strategy 
review session at which presentations on development and 
implementation of the company’s strategy were made to the 
board by senior executives and the board debated the company’s 
strategy and business plans. To further their understanding of 
the group and their relationship with the operating businesses, 
some non-executive directors were able to attend meetings and 
conferences held by various regions and business units, following 
which they reported back to the board on matters of interest. 

Prior to each meeting, comprehensive board papers are circulated 
to the directors addressing not only the regular agenda items 
on which the executives will report, but also details of any areas 
requiring approval or decisions such as signiﬁcant acquisitions or 
important market issues.

At each meeting, the board then receives reports from the 
chairman, the chief executive, the chief ﬁnancial officer and the 
company secretary, an HR report which includes summaries 
of developments on HR and health and safety matters and an 
investor relations report which includes analysts’ reviews and any 
comments received from major shareholders since the previous 
board meeting. After meetings of the board committees, the 
respective committee chairmen report to the board on the 
matters considered by each committee. In addition, each month the 
board receives management accounts, trading and ﬁnancial updates, 
investor relations and HR reports.

(cid:116)(cid:1)  A common risk management framework* is used to provide 
a proﬁle of those risks which may have an impact on the 
achievement of business objectives

(cid:116)(cid:1)  Each signiﬁcant risk is documented, showing an overview of the 
risk, how the risk is managed, and any improvement actions. 
Risk appetite/tolerance is considered in the context of the net (after 
controls and mitigation) risk with a particular focus on “High” net risks. 
To be categorised as “High” a risk must meet at least one of the 
following criteria:

 – major impact on the achievement of the business strategy;

There are seven board meetings scheduled for the current year, 
including a two-day board and strategy meeting.

 – serious damage to business reputation;

 – severe business disruption;

Induction and professional development
When new non-executive directors are recruited, they have the 
opportunity to spend time with the executive directors and other 
senior executives to understand the business, its structure and 
people as well as the company’s strategy and ﬁnancial performance.  
In March 2013, Messrs Crozier, Spence and Weller met the Regional 
CEOs who each presented an overview of their region. This was 
followed by a question and answer session also attended by the 
chief executive officer and the chief ﬁnancial officer.

In addition, the new directors are given the opportunity to visit 
businesses, usually within a number of countries so they can 
begin to understand the group’s operations. In January 2013, John 
Connolly and Nick Buckles, visited the regional management team 
in the Asia and Middle East Region in Hong Kong and Delhi before 
attending the regional conference of the Middle East in Dubai, 
at which they met the regional and country management teams.  
In February 2013, John Connolly, Mark Elliott and Paul Spence 
attended the North American regional management conference 
in Miami. Prior to the conference, as part of his induction, 
Mr Spence attended a session with the Americas regional 
management team, who provided an overview of the businesses 
in region, as well as opportunities and challenges there. 

Meeting regional and country staff continues throughout a 
director’s time on the board, as does continuing professional 
development, usually in areas where the director has speciﬁc 
committee responsibility.

Risk management and internal control
The directors acknowledge their responsibility for the group’s 
system of internal control and for reviewing its effectiveness. 
The system is designed to manage rather than eliminate the 
risk of failure to achieve business objectives and can only 
provide reasonable and not absolute assurance against material 
misstatement or loss.

The risks associated with the group’s activities are reviewed 
regularly by the board, which assesses the group’s risk appetite/
tolerance, considers major risks and evaluates their impact on 
the group. Policies and procedures, which are reviewed and 
monitored by the head of group internal audit, are in place to 
deal with any matters which may be considered by the board 
to present signiﬁcant exposure.

The key features of the group’s risk management process, which 
was in place throughout the year under review and, subject to 
the changes to the Risk Committee described elsewhere in this 
report, since, are:

 – impact of > 5% (£25m) on operating proﬁt or assets. 

(cid:116)(cid:1)  The risk proﬁles ensure that internal audit reviews of the adequacy, 
application and effectiveness of risk management and internal 
controls are targeted on the key risks

(cid:116)(cid:1)  Risk management committees have been established at regional and 
group level.  The regional committees meet at least annually and the 
group committee met quarterly.  A standard agenda covering risk 
and control issues is considered at each meeting and risk proﬁles are 
reviewed and updated at each meeting

(cid:116)(cid:1)  Risk and control self-evaluation exercises are undertaken for 
each operating company, for most companies at least twice a 
year,  and updated risk proﬁles are prepared. Similar exercises 
are undertaken as part of the integration process for all major 
acquisitions.  The results of the company risk evaluations are 
assessed by the regional risk management committees*

The process, which is reviewed regularly by the board in accordance 
with the internal control guidance for directors in the UK Corporate 
Governance Code, is carried out under the overall supervision of 
the group risk committee. This committee includes all the members 
of the group executive. In 2013, a new Risk Committee, which 
reports to the board and the chief executive has been constituted. 

Both the divisional risk management committees and the group risk 
committee receive internal audit reports and regular reports on 
risks. They monitor the actions taken to manage risks.

The internal control system includes clearly deﬁned reporting lines 
and authorisation procedures, a comprehensive budgeting and 
monthly reporting system, and written policies and procedures. 
In addition to a wide range of internal audit reports, senior 
management also receive assurance from other sources including 
security inspections, third party reviews, company ﬁnancial 
control reviews, external audit reports, summaries of whistle-
blowing activity, fraud reports and risk and control self-evaluations. 

The group has in place robust internal control and risk 
management systems for ﬁnancial reporting. The group has a 
single global consolidation system which is used for both internal 
management reporting, budgeting and planning as well as external 
reporting. The group has a comprehensive budgeting process 
with the budget being approved by the board. Forecasts for the 
year are reported at least quarterly. Actual results at business 
unit, region and group level are reported monthly and variances 
are reviewed. A programme of business internal ﬁnancial reviews is 
performed by a ﬁnance team from either region or group to check 
the accuracy of ﬁnancial reporting and compliance with the group 
ﬁnance manual.

*Because G4S Government Solutions, Inc. (“GSI”) is governed through a proxy agreement 
under which the group is excluded from access to operational information, it is not subject to 
the same risk management process as is applied to other group companies. The board has 
however satisﬁed itself as to the adequacy of the internal control processes adopted by GSI 
which include a risk review by an external advisor.

G4S plc Annual Report and Accounts 2012  67

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Governance
Corporate governance statement continued

The Audit Committee undertakes a high level review of risk 
management and internal control each year. As well as the above 
processes and sources of assurance the Audit Committee also 
considers the following year end reporting in conducting this review:

(cid:116)(cid:1)  Summary of 2012 internal audit work including update on all open 
audits with a deﬁcient rating, analysis of results by region, common audit 
ﬁndings and areas identiﬁed for improvement in internal controls

(cid:116)(cid:1)  Summary of 2012 Internal Financial Reviews including 

signiﬁcant accounting or ﬁnancial control issues and common 
concerns identiﬁed

(cid:116)(cid:1)  Overview of year end ﬁnancial control status reports completed 

by all businesses conﬁrming adherence to group standards with any 
exceptions reported

(cid:116)(cid:1)  A broad overview of the general risk management and internal 

control systems in place during the year.

(cid:116)(cid:1) Year end group risk proﬁle

Board performance review
In 2012, the performance of the board and its committees was 
evaluated using a questionnaire-based self assessment process 
which was then interpreted and reported on by the external 
consultancy (Lintstock) which conducted an externally facilitated 
evaluation of the board and its committees’ performance in 
2011.  Reports generated by this process were considered by the 
board, the chairman and by each of the Audit, Remuneration, 
Nomination and CSR committees. 

Following consideration of the reports, the board has agreed a 
set of primary objectives for its work in 2013 which will include:

 – effectively transitioning to the revised board membership;

 – articulating clearly the company’s strategy;

 – reviewing senior executive succession planning;

 – building closer relationships with shareholders; 

 –  spending more time understanding the operations undertaken 

(cid:116)(cid:1)  External audit year end reporting on ﬁnancial controls 

by the group; and

and accounting

The Audit Committee has conﬁrmed that it is satisﬁed that the 
group’s risk management and internal control processes and 
procedures are appropriate.

The board has reviewed the group’s risk management and internal 
control system for the year to 31 December 2012 by considering 
reports from the Audit Committee and has taken account of 
events since 31 December 2012.

 –  reviewing the approach to providing information to the board.

In addition, the reports considered the performance of the 
chairman and each board member and were used to inform 
the discussion about the chairman’s performance, which was 
conducted by the senior independent director without the 
chairman being present. The chairman has also conducted 
discussions with individual directors which, amongst other 
things, allowed the chairman to review directors’ training 
and development needs.

The chairman also held meetings with the non-executive directors 
without the executives being present.

Relations with shareholders 
The company actively seeks to engage with shareholders and, 
during 2012, senior management had extensive contact with 
shareholders representing more than 60% of the share register 
via more than 200 individual meetings and 100 telephone 
conversations. If index/passive fund shareholders are excluded, 
senior management had contact with more than 80% of the 
share register in 2012. In May, the chief executive, chief ﬁnancial 
officer and regional CEOs presented to institutional investors at 
the group’s annual Capital Markets Day which is video webcast 
and available on the group website. Additional results meetings 
are held twice a year for the preliminary and half-yearly results 
announcements and conference calls are arranged for the Interim 
Management Statements.

Upon taking up his position as chairman in June, John 
Connolly met with most of the company’s major shareholders. 
Subsequently, Mr Connolly maintained contact with those 
shareholders during the Olympics contract issues and following 
the board review into the Olympics contract.  

It is intended that all the directors will attend, and be available 
to answer questions at, the Annual General Meeting which is 
an important opportunity for communication between the 
board and shareholders, particularly private shareholders. 
At the Annual General Meeting, the meeting is informed of 
the numbers of proxy votes cast and the same information 
is published subsequently on the company’s website.

68  G4S plc Annual Report and Accounts 2012

Board committees

The Nomination Committee 
“This year proved to be a busy one for the Nomination 
Committee and there have been several changes to the board. 
I joined the board when I took over the role as chairman after 
the AGM in June 2012. In light of the forthcoming retirements 
of Lord Condon and Bo Lerenius after the AGM in 2013, the 
committee initiated an extensive selection process to identify 
suitable candidates to both replace them and to ensure that 
board membership represents the wide range of skills and 
experience it needs.”

The Audit Committee 
“The Audit Committee oversees ﬁnancial reporting and the 
effectiveness of ﬁnancial and regulatory compliance, controls 
and systems. It also manages the board’s relationship with 
the group’s external auditor, which includes agreeing its fee 
and assessing its independence and effectiveness, as well as 
discussing the nature and scope of the audit and reviewing the 
external auditor’s quality control procedures and steps taken 
to respond to changes in regulatory and other requirements. 
The work of the committee supports key events in the group’s 
ﬁnancial calendar and ﬁnancial reporting cycle. In addition, the 
committee monitors the effectiveness of the group’s internal 
audit function and reviews its material ﬁndings.”

John Connolly

Mark Seligman

Membership and meeting attendance in 2012

Membership and meeting attendance in 2012

Director
Alf Duch-Pedersen (former 
chairman) 
John Connolly (chairman)
Lord Condon
Mark Elliott 

Meetings attended

4/4
3/3
7/7
7/7

Director
Mark Seligman (chairman)
Lord Condon  
Winnie Fok 
Bo Lerenius 

Meetings attended
4/4
4/4
4/4
3/4

Mr Seligman is the member of the Audit Committee with recent 
and relevant ﬁnancial experience. Since 24 January 2013, Adam 
Crozier and Paul Spence have been members of the committee 
and Lord Condon and Ms Fok have left. Tim Weller will join 
the committee when he is appointed to the board on 1 April 
and Mr Lerenius will leave upon his retirement following the 
company’s 2013 Annual General Meeting.

Audit Committee meetings are attended by representatives of 
the group auditor, the chief ﬁnancial officer, the group ﬁnancial 
controller, the head of group internal audit and the company 
secretary. The chairman of the board will in future attend 
meetings from time to time in agreement with the chairman of 
the committee.

Role
The committee considers the group’s annual and half-yearly 
ﬁnancial statements as well as interim management statements 
in certain circumstances and any questions raised by the auditor 
on the ﬁnancial statements and ﬁnancial systems. It also reviews, 
amongst other matters, the group’s ﬁnancial reporting and 
internal auditing processes, whistle-blowing arrangements, risk 
management procedures and internal controls.

Mr Duch-Pedersen left the committee and Mr Connolly took 
over as its chairman upon Mr Duch-Pedersen’s retirement and 
Mr Connolly’s appointment following the company’s 2012 AGM. 
Since 24 January 2013, the membership of the committee has 
changed and Adam Crozier has joined and Lord Condon has left.

Role
The Nomination Committee is responsible for making 
recommendations on board appointments and on maintaining a 
balance of skills and experience on the board and its committees. 
Succession planning for the board is a matter which is devolved 
primarily to the Nomination Committee, although the 
committee’s deliberations are reported to and debated by the 
full board. The board itself also regularly reviews more general 
succession planning for the senior management of the group.

Key activities during 2012
The committee led the process by which the new chairman was 
appointed by the board. It has also been responsible for the 
process whereby three new non-executive directors have been 
recruited in order to refresh the board in readiness for the 
retirement of Lord Condon and Bo Lerenius and to strengthen 
the board generally in light of the ﬁndings of the Olympics 
contract review conducted by the board.

The board committee memberships of the non-executive directors 
were evaluated and proposals for changes in 2013 were proposed. 
The changes have now been implemented and further details 
of these changes can be found in the relevant section relating to 
each committee.

G4S plc Annual Report and Accounts 2012  69

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Governance
Corporate governance statement continued

External auditor
The Audit Committee recommended that the board should 
re-appoint the existing external auditor having reviewed its 
performance of audit services for the company, reports on the 
performance of the ﬁrm as a whole, its independence given the 
non-audit services it provides to the group and its policy and 
practice on audit partner rotation, as well as the cost of its services.  
In accordance with that policy, the lead audit partner changed 
during the year. On 31 December 2011, Tony Cates completed 
two years as audit lead partner and ﬁve years before that as a 
key partner, and so was succeeded by John Luke as lead partner.  
The committee will continue to keep the matter of the choice of 
external auditor under review at regular intervals.

So as to ensure that the independence of the audit is not 
compromised, the Audit Committee maintains a policy on the 
provision by the external auditor of non-audit services. Besides its 
formal audit function, the auditor is permitted to provide consultation 
and due diligence services related to mergers and acquisitions, audits 
of employee beneﬁt plans, reviews of internal accounting and control 
policies and general advice on ﬁnancial reporting standards. Where 
the fees for such services are signiﬁcant, prior approval of the 
committee is required. The auditor is also prohibited from providing 
other services without speciﬁc permission from the Audit Committee. 
The provision of any non-audit services by the audit ﬁrm must in any 
event comply with the requirements in that regard of the Auditing 
Practices Board. 

Particular areas of focus
(cid:116)(cid:1)  consideration of the ﬁnancial impact and disclosure of issues 

relating to delivery of the Olympics contract

(cid:116)(cid:1) review of the treatment of other exceptional items

(cid:116)(cid:1)  consideration of the decisions to treat certain businesses as 

discontinued, and their presentation in the ﬁnancial statements

(cid:116)(cid:1)  agreeing the scope of the work for both the external auditor 

and the group internal audit function, including the linkage to the 
principal risks identiﬁed for the group and materiality limits to 
be applied

(cid:116)(cid:1) review of the company’s status as a going concern

(cid:116)(cid:1)  monitoring of the implementation of enhanced business ethics 
policies intended to ensure compliance with the UK Bribery Act 
and other relevant legislation

(cid:116)(cid:1)  consideration of and decision on how best to use the group’s 

external auditor to supplement the group’s internal audit team in 
testing key ﬁnancial controls

(cid:116)(cid:1)  receiving presentations on ﬁnancial controls and signiﬁcant issues 

from the ﬁnance directors for each of the group’s regions

(cid:116)(cid:1)  receiving a presentation from the group’s director of 

reconciliations, dealing with the operational integrity of the cash 
solutions businesses

(cid:116)(cid:1)  receiving a presentation from the group’s head of IT security

The auditor has written to the Audit Committee conﬁrming that, 
in its opinion, it is independent.

The CSR Committee 
“The CSR Committee, established in January 2011, aims to 
ensure that corporate social responsibility is an integral 
part of the group’s strategy and that the group continues to 
have a positive impact on people and communities, whilst 
contributing to a sustainable future for the business and 
everyone connected to it. 2012 was a busy year for the 
committee, which oversaw the preparation and roll-out 
of several initiatives ranging from human rights to road 
safety. Committee members also engaged with investors on 
CSR issues and hosted a meeting with socially responsible 
investors to update them on the group’s corporate 
responsibility programme.”

Mark Elliott

Membership and meeting attendance in 2012

Director
Mark Elliott (chairman)
Winnie Fok
Bo Lerenius
Clare Spottiswoode

Meeting attendance
5/5
3/5
4/5
5/5

Paul Spence joined the committee on 24 January 2013. Following 
the company’s 2013 AGM, Mr Lerenius will leave the committee 
when he retires from the board and Mr Elliott will also leave the 
committee. Ms Spottiswoode will then become its chair.

Role
The CSR Committee’s duties include reviewing and agreeing the 
group’s CSR strategy, developing policies on various CSR related 
matters for consideration by the board, reviewing the activities 
of the executives who are responsible for matters which are 
CSR related and monitoring performance of the group against its 
policies and any associated targets. It also takes responsibility for 
the company’s CSR report. The company’s separate CSR report 
for 2012 provides more detail on the group’s CSR strategy and the 
progress it has made during the year. A brief summary of some the 
issues which that report addresses are set out on pages 48 to 52.

Key activities during 2012
The CSR Committee’s ﬁrst meeting as a full board committee was held 
in January 2012. It has agreed with the board its terms of reference and 
inﬂuenced the tone and content of the company’s 2011 CSR Report. 
It has also similarly reviewed the content of the company’s 2012 CSR 
Report. In addition, during the year the committee has overseen the 
group’s implementation of its revised business ethics policy, approved 
a human rights policy and guidelines and examined the way the group 
operates whistle-blowing hotlines and is working to improve health and 
safety for its employees, and particularly in relation to road safety. With 
regard to road safety, a number of initiatives have taken place around 
the group. The CSR Committee reviewed the work of a new road 
safety steering group, which was set up in 2012. Its aim is to produce 
and disseminate basic road safety guidance to employees who operate 
in those countries with the highest road incident records. The scheme 
is currently being piloted in a number of countries. Other initiatives 
include speed limiters and monitoring equipment being ﬁtted on 
company vehicles. 

70  G4S plc Annual Report and Accounts 2012

Remuneration Committee
Membership and meeting attendance in 2012

Director
Lord Condon (chairman)
Mark Elliott 
Mark Seligman 
Clare Spottiswoode 

Meeting attendance
5/5
5/5
5/5
5/5

The role and work of the Remuneration Committee is more fully 
described in the Directors’ remuneration report which appears 
on pages 72 to 81.

Risk Committee
Membership

Director
John Connolly (chairman)
Nick Buckles
Trevor Dighton
Paul Spence

Tim Weller will become a member of the Risk Committee when 
he joins the board on 1 April 2013. 

Role
The Risk Committee will advise the board on the group’s overall 
risk appetite, develop the group’s risk management strategy, 
advise the board on risk exposures, review the level of risk 
within the group and assess the effectiveness of the group’s risk 
management systems. 

Key activities
Since the Risk Committee did not exist as a board committee 
until 2013, its activities will be reported on in the company’s 
2013 report.

By order of the board

Peter David
Secretary
12 March 2013

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G4S plc Annual Report and Accounts 2012  71

 
 
 
Governance

Directors’ remuneration report

at 31 December 2012

 “The Remuneration Committee needs to ensure that the 
remuneration offered to the directors provides an adequate 
incentive to retain and motivate them, particularly in the context 
of the challenges posed by the macro-economic conditions 
affecting many of the markets in which the group operates, 
and that any payments which are made withstand reasonable 
and appropriate scrutiny by the company’s stakeholders.

The Remuneration Committee is increasing its focus on linking 
incentives to strategic objectives to ensure that directors are 
incentivised to deliver on business strategy. This increased focus 
resulted in an amendment to the annual bonus scheme rules for 
2013 to include non-ﬁnancial strategic objectives.

For the second consecutive year (and for the fourth time in 
ﬁve years), the executive directors’ base salaries will be frozen 
for 2013. The board has also agreed that the fees for the non-
executive directors will not be increased when they are next 
reviewed in July 2013. In addition, the committee has decided 
that no bonus would be payable in respect of 2012. However, in 
order to ensure that the directors continue to be appropriately 
incentivised and motivated, the committee has increased the 
potential maximum value of LTIP awards for 2013. 

Although, the remuneration policy for the executive directors 
and the senior management team remains broadly in line with 
previous years, in the coming year, the committee will continue 
to review the company’s remuneration policy to ensure that it 
continues to help attract, retain and motivate the best people.

This report provides details of the company’s remuneration 
arrangements and outcomes for 2012. The report will be put to 
the shareholders at the company’s Annual General Meeting on 
6 June 2013 and we look forward to receiving your support.” 

Lord Condon
Chair of the Remuneration Committee

This report is prepared on behalf of and approved by the 
board. It: 

(cid:116)(cid:1)sets out the activities of the Remuneration Committee in the 

year under review

(cid:116)(cid:1)sets out the company’s remuneration policies for the current 
ﬁnancial year and, subject to ongoing review, for subsequent 
ﬁnancial years; and

(cid:116)(cid:1)details the remuneration of each of the directors

The report will be put to the company’s Annual General 
Meeting for approval by the shareholders.

Remuneration Committee
The committee is responsible for setting all aspects of the 
remuneration of the chairman, the executive directors and the 
company secretary and for monitoring the level and structure 
of remuneration for other senior management of the group. It is 
also responsible for the operation of the company’s share plans. 
Its terms of reference are available on the company’s website: 
www.g4s.com

The committee met ﬁve times during the period under review. 
The members of the committee, all of whom are considered 
to be independent, are Lord Condon (chairman), Mark Elliott, 
Mark Seligman, Clare Spottiswoode and Winnie Fok. Ms Fok was 
appointed to the committee on 24 January 2013. Lord Condon will 
retire from the board at the conclusion of the company’s 2013 AGM. 
At that time Mr Elliott will become chairman of the committee.

How the committee spent its time

(cid:116)(cid:1)Executive remuneration

(cid:116)(cid:1)Calibrating incentive levels and performance metrics

(cid:116)(cid:1)Best practice update

(cid:116)(cid:1)Oversight of other beneﬁts including pension

(cid:116)(cid:1)Oversight of remuneration for senior management

(cid:116)(cid:1)Other

During the year, the committee received advice from Towers 
Watson Limited as the committee’s appointed advisor on executive 
and senior management remuneration matters. Towers Watson has 
also provided management remuneration information and pension 
advisory services to the group during the period under review.  
The committee ensures that the nature and extent of these other 
services does not to affect the advisor’s independence. Their terms 
of appointment are available on the company’s website. In addition, 
Alithos Limited has been appointed by the committee to verify the 
calculation of certain elements of payments due under the company’s 
performance share plan. Alithos has not provided any other services 
to the company during the period under review. 

Nick Buckles, chief executive, provided guidance to the committee 
on remuneration packages for senior executives within the group. 
Further guidance was received from the group’s HR director, 
Irene Cowden. Neither Mr Buckles nor Mrs Cowden participated 
in discussions regarding their own remuneration.

As part of an effectiveness review for the entire board, an 
evaluation of the committee was also undertaken. The review 
concluded that the committee has operated efficiently but identiﬁed 
a need to concentrate on linking incentives to strategic objectives.

72  G4S plc Annual Report and Accounts 2012

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Remuneration policy
The policy for the remuneration of the executive directors and 
the executive management team aims to achieve:

(cid:116)(cid:1)the ability to attract, retain and motivate high calibre executives

(cid:116)(cid:1)a strong link between executive reward and the group’s performance

(cid:116)(cid:1)alignment of the interests of the executives and the shareholders; and

(cid:116)(cid:1)provision of incentive arrangements which focus appropriately on both 

annual and longer-term performance

In terms of market positioning, the overall objective is to achieve 
remuneration levels which provide a market competitive base 
salary with the opportunity through the company’s incentive 
schemes to achieve earnings commensurate with the delivery 
of superior performance. A signiﬁcant proportion of total 
remuneration is therefore related to performance, through 
participation in both short-term and long-term incentive schemes. 

In 2012 the mix of remuneration available to the executive 
directors was as follows: 

On target performance – CEO % 

Maximum for stretch target performance – CEO % 

11.8% Pension

29.5% Base salary

8.2% Pension

20.4% Base salary

32.1% Long-term incentives

26.6% Annual bonus

40.8% Long-term incentives

30.6% Annual bonus

On target performance – all other executive directors % 

Maximum for stretch target performance – all other 
executive directors % 

13.5% Pension

33.7% Base salary

9.6% Pension

24.1% Base salary

27.5% Long-term incentives

25.3% Annual bonus

36.2% Long-term incentives

30.1% Annual bonus

G4S plc Annual Report and Accounts 2012  73

 
 
 
Governance
Governance
Directors’ remuneration report continued

In 2013, the pay-mix at each of ﬁxed, threshold and maximum 
performance will be as follows: 

Nick Buckles

Grahame Gibson

4.5m

4.0m

3.5m

3.0m

2.5m

2.0m

1.5m

1.0m

0.5m

16%

24%

21%

39%

29%

71%

7%

46%

14%

14%

19%

3.0m

2.5m

2.0m

1.5m

1.0m

0.5m

17%

21%

19%

43%

29%

71%

9%

43%

13%

13%

22%

0

Fixed

Threshold

Maximum

0

Fixed

Threshold

Maximum

Base salary

Annual bonus – cash award

Annual bonus – deferred shares award

Long-term incentives

Pension

Base salary

Annual bonus – cash award

Annual bonus – deferred shares award

Long-term incentives

Pension

Trevor Dighton

2.5m

2.0m

1.5m

1.0m

0.5m

17%

21%

19%

43%

29%

71%

9%

43%

13%

13%

22%

0

Fixed

Threshold

Maximum

Base salary

Annual bonus – cash award

Annual bonus – deferred shares award

Long-term incentives

Pension

74  G4S plc Annual Report and Accounts 2012

The committee believes that the current balance between base pay, 
annual bonus and long-term incentives is appropriate given its desire to 
ensure a strong link between performance and remuneration whilst, at 
the same time, avoiding a system which might incentivise inappropriate 
risk-taking. The committee is satisﬁed that the existing long-term 
incentive scheme, allied to the claw back processes described below 
and minimum shareholding requirements which were introduced in 
2009 and 2010 respectively, provide suitable controls and incentives 
which are designed to avoid rewarding excessive risk-taking or 
behaviour aimed at short term, unsustainable gains. 

The balance between long- and short-term incentives, and between 
basic salary and performance-related bonuses, is however kept under 
close review.

The committee is also satisﬁed that the incentive structure for the 
board does not raise environmental, social or governance risks by 
inadvertently motivating irresponsible behaviour.

Bonus payments do not form part of salary for pension purposes.

The claw-back mechanism
Any payment under either the annual bonus or the performance 
share plan (“PSP”) may be clawed back from the director 
concerned if the committee so determines and, in the case of 
misstatement of accounts, where the Audit Committee concurs. 
The time period in which the claw back can be made depends on 
the reason for the overpayment.

Misstatement of ﬁnancial accounts

Fraud or reckless behaviour

Annual 
bonus scheme

Performance 
share plan

up to two years 
after payment

up to two years 
after vesting

up to two years 
after payment

up to six years 
after vesting

The amount to be clawed back directly from the executive will be the 
overpaid amount after netting off taxes and social security deductions.

Link between pay and performance
Payouts made in previous years under the annual bonus scheme 
and long-term incentive plan have been in accordance with the 
agreed measures. Where there has been a payout under the 
annual bonus scheme or long-term incentive plan, the committee 
has not exercised any discretion to increase payments above 
that to which the executives were entitled under the applicable 
rules. The committee reserves the right to exercise discretion 
to reduce payouts under these schemes if the measures 
would result in a payout which does not reﬂect the company’s 
underlying performance. 

Pay for group executive committee

Base Pay (£000)

201 – 250

251 – 300

301 – 350

351 – 400

Number in band

2012

2011

2

3

2

0

2

3

1

2

The maximum bonus level for the member of the group executive 
committee is 100% of base salary. 
Elements of remuneration 
Elements of 
remuneration

Availability

Fixed

Base salaries

Pensions

Variable

Annual bonus

Available to all 
employees worldwide

Available to most employees 
in developed markets

Available to all senior 
managers worldwide

Long-term incentive plan Available to some senior 
management worldwide

Beneﬁts

Car or car allowance

Protection insurance

Health care

Available to all senior 
managers worldwide 

Available to most employees 
in developed markets

Available to all senior 
managers worldwide

(a) Base salary and beneﬁts
The salaries of the executive directors are reviewed with effect 
from 1 January each year. Although interim salary reviews may be 
carried out following signiﬁcant changes in responsibility, no such 
reviews have taken place. The salaries take account of pay decisions 
across the rest of the organisation and the results of a bespoke 
benchmarking exercise based on a robust sample of similarly sized 
companies by revenue and market capitalisation with a signiﬁcant part 
of their business overseas. The exercise also reﬂects responsibility, 
individual performance and other market information supplied by 
Towers Watson. After base salaries for the executive directors were 
frozen in 2009 and 2010, in 2011 the committee took steps to more 
closely align basic pay to the company’s stated remuneration policy, 
i.e. competitive mid-market. Notwithstanding the consistently strong 
underlying performance of the group throughout the period, the 
committee has decided to freeze base salaries again in 2013 (as it 
did in 2012), in view of the economic circumstances and the pay and 
employment conditions across the group.

(b) Performance-related bonus scheme
For the year under review, the executive directors participated 
in an annual performance-related bonus scheme, payments under 
which were dependent on the attainment of deﬁned PBTA (proﬁt 
before tax and amortisation) targets of the group, adjusted for the 
effect of any exceptional items and discontinued operations and 
using constant exchange rates. The maximum bonus entitlement 
for the executive directors is an amount equal to 125% of base 
salary (150% in the case of the chief executive). For 2012, 60% 
of maximum bonus entitlement was payable on achievement of 
the budgeted target and the amount of bonus increased on a 
straight line basis up to 100% of maximum bonus entitlement for 
achievement of a stretch proﬁt target. Any bonus due above 50% 
of the individual’s maximum bonus entitlement would be awarded 
as deferred shares which would not vest for three years. For 
achievement of a threshold level of proﬁts which is at least 95% of 
the budgeted proﬁt target, a bonus payment of 35% of maximum 
bonus entitlement was due, with no bonus payable for performance 
below threshold. 

The PBTA target used for the above scheme is the same as 
the company’s budgeted PBTA for the corresponding period 
(assuming constant exchange rates). The PBTA target allows for 
adjustments in respect of any material, non-budgeted changes 
which take place during the year, such as acquisitions, disposals etc. 
Thus, for example, should a planned disposal not be completed 
by the year end, the committee reserves the right to re-insert the 
operating proﬁt or loss for the business in question in the actual 
and budgeted PBTA targets.

The Remuneration Committee has decided that no bonus is 
payable to the executive directors in respect of the group’s 
performance in 2012.

Percentage of maximum bonus entitlement

% of max bonus entitlement

Threshold proﬁt

Targeted PBTA

Stretch proﬁt

2010

35%

60%

100%

2011

50%

75%

100%

2012

35%

60%

100%

G4S plc Annual Report and Accounts 2012  75

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Governance
Directors’ remuneration report continued

Although the committee believes that PBTA best reﬂects the 
various key drivers of business success within the group, it felt it 
could strengthen the alignment of the annual bonus scheme with 
the business strategy by introducing a number of changes for 2013. 
These will be to include two other ﬁnancial measures (organic 
growth and cash generation) as well as proﬁt and non-ﬁnancial 
strategic objectives linked to the business plan. The maximum bonus 
entitlement remains unchanged, but the payout is dependent on the 
achievement of the ﬁnancial and non-ﬁnancial objectives, which are 
weighted 70% of maximum bonus entitlement in favour of ﬁnancial 
objectives and the remainder in favour of non-ﬁnancial objectives. 
The maximum pay-out for ﬁnancial targets will only be reached when 
all stretch targets are achieved. 

Objectives

Target

Maximum score

Financial

Organic growth

Budgeted %

Proﬁt

Budgeted proﬁt

Cash generation Cash conversion

Non-ﬁnancial

Strategic 
execution

Organisation

Agreed milestones 
from business plan

Agreed objectives linked 
to organisation, people, 
CSR, risk, values, etc.

20

35

15

15

15

Each of the measures operates independently from the others.

(c) Performance Share Plan (long-term incentive plan)
The Performance Share Plan (“PSP”) was introduced in July 2004 
and modiﬁed in 2007. Under the plan, the executive directors 
and certain other senior executives receive conditional allocations 
of the company’s shares which are released to them only on the 
achievement of demanding performance targets. The company’s 
current policy is to use market purchased shares to satisfy 
performance share plan awards. 

The maximum annual award of shares payable under the plan 
is two-and-a-half times base salary. The annual award approved 
by the committee for the year under review is two times base 
salary for the chief executive, one-and-a-half times base salary 
for the other executive directors and one times salary for senior 
executives below board level. For 2013, the annual award will be 
two-and-half-times base salary for the chief executive, two times 
base salary for the other executive directors and one-and-a-half 
times base salary for senior executives below board level. 

Targets applicable prior to March 2011

Two-thirds of each award granted

Average annual growth in EPS 
period ending on 31 December  
in the third year

Less than UK RPI + 6% pa

UK RPI + 6% pa (18% over 3 years)

Proportion of allocation vesting

Nil

25%

UK RPI + 6 to 11% pa

Pro-rata between 25% and 100%

Greater than UK RPI + 11% pa 
(33% over 3 years)

100%

One-third of each award granted

Ranking against the bespoke 
comparator group by reference 
to TSR

Below median

Median

Proportion of allocation vesting

Nil

25%

Between median and upper quartile

Pro-rata between 25% and 100%

Upper quartile

100%

In respect of awards made from March 2011 onwards, the inﬂation 
measure applied to EPS will be global CPI weighted according to the group’s 
geographical revenue sources rather than UK RPI, and the lower end of 
the range will be plus 4% per annum rather than plus 6% per annum.

Targets applicable for awards made in March 2011

Two-thirds of each award granted

Average annual growth in EPS  
period ending on 31 December  
in the third year

Proportion of allocation vesting

Less than global CPI + 4% pa

Nil

Global CPI + 4% pa (12% over 3 years) 25%

Global CPI + 4 to 11% pa

Pro-rata between 25% and 100%

Greater than global CPI + 11% pa 
(33% over 3 years)

100%

One-third of each award granted

Ranking against the bespoke 
comparator group by reference  
to TSR

Below median

Median

Proportion of allocation vesting

Nil

25%

Between median and upper quartile

Pro-rata between 25% and 100%

Upper quartile

100%

76  G4S plc Annual Report and Accounts 2012

 
Targets applicable for awards made in March 2012

Half of each award granted

Average annual growth in EPS  
period ending on 31 December  
in the third year

Proportion of allocation vesting

Less than global CPI + 4% pa

Nil

Global CPI + 4% pa (12% over 3 years) 25%

Global CPI + 4 to 11% pa

Pro-rata between 25% and 100%

Greater than global CPI + 11% pa 
(33% over 3 years)

100%

Half of each award granted

Ranking against the bespoke 
comparator group by reference  
to TSR

Below median

Median

Proportion of allocation vesting

Nil

25%

Between median and upper quartile

Pro-rata between 25% and 100%

Upper quartile

100%

At this time, the Remuneration Committee continues to believe 
that a combination of earnings per share growth and total 
shareholder return targets is the most appropriate performance 
measure for the performance share plan, as it provides a 
transparent method of assessing the company’s performance, 
both in terms of underlying ﬁnancial performance and returns 
to shareholders. Other measures such as Return On Invested 
Capital, were considered to be less appropriate for a service 
company. The committee will however continue to review the 
operation of the long-term incentive plan and consider whether 
further improvements can be made during the course of 2013.

In respect of awards made from 2012 onwards, the extent to which 
allocations of shares under the plan vest will be determined, as to 
half of the award, by the company’s normalised earnings per share 
growth relative to the global CPI over a single three-year period and 
half of the award, by the company’s ranking by reference to TSR using 
the bespoke global comparator group, again over a single three-year 
period. See page 78 for the list of companies that, in addition to G4S, 
make up the comparator group. 

Participants in the PSP will receive a further share award with a value 
equivalent to the dividends which would have been paid in respect of 
future PSP award vesting at the end of the performance period. 

There will only be a transfer of shares under the element of 
the award attributable to TSR if the Remuneration Committee 
is satisﬁed that the company’s TSR performance is reﬂective 
of the company’s underlying performance. 

The company calculates whether the EPS performance targets 
have been achieved by reference to the company’s audited accounts 
which provide an accessible and objective measure of the company’s 
earnings per share, whilst TSR ranking will be determined by Towers 
Watson whose ﬁndings are veriﬁed by Alithos. 

Awards will not normally vest where an employee ceases to be 
employed within the group unless cessation of employment is due 
to death, injury, disability, redundancy, retirement or following 
a change of control, or sale outside the group, of his or her 
employing company. In these situations, vesting will occur in the 
normal course and the performance targets will need to be 
satisﬁed. Only a proportion of the award, based on the time which 
has elapsed from the award date to the end of the last complete 
month in which the employee was employed, will vest in these 
circumstances in most cases. The Remuneration Committee does 
however retain the ability to allow for a greater award to vest if 
it considers it to be appropriate in exceptional circumstances.
Share retention
The committee believes that continued shareholding by executive 
directors will strengthen the alignment of their interests with 
shareholders’ interests. Accordingly, the current policy requires 
executive directors to retain 50% of after-tax PSP vestings until a 
total shareholding equal to 100% of base salary (150% for the chief 
executive) is achieved. This policy has been extended to senior 
management, but the minimum shareholding is set at a lower level.

Minimum  

shareholding Value of shares held*

Shareholding as at 
31 December 2012

Retention 
policy met?

Nick  
Buckles

Trevor  
Dighton

Grahame 
Gibson

150% of salary

£4,699,208

566% of salary

100% of salary

£3,219,306

631% of salary

100% of salary

£1,807,517

287% of salary

Yes

Yes

Yes

*Based on shareholding (excluding deferred shares) as at 31 December 2012 and share price 
of £2.565, as at that date.

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G4S plc Annual Report and Accounts 2012  77

 
 
 
Governance
Directors’ remuneration report continued

Fees, service contracts and letters of appointment
The fees of the non-executive directors, which are set by the chairman and the executive directors, are subject to periodic review which takes into 
account comparative fee levels in other groups of a similar size and the anticipated time commitment. Their fees were not increased in 2012; the 
previous increase having been made in July 2011 (5%). Mr Connolly was appointed as non-executive chairman on 8 June 2012 and his fee was 
agreed with effect from that date.

The service contracts of those who served as executive directors during the period are dated as follows: 

Nick Buckles 

Trevor Dighton  

Grahame Gibson 

2 June 2004

2 June 2004

6 December 2006

The service contracts are terminable on 12 months’ notice by either the company or by the executive directors. There are no liquidated 
damages provisions for compensation payable upon early termination, but the company reserves the right to pay salary in lieu of notice. The 
directors’ contracts do not provide for the payment of a guaranteed bonus in the event of termination. It is the company’s policy that it 
should be able to terminate service contracts of executive directors on no more than 12 months’ notice and that payments for termination 
of contract are restricted to the value of salary and other contractual entitlements for the notice period. The Remuneration Committee 
would consider the application of mitigation obligations in relation to any termination payments. The committee is satisﬁed that the current 
arrangements are appropriate and were in line with best practice at the time the executive directors were appointed.

The chairman and the other non-executive directors do not have service contracts but letters of appointment.

John Connolly

Lord Condon

Adam Crozier

Mark Elliott

Winnie Fok

Bo Lerenius

Mark Seligman

Paul Spence

Date of appointment

Extended until

8 June 2012 for 2 years

Period of appointment as at 
31 December 2012

6 months

19 May 2004

AGM 2013

8 years 7 months

1 January 2013 for 2 years

1 September 2006

1 October 2010 

19 May 2004

31 August 2013

1 October 2014

AGM 2013

1 January 2006

31 December 2012

1 January 2013 for 2 years

–

6 years 4 months

2 years 3 months

8 years 7 months

7 years

–

Clare Spottiswoode

14 June 2010

13 June 2014

2 years 6 months

All continuing directors are required to stand for re-election by the shareholders at least once every three years, although they have 
agreed to submit themselves for re-election annually in accordance with the UK Corporate Governance Code.

It is the company’s policy that executive directors may each hold not more than one external non-executive appointment and may retain 
any associated fees. None of the executive directors currently holds an external non-executive appointment. 
Performance graph
The performance graph below shows the total cumulative shareholder return of the company over the ﬁve years to the end of 
December 2012, based on a hypothetical shareholding worth £100, compared with the return achieved by the FTSE-100 constituent 
companies over the same period. The directors believe this to be an appropriate form of broad equity market index against which 
to base a comparison given the size and geographic coverage of the company and the fact that the company is itself a member of the 
FTSE 100. The graph also compares the company’s performance over the same period with the bespoke group of companies which is 
used now for comparative total shareholder return purposes in the company’s performance share plan. The values attributable to the 
bespoke comparator group companies have been weighted in accordance with the market capitalisation of the companies calculated 
at spot exchange rates as at each year end.

The peer group currently** includes G4S and the following 
companies: 

Atkins (WS) Brambles Ind Brink’s 

Compass

Rexam

Hays

Bunzl 

MITIE

Rentokil Initial Loomis*

Securitas AB  Serco

Capita

Prosegur

Sodexo

* Loomis added in respect of awards made from March 2011 onwards

** Garda included in the comparators until 2012

2008–2012 total shareholder 
return performance Value (p)

180

160

140

120

100

80

60

2008

2009

2010

2011

2012

G4S

FTSE 100 index

Peer Group

78  G4S plc Annual Report and Accounts 2012

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The following information has been audited

Base salaries and bonuses

Executive Directors

Nick Buckles

Trevor Dighton

Grahame Gibson (see notes 2 & 3 below)

Salary and fees 
£

Value of beneﬁts 
(excl pensions) 
£

Payment in lieu 
of pension 
£

Performance 
related bonus  
£

830,000

510,000

630,286

23,551

31,749

37,223

332,000

204,000

252,114

–

–

–

2012 Total 
£

2011 Total1
£

1,185,551

1,023,920

745,749

919,623

697,695

918,789

Non-executive directors

Alf Duch-Pedersen

John Connolly

Lord Condon

Mark Elliott

Winnie Fok

Thorleif Krarup  
(retired January 2011)

Bo Lerenius

Mark Seligman

Clare Spottiswoode

Total

Notes:

Senior  
Independent 
Director 
£

Chair of  
Committee 
£

Deputy Chair 
£

10,500

17,550

17,550

17,550

46,800

Base fee 
£

126,409

195,412

56,800

56,800

56,800

–

56,800

56,800

56,800

2012 Total 
£

126,409

195,412

84,850

74,350

56,800

–

56,800

121,150

56,800

2011 Total1
£

280,000

–

124,600

64,225

55,450

4,508

55,450

82,355

55,450

3,623,494

3,362,442

1. 

2. 

3. 

 The 2011 totals in the above table have been restated to include the payment in lieu of pension received by Nick Buckles from July 
2011, by Trevor Dighton from April 2011 and by Grahame Gibson throughout the year.

 The company paid air fares amounting to US$40,608 for ﬂights between the UK and the USA for Mr Gibson’s wife and children. 
This sum is taxable in the USA and not included in the ﬁgures above.

 Mr Gibson receives part of his salary in sterling and part in US$.  The US$ element has been translated into sterling for the purposes 
of his salary at the exchange rates prevailing in each month in which Mr Gibson was paid.

The annual base salaries of the executive directors and the annual fees of the non-executive directors at 31 December 2012 were:

Executive directors

Nick Buckles

Trevor Dighton

Grahame Gibson

Non-executive directors

John Connolly (chairman)

Lord Condon

Mark Elliott

Winnie Fok

Bo Lerenius

Mark Seligman

Clare Spottiswoode

£830,000 

£510,000

£53,444 and US$917,112

£348,000

 £84,850

 £74,350

 £56,800

£56,800

£121,150 

£56,800

G4S plc Annual Report and Accounts 2012  79

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Governance
Directors’ remuneration report continued

Directors’ interests in Performance Share Plan

Executive directors

Nick Buckles

Trevor Dighton

Grahame Gibson

*Market price at date of award was 277.13p

Conditional shares 
held at 31.12.11

Shares awarded 
conditionally on 
19.03.12

Face value of 2012
awards *

2,059,132

958,978

1,036,756

598,996

2 times salary

276,043 1.5 times salary

290,084 1.5 times salary

2009 awards 

(820,032)

(383,877)

(420,298)

Conditional shares 
held at 31.12.12

1,838,096

851,144

906,542

The conditions subject to which allocations of conditional shares vest under this plan are described under (c) Performance Share Plan on 
pages 76 and 77. 

During the year under review the performance share plan awarded in March 2009 vested in March 2012. The vesting percentage is 
14.403%, split as follows.

Criteria

Earnings per share

Total shareholder 
return

Split Actual performance

Vesting level

2/3

1/3

25.3%

Between 7th 
and 8th in a 
group of 15 
other companies

0%

43.21%

The number of shares from the performance share plan that vested  
in March 2012

Conditional  
shares awarded  
in March 2009

Number of 
shares vested

Additional shares 
arising from 
dividends

Shares released 
before PAYE 
deductions

Nick Buckles

Trevor Dighton

820,032

383,877

Grahame Gibson

420,298

118,112

55,291

60,538

n/a*

n/a*

4,858

n/a

n/a

65,396

Market price at date of vesting (16.3.2012) was 276.3p.

* Additional shares arising from dividends since the date of the award will be added when the  
shares are released.

Directors’ interests in shares of G4S plc (unaudited)
Interests shown below exclude shares awarded conditionally under  
the performance share plan as shown above.

Executive directors

As at 31.12.2012

As at 31.12.2011

Nick Buckles

Deferred shares*

Shares

Total

Trevor Dighton

Deferred shares*

Shares

Total

Grahame Gibson

Deferred shares*

Shares

Total

John Connolly

Paul Condon

Mark Elliott

Winnie Fok

Bo Lerenius

Mark Seligman

Clare Spottiswoode

370,568

1,832,050

2,202,618

200,452

1,255,090

1,455,542

67,869

704,685

772,554

100,000

2,029 

25,000

20,000

16,000

75,496

–

252,455

1,832,050

2,084,505

145,161

1,255,090

1,400,251

150,527

706,509

857,036

–

2,029

25,000

20,000

16,000

75,496

–

* The deferred shares are those granted and held in trust, including those that have vested  
but have not yet been released, but do not include the further shares with a value equivalent  
to the dividends which would have been paid.

There have been no changes in the executive directors’ holdings  
since 31 December 2012. 

As at 31 December 2012, each of Nick Buckles, Trevor Dighton and  
Grahame Gibson also had a deemed interest in 7,589,853 ordinary  
shares held in the G4S Employee Beneﬁt Trust.

80  G4S plc Annual Report and Accounts 2012

Directors’ pension entitlements 
The executive directors have ceased accruing pensions under the deﬁned beneﬁt scheme. A salary supplement in lieu of pension at the rate 
of 40% of basic salary is paid instead. The dates from which the cessation of pensionable service took place are set out below. 

Nick Buckles 

Trevor Dighton

Grahame Gibson

Date

5 July 2011

6 April 2011

6 April 2006

For death before retirement a capital sum equal to four times pensionable salary is payable, together with a spouse’s pension of 50% of 
the member’s accrued pension plus a return of any contributions paid prior to the admission to the non-contributory category. For death in 
retirement, a spouse’s pension of 50% of the member’s pre-commutation pension is payable.

Pension entitlements and corresponding transfer values during the 12 months ended 31 December 2012 (all ﬁgures are in £’000s) are 
shown below:

Executive directors

Nick Buckles

Trevor Dighton

Grahame Gibson

Gross increase  
in accrued  
pension

Increase in accrued 
pension net of 
inﬂation (CPI)

Total accrued  
pension at  
31/12/12

Value of net 
increase in accrual 
over period

Total change 
in transfer value 
during period

Transfer value of 
accrued pension 
at 31/12/12

Transfer value of 
accrued pension 
at 31/12/11

9

–

–

–

–

–

412

128

20

–

–

–

818

158

23

9,523

3,408

338

8,705

3,250

315

Notes 
(i)   Mr Buckles’ accrued pension is still linked to salary but as the pensionable salary did not increase during the year, his accrued pension 
is based on the deferred pension at the date he ceased accrual (5 July 2011) increased to the year end in line with an inﬂation index.

(ii)   In 2011, Mr Gibson transferred the majority of his beneﬁts to a private pension arrangement leaving a residual preserved beneﬁt 

of £20k pa payable from age 60.

(iii)  Mr Dighton is over the normal retirement age of 60 and hence, consistent with last year’s disclosure, the transfer value is calculated 

on the assumption that he retired at the end of the year. 

(iv)  Mr Dighton’s accrued pension represents that amount accrued to 6 April 2011 before the application of any later retirement factor. 

(v)   Pension accruals shown are the amounts which would be paid annually on retirement. 

(vi)  Transfer values have been calculated in accordance with the current transfer value basis adopted by the trustees of the G4S Pension 

Scheme in May 2011.

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Lord Condon
Chairman of the Remuneration Committee

12 March 2013

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G4S plc Annual Report and Accounts 2012  81

 
 
 
 
 
 
 
 
Statement of directors’ responsibilities in respect of the 
annual report and the ﬁnancial statements

The directors are responsible for preparing the Annual Report and the group and parent company ﬁnancial statements in accordance with applicable 
law and regulations.

Company law requires the directors to prepare group and parent company ﬁnancial statements for each ﬁnancial year. Under that law 
they are required to prepare the group ﬁnancial statements in accordance with IFRSs as adopted by the EU and applicable law and have elected 
to prepare the parent company ﬁnancial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted 
Accounting Practice).

Under company law the directors must not approve the ﬁnancial statements unless they are satisﬁed that they give a true and fair view of the state 
of affairs of the group and parent company and of their proﬁt or loss for that period. In preparing each of the group and parent company ﬁnancial 
statements, the directors are required to:

(cid:116)(cid:1)select suitable accounting policies and then apply them consistently;

(cid:116)(cid:1)make judgements and estimates that are reasonable and prudent;

(cid:116)(cid:1)for the group ﬁnancial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU;

(cid:116)(cid:1)for the parent company ﬁnancial statements, state whether applicable UK Accounting Standards have been followed, subject to any material 

departures disclosed and explained in the parent company ﬁnancial statements; and

(cid:116)(cid:1)prepare the ﬁnancial statements on the going concern basis unless it is inappropriate to presume that the group and the parent company will 

continue in business. 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company’s transactions and 
disclose with reasonable accuracy at any time the ﬁnancial position of the parent company and enable them to ensure that its ﬁnancial statements 
comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets 
of the group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the directors are also responsible for preparing a directors’ report, directors’ remuneration report and 
corporate governance statement that comply with that law and those regulations.

The directors are responsible for the maintenance and integrity of the corporate and ﬁnancial information included on the company’s website. 
Legislation in the UK governing the preparation and dissemination of ﬁnancial statements may differ from legislation in other jurisdictions.

Directors’ Responsibility Statement

Each of the directors, the names of whom are set out on pages 54 to 57 of this annual report conﬁrm that, to the best of his or her knowledge: the 
ﬁnancial statements in this annual report have been prepared in accordance with the applicable accounting standards and give a true and fair view 
of the assets, liabilities, ﬁnancial position and proﬁt of the company and the group taken as a whole; and the directors’ report, including the Business 
Review on pages 8 to 47, includes a fair review of the development and performance of the business and the position of the company and the group 
taken as a whole, together with a description of the principal risks and uncertainties they face.

The statement of directors’ responsibilities was approved by a duly authorised committee of the board of directors on 12 March 2013 and signed 
on its behalf by Trevor Dighton, chief ﬁnancial officer.

Trevor Dighton  
Chief ﬁnancial officer
12 March 2013

82  G4S plc Annual Report and Accounts 2012

Independent auditor’s report to the members of G4S plc

We have audited the ﬁnancial statements of G4S plc for the year ended 31 December 2012 set out on pages 84 to 141. The ﬁnancial reporting 
framework that has been applied in the preparation of the group ﬁnancial statements is applicable law and International Financial Reporting 
Standards (IFRSs) as adopted by the EU. The ﬁnancial reporting framework that has been applied in the preparation of the parent company 
ﬁnancial statements is applicable law and UK Accounting Standards (UK Generally Accepted Accounting Practice). 

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit 
work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s 
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the 
company and the company’s members, as a body, for our audit work, for this report, or for the opinions we have formed. 

Respective responsibilities of directors and auditor 

As explained more fully in the Directors’ Responsibilities Statement set out on page 82, the directors are responsible for the preparation of the 
ﬁnancial statements and for being satisﬁed that they give a true and fair view. Our responsibility is to audit, and express an opinion on, the ﬁnancial 
statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with 
the Auditing Practices Board’s Ethical Standards for Auditors. 

Scope of the audit of the ﬁnancial statements 

A description of the scope of an audit of ﬁnancial statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/auditscopeukprivate. 

Opinion on ﬁnancial statements 

In our opinion: 

(cid:116)(cid:1)the ﬁnancial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2012 and of the 

group’s proﬁt for the year then ended; 

(cid:116)(cid:1)the group ﬁnancial statements have been properly prepared in accordance with IFRSs as adopted by the EU; 

(cid:116)(cid:1)the parent company ﬁnancial statements have been properly prepared in accordance with UK Generally Accepted Accounting Practice; and

(cid:116)(cid:1)the ﬁnancial statements have been prepared in accordance with the requirements of the Companies Act 2006; and, as regards the group ﬁnancial 

statements,  Article 4 of the IAS Regulation. 

Opinion on other matters prescribed by the Companies Act 2006 

In our opinion: 

(cid:116)(cid:1)the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006; and 

(cid:116)(cid:1)the information given in the Directors’ Report for the ﬁnancial year for which the ﬁnancial statements are prepared is consistent with the 

ﬁnancial statements.

Matters on which we are required to report by exception 

We have nothing to report in respect of the following: 

Under the Companies Act 2006 we are required to report to you if, in our opinion: 

(cid:116)(cid:1)adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches 

not visited by us; or 

(cid:116)(cid:1)the parent company ﬁnancial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the 

accounting records and returns; or 

(cid:116)(cid:1)certain disclosures of directors’ remuneration speciﬁed by law are not made; or 

(cid:116)(cid:1)we have not received all the information and explanations we require for our audit.

Under the Listing Rules we are required to review: 

(cid:116)(cid:1)the directors’ statement, set out on page 89, in relation to going concern; 

(cid:116)(cid:1)the part of the Corporate Governance Statement on pages 65 to 71 relating to the company’s compliance with the nine provisions of the 

UK Corporate Governance Code speciﬁed for our review; and

(cid:116)(cid:1)certain elements of the report to shareholders by the board on directors’ remuneration.

John Luke (Senior Statutory Auditor) 

for and on behalf of KPMG Audit Plc, Statutory Auditor 
Chartered Accountants 
15 Canada Square
Canary Wharf
E14 5GL
12 March 2013 

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G4S plc Annual Report and Accounts 2012  83

 
 
 
 
Consolidated income statement
For the year ended 31 December 2012

Continuing operations

Revenue

Proﬁt from operations before amortisation and impairment 
of acquisition-related intangible assets and exceptional 
items (PBITA)

Amortisation and impairment of acquisition-related intangible assets

Acquisition-related expenses

Exceptional items:

– Net loss on Olympics contract

– Other costs on Olympics

– Sponsorship costs on Olympics

– Restructuring costs

– Aborted acquisition and legal settlement costs

Proﬁt/(loss) from operations before interest and taxation (PBIT)

Finance income

Finance costs

Proﬁt/(loss) before taxation (PBT)

Taxation:

– Before amortisation and impairment of acquisition-related

intangible assets and exceptional items

– On amortisation of acquisition-related intangible assets

– On acquistion-related expenses

– On exceptional items

Proﬁt after taxation

Loss from discontinued operations

Proﬁt for the year

Attributable to:

Equity holders of the parent

Non-controlling interests

Proﬁt for the year

Earnings per share attributable to equity shareholders 

of the parent

For proﬁt from continuing operations:

Basic and diluted

For proﬁt from continuing and discontinued operations:

Basic and diluted

Notes

5, 6

6

6, 8

12

13

14

7

16

2012  
Ex. Olympics  
£m

2012  
Olympics  
£m

2012  
Total  
£m

2011  
Total  
£m

7,297

204

7,501

6,966

516

(86)

(7)

–

–

–

(45)

–

(45)

378

94

(206)

266

–

–

–

(70)

(11)

(7)

–

–

(88)

(88)

–

(3)

(91)

516

(86)

(7)

(70)

(11)

(7)

(45)

–

(133)

290 

94

(209)

175

(90)

25

2

21

(42)

133

(63)

70

48

22

70

7.9p

3.4p

502

(96)

(2)

–

–

–

–

(55)

(55)

349

111

(203)

257

(92)

25

1

13

(53)

204

(6)

198

181

17

198

13.3p

12.9p

84  G4S plc Annual Report and Accounts 2012

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated statement of comprehensive income
For the year ended 31 December 2012

Proﬁt for the year

Other comprehensive income

Exchange differences on translation of foreign operations

Change in fair value of net investment hedging ﬁnancial instruments 

Change in fair value of cash ﬂow hedging ﬁnancial instruments

Actuarial losses on deﬁned retirement beneﬁt schemes

Tax on items taken directly to equity

Other comprehensive income, net of tax

Total comprehensive income for the year

Attributable to:

Equity holders of the parent

Non-controlling interests

Total comprehensive income for the year

Note

14

2012  
£m

70

(95)

(4)

(6)

(177)

37

(245)

(175)

(194)

19

(175)

2011  
£m

198

(65)

–

8

(73)

9

(121)

77

62

15

77

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G4S plc Annual Report and Accounts 2012  85

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated statement of changes in equity
For the year ended 31 December 2012

Attributable to equity holders of the parent

At 1 January 2011

Total comprehensive income

Dividends declared

Own shares purchased

Own shares awarded

Transactions with non-controlling interests

Equity-settled transactions

At 31 December 2011

At 1 January 2012

Total comprehensive income

Dividends declared

Own shares purchased

Own shares awarded

Transactions with non-controlling interests

Share  
capital  
£m

353

Share  
premium  
£m

258

–

–

–

–

–

–

353

353

–

–

–

–

–

–

–

–

–

–

–

258

258

–

–

–

–

–

At 31 December 2012

353

258

*See Note 38

Retained  
earnings  
£m

420

110

(114)

–

(9)

(19)

1

389

389

(126)

(120)

–

(2)

2

143

Other 
reserves* 

£m

546

(48)

–

(13)

9

–

–

494

494

(68)

–

(6)

2

–

Total  
£m

1,577

62

(114)

(13)

–

(19)

1

1,494

1,494

(194)

(120)

(6)

–

2

422

1,176

NCI 
reserve 
£m

46

15

(10)

–

–

(1)

–

50

50

19

(18)

–

–

4

55

Total  
reserves  
£m

1,623

77

(124)

(13)

–

(20)

1

1,544

1,544

(175)

(138)

(6)

–

6

1,231

86  G4S plc Annual Report and Accounts 2012

Consolidated statement of ﬁnancial position
As at 31 December 2012

ASSETS

Non-current assets

Goodwill

Other acquisition-related intangible assets

Other intangible assets

Property, plant and equipment

Investment in associates

Trade and other receivables

Deferred tax assets

Current assets

Inventories

Investments

Trade and other receivables

Cash and cash equivalents

Assets classiﬁed as held for sale

Total assets

LIABILITIES

Current liabilities

Bank overdrafts

Bank loans

Loan notes

Obligations under ﬁnance leases

Trade and other payables

Current tax liabilities

Provisions

Liabilities associated with assets classiﬁed as held for sale

Non-current liabilities

Bank loans

Loan notes

Obligations under ﬁnance leases

Trade and other payables

Retirement beneﬁt obligations

Provisions

Deferred tax liabilities

Total liabilities

Net assets

EQUITY

Share capital

Share premium and reserves

Equity attributable to equity holders of the parent

Non-controlling interests

Total equity

Notes

2012  
£m

2011  
£m

19

19

19

20

22

25

36

 6

23

24

25

28

27

6

28, 29

29

29

30

31

35

27

29

29

30

31

34

35

36

6

37

38

2,123

2,205

204

87

512

3

129

179

3,237

128

56

1,497

469

229

2,379

5,616

(17)

(18)

(40)

(18)

269

87

531

9

162

157

3,420

123

70

1,546

433

35

2,207

5,627

(53)

(47)

–

(16)

(1,196)

(1,251)

(41)

(32)

(52)

(48)

(30)

(29)

(1,414)

(1,474)

(327)

(1,999)

(43)

(18)

(471)

(45)

(68)

(2,971)

(4,385)

1,231

353

823

1,176

55

1,231

(885)

(1,180)

(48)

(19)

(344)

(41)

(92)

(2,609)

(4,083)

1,544

353

1,141

1,494

50

1,544

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The consolidated ﬁnancial statements were approved by the board of directors and authorised for issue on 12 March 2013.

They were signed on its behalf by:

Nick Buckles 
Director   

Trevor Dighton 
Director

G4S plc Annual Report and Accounts 2012  87

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated statement of cash ﬂow
For the year ended 31 December 2012

Notes

Proﬁt before taxation

Adjustments for:

Finance income

Finance costs

Depreciation of property, plant and equipment

Amortisation and impairment of acquisition-related intangible assets

Amortisation of other intangible assets

Acquisition-related expenses

Proﬁt on disposal of property, plant and equipment and intangible assets other than acquisition-related

Proﬁt on disposal of subsidiaries

Equity-settled transactions

Operating cash ﬂow before movements in working capital

Increase in inventories

Increase in receivables

Increase in payables

Decrease in provisions

Decrease in retirement beneﬁt obligations

Net cash ﬂow from operating activities of continuing operations

Net cash ﬂow from operating activities of discontinued operations

Cash generated by operations

Tax paid

Net cash ﬂow from operating activities

Investing activities

Interest received

Cash ﬂow from associates

Purchases of property, plant and equipment and intangible assets other than acquisition-related

Proceeds on disposal of property, plant and equipment and  

intangible assets other than acquisition-related

Acquisition of subsidiaries 

Net cash balances acquired

Disposal of subsidiaries

Sale of investments

Net cash used in investing activities

Financing activities

Dividends paid to non-controlling interests

Dividends paid to equity shareholders of the parent

Other net movement in borrowings

Transactions with non-controlling interests

Interest paid

Repayment of obligations under ﬁnance leases

Own shares purchased

Net cash ﬂow from/(used in) ﬁnancing activities

Net increase in cash, cash equivalents and bank overdrafts

Cash, cash equivalents and bank overdrafts at the beginning of the year

Effect of foreign exchange rate ﬂuctuations on cash held

Cash, cash equivalents and bank overdrafts at the end of the year

88  G4S plc Annual Report and Accounts 2012

2012  
£m

175

(94)

209

121

86

24

7

(3)

(2)

–

523

(14)

(117)

6

(5)

(37)

356

16

372

(85)

287

6

3

(160)

23

(101)

15

19

–

2011  
£m

257

(111)

203

120

96

17

2

(11)

(33)

1

541

(20)

(123)

77

(7)

(40)

428

21

449

(77)

372

17

4

(173)

31

(165)

6

37

10

(195)

(233)

(19)

(120)

324

6

(117)

(22)

(6)

46

138

370

(36)

472

(10)

(114)

239

(18)

(119)

(17)

(13)

(52)

87

306

(23)

370

39

28

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes to the consolidated ﬁnancial statement

1. General information

G4S plc is a company incorporated in the United Kingdom under the Companies Act 1985. The consolidated ﬁnancial statements incorporate the 
ﬁnancial statements of the company and entities (its subsidiaries) controlled by the company (collectively comprising the group) and the group’s 
interest in associates and jointly controlled entities made up to 31 December each year. The group operates throughout the world and in a wide 
range of functional currencies, the most signiﬁcant being the euro, the US dollar and sterling. The group’s ﬁnancial statements are presented in 
sterling, as the group’s primary listing is in the UK. The address of the registered office is given on page 150.

In preparing the ﬁnancial statements this year the format and layout of certain disclosures have been revised in regard to the principles set out in 
the Financial Reporting Council’s publication ‘Cutting Clutter’. These revisions have been implemented to make the ﬁnancial statements easier to 
follow and to provide readers with a clearer understanding of the ﬁnancial performance of the group. 

2. Statement of compliance

The consolidated ﬁnancial statements of the group have been prepared in accordance with International Financial Reporting Standards adopted for 
use in the European Union (adopted IFRSs). The company has elected to prepare its parent company ﬁnancial statements in accordance with UK 
Generally Accepted Accounting Practice (UK GAAP). These are presented on pages 132 to 141.

3. Signiﬁcant accounting policies

(a) Basis of preparation 

The consolidated ﬁnancial statements of the group have been prepared under the going concern basis and using the historical cost basis, except for 
the revaluation of certain non-current assets and ﬁnancial instruments. The principal accounting policies adopted are set out below. Judgements 
made by the directors in the application of these accounting policies which have a signiﬁcant effect on the ﬁnancial statements, and estimates with a 
signiﬁcant risk of material adjustment, are discussed in note 4. The directors are conﬁdent that, after making enquiries and on the basis of current 
ﬁnancial projections and available facilities, they have a reasonable expectation that the group has adequate resources to continue in operational 
existence for the foreseeable future. Further information on the going concern assessment is given in note 33 on pages 116 to 119.

The comparative income statement for the year ended 31 December 2011 has been re-presented for operations qualifying as discontinued 
during the current year. Revenue from continuing operations has been reduced by £556m and PBT has been decreased by £22m compared to 
the ﬁgures published previously. Further details of discontinued operations are presented within note 7. In addition, the comparative consolidated 
statement of ﬁnancial position as at 31 December 2011 has been restated to reﬂect the completion during 2012 of the initial accounting in respect 
of acquisitions made during 2011. Adjustments made to the provisional calculation of the fair values of assets and liabilities acquired amount to 
£9m, with an equivalent increase in the reported value of goodwill. The impact of these adjustments on the net assets acquired is presented in 
note 17. The prior year statement of changes in equity has been restated to show the movements in the reserve for non-controlling interests. 
The prior year cash ﬂow statement has been restated to show own shares purchased within ﬁnancing activities, rather than investing activities.

(b) Basis of consolidation

Subsidiaries 
Subsidiaries are entities controlled by the group. Control is achieved where the group has the power to govern the ﬁnancial and operating 
policies of an investee entity so as to obtain beneﬁts from its activities, determined either by the group’s ownership percentage, or by the terms 
of any shareholder agreement. 

On acquisition, the assets and liabilities and contingent liabilities of the acquired business are measured at their fair values at the date of 
acquisition. The cost of acquisition is measured as the acquisition date fair values of the assets transferred to the vendor and does not include 
transaction costs. Any excess of the cost of acquisition over the fair values of the identiﬁable net assets acquired is recognised as goodwill. Any 
deﬁciency in the cost of acquisition below the fair values of the identiﬁable net assets acquired (i.e. discount on acquisition) is credited to the 
income statement in the year of acquisition.

The cost of acquisition includes the present value of deferred and contingent consideration payable, including that in respect of put options 
held by non-controlling shareholders, as estimated at the date of acquisition. For acquisitions prior to 1 January 2010 subsequent changes to the 
present value of the estimate of contingent consideration and any difference upon ﬁnal settlement of such a liability are recognised as adjustments 
to the cost of acquisition. For acquisitions after 1 January 2010 such changes are recognised in the income statement with respect to contingent 
consideration and in other comprehensive income with respect to put options. Non-controlling interests are stated at their proportion of the 
fair values of the assets and liabilities recognised. Proﬁts and losses are applied in the proportion of their respective ownership to the interest of 
the parent and to the non-controlling interest. 

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of 
control or up to the effective date of disposal, as appropriate. 

Joint ventures 
A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control, in that 
strategic, ﬁnancial and operating decisions require the unanimous consent of the parties. 

The group’s interest in joint ventures is accounted for using the proportionate consolidation method, whereby the group’s share of the results 
and assets and liabilities of a jointly-controlled entity is combined line by line with similar items in the group’s consolidated ﬁnancial statements. 

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G4S plc Annual Report and Accounts 2012  89

 
 
 
Notes to the consolidated ﬁnancial statements continued

3. Signiﬁcant accounting policies continued

(b) Basis of consolidation continued

Associates 
An associate is an entity over which the group is in a position to exercise signiﬁcant inﬂuence, but not control or joint control, through participation in 
the ﬁnancial and operating policy decisions of the investee. 

The results and assets and liabilities of associates are incorporated in the group’s consolidated ﬁnancial statements using the equity method of 
accounting. Investments in associates are carried in the consolidated statement of ﬁnancial position at cost as adjusted by post-acquisition changes in 
the group’s share of the net assets of the associates, less any impairment in the value of individual investments. Losses of the associates in excess of 
the group’s interest in those associates are not recognised. 

Transactions eliminated on consolidation 
All intra-group transactions, balances, income and expenses are eliminated on consolidation. Where a group company transacts with a joint venture 
or associate of the group, proﬁts and losses are eliminated to the extent of the group’s interest in the relevant joint venture or associate. 

(c) Foreign currencies 

The ﬁnancial statements of each of the group’s businesses are prepared in the functional currency applicable to that business. Transactions in 
currencies other than the functional currency are translated at the rates of exchange prevailing on the dates of the transactions. At each balance 
sheet date, monetary assets and liabilities which are denominated in other currencies are retranslated at the rates prevailing on that date.  
Non-monetary assets and liabilities carried at fair value which are denominated in other currencies are translated at the rates prevailing at the date 
when the fair value was determined. Non-monetary items measured at historical cost denominated in other currencies are not retranslated. Gains 
and losses arising on retranslation are included in the income statement for the period. 

On consolidation, the assets and liabilities of the group’s overseas operations, including goodwill and fair value adjustments arising on their acquisition, 
are translated into sterling at exchange rates prevailing on the balance sheet date. Income and expenses are translated into sterling at the average 
exchange rates for the period (unless this is not a reasonable approximation of the cumulative effect of the rate prevailing on the transaction 
dates, in which case income and expenses are translated at the dates of the transactions). Exchange differences arising are recognised in other 
comprehensive income, together with exchange differences arising on monetary items that are in substance a part of the group’s net investment in 
foreign operations and on borrowings and other currency instruments designated as hedges of such investments where and to the extent that the 
hedges are deemed to be effective. On disposal translation differences are recognised in the income statement in the period in which the operation 
is disposed of. 

(d) Derivative ﬁnancial instruments and hedge accounting 

In accordance with its treasury policy, the group only holds or issues derivative ﬁnancial instruments to manage the group’s exposure to ﬁnancial risk, 
not for trading purposes. Such ﬁnancial risk includes the interest risk on the group’s variable-rate borrowings, the fair value risk on the group’s ﬁxed-
rate borrowings, commodity risk in relation to its diesel consumption and foreign exchange risk on transactions, on the translation of the group’s 
results and on the translation of the group’s net assets measured in foreign currencies. The group manages these risks through a range of derivative 
ﬁnancial instruments, including interest rate swaps, ﬁxed rate agreements, commodity swaps, commodity options, forward foreign exchange contracts 
and currency swaps. 

Derivative ﬁnancial instruments are recognised in the consolidated statement of ﬁnancial position as ﬁnancial assets or liabilities at fair value. 

The gain or loss on re-measurement to fair value is recognised immediately in the income statement, unless the derivatives qualify for hedge 
accounting. Where derivatives do qualify for hedge accounting, the treatment of any resultant gain or loss depends on the nature of the item being 
hedged as described below. 

Fair value hedge 
The change in the fair value of both the hedging instrument and the related portion of the hedged item is recognised immediately in the income 
statement. 

Cash ﬂow and net investment hedges 
The change in the fair value of the portion of the hedging instrument that is determined to be an effective hedge is recognised in equity and 
subsequently recycled to the income statement when the hedged cash ﬂow or hedged net investment impacts the income statement. The ineffective 
portion of the fair value of the hedging instrument is recognised immediately in the income statement. 

90  G4S plc Annual Report and Accounts 2012

3. Signiﬁcant accounting policies continued

(e) Intangible assets 

Goodwill 
All business combinations are accounted for by the application of the acquisition method. Goodwill arising on consolidation represents the excess 
of the cost of acquisition over the group’s interest in the fair value of the identiﬁable assets and liabilities and contingent liabilities of a subsidiary, 
associate or jointly-controlled entity at the date of acquisition. No goodwill arises on the acquisition of an additional interest from a non-controlling 
interest in a subsidiary as this is accounted for as an equity transaction. Goodwill is stated at cost, less any accumulated impairment losses, and is 
tested annually for impairment or more frequently if there are indications that amounts may be impaired. On disposal of a subsidiary, associate or 
jointly controlled entity, the attributable amount of goodwill is included in the determination of the proﬁt or loss on disposal. 

Acquisition-related intangible assets 
Intangible assets on acquisitions that are either separable or arising from contractual rights are recognised at fair value at the date of acquisition. 
Such acquisition-related intangible assets include trademarks, technology, customer contracts and customer relationships. The fair value of acquisition-
related intangible assets is determined by reference to market prices of similar assets, where such information is available, or by the use of 
appropriate valuation techniques, including the royalty relief method and the excess earnings method. 

Acquisition-related intangible assets are amortised by equal annual instalments over their expected economic life. The directors review acquisition-
related intangible assets on an ongoing basis and, where appropriate, provide for any impairment in value. 

The estimated useful lives are as follows:

Trademarks and technology 
Customer contracts and customer relationships  

up to a maximum of ﬁve years 
up to a maximum of ten years

Other intangible assets 
Development expenditure represents expenditure incurred in establishing new services and products of the group. Such expenditure is recognised 
as an intangible asset only if the following can be demonstrated: the expenditure creates an identiﬁable asset, its cost can be measured reliably, it is 
probable that it will generate future economic beneﬁts, it is technically and commercially feasible and the group has sufficient resources to complete 
development. In all other instances, the cost of such expenditure is taken directly to the income statement.

Capitalised development expenditure is amortised over the period during which the expenditure is expected to be revenue-producing, up to a 
maximum of ten years. The directors review the capitalised development expenditure on an ongoing basis and, where appropriate, provide for any 
impairment in value. 

Research expenditure is written off in the year in which it is incurred. 

Capitalised computer software is stated at cost, net of amortisation and any provision for impairment. Amortisation is charged on software so as 
to write off the cost of the assets to their estimated residual values by equal annual instalments over their expected useful economic lives up to a 
maximum of eight years. 

(f) Property, plant and equipment 

Property, plant and equipment is stated at cost, net of accumulated depreciation and any provision for impairment. Depreciation is provided on all 
property, plant and equipment other than freehold land. Depreciation is calculated so as to write off the cost of the assets to their estimated residual 
values by equal annual instalments over their expected useful economic lives as follows: 

Freehold and long leasehold buildings 
Short leasehold buildings (under 50 years)  
Equipment and motor vehicles 

up to 50 years 
over the life of the lease  
two to ten years

Assets held under ﬁnance leases are depreciated over the shorter of their expected useful economic lives or the term of the relevant lease. 

Where signiﬁcant, the residual values and the useful economic lives of property, plant and equipment are re-assessed annually. 

(g) Financial instruments 

Financial assets and ﬁnancial liabilities are recognised when the group becomes a party to the contractual provisions of the instruments. 

Trade receivables 
Trade receivables do not carry interest and are stated initially at their fair value. The carrying amount of trade receivables is reduced through the 
use of a bad debt allowance account. The group provides for bad debts based upon an analysis of those that are past due in accordance with local 
conditions and past default experience. 

Service concession assets 
Under the terms of a Private Finance Initiative (PFI) or similar project the risks and rewards of ownership of an asset remain largely with the 
purchaser of the associated services. In such cases, the group’s interest in the asset is classiﬁed as a ﬁnancial asset and included at its discounted value 
within trade and other receivables, to the extent to which the group has an unconditional right to receive cash from the grantor of the concession 
for the construction of the asset. To the extent that the group has the right to charge for the use of such an asset, conditional upon the extent of the 
use, the group recognises an intangible asset. 

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G4S plc Annual Report and Accounts 2012  91

 
 
 
 
 
 
 
Notes to the consolidated ﬁnancial statements continued

3. Signiﬁcant accounting policies continued

(g) Financial instruments continued

Current asset investments 
Current asset investments comprise investments in securities, which are classiﬁed as held-for-trading. They are initially recognised at cost, including 
transaction costs, and subsequently measured at fair value. Gains and losses arising from changes in fair value are recognised in the income statement. 

Cash and cash equivalents 
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the 
group’s cash management are included as a component of cash and cash equivalents for the purpose of the cash ﬂow statement. 

Interest-bearing borrowings 
Interest-bearing bank overdrafts, loans and loan notes are recognised at the value of proceeds received, net of direct issue costs. Finance charges, 
including premiums payable on settlement or redemption and direct issue costs, are recognised in the income statement on an accrual basis using the 
effective interest method. 

Trade payables 
Trade payables are not interest-bearing and are stated initially at fair value. 

Equity instruments 
Equity instruments issued by the group are recorded at the value of proceeds received, net of direct issue costs. 

(h) Inventories 

Inventories are valued at the lower of cost and net realisable value. Cost represents expenditure incurred in the ordinary course of business in 
bringing inventories to their present condition and location and includes appropriate overheads. Cost is calculated using either the weighted average 
or the ﬁrst-in-ﬁrst-out method. Net realisable value is based on estimated selling price, less further costs expected to be incurred to completion 
and disposal. 

(i) Impairment 

The carrying value of the group’s assets, with the exception of inventories and deferred tax assets, is reviewed on an ongoing basis for any indication 
of impairment and, if any such indication exists, the assets’ recoverable amount is estimated.  An impairment loss is recognised in the income 
statement whenever the carrying value of an asset or its cash-generating unit exceeds its recoverable amount. 

An impairment loss in respect of goodwill is not reversed. In respect of any other asset, an impairment loss is reversed if there has been a change in 
the estimates used to determine its recoverable amount. The amount of the reversal is limited such that the asset’s carrying amount does not exceed 
that which would have been determined (after depreciation and amortisation) if no impairment loss had been recognised. 

(j) Employee beneﬁts 

Retirement beneﬁt costs 
Payments to deﬁned contribution schemes are charged as an expense as they fall due. Payments made to state-managed retirement beneﬁt schemes 
are dealt with as payments to deﬁned contribution schemes where the group’s obligations under the schemes are equivalent to those arising in a 
deﬁned contribution retirement beneﬁts scheme. 

The retirement beneﬁt obligation recognised in the consolidated statement of ﬁnancial position represents the present value of the deﬁned beneﬁt 
obligation as adjusted for unrecognised past service cost, reduced by the fair value of scheme assets. Any asset resulting from this calculation is 
limited to unrecognised past service cost plus the present value of available refunds and reductions in future contributions to the scheme. 

The expected ﬁnance income on assets and the ﬁnance cost on liabilities are recognised in the income statement as components of ﬁnance income 
and ﬁnance cost respectively. Actuarial gains and losses are recognised in full in the period in which they occur and presented outside the income 
statement in the statement of comprehensive income. 

Share-based payments 
The group issues equity-settled share-based payments to certain employees. The fair value of share-based payments is determined at the date of 
grant and expensed, with a corresponding increase in equity, on a straight-line basis over the vesting period, based on the group’s estimate of the 
shares that will eventually vest. The amount expensed is adjusted over the vesting period for changes in the estimate of the number of shares that 
will eventually vest, save for changes resulting from any market-related performance conditions. 

(k) Provisions 

Provisions are recognised when a present legal or constructive obligation exists for a future liability in respect of a past event and where the amount 
of the obligation can be estimated reliably. 

Where the time value of money is material, provisions are stated at the present value of the expected expenditure using an appropriate 
discount rate. 

92  G4S plc Annual Report and Accounts 2012

3. Signiﬁcant accounting policies continued

(l) Revenue recognition 

Revenue 
Revenue represents amounts receivable for goods and services provided in the normal course of business and is measured at the fair value of the 
consideration received or receivable, net of discounts, VAT and other sales related taxes. Revenue for manned security and cash solutions products 
and for recurring services in security systems products is recognised to reﬂect the period in which the service is provided. Revenue on security 
systems installations is recognised either on completion in respect of product sales, or in accordance with the stage of completion method in respect 
of construction contracts. 

Construction contracts 
Where signiﬁcant, security system installations with a contract duration in excess of one month are accounted for as construction contracts.  Where 
the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the 
contract activity at the balance sheet date. This is measured either by the proportion that contract costs incurred for work to date bears to the 
estimated total contract costs or by the proportion that sales value of work completed to date bears to the total sales value.  Variations in contract 
work, claims and incentive payments are included to the extent that it is likely that they will be agreed with the customer. 

Where the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred 
that are deemed likely to be recoverable. Contract costs are recognised as expenses as they are incurred.  Where it is probable that total contract 
costs will exceed total contract revenue, the expected loss is recognised immediately as an expense. 

Construction contracts are recognised in the consolidated statement of ﬁnancial position at cost plus proﬁt recognised to date, less provision for 
foreseeable losses and less progress billings. Balances are not offset. 

(m) Pre-contract costs

Pre-contract costs in respect of major outsourcing contracts incurred after the point at which the group achieves preferred bidder status, at which 
point it is considered probable that the contract will be obtained, are capitalised and expensed over the life of the contract (subject to recoverability 
criteria). Costs incurred prior to this point are expensed as incurred. Capitalised costs are expensed immediately in the event that the bidder status 
is not followed by the award of the contract.

(n) Interest 

Interest income is accrued on a time basis by reference to the principal outstanding and at the effective interest rate applicable. This is the rate 
that exactly discounts estimated future cash receipts through the expected life of the ﬁnancial asset’s net carrying amount. Borrowing costs are 
recognised as an expense in the income statement.

(o) Proﬁt from operations

Proﬁt from operations is stated after the share of results of associates but before ﬁnance income and ﬁnance costs. Exceptional items of particular 
signiﬁcance by quantum or nature, including major restructuring costs and other one off items, are included within proﬁt from operations but are 
disclosed separately. 

(p) Income taxes 

Tax is recognised in the income statement except to the extent that it relates to items recognised in equity, in which case it is recognised in equity. 
The tax expense represents the sum of current tax and deferred tax. 

Current tax is based on taxable proﬁt for the year. Taxable proﬁt differs from net proﬁt as reported in the income statement because it excludes 
items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. 
The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. 

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the 
consolidated ﬁnancial statements and the corresponding tax bases used in the computation of taxable proﬁt, and is accounted for using the balance 
sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are recognised to the 
extent that it is probable that taxable proﬁts will be available against which deductible temporary differences can be utilised. 

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and interests in joint ventures, except 
where the group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the 
foreseeable future. 

The carrying amount of each deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that 
sufficient taxable proﬁts will be available to allow all or part of the asset to be recovered. 

Deferred tax is measured based on the tax rates that have been enacted or substantively enacted by the end of the reporting period. 

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G4S plc Annual Report and Accounts 2012  93

 
 
 
Notes to the consolidated ﬁnancial statements continued

3. Signiﬁcant accounting policies continued

(q) Leasing

Leases are classiﬁed as ﬁnance leases when the terms of the lease transfer substantially all of the risks and rewards of ownership to the lessee. 
All other leases are classiﬁed as operating leases. This classiﬁcation can be a matter of ﬁne judgement.

Assets held under ﬁnance leases are recognised at the inception of the lease at their fair value or, if lower, at the present value of the minimum lease 
payments. The corresponding liability to the lessor is included in the consolidated statement of ﬁnancial position as a ﬁnance lease obligation. Lease 
payments made or received are apportioned between ﬁnance charges or income and the reduction of the lease liability or asset so as to produce 
a constant rate of interest on the outstanding balance of the liability or asset. 

Rentals payable or receivable under operating leases are charged or credited to income on a straight-line basis over the lease term, as are incentives 
to enter into operating leases. 

(r) Non-current assets held for sale and discontinued operations 

Non-current assets (and disposal groups) classiﬁed as held for sale are measured at the lower of carrying amount and fair value less costs to sell. 

Non-current assets and disposal groups are classiﬁed as held for sale if their carrying amount will be recovered through a sale transaction rather 
than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available 
for immediate sale in its present condition. The group must be committed to the sale which should be expected to qualify for recognition as a 
completed sale within one year from the date of classiﬁcation. 

A discontinued operation is a component of the group’s business that represents a separate major line of business or geographical area of operations 
or is a subsidiary acquired exclusively with a view to resale, that has been disposed of, has been abandoned or meets the criteria to be classiﬁed as 
held for sale. 

(s) Dividend distribution 

Dividends are recognised as distributions to equity holders in the period in which they are paid or approved by the shareholders in general meeting.

(t) Adoption of new and revised accounting standards and interpretations

A number of new standards, amendments to standards and interpretations became effective for the year ended 31 December 2012, but none 
of these had a material effect on the consolidated ﬁnancial statements of the group. The group has not adopted early any standard, amendment 
or interpretation. A number of new standards, amendments to standards and interpretations have been announced but are not yet effective for 
the year ended 31 December 2012. One of these amendments is to IAS19 Employee Beneﬁts. The amendment makes changes to recognition, 
measurement and disclosure of deﬁned beneﬁt expense, in particular requiring that the return on investment assets recognised in the income 
statement be calculated at the same interest rate as that used for calculating the ﬁnance cost on the obligations, and to the disclosures of 
employee beneﬁts. None of the new standards is expected to have a material effect on the consolidated ﬁnancial statements of the group.

94  G4S plc Annual Report and Accounts 2012

4. Accounting estimates, judgements and assumptions

The preparation of ﬁnancial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect 
the application of the group’s accounting policies, which are described in note 3, with respect to the carrying amounts of assets and liabilities at the 
date of the ﬁnancial statements, the disclosure of contingent assets and liabilities at the date of the ﬁnancial statements and the reported amounts of 
income and expenses during the reporting period. These judgements, estimates and associated assumptions are based on historical experience and 
various other factors that are believed to be reasonable under the circumstances, including current and expected economic conditions, and in some 
cases, actuarial techniques. Although these judgements, estimates and associated assumptions are based on management’s best knowledge of current 
events and circumstances, the actual results may differ. 

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the 
estimate is revised and in any future periods affected.

The judgements, estimates and assumptions which are of most signiﬁcance to the group are detailed below:

Valuation of acquired businesses

The initial accounting for an acquisition involves identifying and determining the fair values to be assigned to identiﬁable assets, liabilities and 
contingent liabilities as well as the acquisition cost. In some instances, this initial accounting can only be determined provisionally by the end of 
the period in which the acquisition is effected because the fair values and/or the cost is not known with full certainty. In such an event, the initial 
accounting can be completed using provisional values with any adjustments to those provisional values being completed within 12 months of the 
acquisition date. Additionally, in determining the fair value of acquisition-related intangible assets, in the absence of market prices for similar assets, 
valuation techniques are applied. These techniques use a variety of estimates including projected future results and expected future cash ﬂows, 
discounted using the weighted average cost of capital relevant to the acquisition. Furthermore, management make an assessment of the useful 
economic life of acquired intangible assets upon recognition. Full details of the fair values of assets and liabilities of acquired businesses are presented 
in note 17.

Assessment of the recoverable amounts in respect of assets tested for impairment

The group tests tangible and intangible assets, including goodwill, for impairment on an annual basis or more frequently if there are indications that 
amounts may be impaired. The impairment analysis for such assets is based principally upon discounted estimated future cash ﬂows from the use 
and eventual disposal of the assets. Such an analysis includes estimation of future results, cash ﬂows, any annual growth rates and judgement as to the 
appropriate discount rates. The full methodology and results of the group’s impairment testing is presented in note 19.

Valuation of retirement beneﬁt obligations

The valuation of deﬁned retirement beneﬁt schemes is arrived at using the advice of qualiﬁed independent actuaries who use the projected unit 
credit method for determining the group’s obligations. This methodology requires the use of a variety of assumptions and estimates, including the 
appropriate discount rate, the expected return on scheme assets, mortality assumptions, future service and earnings increases of employees and 
inﬂation. Full details of the group’s retirement beneﬁt obligations, including an analysis of the sensitivity of the calculations to the key assumptions are 
presented in note 34.

5. Revenue

An analysis of the group’s revenue, as deﬁned by IAS18, is as follows:

Continuing operations

Sale of goods

Rendering of services

Revenue from construction contracts

Revenue from continuing operations as presented in the consolidated income statement

Discontinued operations

Sale of goods

Rendering of services

Revenue from construction contracts

Revenue from discontinued operations

Other operating income

Interest income

Expected return on deﬁned retirement beneﬁt scheme assets

Total other operating income

Notes

2012  
£m

2011  
£m

6

6, 7

154

7,126

221

7,501

1

535

2

538

12

82

94

218

6,524

224

6,966

3

676

3

682

18

93

111

Total revenue as deﬁned by IAS18

8,133

7,759

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G4S plc Annual Report and Accounts 2012  95

 
 
 
Notes to the consolidated ﬁnancial statements continued

6. Operating segments

The group operates in two core product areas: secure solutions and cash solutions which represent the group’s reportable segments. For each of 
the reportable segments, the group’s CEO (the chief operating decision maker) reviews internal management reports on a regular basis. The group 
operates on a worldwide basis and derives a substantial proportion of its revenue, PBITA and PBIT from each of the following geographical regions: 
Europe (comprising the United Kingdom and Ireland, and Continental Europe), North America, and Developing markets (comprising the Middle East 
and Gulf States, Latin America and the Caribbean, Africa, and Asia Paciﬁc). 

Segment information is presented below:

Revenue by reportable segment

Secure solutions 

  UK and Ireland

  Continental Europe

Europe

North America

  Middle East and Gulf States

  Latin America and the Caribbean

  Africa

  Asia Paciﬁc

Developing markets

Total Secure solutions

Cash solutions

  Europe

  North America

  Developing markets

Total Cash solutions

Total revenue

Revenue by geographical area

  UK and Ireland*

  Continental Europe

Europe

North America

  Middle East and Gulf States

  Latin America and the Caribbean

  Africa

  Asia Paciﬁc

Developing markets

Total revenue

Continuing 
operations 
2012 
£m

Discontinued 
operations 
2012 
£m

1,516

1,393

2,909

1,311

381

582

357

671

1,991

6,211

780

114

396

1,290

7,501

–

20

20

425

48

2

1

25

76

521

14

–

3

17

538

Total 
2012 
£m

1,516

1,413

2,929

1,736

429

584

358

696

2,067

6,732

794

114

399

1,307

8,039

Continuing 
operations 
2011 
£m

Discontinued 
operations 
2011 
£m

1,252

1,475

2,727

1,169

368

427

346

635

1,776

5,672

817

106

371

1,294

6,966

–

29

29

483

74

4

3

22

103

615

60

–

7

67

682

Total 
2012 
£m

1,963

1,760

3,723

1,850

501

644

479

842

2,466

8,039

Revenue from internal and external customers by reportable segment

Secure solutions

Cash solutions

Total revenue

Total gross 
segment 
revenue 
2012 
£m

6,737

1,307

8,044

Inter-segment 
revenue 
2012 
£m

(5)

–

(5)

External 
revenue 
2012 
£m

6,732

1,307

8,039

Total gross 
segment 
revenue 
2011 
£m

6,296

1,361

7,657

Inter-segment 
revenue 
2011 
£m

(9)

–

(9)

Inter-segment sales are charged at prevailing market prices.

*UK and Ireland revenue includes £1,851m relating to the UK (2011: £1,591m).

96  G4S plc Annual Report and Accounts 2012

Total 
2011 
£m

1,252

1,504

2,756

1,652

442

431

349

657

1,879

6,287

877

106

378

1,361

7,648

Total 
2011 
£m

1,708

1,925

3,633

1,758

504

489

474

790

2,257

7,648

External 
revenue 
2011 
£m

6,287

1,361

7,648

6. Operating segments continued

PBITA by reportable segment

Continuing 
operations 
2012 
£m

Discontinued 
operations 
2012 
£m

Secure solutions 

  UK and Ireland

  Continental Europe

Europe

North America

  Middle East and Gulf States

  Latin America and the Caribbean

  Africa

  Asia Paciﬁc

Developing markets

Total Secure solutions

Cash solutions

  Europe

  North America

  Developing markets

Total Cash solutions

Total PBITA before head office costs

Head office costs 

Total PBITA

PBITA by geographical area

Europe

North America

Developing markets

Total PBITA before head office costs

Head office costs

Total PBITA 

Reconciliation to PBIT

115

75

190

76

33

51

29

39

152

418

78

5

52

135

553

(37)

516

268

81

204

553

(37)

516

–

(4)

(4)

(1)

–

–

–

2

2

(3)

(1)

–

(3)

(4)

(7)

–

(7)

(5)

(1)

(1)

(7)

–

(7)

Continuing 
operations 
2012 
£m

Discontinued 
operations 
2012 
£m

Total PBITA

Amortisation and impairment of acquisition-

related intangible assets

Impairment of assets relating to disposal groups

Acquisition-related costs

Exceptional items

Total PBIT

516

(86)

–

(7)

(133)

290

(7)

(3)

(35)

–

–

(45)

Total 
2012 
£m

115

71

186

75

33

51

29

41

154

415

77

52

49

131

546

(37)

509

263

80

203

546

(37)

509

Total 
2012 
£m

509

(89)

(35)

(7)

(133)

245

Continuing 
operations 
2011 
£m

Discontinued 
operations 
2011 
£m

119

81

200

72

31

37

33

35

136

408

88

–

47

137

545

(43)

502

288

74

183

545

(43)

502

–

(4)

(4)

16

6

(3)

1

2

6

18

(9)

2

1

(8)

10

–

10

(13)

16

7

10

–

10

Continuing 
operations 
2011 
£m

Discontinued 
operations 
2011 
£m

502

(96)

–

(2)

(55)

349

10

(3)

(6)

–

–

1

Continuing PBIT as stated above is equal to PBIT as disclosed in the income statement. Discontinued PBIT as stated above is analysed in note 7.

Total 
2011 
£m

119

77

196

88

37

34

34

37

142

426

79

48

129

555

(43)

512

275

90

190

555

(43)

512

Total 
2011 
£m

512

(99)

(6)

(2)

(55)

350

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G4S plc Annual Report and Accounts 2012  97

 
 
 
Notes to the consolidated ﬁnancial statements continued

6. Operating segments continued

Segment assets and liabilities 

The following information is analysed by reportable segment and by the geographical area in which the assets are located:

Total assets

By reportable segment

Secure solutions

Cash solutions

Head office

Inter-segment trading balances

Total segment operating assets

Non-operating assets

Total assets

Total liabilities

By reportable segment

Secure solutions

Cash solutions

Head office

Inter-segment trading balances

Total segment operating liabilities

Non-operating liabilities

Total liabilities

Non-current operating assets

By geographical area

  UK and Ireland*

  Continental Europe

Europe

North America

  Middle East and Gulf States

  Latin America and the Caribbean

  Africa

  Asia Paciﬁc

Developing markets

Head office

Total segment non-current operating assets

Non-operating assets

Less: Non-current assets held for sale

Total non-current assets

2012  
£m

3,620

1,070

294

(272)

4,712

904 

5,616

2012  
£m

(1,259)

(212)

(76)

272 

(1,275)

(3,110)

(4,385)

2012  
£m

1,195

440

1,635

539

54

315

150

237

756

127

3,057

274

(94)

3,237

2011  
£m

3,652

1,103

228

(173)

4,810

817 

5,627 

2011  
£m

(1,245)

(202)

(46)

173 

(1,320)

(2,763)

(4,083)

2011  
£m

1,231

472

1,703

633

56

240

168

248

712

122

3,170

263

(13)

3,420

*UK and Ireland non-current operating assets include £1,158m of assets relating to the UK (2011: £1,206m).

Non-operating assets and liabilities comprise ﬁnancial assets and liabilities, taxation assets and liabilities and retirement beneﬁt obligations. 

Included within operating and non-operating assets are £183m (2011: £33m) and £46m (2011: £2m) respectively relating to disposal groups 
classiﬁed as held for sale.  Included within operating and non-operating liabilities are £36m (2011: £19m) and £16m (2011: £10m) respectively 
relating to liabilities associated with disposal groups classiﬁed as held for sale.  Disposal groups are analysed in note 27.

98  G4S plc Annual Report and Accounts 2012

 
6. Operating segments continued

Other information

By reportable segment

Secure solutions

Cash solutions

Head office

Total

By geographical area
  UK and Ireland

  Continental Europe

Europe

North America

  Middle East and Gulf States

  Latin America and the Caribbean

  Africa

  Asia Paciﬁc

Developing markets

Head office

Total

7. Discontinued operations

Impairment 
losses 
recognised 
in income 
2012 
£m

Depreciation 
and 
amortisation 
2012 
£m

35

–

–

35

151

85

4

240

Capital 
additions 
2012 
£m

192

84

7–

283

Impairment 
losses 
recognised 
in income 
2011 
£m

Depreciation 
and 
amortisation 
2011 
£m

13

6

19

1

145

89

9

235

Capital 
additions 
2011 
£m

257

86

352

Capital 
additions 
2012 
£m

Capital 
additions 
2011 
£m

59

49

108

17

5

108

16

22

151

7

283

101

59

160

27

4

113

13

26

156

9

352

Operations qualifying as discontinued in 2012 comprise the cash and secure solutions businesses in Pakistan, which were disposed of in October 
2012, the electronic monitoring justice business in North America, which was disposed of in April 2012, and the US government solutions business. 
Following a strategic review, the group decided to divest its US government solutions business to a parent able to add or create more value than 
it is able to, being a foreign parent with limited control over the business strategy and restricted access to the data required to run the business 
successfully. The sale is expected to complete during 2013.

Operations qualifying as discontinued in 2011 comprised the cash and secure solutions businesses in Poland, which were disposed of in September 
2012; the cash solutions business in Sweden, which was disposed of in February 2012 and the secure solutions business in Russia. The UK Risk 
Assessment business in Afghanistan was classiﬁed as held for sale in December 2011, however, upon the extension of a major contract, it has been 
reclassiﬁed as continuing as at 31 December 2012.

The results of the discontinued operations which have been included in the consolidated income statement are presented below:

Revenue

Expenses

Impairment of assets

Operating loss before interest and taxation (PBIT)

Net ﬁnance costs

Attributable tax credit/(charge)

Total operating loss for the year

Loss on disposal of discontinued operations

Net loss attributable to discontinued operations

2012  
£m

538

(548)

(35)

(45)

(4)

6

(43)

(20)

(63)

2011  
£m

682

(675)

(6)

1

(5)

(2)

(6)

–

(6)

The effect of discontinued operations on segment results is disclosed in note 6. 

The impairment of assets in 2012 relates to the US government solutions business to bring its net assets down to its realisable value.

The impairment of assets in 2011 relates to the sale of the Swedish cash business which was sold in 2012 for total proceeds below the carrying value 
of its assets.

G4S plc Annual Report and Accounts 2012  99

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Notes to the consolidated ﬁnancial statements continued

7. Discontinued operations continued
Cash ﬂows from discontinued operations included in the consolidated cash ﬂow statement are as follows:

Net cash ﬂows from operating activities

Net cash ﬂows from investing activities

Net cash ﬂows from ﬁnancing activities

8. Proﬁt from operations before interest and taxation (PBIT)
The income statement can be analysed as follows:

Continuing operations
Revenue

Cost of sales

Gross proﬁt

Administration expenses

PBIT

2012  
Ex. Olympics 
£m

2012  
Olympics 
£m

7,297

(5,682)

1,615

(1,237)

378

204

(274)

(70)

(18)

(88)

2012  
£m

16

5

(3)

18

2012  
Total 
£m

7,501

(5,956)

1,545

(1,255)

290

2011  
£m

21

(12)

(11)

(2)

2011  
Total 
£m

6,966

(5,414)

1,552

(1,203)

349

Included within administration expenses in the current year is £86m of amortisation of acquisition-related intangible assets, £7m of acquisition-
related expenses and £45m of restructuring costs. During 2012 the group undertook a detailed review of the overhead structure across all 
reporting levels and geographies in order to maximise efficiency and eliminate duplication. Restructuring generated a headcount reduction of over 
1,500 positions.

In February 2013, the group announced that it had agreed a ﬁnancial settlement with the London Organising Committee of the Olympic and 
Paralympic Games in respect of the provision of the security workforce for the London 2012 Olympic and Paralympic Games. The terms of the 
settlement meant that the group incurred an overall loss on the contract of approximately £70m (recorded in cost of sales), plus additional costs 
mainly relating to charitable donations and external fees of £11m, and further sponsorship and marketing costs of £7m, both of which are included 
within administrative expenses. 

As explained in the ﬁnancial review on page 43, the £45 million of restructuring costs and the Olympics contract which made an £88 million 
loss have both been treated as exceptional items and disclosed separately on the face of the income statement on the basis of their quantum 
and one off nature. The group considers the entire Olympics contract, including all directly attributable costs, to be exceptional as the scale and 
complexity of the contract means it can be distinguished from the group’s underlying operations.

For 2011 the revenue and PBITA relating to the Olympics contract is not sufficiently material to require separate disclosure.

Included within administration expenses in the prior year is £83m of amortisation of acquisition-related intangible assets and a £13m goodwill 
impairment charge relating to the group’s businesses in Greece, £2m of acquisition-related expenses and £55m of aborted acquisition and legal 
costs. The aborted acquisition costs include debt ﬁnance underwriting fees, ﬁnancing and hedging costs that arose on the proposed acquisition of 
ISS A/S which was terminated on 1 November 2011.

Revenue and expenses relating to discontinued operations are disclosed in note 7.

100  G4S plc Annual Report and Accounts 2012

9. Proﬁt from operations
Proﬁt from continuing and discontinued operations has been arrived at after charging/(crediting):

Cost of sales

Cost of inventories recognised as an expense

Write-down of inventories to net realisable value 

Net loss on Olympics contract

Administration expenses

Acquisition-related expenses

Aborted acquisition costs

Other costs on Olympics

Sponsorship costs on Olympics

Restructuring costs

Amortisation of acquisition-related intangible assets

Goodwill impairment

Amortisation of other intangible assets

Impairment of goodwill and other assets relating to disposal groups

Depreciation of property, plant and equipment

Proﬁt on disposal of property, plant and equipment and intangible assets other than acquisition-related

Loss/(proﬁt) on disposal of subsidiaries

Impairment of trade receivables

Litigation settlements

Research and development expenditure

Operating lease rentals payable

Operating sub-lease rentals receivable

Government grants received as a contribution towards wage costs

10. Auditors’ remuneration

Fees payable to the company’s auditor for the audit of the company’s annual report and accounts

Fees payable to the company’s auditor and its associates for other services:

The audit of the company’s subsidiaries pursuant to legislation

Corporate ﬁnance services

Fees payable to other auditors for the audit of the company’s subsidiaries pursuant to legislation

2012  
£m

90

–

70

7

–

11

7

45

89

–

24

35

127

(3)

18

28

1

5

131

(14)

–

2012  
£m

1

5

–

1

The Corporate Governance Statement on pages 65 to 71 outlines the company’s established policy for ensuring that audit independence is not 
compromised through the provision by the company’s auditor of other services.

2011  
£m

101

2

–

2

55

–

–

–

86

13

18

6

131

(11)

(33)

13

1

6

143

(14)

(1)

2011  
£m

1

5

1

1

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G4S plc Annual Report and Accounts 2012  101

 
 
 
 
 
 
 
Notes to the consolidated ﬁnancial statements continued

11. Staff costs and employees

The average monthly number of employees, in continuing and discontinued operations, including executive directors was:

2012  
Number

2011  
Number

By reportable segment

Secure solutions 

Cash solutions

Not allocated, including shared administration and head office

Total average number of employees

By geographical area

Europe

North America

Developing markets

Not allocated, including shared administration and head office

Total average number of employees

Their aggregate remuneration, in continuing and discontinued operations, comprised:

Wages and salaries

Social security costs

Employee beneﬁts 

Total staff costs

595,950

52,178

126

648,254

127,136

59,062

461,930

126

648,254

2012  
£m

4,689

552

211

5,452

Information on directors’ remuneration, long-term incentive plans, and pension contributions and entitlements is set out in the Directors’ 
Remuneration Report on pages 72 to 81.

12. Finance income

Interest income on cash, cash equivalents and investments

Other interest income

Expected return on deﬁned retirement beneﬁt scheme assets

Loss arising from change in fair value of derivative ﬁnancial instruments hedging loan notes

Gain arising from fair value adjustment to the hedged loan note items 

Total ﬁnance income

13. Finance costs

Interest on bank overdrafts and loans

Interest on loan notes 

Interest receivable on loan note related derivatives

Interest on obligations under ﬁnance leases

Other interest charges

Total group borrowing costs

Finance costs on deﬁned retirement beneﬁt obligations

Total ﬁnance costs

2012  
£m

11

1

82

(6)

6

94

2012  
£m

35

83

(10)

4

7

119

90

209

589,673

50,078

153

639,904

123,237

55,005

461,509

153

639,904

2011  
£m

4,404

553

170

5,127

2011  
£m

10

8

93

(22)

22

111

2011  
£m

32

73

–

4

4

113

90

203

Included within interest on bank overdrafts and loans is a charge of £6m (2011: £9m) relating to cash ﬂow hedges that were transferred from equity 
during the year.

102  G4S plc Annual Report and Accounts 2012

14. Taxation

Current taxation expense/(credit)

UK corporation tax

Overseas tax

Adjustments in respect of prior years:

UK corporation tax 

Overseas tax 

Total current taxation expense/(credit)

Deferred taxation credit (see note 36)

Current year

Adjustments in respect of prior years

Total deferred taxation credit

Total income tax expense/(credit) for the year

Continuing 
operations 
2012 
£m

Discontinued 
operations 
2012 
£m

6

72

(3)

(1)

74

(26)

(6)

(32)

42

–

(2)

–

–

(2)

–

(4)

(4)

(6)

Total 
2012 
£m

62

70

(3)

(1)

72

(26)

(10)

(36)

36

Continuing 
operations 
2011 
£m

Discontinued 
operations 
2011 
£m

–

76

(10)

(6)

62

(3)

(6)

(9)

53

2

3

–

–

3

–

(1)

(1)

2

UK corporation tax is calculated at 24.5% (2011: 26.5%) of the estimated assessable proﬁts for the period. Overseas tax is calculated at the 
corporation tax rates prevailing in the relevant jurisdictions. 

The tax charge for the year can be reconciled to the proﬁt per the income statement as follows:

Proﬁt before taxation

Continuing operations

Discontinued operations

Total proﬁt before taxation

Tax at UK corporation tax rate of 24.5% (2011: 26.5%)

Expenses that are not deductible in determining taxable proﬁt

Tax losses not recognised in the current year

Different tax rates of subsidiaries operating in non-UK jurisdictions

Movement in deferred tax balance due to reduction in UK rate to 23% from 1 April 2013

Adjustments for previous years

Total income tax charge

Effective tax rate

The following taxation (credit)/charge has been recognised directly in equity within the statement of comprehensive income:

Tax relating to components of other comprehensive income

Change in fair value of cash ﬂow and net investment hedging ﬁnancial instruments

Actuarial losses on deﬁned retirement beneﬁt schemes

Other

Total tax credited to other comprehensive income

15. Dividends

Amounts recognised as distributions to equity holders of the parent in the year

Final dividend for the year ended 31 December 2010

Interim dividend for the six months ended 30 June 2011

Final dividend for the year ended 31 December 2011

Interim dividend for the six months ended 30 June 2012

Pence 
per share

DKK 
 per share

4.73

3.42

5.11

3.42

0.4082

0.2928

0.4544

0.3220

Proposed ﬁnal dividend for the year ended 31 December 2012

5.54

0.4730

2012  
£m

175

(69)

106

26

9

8

8

(1)

(14)

36

34%

2012 
£m 

(3)

(32)

(2)

(37)

2012  
£m

–

–

72

48

120

78

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Total 
2011 
£m

79

(10)

(6)

65

(3)

(7)

(10)

55

2011  
£m

257

(4)

253

67

6

2

5

(3)

(22)

55

22%

2011 
£m 

2

(12)

1

(9)

2011  
£m

66

48

–

–

114

The proposed ﬁnal dividend is subject to approval by shareholders at the Annual General Meeting. If so approved, it will be paid on 14 June 2013 to 
shareholders who are on the UK register on 17 May 2013. The exchange rate used to translate it into Danish krone is that at 12 March 2013.

G4S plc Annual Report and Accounts 2012  103

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes to the consolidated ﬁnancial statements continued

16. Earnings/(loss) per share attributable to equity shareholder of the parent

From continuing and discontinued operations

Proﬁt for the year attributable to equity holders of the parent

Weighted average number of ordinary shares (m)

Earnings per share from continuing and discontinued operations (pence)

Basic and diluted

From continuing operations

Earnings

Proﬁt for the year attributable to equity holders of the parent

Adjustment to exclude loss for the year from discontinued operations (net of tax) (note 7)

Proﬁt from continuing operations

Earnings per share from continuing operations (pence)

Basic and diluted

From discontinued operations

Loss per share from discontinued operations (pence)

Basic and diluted

From adjusted earnings

Earnings

Proﬁt from continuing operations

Adjustment to exclude net retirement beneﬁt ﬁnance cost/(income) (net of tax) 

Adjustment to exclude amortisation and impairment of acquisition-related intangible assets (net of tax)

Adjustment to exclude acquisition-related expenses (net of tax)

Adjustment to exclude exceptional items (net of tax)

Adjusted proﬁt for the year attributable to equity holders of the parent

Weighted average number of ordinary shares (m)

Adjusted earnings per share (pence)

2012  
£m

48

1,403

2011  
£m

181

1,405

3.4p

12.9p

48

63

111

181

6

187

7.9p

13.3p

(4.5)p

(0.4)p

111

6

61

5

115

298

1,403

21.2p

187

(2)

71

1

42

299

1,405

21.3p

In the opinion of the directors, the earnings per share ﬁgure of most use to shareholders is that which is adjusted. This ﬁgure better allows 
the assessment of operational performance, the analysis of trends over time, the comparison of different businesses and the projection of 
future earnings. 

The denominators used in all earnings/(loss) per share calculations are those disclosed in respect of continuing and discontinued operations.

104  G4S plc Annual Report and Accounts 2012

 
 
 
 
 
 
 
 
 
 
17. Acquisitions

Current year acquisitions 

The group undertook a number of business combinations in the current period. The principal acquisition in subsidiary undertakings was the purchase of 
a 100% interest in Vanguarda Segurança e Vigilância Ltda “Vanguarda”, a security personnel, security systems and monitoring services provider in Brazil.

A summary of the provisional fair value of net assets acquired by geographical location is presented below:

Provisional fair value of net assets acquired of subsidiary undertakings 

Goodwill 

Total purchase consideration 

Europe 
£m

10

1

11

Developing 
markets 
£m

7

75

82

The following table sets out the provisional fair value to the group in respect of all acquisitions made in the year:

Intangible assets 

Property, plant and equipment 

Trade and other receivables 

Cash and cash equivalents 

Trade and other payables 

Provisions 

Borrowings 

Deferred tax liabilities 

Net assets acquired of subsidiary undertakings 

Goodwill 

Total purchase consideration (paid in cash)  

Total 
group 
£m

17

76

93

Fair value 
£m

31

1

7

17

(22)

(7)

(1)

(9)

17

76

93

Within trade and other receivables are gross contractual amounts receivable of £8m with £1m of the contractual cash ﬂows from these receivables 
not expected to be collected.

Adjustments made to identiﬁable assets and liabilities on acquisition are to reﬂect their fair value. These include the recognition of customer-related 
intangible assets amounting to £31m.The fair values of net assets acquired are provisional and represent estimates following a preliminary valuation 
exercise. These estimates may be adjusted to reﬂect any development in the issues to which they relate.

The goodwill arising on acquisitions can be ascribed to the existence of a skilled, active workforce, developed expertise and processes, and the 
opportunities to obtain new contracts and develop the business. None of these meet the criteria for recognition as intangible assets separable from 
goodwill. No goodwill acquired in the year is expected to be deductible for tax purposes.

From their respective dates of acquisition, the acquired businesses contributed £39m to revenues, £4m to PBITA and £1m to proﬁt for the part year 
they were under the group’s ownership. If all acquisitions had occurred on 1 January 2012, group revenue would have been £7,537m, PBITA would 
have been £518m and proﬁt for the year would have been £72m.

Prior year acquisitions 

Principal acquisitions in subsidiary undertakings in the prior year included the purchase of a 100% interest in Interativa Service Ltda, a facilities 
management business in Brazil; Munt Centrale Holland B.V., a coin management service company based in the Netherlands, and The Cotswold 
Group Limited, the UK’s market leader in surveillance, fraud, analytics, intelligence and investigations services. The group also acquired the offender 
monitoring technology operations of Guidance Limited and customer contracts from Chubb Group Security Limited and completed the buyout 
of its Turkish business during the year, which was accounted for in equity.

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G4S plc Annual Report and Accounts 2012  105

 
 
 
Notes to the consolidated ﬁnancial statements continued

17. Acquisitions continued

Prior year acquisitions continued

At 31 December 2011, the fair value adjustments made against net assets acquired were provisional. The initial accounting in respect of acquisitions 
made during 2011 has since been ﬁnalised. The net assets acquired and goodwill arising in respect of all acquisitions made in the year are as follows:

Intangible assets 

Property, plant and equipment 

Inventories

Trade and other receivables 

Cash and cash equivalents 

Trade and other payables 

Current tax liabilities  

Provisions 

Borrowings 

Deferred tax liabilities 

Net assets acquired of subsidiary undertakings 

Goodwill 

Total purchase consideration 

Satisﬁed by: 

Cash 

Contingent consideration 

Total purchase consideration 

Fair value 
£m

71

7

2

17

13

(36)

(1)

(4)

(5)

(21)

43

94

137

130

7

137

Adjustments made to identiﬁable assets and liabilities on acquisition are to reﬂect their fair value. These include the recognition of customer-related 
intangible assets amounting to £70m. 
On completion of the fair value exercise during 2012, adjustments made to the provisional calculation of identiﬁable assets and liabilities 
amounted to £9m, with an equivalent increase in the reported value of goodwill. The comparative consolidated statement of ﬁnancial position 
at 31 December 2011 has been restated accordingly. 
In the year of acquisition, in aggregate, the acquired businesses contributed £28m to revenues, £4m to PBITA and £2m to proﬁt for the part year 
they were under the group’s ownership. If all acquisitions had occurred on 1 January 2011, group revenue would have been £7,038m, PBITA would 
have been £509m and proﬁt for the year would have been £200m. 

Post balance sheet acquisitions

No signiﬁcant acquisitions have been effected between the balance sheet date and the date that the ﬁnancial statements were authorised for issue.

18. Disposal of subsidiaries

In February 2012, the group disposed of its cash solutions business in Sweden.
In April 2012, the group disposed of the electronic monitoring justice business in North America.
In September 2012, the group disposed of its businesses in Poland.
In October 2012, the group disposed of its business in Pakistan.
In December 2012, the group disposed of its security systems business in the Netherlands.
In December 2011, the group disposed of its consumer alarms business in Norway.
In December 2011, the group sold its 50% share of the equity in STC (Milton Keynes) Ltd.
The net assets and proﬁt on disposal of operations disposed of were as follows: 

Goodwill 

Property, plant and equipment and intangible assets other than acquisition-related

Other non current assets

Current assets

Liabilities

Net assets of operations disposed

(Loss)/proﬁt on disposal 

Total consideration

Satisﬁed by:

Cash received

Disposal costs

Total consideration

106  G4S plc Annual Report and Accounts 2012

2012  
£m

10

18

–

26

(17)

37

(18)

19

25

(6)

19

2011  
£m

–

1

9

13

(19)

4

33

37

38

(1)

37

 
 
 
 
 
19. Intangible assets

2012

Cost

At 1 January 2012

Acquisition of businesses

Additions

Disposals 

Reclassiﬁed as held for sale

Translation adjustments

At 31 December 2012

Amortisation and accumulated  

impairment losses

At 1 January 2012

Amortisation charge

Disposals 

Reclassiﬁed as held for sale

Translation adjustments

At 31 December 2012

Carrying amount

At 1 January 2012

At 31 December 2012

2011

Cost

At 1 January 2011

Acquisition of businesses

Additions

Disposals

Reclassiﬁed as held for sale

Translation adjustments

At 31 December 2011

Amortisation and accumulated  

impairment losses

At 1 January 2011

Amortisation charge

Impairment charge

Disposals

Reclassiﬁed as held for sale

Translation adjustments

At 31 December 2011

Carrying amount

At 1 January 2011

At 31 December 2011

Acquisition-related intangible assets

Goodwill 
£m

Trademarks 
£m

Customer  
related 
£m

Technology 
£m

Other  
intangibles 
£m

2,275

76

–

(5)

(88)

(73)

2,185

(70)

–

1

–

7

34

–

–

(1)

–

–

33

(28)

(3)

1

–

–

673

31

–

(2)

(14)

(13)

675

(412)

(85)

2

11

9

(62)

(30)

(475)

2,205

2,123

2,232

94

–

–

(15)

(36)

2,275

(73)

–

(13)

–

9

7

6

3

34

–

–

–

–

–

34

(25)

(3)

–

–

–

–

(70)

(28)

2,159

2,205

9

6

261

200

608

70

1

–

–

(6)

673

(335)

(82)

–

–

–

5

(412)

273

261

19

–

–

(12)

–

(1)

6

(17)

(1)

12

–

1

(5)

2

1

18

–

–

–

–

1

19

(15)

(1)

–

–

–

(1)

(17)

3

2

Total 
£m

3,186

107

25

(30)

(102)

(88)

3,098

(625)

(113)

22

11

21

185

–

25

(10)

–

(1)

199

(98)

(24)

6

–

4

(112)

(684)

87

87

154

1

35

(4)

(6)

5

185

(83)

(18)

–

4

6

(7)

(98)

71

87

2,561

2,414

3,046

165

36

(4)

(21)

(36)

3,186

(531)

(104)

(13)

4

15

4

625

2,515

2,561

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Customer-related intangibles comprise the contractual and other relationships with customers which meet the criteria for identiﬁcation as intangible 
assets in accordance with IFRS. 

Goodwill acquired in a business combination is allocated to the cash-generating units (CGUs) which are expected to beneﬁt from that business 
combination. The most signiﬁcant component of goodwill was generated by the merger of the security services businesses of Group 4 Falck and 
Securicor in 2004 which was accounted for as an acquisition of Securicor by Group 4 Falck. 

G4S plc Annual Report and Accounts 2012  107

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes to the consolidated ﬁnancial statements continued

19. Intangible assets continued

The group tests tangible and intangible assets, including goodwill, for impairment on an annual basis or more frequently if there are indications that 
amounts may be impaired. The annual impairment test is performed prior to the year end when the budgeting process is ﬁnalised and reviewed post 
year end. The group’s impairment test compares the carrying value of each CGU to its recoverable amount. CGUs are identiﬁed on a country level 
basis including signiﬁcant business units, as per the group’s detailed management accounts. Under IAS 36 Impairment of Assets, an impairment  
is deemed to have occurred where the recoverable amount of a CGU is less than its carrying value. 

The recoverable amount of a CGU is determined by its value in use which is derived from discounted cash ﬂow calculations. These calculations 
include forecast pre-tax cash ﬂows for a period of ﬁve years. The ﬁve-year cash ﬂow forecasts are based on the budget for the following year 
(year one) and the business plans for years two and three, the results of which are reviewed by the board, and projections for years four and ﬁve, all 
of which reﬂect past experience as well as future expected market trends. Budgeted and forecast cash ﬂows are based on management’s assessment 
of current contract portfolio, contract wins, contract retention and price increases. Cash ﬂows beyond year three are projected up to year ﬁve at the 
lower of the planned growth rate in year three and the forecast underlying economic growth rate for the economies in which the CGU operates.

Where the planned growth rate in year three exceeds the forecast underlying economic growth rate, the excess is reduced progressively in the 
projections for years four and ﬁve. The table below shows the year three growth rates for the group’s signiﬁcant CGUs. Into-perpetuity growth rates 
are derived from the expected year ﬁve growth rates taking into account the estimated long-term growth prospects of the relevant economic 
market that the CGU operates in and generally range between 0% and 5%.

Future cash ﬂows are discounted at a pre-tax, weighted average cost of capital which for the businesses based in the UK is 7.1% (2011: 6.1%). This 
UK rate is used as a base for calculating the rates across the group by adjusting for the different ﬁnancial risks in each country in which the CGUs 
operate. Pre-tax cash ﬂows are discounted using pre-tax discount rates derived from calculating the net present value of the post-tax cash ﬂows 
discounted at post-tax rates. Risk-adjusted discount rates applicable to group entities range from 5.4% in Hong Kong to 71.1% in the Democratic 
Republic of Congo. The discount rates for the group’s signiﬁcant CGUs are disclosed in the table below.

The following countries have signiﬁcant carrying amounts of goodwill:

Discount rate 
2012

Discount rate 
2011

Year 3 growth rate*
2012

Year 3 growth rate*
2011

Goodwill 
2012 
£m

Goodwill 
2011 
£m

United Kingdom

United States of America

Brazil

Netherlands

Canada

Hong Kong

Malaysia 

Estonia

Israel

South Africa

Other (all allocated)

Total goodwill

7.1%

7.4%

14.8%

7.0%

6.9%

5.4%

8.6%

7.4%

9.4%

14.0%

6.1%

6.0%

18.7%

6.0%

6.1%

4.9%

9.2%

7.4%

9.4%

14.3%

2.8%

5.2%

8.7%

3.6%

2.8%

7.3%

7.5%

3.6%

2.0%

9.0%

4.1%

4.2%

8.7%

3.5%

4.4%

7.4%

7.5%

5.0%

1.3%

8.4%

706

395

157

146

51

39

43

61

34

36

455

2,123

694

415

88

149

53

41

44

63

35

40

583

2,205

*Lower of country growth rate per IMF and implied year three business forecast growth rate.

Within the UK, the most signiﬁcant CGUs and their goodwill carrying values are UK Care and Justice (£247m), UK Cash Solutions (£205m) and 
UK Secure Solutions (£102m). Within the US, the most signiﬁcant CGU is US Commercial Security Solutions with goodwill of £283m.

The key assumptions used in the discounted cash ﬂow calculations relate to the discount rates used. The underlying economic growth rates do not 
have a material effect on the calculations of the discounted cash ﬂow.  With all other variables being equal, a 1% increase applied to all group CGUs 
(e.g. increasing the base UK discount rate from 7.1% to 8.1%) would result in a goodwill impairment to the group of approximately £10m.  A signiﬁcant 
increase of 3% applied to all group CGUs (e.g. increasing the base UK discount rate from 7.1% to 10.1%) would result in a group impairment of 
approximately £35m, of which £20m relates to Brazil. 

In applying the group’s model in 2011, the group impaired the goodwill relating to its businesses in Greece by £13m. The challenging economic 
circumstances in the country had resulted in a discount rate of 16% being applied to the relevant cash ﬂows. The remaining goodwill relating to 
Greece is £14m and given the ongoing economic and political uncertainty in the country there remains a risk of further impairment. However, 
during the current year there has been no further deterioration in the country’s outlook and therefore no further impairment has been required. 
No impairment has been identiﬁed and recognised in any of the group’s other CGUs for the year ended 31 December 2012 or for the year ended 
31 December 2011. Management believe that there is currently no reasonably possible change in the underlying factors used in the impairment 
model for its CGUs, which would lead to a material impairment of goodwill. 

108  G4S plc Annual Report and Accounts 2012

 
 
 
 
20. Property plant and equipment

2012

Cost

At 1 January 2012

Acquisition of businesses 

Additions 

Disposals

Reclassiﬁed as held for sale

Translation adjustments

At 31 December 2012

Depreciation and accumulated  

impairment losses

At 1 January 2012

Depreciation charge

Disposals

Reclassiﬁed as held for sale

Translation adjustments

At 31 December 2012

Carrying amount

At 1 January 2012

At 31 December 2012

2011

Cost

At 1 January 2011

Acquisition of businesses 

Additions

Disposals

Reclassiﬁcation

Reclassiﬁed as held for sale

Translation adjustments

At 31 December 2011

Depreciation and accumulated  

impairment losses

At 1 January 2011

Depreciation charge

Disposals

Reclassiﬁcation

Reclassiﬁed as held for sale

Translation adjustments

At 31 December 2011

Carrying amount

At 1 January 2011

At 31 December 2011

Land and 
buildings 
£m

Equipment and 
vehicles 
£m

Total 
£m

222

1,012

1,234

–

24

(3)

(2)

(1)

240

(67)

(15)

4

1

–

(77)

155

163

1

126

(89)

(15)

(52)

983

(636)

(112)

65

10

39

(634)

376

349

1

150

(92)

(17)

(53)

1,223

(703)

(127)

69

11

39

(711)

531

512

223

1,025

1,248

1

16

(9)

–

(6)

(3)

6

128

(97)

(21)

(21)

(8)

7

144

(106)

(21)

(27)

(11)

222

1,012

1,234

(61)

(16)

6

–

2

2

(67)

162

155

(611)

(115)

80

3

15

(8)

(636)

414

376

(672)

(131)

86

3

17

(6)

(703)

576

531

During the prior year management reclassiﬁed certain short-life assets, such as consumables, from within the equipment and vehicles category to 
inventory to more accurately reﬂect their usage.

The net book value of equipment and vehicles held under ﬁnance leases was £57m (2011: £50m). Accumulated depreciation on these assets was 
£116m (2011: £104m) and the depreciation charge for the year was £19m (2011: £15m).

The rights over ﬁnance leased assets are effectively security for lease liabilities. These rights revert to the lessor in the event of default.

G4S plc Annual Report and Accounts 2012  109

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Notes to the consolidated ﬁnancial statements continued

20. Property plant and equipment continued

The net book value of equipment and vehicles includes £34m (2011: £36m) of assets leased by the group to third parties under operating leases. 
Accumulated depreciation on these assets was £91m (2011: £88m) and the depreciation charge for the year was £9m (2011: £11m).

The net book value of land and buildings comprises of freeholds of £71m (2011: £66m), long leaseholds of £20m (2011: £19m) and short leaseholds 
of £72m (2011: £70m).

21. Investment in joint ventures

At the year end the group owned 59% of the equity of Bridgend Custodial Services Ltd. The group jointly shares operational and ﬁnancial control 
over the operations and is therefore entitled to a proportionate share of its results, which are consolidated on the basis of the equity shares held. 
The group’s correctional facilities in South Africa are under a similar arrangement other than that the group’s holding is 20%. 

During 2011, the group sold its 50% share of the equity in STC (Milton Keynes) Ltd. Up until the date of disposal, its results were also consolidated 
on the basis of equity shares held.

The results of each of the jointly controlled operations are prepared in accordance with group accounting policies. Amounts proportionately 
consolidated into the group’s ﬁnancial statements are as follows:

Results
Revenue

Expenses

Proﬁt after tax

Balance sheet

Assets

Non-current assets

Current assets

Liabilities

Current liabilities

Non-current liabilities

Net assets

2012  
£m

36

(32)

4

2012  
£m

16

6

(10)

(7)

5

22. Investment in associates

The net investment in associates at 31 December 2012 is £3m and relates to a non-trading entity in Australia.  As at 31 December 2011 the net 
investment of £9m also included Space Gateway Support LLC and MW-All Star, both in the USA.  These associates are undertakings of the US 
Government Solutions business and have been discontinued and reclassiﬁed as held for sale during 2012.  In total the two associates recorded 
revenue of £39m (2011: £60m) and proﬁt of £2m (2011: £3m) for the year ended 31 December 2012.

23. Inventories

Raw materials

Work in progress

Finished goods including consumables

Total inventories

24. Investments

2012  
£m

16

16

96

128

Investments comprise primarily listed securities of £40m (2011: £44m) held by the group’s wholly-owned captive insurance subsidiaries stated 
at their fair values based on quoted market prices. Use of these investments is restricted to the settlement of claims against the group’s captive 
insurance subsidiaries. 

2011  
£m

44

(41)

3

2011  
£m

22

7

(10)

(14)

5

2011  
£m

16

13

94

123

110  G4S plc Annual Report and Accounts 2012

 
 
 
 
25. Trade and other receivables

Within current assets

Trade debtors 

Allowance for doubtful debts

Amounts owed by associated undertakings

Other debtors (including tax receivable)

Prepayments and accrued income

Amounts due from construction contract customers (see note 26)

Derivative ﬁnancial instruments at fair value (see note 32)

Total trade and other receivables included within current assets

Within non-current assets

Derivative ﬁnancial instruments at fair value (see note 32)

Other debtors*

Total trade and other receivables included within non-current assets

2012  
£m

1,234

(46)

2

171

88

22

26

2011  
£m

1,286

(67)

2

180

103

28

14

1,497

1,546

81

48

129

106

56

162

*Other debtors includes amounts receivable under service concession arrangements of £13m (2011: £19m) which are pledged as security against borrowings of the group.

Credit risk on trade receivables

There is limited concentration of credit risk with respect to trade receivables, as the group’s customers are both large in number and dispersed 
geographically in over 120 countries. The group’s largest customer is the UK Government which represents approximately 10% (2011: 5%) of the 
total trade debtor balance as at 31 December 2012. Group companies are required to follow the Group Finance Manual guidelines with respect 
to assessing the credit worthiness of potential customers. These guidelines include processes such as obtaining approval for credit limits over a set 
amount, performing credit checks and assessments and obtaining additional security where required.

Credit terms vary across the group and can range from 0 to 90 days to reﬂect the different risks within each country in which the group operates. 
There is no group-wide rate of provision, and provision is made for debts that are past due according to local conditions and past default experience.

The movement in the allowance for doubtful debts is as follows:

At 1 January

Amounts written off during the year

Increase in allowance

At 31 December

The ageing of trade debtors, net of allowance for doubtful debt, is as follows:

Not yet due

1–30 days overdue

30–60 days overdue

60–90 days overdue

91–180 days overdue

181–365 days overdue

Over 365 days overdue

Net trade debtors

2012  
£m

(67)

28

(7)

(46)

2012 
£m

881

161

70

29

26

7

14

2011  
£m

(73)

13

(7)

(67)

2011 
£m

846

185

70

37

30

30

21

1,188

1,219

No provision has been made on the above amounts as there has not been a signiﬁcant change in credit quality and the group believes that the 
amounts are still recoverable. The group does not hold any collateral over these balances. The proportion of trade debtors at 31 December 2012 
that were overdue for payment was 31% (2011: 34%). The group-wide average age of all trade debtors at year end was 60 days (2011: 59 days). 

The group’s monthly management accounts use the last three months sales of the year to calculate management trade debtor days. Using this 
calculation the group-wide average age of trade debtors is 50 days (2011: 49 days at constant exchange rates). 

The directors believe the fair value of trade and other receivables, being the present value of future cash ﬂows, approximates to their book value.

Included within “not yet due” is £75m relating to the Olympics contract settlement.

G4S plc Annual Report and Accounts 2012  111

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Notes to the consolidated ﬁnancial statements continued

26. Construction contracts

Contracts in place at the balance sheet date are as follows:

Amounts due from contract customers included in trade and other receivables (see note 25)

Amounts due to contract customers included in trade and other payables (see note 31)

Net balances relating to construction contracts

Contract costs incurred plus recognised proﬁts less recognised losses to date

Less: Progress billings

Net balances relating to construction contracts

2012  
£m

22

(2)

20

311

(291)

20

2011  
£m

28

(5)

23

320

(297)

23

 At 31 December 2012, advances received from customers for contract work amounted to £4m (2011: £5m). There were no retentions held by 
customers for contract work at either balance sheet date. All trade and other receivables arising from construction contracts are due for settlement 
within one year.

27. Disposal groups classiﬁed as held for sale

At 31 December 2012, disposal groups classiﬁed as held for sale comprised primarily the assets and liabilities associated with the classiﬁed 
Government Solutions business in the United States of America, which have been subjected to a £35m impairment charge to goodwill to write 
down their assets to their estimated recoverable value.

At 31 December 2011, disposal groups classiﬁed as held for sale comprised primarily the assets and liabilities associated with the cash solutions 
business in Sweden, which was disposed of on 27 February 2012, the cash and secure solutions businesses in Poland, which was disposed of on 
4 September 2012, and the UK Risk Assessment Services business in Afghanistan, which has now been reclassiﬁed as continuing following the 
extension of a major contract. 

The major classes of assets and liabilities comprising the operations classiﬁed as held for sale are as follows:

2012  
£m

2011  
£m

ASSETS

Goodwill

Acquisition-related intangibles

Property, plant and equipment and intangible assets other than acquisition-related

Investment in associates 

Trading investments

Trade and other receivables

Deferred tax asset

Cash and cash equivalents

Total assets classiﬁed as held for sale

LIABILITIES

Bank overdrafts 

Bank loans

Trade and other payables

Current tax liabilities

Retirement beneﬁt obligations

Deferred tax liability

Total liabilities associated with assets classiﬁed as held for sale

Net assets of disposal group

53

3

6

5

11

116

15

20

229

–

(1)

(36)

–

(13)

(2)

(52)

177

6

–

10

–

–

17

–

2

35

(12)

–

(19)

2

–

–

(29)

6

112  G4S plc Annual Report and Accounts 2012

28. Cash, cash equivalents and bank overdrafts

A reconciliation of cash and cash equivalents reported within the consolidated cash ﬂow statement to amounts reported within the consolidated 
statement of ﬁnancial position is presented below:

Cash and cash equivalents

Bank overdrafts

Cash, cash equivalents and bank overdrafts included within disposal groups classiﬁed as held for sale

Total cash, cash equivalents and bank overdrafts

2012  
£m

469

(17)

20

472

2011  
£m

433

(53)

(10)

370

Cash and cash equivalents comprise principally short-term money market deposits, current account balances and group-owned cash held in ATM 
machines and at 31 December 2012 bore interest at a weighted average rate of 0.5% (2011: 0.4%). The credit risk on cash and cash equivalents is 
limited because wherever possible and in accordance with Group Treasury policy the cash is placed with bank counterparties that hold investment 
grade credit ratings assigned by international credit-rating agencies. 

The group operates a multi-currency notional pooling cash management system which included over 140 group companies at 31 December 2012. 
It is anticipated that the number of participants in the group will continue to grow. The group met the conditions of IAS 32 Financial Instruments: 
Presentation allowing balances within this cash pool to be offset for reporting purposes. At 31 December 2012 £360m (2011 £303m) of the cash 
balances and the equivalent amount of the overdraft balances were offset. 

Cash and cash equivalents of £27m (2011: £17m) are held by the group’s wholly-owned captive insurance subsidiaries. Their use is restricted to the 
settlement of claims against the group’s captive insurance subsidiaries.

29. Bank overdrafts, bank loans and loan notes

Bank overdrafts

Bank loans

Loan notes*

Total bank overdrafts, bank loans and loan notes

The borrowings are repayable as follows:

On demand or within one year

In the second year

In the third to ﬁfth years inclusive

After ﬁve years

Total bank overdrafts, bank loans and loan notes

Less: Amount due for settlement within 12 months (shown under current liabilities): 

  – Bank overdrafts

  – Bank loans

  – Loan notes

Amount due for settlement after 12 months

*Loan notes includes £794m (2011: £830m) of private loan notes and £1,245m (2011: £350m) of public loan notes.

Analysis of bank overdrafts, bank loans and loan notes by currency:

2012  
£m

17

345

2,039

2,401

75

86

1,059

1,181

2,401

(17)

(18)

(40)

(75)

2,326

Bank overdrafts

Bank loans

Loan notes

At 31 December 2012

Bank overdrafts

Bank loans

Loan notes

At 31 December 2011

Sterling 
£m

Euros 
£m

US dollars 
£m

Others 
£m

6

137

419

562

21

419

419

859

1

73

895

969

24

205

–

229

7

99

725

831

–

263

761

1,024

3

36

–

39

8

45

–

53

Of the borrowings in currencies other than sterling, £1,078m (2011: £1,032m) is designated as a net investment hedge.

2011  
£m

53

932

1,180

2,165

100

53

1,065

947

2,165

(53)

(47)

–

(100)

2,065

Total 
£m

17

345

2,039

2,401

53

932

1,180

2,165

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G4S plc Annual Report and Accounts 2012  113

 
 
 
Notes to the consolidated ﬁnancial statements continued

29. Bank overdrafts, bank loans and loan notes continued

The weighted average interest rates on bank overdrafts, bank loans and loan notes at 31 December 2012 adjusted for hedging were as follows:

Bank overdrafts

Bank loans

Private loan notes

Public loan notes

2012  
%

1.5

3.5

4.5

4.2

2011  
%

1.2

2.4

4.4

7.8

The group’s committed bank borrowings comprise a £1,100m multicurrency revolving credit facility with a maturity date of March 2016. 
At 31 December 2012, undrawn committed available facilities amounted to £856m (2011: £767m). Interest on all committed bank borrowing 
facilities is at prevailing Libor or Euribor rates, dependent upon the period of drawdown, plus an agreed margin, and re-priced within one year  
or less. 

Borrowing at ﬂoating rates exposes the group to cash ﬂow interest rate risk. The management of this risk is discussed in note 33. 

The group issued ﬁxed rate loan notes in the US Private Placement market totalling US$550m (£354m) on 1 March 2007. The notes mature in 
March 2014 ($100m), March 2017 ($200m), March 2019 ($145m) and March 2022 ($105m). 

The group issued further ﬁxed rate loan notes in the US Private Placement market totalling US$514m (£331m) and £69m on 15 July 2008. 
The notes mature in July 2013 ($65m), July 2015 ($150m), July 2016 (£25m), July 2018 ($224m) and (£44m), and July 2020 ($75m).

The group issued its inaugural public note of £350m using its European Medium Term Note Programme on 13 May 2009. The note matures in 
May 2019.

During 2012 the group issued two further public notes. A euro 600m note issued on May 2012 maturing May 2017 and a euro 500m note issued on 
December 2012 maturing December 2018.

The committed bank facilities and the private loan notes are subject to one ﬁnancial covenant (net debt to EBITDA ratio where EBITDA is calculated 
as PBITA plus depreciation) and non-compliance with the covenant may lead to an acceleration of maturity. The group complied with the ﬁnancial 
covenant throughout the year to 31 December 2012 and the year to 31 December 2011.  The group has not defaulted on, or breached the terms 
of, any material loans during the year. 

Bank overdrafts, bank loans, the loan notes issued in July 2008, the loan notes issued in May 2009, euro 510m of the loan notes issued in May 2012 
and euro 380m of the loan notes issued in December 2012 are stated at amortised cost. The loan notes issued in March 2007, euro 90m of the 
loan notes issued in May 2012 and euro 120m of the loan notes issued in December 2012 are stated at amortised cost recalculated at an effective 
interest rate current at the balance sheet date as they are part of a fair value hedge relationship. 

US$265m (£163m) of the loan notes issued in July 2008 have a fair value market gain of £31m (2011: £40m) resulting from the cross currency 
swaps ﬁxing the GBP value of this portion of the loan notes at an exchange rate of 1.975.

Euro 325m (£264m) of the loan notes issued in May 2012 have a fair value market loss of £5m partly resulting from the cross currency swaps ﬁxing 
the GBP value of this portion of the loan notes at an exchange rate of 1.222 and partly resulting from the cross currency swaps ﬁxing the GBP and 
euro interest rates.

Euro 350m (£284m) of the loan notes issued in December 2012 have a fair value market gain of £2m resulting from the cross currency swaps ﬁxing 
the GBP and euro interest rates. 

114  G4S plc Annual Report and Accounts 2012

16

46

2

64

(16)

48

2011  
£m

245

5

2

231

435

328

5

2012  
£m

232

2

2

228

433

294

5

1,196

1,251

6

12

18

4

15

19

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30. Obligations under ﬁnance leases

Amounts payable under ﬁnance leases:

Within one year

In the second to ﬁfth years inclusive

After ﬁve years

Less: Future ﬁnance charges on ﬁnance leases

Present value of lease obligations

Less: Amount due for settlement within 12 months (shown under current liabilities)

Amount due for settlement after 12 months

Minimum 
lease 
payments 
2012 
£m

Minimum 
lease 
payments 
2011 
£m

Present 
value of 
 minimum 
lease 
payments 
2012 
£m

Present 
value of 
minimum 
lease 
payments 
2011 
£m

20

42

4

66

(5)

61

18

51

2

71

(7)

64

18

40

3

61

(18)

43

It is the group’s policy to lease certain of its ﬁxtures and equipment under ﬁnance leases. The weighted average lease term is eight years. 
For the year ended 31 December 2012, the weighted average effective borrowing rate was 4.9% (2011: 5.5%). Interest rates are ﬁxed at the 
contract date. All leases are on a ﬁxed repayment basis and no arrangements have been entered into for contingent rental payments. 

The group’s obligations under ﬁnance leases are secured by the lessors’ charges over the leased assets. 

31. Trade and other payables

Within current liabilities:

Trade creditors

Amounts due to construction contract customers (see note 26)

Amounts owed to associated undertakings

Other taxation and social security costs

Other creditors

Accruals and deferred income

Derivative ﬁnancial instruments at fair value (see note 32)

Total trade and other payables included within current liabilities

Within non-current liabilities:

Derivative ﬁnancial instruments at fair value (see note 32)

Other creditors

Total trade and other payables included within non-current liabilities

Trade and other payables comprise principally amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade 
purchases is 42 days (2011: 39 days).

G4S plc Annual Report and Accounts 2012  115

 
 
 
 
 
Notes to the consolidated ﬁnancial statements continued

32. Derivative ﬁnancial instruments

The carrying values of derivative ﬁnancial instruments at the balance sheet date are presented below:

Cross currency swaps designated as cash ﬂow hedges

Interest rate swaps designated as cash ﬂow hedges 

Interest rate swaps designated as fair value hedges 

Commodity swaps

Less: Non-current portion

Current portion

Assets 
2012 
£m

32 

–

73 

2 

107 

(81)

26 

Assets 
2011 
£m

40 

–

77 

3 

120 

(106)

14 

Liabilities 
2012 
£m

Liabilities 
2011 
£m

5 

6 

–

–

11 

(6)

5 

–

9 

–

–

9 

(4)

5 

Derivative ﬁnancial instruments are stated at fair value, measured using techniques consistent with Level 2 of the valuation hierarchy (inputs other 
than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly). The source of the market prices is 
Bloomberg and in addition the third party relationship, counterparty banks. The relevant currency yield curve is used to forecast the ﬂoating rate cash 
ﬂows anticipated under the instrument, which are discounted back to the balance sheet date. This value is compared to the original transaction value 
giving a fair value of the instrument at the balance sheet date.

The mark to market valuation of the derivatives has fallen by £15m during the year. 

The interest rate, cross currency and commodity swaps treated as cash ﬂow hedges have the following maturities:

Within one year

In the second year

In the third year 

In the fourth year

In the ﬁfth year or greater

Total carrying value

Assets 
2012 
£m

Assets 
2011 
£m

Liabilities 
2012 
£m

Liabilities 
2011 
£m

9

–

17

–

8

34

2

10

–

23

8

43

1

2

–

3

5

11

3

2

2

1

1

9

Projected settlement of cash ﬂows (including accrued interest) associated with derivatives treated as cash ﬂow hedges:

Within one year

In the second year

In the third year 

In the fourth year

In the ﬁfth year or greater

Total cash ﬂows

33. Financial risk

Capital management

Assets 
2012 
£m

Assets 
2011 
£m

Liabilities 
2012 
£m

Liabilities 
2011 
£m

7

3

–

17

17

44

2

10

–

24

9

45

7

6

5

4

–

22

7

2

2

–

1

12

The group manages its capital structure through an appropriate mix of debt and equity that supports the development of the group through organic 
and acquisition growth, maximises shareholder returns and minimises the cost of capital whilst maintaining an investment grade credit rating so that it 
can beneﬁt from good access to debt capital markets on attractive terms.

The group has had an investment grade credit rating since March 2009 when Standard & Poor’s assessed the group BBB stable. Subsequent to 
the Olympics contract announcement on 13 July 2012 and the board review in September, Standard & Poor’s revised the rating to BBB stable in 
November. The group will continue to manage its capital structure so that it retains its investment grade.

The group’s policy is to maintain a net debt to EBITDA ratio of around 2 to 2.5 times.  At the end of 2012 the ratio was 2.66 times. It is expected 
that the ratio will fall back into the target range next year. The group is currently well ﬁnanced has a diverse range of ﬁnance providers and the 
maturity proﬁle is long term. Borrowings are principally in pounds sterling, US dollars and euros reﬂecting the geographies of signiﬁcant operational 
assets and proﬁts.

116  G4S plc Annual Report and Accounts 2012

33. Financial risk continued

Liquidity risk

The group mitigates liquidity risk by ensuring there are sufficient undrawn committed facilities available to it. For more details of the group’s bank 
overdrafts, bank loans and loan notes see note 29.

The percentage of available, but undrawn committed facilities during the course of the year was as follows:

31 December 2011 
31 March 2012 
30 June 2012 
30 September 2012 
31 December 2012 

  29% 
  25% 
  27% 
   15% 
   28%

To reduce re-ﬁnancing risk, group treasury obtains ﬁnance with a range of maturities and hence minimises the impact of a single material source 
of ﬁnance terminating on a single date.

Re-ﬁnancing risk is further reduced by group treasury opening negotiations to either replace or extend any major medium term facility at least 
18 months before its termination date. 

Maturity proﬁle of loans and borrowings

The contractual maturities of ﬁnancial assets and liabilities, together with the carrying amounts in the statement of ﬁnancial position, including interest 
payments, estimated based on expectations at the reporting date, are shown below:

31 December 2012

Notes

Carrying 
amount 
£m

Investments

Derivative ﬁnancial instruments  

(interest rate swaps)

Financial assets designated at fair value through 

proﬁt and loss

Derivative ﬁnancial instruments  

(commodity swaps)

Derivative ﬁnancial instruments  

(cross currency swaps)

Financial assets designated as cash ﬂow hedges

Net trade receivables

Cash and cash equivalents

Other ﬁnancial assets

Loans and receivables

Loan notes (issued March 2007, 5.77%-6.06%, 

maturing 2014-22)

Financial liabilities designated as fair value hedges

Derivative ﬁnancial instruments  

(interest rate swaps)

Derivative ﬁnancial instruments  

(cross-currency swaps)

Financial liabilities designated as cash ﬂow hedges

Loan notes (issued July 2008, 6.09%-7.56%, 

maturing 2013-20)

Loan notes (issued May 2009, 7.75%,  

maturing 2019)

Loan notes (issued May 2012, 2.875%, 

maturing 2017)

Loan notes (issued December 2012, 2.625%,  

maturing 2018)

Bank loans

Overdrafts

Finance lease liabilities

Trade payables

Other liabilities

24

32

32

32

25

28

25

29

32

32

29

29

29

29

29

29

30

31

31

56

73

129

2

32

34

1,188

469

13

1,670

(409)

(409)

(6)

(5)

(11)

(385)

(350)

(489)

(406)

(345)

(17)

(61)

(232)

(12)

Fair 
value 
£m

56

73

129

2

32

34

1,188

469

13

1,670

(409)

(409)

(6)

(5)

(11)

(354)

(350)

(507)

(409)

(345)

(17)

(61)

(232)

(12)

Financial liabilities measured at amortised cost

(2,297)

(2,287)

(2,747)

Total 
contractual 
cash ﬂows 
£m

Within  
1 year 
£m

2-5 years 
£m

Over  
5 years 
£m

56

81

137

2

32

34

1,188

469

13

1,670

(448)

(448)

(6)

(5)

(11)

(514)

(540)

(557)

(469)

(345)

(17)

(61)

(232)

(12)

56

18

74

2

6

8

1,188

469

–

1,657

(20)

(20)

(3)

(2)

(5)

(66)

(27)

(14)

(11)

(18)

(17)

(18)

(232)

–

(403)

–

52

52

–

12

12

–

–

13

13

(249)

(249)

(3)

(3)

(6)

(198)

(109)

(543)

(42)

(327)

–

(40)

–

(12)

–

11

11

–

14

14

–

–

–

–

(179)

(179)

–

–

–

(250)

(404)

–

(416)

–

–

(3)

–

–

(1,271)

(1,073)

G4S plc Annual Report and Accounts 2012  117

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Notes to the consolidated ﬁnancial statements continued

33. Financial risk continued

31 December 2011

Notes

Carrying 
amount 
£m

Investments

Derivative ﬁnancial instruments (interest rate swaps)

Financial assets designated at fair value through 

proﬁt and loss

Derivative ﬁnancial instruments (commodity swaps)

Derivative ﬁnancial instruments (cross currency swaps)

Financial assets designated as cash ﬂow hedges

Net trade receivables

Cash and cash equivalents

Other ﬁnancial assets

Loans and receivables

Loan notes (issued March 2007, 5.77%-6.06%,  

maturing 2014-22)

Financial liabilities designated as fair value through 

proﬁt and loss

Derivative ﬁnancial instruments (interest rate swaps)

Financial liabilities designated as cash ﬂow hedges

Loan notes (issued July 2008, 6.09%-7.56%,  

maturing 2013-20)

Loan notes (issued May 2009, 7.75%, maturing 2019)

Bank loans

Overdrafts

Finance lease liabilities

Trade payables

Other liabilities

24

32

32

32

25

28

25

29

32

29

29

29

29

30

31

31

70

77

147

3

40

43

1,219

433

19

1,671

(430)

(430)

(9)

(9)

(400)

(350)

(932)

(53)

(64)

(245)

(15)

Fair 
value 
£m

70

77

147

3

40

43

1,219

433

19

1,671

(430)

(430)

(9)

(9)

(360)

(393)

(932)

(53)

(64)

(245)

(15)

Total 
contractual 
cash ﬂows 
£m

Within  
1 year 
£m

2-5 years 
£m

Over  
5 years 
£m

70

85

155

3

40

43

1,219

433

19

1,671

(489)

(489)

(10)

(10)

(560)

(567)

(932)

(53)

(64)

(245)

(15)

70

17

87

2

(1)

1

1,219

433

–

1,652

(21)

(21)

(6)

(6)

(27)

(27)

(47)

(53)

(16)

(245)

–

(415)

–

51

51

1

32

33

–

–

19

19

(271)

(271)

(3)

(3)

(258)

(109)

(885)

–

(46)

–

(15)

–

17

17

–

9

9

–

–

–

–

(197)

(197)

(1)

(1)

(275)

(431)

–

–

(2)

–

–

(1,313)

(708)

Financial liabilities measured at amortised cost

(2,059)

(2,062)

(2,436)

The gross cash ﬂows disclosed in the tables above represent the contractual undiscounted cash ﬂows relating to derivative ﬁnancial liabilities held for risk 
management purposes and which are usually not closed out before contractual maturity. The disclosure shows net cash ﬂow amount for derivatives that are 
net cash-settled and gross cash inﬂow and outﬂow amounts for derivatives that have simultaneous gross cash settlement – e.g. forward exchange contracts. 

Market risk

Currency risk and forward foreign exchange contracts 
The group conducts business in many currencies. Transaction risk is limited since, wherever possible, each business operates and conducts its ﬁnancing 
activities in local currency. However, the group presents its consolidated ﬁnancial statements in sterling and it is in consequence subject to foreign 
exchange risk due to the translation of the results and net assets of its foreign subsidiaries. The group hedges a substantial proportion of its exposure 
to ﬂuctuations in the translation into sterling of its overseas net assets by holding loans in foreign currencies. 

Translation adjustments arising on the translation of foreign currency loans are recognised in equity to match translation adjustments on foreign 
currency equity investments as they qualify as net investment hedges. 

At 31 December 2012, the group’s US dollar and euro net assets were approximately 85% and 60% respectively hedged by foreign currency loans 
(2011: US dollar 75%, euro 50%). 

Cross-currency swaps with a nominal value of £134m were arranged to hedge the foreign currency risk on US$265m of the second US Private 
Placement notes issued in July 2008, effectively ﬁxing the sterling value of this portion of debt at an exchange rate of 1.9750.

Cross currency swaps with a nominal value of £266m were arranged to hedge the foreign currency risk on euro 325m of the euro public notes 
issued in May 2012, effectively ﬁxing the sterling value of this portion of debt at an exchange rate of 1.2217.

Cross currency swaps with a nominal value of £284m were arranged to hedge the foreign currency risk on euro 350m of the euro public notes 
issued in December 2012, effectively ﬁxing the sterling value of this portion of debt at an exchange rate of 1.2332.

Assuming a 1% appreciation of sterling against the US dollar and the euro, the fair value net gain on the cross currency swaps which hedge part 
of the currency loan notes would be expected to fall by £7m.

118  G4S plc Annual Report and Accounts 2012

 
 
 
 
 
 
33. Financial risk continued

Market risk continued

Interest rate risk and interest rate swaps 
Borrowing at ﬂoating rates as described in note 29 exposes the group to cash ﬂow interest rate risk, which the group manages within policy limits 
approved by the directors. Interest rate swaps and, to a limited extent, forward rate agreements are utilised to ﬁx the interest rate on a proportion 
of borrowings on a reducing scale over forward periods up to a maximum of ﬁve years. At 31 December 2012 the nominal value of such contracts 
was £98m (in respect of US dollar) (2011: £174m) and £73m (in respect of euro) (2011: £121m), their weighted average interest rate was 1.3% 
(US dollar) (2011: 2.7%) and 3.2% (euro) (2011: 3.6%), and their weighted average period to maturity was three years. All the interest rate hedging 
instruments are designated and fully effective as cash ﬂow hedges and movements in their fair value have been deferred in equity. 

The US Private Placement market is predominantly a ﬁxed rate market, with investors looking for a ﬁxed rate return over the life of the loan notes. 
At the time of the ﬁrst issue in March 2007, the group was comfortable with the proportion of ﬂoating rate exposure not hedged by interest rate 
swaps and therefore rather than take on a higher proportion of ﬁxed rate debt arranged ﬁxed to ﬂoating swaps effectively converting the ﬁxed 
coupon on the Private Placement to a ﬂoating rate. Following the swaps the resulting average coupon on the US Private Placement is Libor + 60bps. 
These swaps have been documented as fair value hedges of the US Private Placement ﬁxed interest loan notes, with the movements in their fair 
value posted to proﬁt and loss at the same time as the movement in the fair value of the hedged item.

The interest on the US Private Placement notes issued in July 2008, the GBP public notes issued in May 2009, 510m of the euro public notes issued 
in May 2012 and 380m of the euro public notes issued in December 2012 was kept at ﬁxed rate.

All three public notes have a coupon step up of 1.25% which is triggered should the credit rating of G4S plc fall below investment grade.

The core group borrowings are held in US dollar, euro and sterling. Although the impact of rising interest rates is largely shielded by ﬁxed rate loans 
and interest rate swaps which ﬁx a portion of the exposure, some interest rate risk remains. A 1% increase in interest rates across the yield curve 
in each of these currencies with the 31 December 2012 debt position constant throughout 2013, would lead to an expectation of an additional 
interest charge of £9m in the 2013 ﬁnancial year.

Commodity risk and commodity swaps
The group’s principal commodity risk relates to the ﬂuctuating level of diesel prices, particularly affecting its cash solutions businesses. Commodity 
swaps and commodity options are used to ﬁx synthetically part of the exposure and reduce the associated cost volatility. Commodity swaps hedging 
39 million litres of projected 2013 diesel consumption, 36 million litres of projected 2014 diesel consumption and 21 million litres of projected 2015 
diesel consumption were in place at 31 December 2012.

Counterparty credit risk 
The group’s strategy for credit risk management is to set minimum credit ratings for counterparties and monitor these on a regular basis. 

For treasury-related transactions, the policy limits the aggregate credit risk assigned to a counterparty. The utilisation of a credit limit is calculated by 
applying a weighting to the notional value of each transaction outstanding with each counterparty based on the type and duration of the transaction. 
The total mark to market value outstanding with each counterparty is also closely monitored against policy limits assigned to each counterparty. 
For short-term transactions (under one year), at inception of the transaction, the ﬁnancial counterparty must be investment grade rated by either 
the Standard & Poor’s or Moody’s rating agencies. For long-term transactions, at inception of the transaction, the ﬁnancial counterparty must have 
a minimum rating of BBB+/Baa1 from Standard & Poor’s or Moody’s. 

Treasury transactions are dealt with the group’s relationship banks, all of which have a strong investment grade rating. At 31 December 2012 the 
largest two counterparty exposures related to treasury transactions were £38m and £31m and both were held with institutions with a long-term 
Standard & Poor’s credit rating of A– and A respectively. These exposures represent 36% and 29% of the carrying values of derivative ﬁnancial 
instruments, with a fair value gain at the balance sheet date. Both of these banks had signiﬁcant loans commitments outstanding to G4S plc at 
31 December 2012.

The group operates a multi-currency notional pooling cash management system with a wholly-owned subsidiary of an A+ rated bank. At year end 
credit balances of £360m were pooled with debit balances of £362.7m, resulting in a net pool balance of negative £2.7m. There is legal right of set 
off under the pooling agreement and an overdraft facility of £3m.

At an operating level the minimum investment grade rating criteria applies. Exceptionally, where required by local country circumstances, 
counterparties with no, or a non-investment grade, rating can be approved as counterparties for a period of up to 12 months. Due to the group’s 
global geographical footprint and exposure to multiple industries, there is minimal concentration risk.

34. Retirement beneﬁt obligations

The group operates a wide range of retirement beneﬁt arrangements which are established in accordance with local conditions and practices within 
the countries concerned. These include funded deﬁned contribution and funded and unfunded deﬁned beneﬁt schemes. 

Deﬁned contribution arrangements

The majority of the retirement beneﬁt arrangements operated by the group are of a deﬁned contribution structure, where the employer 
contribution and resulting income statement charge is ﬁxed at a set level or is a set percentage of employees’ pay. Contributions made to deﬁned 
contribution schemes and charged to the income statement totalled £107m (2011: £107m).

In the UK, following the closure of the deﬁned beneﬁt schemes to new entrants in 2004, the main scheme for new employees is a contracted-in 
deﬁned contribution scheme. 

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G4S plc Annual Report and Accounts 2012  119

 
 
 
Notes to the consolidated ﬁnancial statements continued

34. Retirement beneﬁt obligations continued

Deﬁned contribution arrangements continued

G4S Government Solutions, Inc. is the administrator of several deﬁned beneﬁt schemes. G4S Government Solutions, Inc. is responsible for making 
periodic cost-reimbursable deposits to the various deﬁned beneﬁt schemes as determined by independent actuaries. In each instance, the US 
Department of Energy (“DOE”) acknowledged within the contract entered between the DOE and G4S Government Solutions, Inc. its responsibility 
for all unfunded pension and beneﬁt liabilities. Therefore, these schemes are accounted for as deﬁned contribution schemes. 

In the Netherlands, most employees are members of industry-wide deﬁned beneﬁt schemes which are not valued on an IAS 19 basis as it is 
not possible to identify separately the group’s share of the schemes’ assets and liabilities. As a result the schemes are accounted for as deﬁned 
contribution schemes. Contributions made to the schemes and charged to the income statement in 2012 totalled £8m (2011: £8m). The estimated 
amounts of contributions expected to be paid to the schemes during the ﬁnancial year commencing 1 January 2013 in respect of the ongoing 
accrual of beneﬁts is approximately £8m assuming consistent exchange rates.

Deﬁned beneﬁt arrangements 

The group operates a number of deﬁned beneﬁt retirement arrangements where the beneﬁts are based on employees’ length of service. In most 
cases these are calculated on the basis of ﬁnal pensionable pay, other than for the smallest of the three sections in the UK and one scheme in the 
Netherlands where they are based on career average pay. Liabilities under these arrangements are stated at the discounted value of beneﬁts accrued 
to date, based upon actuarial advice. 

Under unfunded arrangements, the group does not hold the related assets separate from the group. The amount charged to the income statement 
in respect of these arrangements in 2012 totalled £4m (2011: £3m). Under funded arrangements, the assets of deﬁned beneﬁt schemes are held 
in separate trustee-administered funds. The pension costs are assessed on the advice of qualiﬁed independent actuaries using the projected unit 
credit method. The group operates several funded deﬁned retirement beneﬁt schemes. Whilst the group’s primary scheme is in the UK, it also 
operates other material schemes, primarily in the Netherlands and Canada. 

For deﬁned beneﬁt schemes, the cost of providing beneﬁts is determined using the projected unit credit method, with actuarial valuations being 
updated to each balance sheet date. The discount rate used is the yield at the balance sheet date on AA credit rated corporate bonds that have 
maturity dates approximating to the terms of the group’s obligations.

The carrying values of retirement beneﬁt obligations at the balance sheet date are presented below:

UK

Rest of World

Net liability on material funded deﬁned retirement beneﬁt schemes

Unfunded and other funded deﬁned retirement beneﬁt obligations

2012  
£m

412

24

436

35

471

2011  
£m

285

10

295

49

344

The deﬁned beneﬁt scheme in the UK accounts for 95% of the net balance sheet liability on material funded deﬁned retirement beneﬁt schemes. 
It comprises three sections: the pension scheme demerged from the former Group 4 Falck A/S with total membership of approximately 8,000; 
the Securicor scheme, responsibility for which the group assumed on 20 July 2004 with the acquisition of Securicor plc, with total membership 
of approximately 20,000; and the GSL scheme, responsibility for which the group assumed on 12 May 2008 with the acquisition of GSL, with total 
membership of approximately 2,000. The UK scheme was formally actuarially assessed at 5 April 2009. Pension obligations stated in the statement 
of ﬁnancial position take account of future earnings increases, have been updated to 31 December 2012 and use the valuation methodologies 
speciﬁed in IAS 19 Employee Beneﬁts. 

During the prior year the group closed the UK scheme to future accrual. Existing members retained their link to ﬁnal salary where appropriate and 
their beneﬁts accrued to-date. Members have been offered the opportunity to move to a new deﬁned contribution scheme for future pension 
beneﬁts. There has been no curtailment gain or loss. 

As at the latest actuarial valuation, the participants of the UK pension scheme sections can be analysed as follows:

At 5 April 2009

Active participants

– Number

– Average age

Deferred participants

– Number

– Average age

Pensioner participants

– Number

– Average age

120  G4S plc Annual Report and Accounts 2012

Group 4 Falck 
Scheme

GSL  
Scheme

Securicor  
Scheme

618

53.2

4,559

51.3

2,607

68.2

1,311

50.8

537

48.4

208

61.1

1,409

51.9

10,352

50.8

7,878

69.9

Total

3,338

51.7

15,448

50.9

10,693

69.3

34. Retirement beneﬁt obligations continued

The weighted average principal assumptions used for the purposes of the actuarial valuations were as follows:

Key assumptions used at 31 December 2012

Discount rate

Expected return on scheme assets (as at 1 January 2012)

Expected rate of salary increases

Future pension increases (LPI5%)

Inﬂation

Key assumptions used at 31 December 2011

Discount rate

Expected return on scheme assets (as at 1 January 2011)

Expected rate of salary increases

Future pension increases (LPI5%)

Inﬂation

UK

4.5%

5.7%

3.1%

2.9%

3.0%

5.0%

7.0%

3.1%

3.0%

3.1%

Rest of  
World

3.9%

4.4%

2.3%

1.1%

2.1%

5.3%

5.1%

2.4%

1.5%

2.1%

In addition to the above, the group uses appropriate mortality assumptions when calculating the schemes obligations. The mortality tables used for 
the scheme in the UK are as follows:

(cid:116)(cid:1)Current and future pensioners: Birth year table S1P[M/F]A base allowing for individual scaling factors based on analysis of mortality experienced, 

medium cohort improvement factors with an underpin of 1.0% per annum. 

The amounts recognised on the balance sheet in respect of these deﬁned beneﬁt schemes are as follows:

DBO 
£m

Assets 
£m

Asset ceiling 
£m

Total 
£m

2012

Amounts recognised on the balance sheet at beginning of the period

(1,723)

(102)

(1,825)

1,438

101

1,539

–

(9)

(9)

UK

Rest of World

Total

Amounts recognised in income

Current service cost

Settlement and curtailment gains

Finance cost on deﬁned retirement beneﬁt obligations

Expected return on deﬁned retirement beneﬁt scheme assets

Total amounts recognised in income

Remeasurements

Actuarial loss on deﬁned beneﬁt obligation

Actuarial loss on asset

Change in effect of asset ceiling

Remeasurement effects recognised in OCI

Cash

Employer contributions

Employee contributions

Beneﬁts paid from plan assets

Net cash

Other

Exchange rates

Amounts recognised on the balance sheet at end of the period

UK

Rest of World

Total

(1,886)

(139)

(2,025)

1,474

115

1,589

(7)

2

(90)

–

(95)

(177)

–

–

(177)

–

(4)

73

69

3

–

–

–

82

82

–

(9)

–

(9)

47

4

(73)

(22)

(1)

(285)

(10)

(295)

(7)

2

(90)

82

(13)

(177)

(9)

9

(177)

47

–

–

47

2

(412)

(24)

(436)

–

–

–

–

–

–

–

9

9

–

–

–

–

–

–

–

–

G4S plc Annual Report and Accounts 2012  121

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DBO  
£m

Assets  
£m

Asset ceiling  
£m

Total 
£m

(4)

(4)

–

–

–

–

–

–

(5)

(5)

–

–

–

–

–

–

(9)

(9)

(256)

(9)

(265)

(9)

(90)

93

(6)

(132)

64

(5)

(73)

48

–

–

48

1

(285)

(10)

(295)

Notes to the consolidated ﬁnancial statements continued

34. Retirement beneﬁt obligations continued

2011

Amounts recognised on the balance sheet at beginning of the period

UK

Rest of World

Total

Amounts recognised in income

Current service cost

Finance cost on deﬁned retirement beneﬁt obligations

Expected return on deﬁned retirement beneﬁt scheme assets

Total amounts recognised in income

Remeasurements

Actuarial loss on deﬁned beneﬁt obligation

Actuarial gain on assets

Change in effect of asset ceiling

Remeasurement effects recognised in OCI

Cash

Employer contributions

Employee contributions

Beneﬁts paid from plan assets

Net cash

Other

Exchange rates

(1,566)

(95)

(1,661)

1,310

90

1,400

(9)

(90)

–

(99)

(132)

–

–

(132)

–

(6)

70

64

3

–

–

93

93

–

64

–

64

48

6

(70)

(16)

(2)

Amounts recognised on the balance sheet at end of the period

UK

Rest of World

Total

(1,723)

(102)

(1,825)

1,438

101

1,539

122  G4S plc Annual Report and Accounts 2012

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
34. Retirement beneﬁt obligations continued

The amounts recognised in income are included within the following categories in the income statement:

Cost of sales

Administration expenses

Finance income

Finance costs

Total

Actuarial gains and losses recognised cumulatively in the statement of comprehensive income are as follows:

At 1 January

Actuarial losses recognised in the year

Restriction to deﬁned beneﬁt asset due to the asset ceiling

At 31 December

2012  
£m

(5)

–

82

(90)

(13)

2012  
£m

(326)

(186)

9

(503)

2011  
£m

(6)

(3)

93

(90)

(6)

2011  
£m

(253)

(68)

(5)

(326)

The contribution from sponsoring companies in 2012 included £37m (2011: £40m) of additional contributions in respect of the deﬁcit in the 
schemes.

The asset ceiling restriction reﬂects an inability to derive economic value from an IAS19 surplus in a plan in the Netherlands.

The amounts included in the consolidated statement of ﬁnancial position arising from the group’s obligations in respect of its material deﬁned beneﬁt 
schemes are as follows:

2012

Present value of deﬁned beneﬁt obligations

Fair value of scheme assets

Deﬁcit in scheme

2011

Present value of deﬁned beneﬁt obligations

Fair value of scheme assets

Restriction to deﬁned beneﬁt asset due to the asset ceiling

Deﬁcit in scheme

2010

Present value of deﬁned beneﬁt obligations

Fair value of scheme assets

Restriction to deﬁned beneﬁt asset due to the asset ceiling

Deﬁcit in scheme

2009

Present value of deﬁned beneﬁt obligations

Fair value of scheme assets

Deﬁcit in scheme

2008

Present value of deﬁned beneﬁt obligations

Fair value of scheme assets

Deﬁcit in scheme

UK  
£m

1,886

(1,474)

412

1,723

(1,438)

–

285

1,566

(1,310)

–

256

1,547

(1,240)

307

1,296

(1,040)

256

Rest of  
World  
£m

139

(115)

24

102

(101)

9

10

95

(90)

4

9

116

(95)

21

111

(81)

30

Total  
£m

2,025

(1,589)

436

1,825

(1,539)

9

295

1,661

(1,400)

4

265

1,663

(1,335)

328

1,407

(1,121)

286

G4S plc Annual Report and Accounts 2012  123

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Notes to the consolidated ﬁnancial statements continued

34. Retirement beneﬁt obligations continued

The composition of the scheme assets at the reporting date is as follows: 

2012

Equity instruments

Debt instruments

Property

Cash

Other assets

2011

Equity instruments

Debt instruments

Property

Cash

Other assets

UK 

15%

22%

2%

10%

51%

100%

10%

25%

0%

28%

37%

100%

Rest of  
World 

35%

45%

3%

2%

15%

100%

34%

44%

4%

2%

16%

100%

Total 

16%

24%

2%

10%

48%

100%

12%

27%

0%

26%

35%

100%

Other assets in the UK comprised a range of derivatives, private equity holdings, macro-orientated and multi-strategy alternative investments 
and a credit portfolio including corporate bond exposure, credit long/short funds and distressed debt investments.

None of the pension scheme assets are held in the entity’s own ﬁnancial instruments or in any assets held or used by the entity.

For the UK, the expected return on assets is based on the return targeted under the investment strategy. For the rest of the world, the expected 
rates of return on individual categories of scheme assets are determined with respect to bonds by reference to relevant indices, and with respect to 
other assets by reference to relevant indices of the historical return and economic forecasts of future returns relative to inﬂation in respect of assets 
of a similar nature. The overall expected rate of return is the weighted average of the rates on the individual asset categories.

The history of experience adjustments is as follows: 

Experience adjustments on scheme liabilities

Amount (£m)

Percentage of scheme liabilities (%)

Experience adjustments on scheme assets

Amount (£m)

Percentage of scheme assets (%)

2012

2011

2010

2009

2008

(2)

–

9

1

16

1

(63)

(4)

(31)

(2)

3

–

8

–

(141)

(11)

1

–

(332)

(30)

The estimated amounts of contributions expected to be paid to the schemes during the ﬁnancial year commencing 1 January 2013 in respect 
of the ongoing accrual of beneﬁts should be approximately £10m and it is anticipated that these will remain at a similar level in the medium term 
subject to changes in ﬁnancial conditions. Additional contributions of approximately £38m will also be made in 2013 in respect of the deﬁcit in 
the schemes. 

IAS 19 speciﬁes that pension liabilities should be discounted at appropriate high quality corporate bond rates. The directors consider that 
it is appropriate to apply the average of the yields on those AA corporate bonds which most closely approximate to the timescale of 
the liability proﬁle of the schemes and have therefore used such a rate, being 4.5%, in respect of the UK schemes at 31 December 2012 
(4.95% at 31 December 2011). The effect of a 0.1% movement in the discount rate applicable in the UK is to alter reported liabilities 
(before associated deferred tax) by approximately £32m. 

Liability calculations are also impacted heavily by the mortality projections included in the actuarial assumptions. The weighted average life expectancy 
of a male member of the UK schemes currently aged 65 has been assumed as 21 years. The weighted average life expectancy at 65 of a male 
currently aged 52 has been assumed as 22 years. The directors consider, on actuarial advice, these assumptions to be appropriate to the proﬁle of the 
membership of the schemes. The effect of a one-year change in this UK life expectancy assumption is to alter reported liabilities (before associated 
deferred tax) by approximately £88m. 

Pension obligations in respect of deferred members increase in line with inﬂation. Increases in salaries and increases in pensions-in-payment 
generally move in line with inﬂation. Inﬂation is therefore an important assumption in the calculation of deﬁned retirement beneﬁt liabilities. 
The effect of a 0.1% movement in the rate of inﬂation assumption applicable in the UK is to alter reported liabilities (before associated deferred tax) 
by approximately £15m.

124  G4S plc Annual Report and Accounts 2012

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
35. Provisions

At 1 January 2012

Additional provision in the year

On acquisition of subsidiary

Utilisation of provision

Unused amounts reversed

Translation adjustments

At 31 December 2012

Included in current liabilities

Included in non-current liabilities

Employee beneﬁts 

Employee 
beneﬁts 
£m 

Restructuring 
£m

Claims 
reserves 
£m 

Onerous 
contracts 
£m 

17

7

–

(7)

(2)

(1)

14

1

3

–

(1)

–

–

3

40

38

6

(33)

(1)

(1)

49

13

4

1

(6)

(1)

–

11

Total 
£m 

71

52

7

(47)

(4)

(2)

77

32

45

77

The provision for employee beneﬁts is in respect of any employee beneﬁts which accrue over the working lives of the employees, typically including 
items such as long service awards and termination indemnity schemes. 

The group’s net obligation in respect of long-term service beneﬁts other than retirement beneﬁts represents the present value of the future beneﬁt 
that employees have earned at the balance sheet date, less the fair value of scheme assets out of which the obligations are to be settled directly.

Restructuring 

Restructuring provisions include amounts for redundancy payments, and the costs of closure of activities in acquired businesses and discontinued 
operations. Settlement of restructuring provisions is highly probable. The timing is uncertain but is generally likely to be short term. 

Claims reserves 

The claims reserves are held by the wholly-owned captive insurance subsidiaries in Guernsey and the US which underwrite part of the group’s cash 
solutions, general liability, workers’ compensation and auto liability policies. The provisions are subject to regular actuarial review and are adjusted 
as appropriate. Settlement of these provisions is highly probable but both the value of the ﬁnal settlements and their timing is uncertain, dependent 
upon the outcome of ongoing processes to determine both liability and quantum in respect of a wide range of claims or possible claims. 

Onerous contracts 

The onerous contract provision mainly comprises the provision against future liabilities for loss-making contracts, for all properties sub-
let at a shortfall, for the cost of replacing assets where there is a present contractual requirement and for long-term idle, leased properties. 
The provision is based on the value of future net cash outﬂows. Whilst the likelihood of settlement of these obligations is considered probable, 
there is uncertainty over their value and duration. 

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G4S plc Annual Report and Accounts 2012  125

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes to the consolidated ﬁnancial statements continued

36. Deferred tax

The following are the major deferred tax liabilities and assets recognised by the group and movements thereon during the current and prior 
reporting periods:

At 1 January 2011

(Charge)/credit to the income statement

Acquisition of subsidiaries

Charge/(credit) to equity 

Transfers/other

At 31 December 2011

At 1 January 2012

Credit to the income statement

Acquisition of subsidiaries

Credit to equity 

Transfers/other

At 31 December 2012

Retirement 
beneﬁt 
obligations 
£m

Intangible 
assets 
£m

75

(11)

–

12

–

76

76

3

–

25

–

104

(84)

25

(21)

–

1

(79)

(79)

27

(9)

–

–

(61)

Tax  
losses 
£m

27

(4)

–

–

–

23

23

5

–

–

–

28

Other 
temporary 
differences 
£m

45

–

–

(1)

1

45

45

1

–

3

4

53

Total 
£m

63

10

(21)

11

2

65

65

36

(9)

28

4

124

Certain deferred tax assets and liabilities have been offset where permitted. The following is the analysis of the deferred tax balances (after offset) 
for ﬁnancial reporting purposes:

Deferred tax liabilities

Deferred tax assets

Net deferred tax asset included in held for sale

Total deferred tax position

2012 
£m

(68)

179

13

124

2011 
£m

(92)

157

–

65

At 31 December 2012, the group has unutilised tax losses of approximately £485m (2011: £456m) potentially available for offset against future 
proﬁts. A deferred tax asset of £28m (2011: £23m) has been recognised in respect of approximately £106m (2011: £71m) of gross losses. 
No deferred tax asset has been recognised in respect of the remaining £379m (2011: £385m) of gross losses due to the unpredictability of 
future proﬁt streams in the relevant jurisdictions and the fact that a signiﬁcant proportion of such losses remains unaudited by the relevant tax 
authorities. Included in unrecognised tax losses are gross losses of £14m which will expire between 2013 and 2022. Other losses may be carried 
forward indeﬁnitely. 

At 31 December 2012, the aggregate amount of temporary differences associated with undistributed earnings of non-UK subsidiaries for which 
deferred tax liabilities have not been recognised is £1,378m (2011: £1,401m). No liability has been recognised in respect of these gross differences 
on the basis that the group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences 
will not reverse in the foreseeable future. 

At 31 December 2012, the group has total unprovided contingent tax liabilities of approximately £5m (2011: £11m) relating to unresolved tax issues 
in various jurisdictions. 

37. Share capital

G4S plc

Issued and fully paid ordinary shares of 25p each

Ordinary shares in issue

2012 
£

2011 
£

352,667,160

352,667,160

2012 
Number 

2011 
Number

1,410,668,639

1,410,668,639

126  G4S plc Annual Report and Accounts 2012

38. Other reserves

At 1 January 2011

Total comprehensive income

Own shares purchased

Own shares awarded

At 31 December 2011

At 1 January 2012

Total comprehensive income

Own shares purchased

Own shares awarded

At 31 December 2012

Other reserves includes:

Hedging reserve 

Hedging 
reserve 
£m

(32)

6

–

–

(26)

(26)

(8)

–

–

(34)

Translation 
reserve 
£m

164

(54)

–

–

110

110

(60)

–

–

50

Merger 
reserve 
£m

426

–

–

–

426

426

–

–

–

426

Reserve for  
own shares 
£m

Total other 
reserves 
£m

(12)

–

(13)

9

(16)

(16)

–

(6)

2

(20)

546

(48)

(13)

9

494

494

(68)

(6)

2

422

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash ﬂow instruments related to the hedged 
transactions that have not yet occurred (net of tax).

Translation reserve 

The translation reserve comprises all foreign exchange differences arising from the translation of the ﬁnancial statements of foreign operations, as 
well as from the translation of liabilities that hedge the company’s net investment in foreign operations (net of tax).

Merger reserve 

The merger reserve comprises reserves arising upon the merger between the former Group 4 Falck A/S and the former Group 4 Securitas BV in 
2000 and the acquisition of Securicor plc by the group in 2004. 

Reserve for own shares 

An employee beneﬁt trust established by the group held 7,589,853 shares at 31 December 2012 (2011: 6,265,571 shares) to satisfy the vesting of 
awards under the performance share plan and performance-related and synergy bonus schemes. During the year 2,211,404 shares were purchased 
by the trust, whilst 885,970 shares were used to satisfy the vesting of awards under the schemes. At 31 December 2012, the cost of shares held by 
the trust was £20,207,798 (2011: £16,484,777), whilst the market value of these shares was £19,470,928 (2011: £17,029,822). Shares held by the 
trust are treated as treasury shares, are deducted from equity, do not receive dividends and are excluded from the calculations of earnings per share.

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G4S plc Annual Report and Accounts 2012  127

 
 
 
Notes to the consolidated ﬁnancial statements continued

39. Analysis of net debt

A reconciliation of net debt to amounts in the consolidated statement of ﬁnancial position is presented below:

Cash and cash equivalents

Investments

Net cash and overdrafts included within disposal groups classiﬁed as held for sale

Net debt (excluding cash and overdrafts) included within disposal groups classiﬁed as held for sale

Bank overdrafts

Bank loans

Loan notes 

Fair value of loan note derivative ﬁnancial instruments

Obligations under ﬁnance leases

Total net debt

An analysis of movements in net debt in the year is presented below:

Increase in cash, cash equivalents and bank overdrafts per consolidated cash ﬂow statement

Sale of investments

Movement in debt and lease ﬁnancing

Change in net debt resulting from cash ﬂows

Borrowings acquired with subsidiaries

Net additions to ﬁnance leases

Movement in net debt in the year

Translation adjustments

Net debt at the beginning of the year

Net debt at the end of the year

40. Contingent liabilities

2012 
£m

469

56

20

10

(17)

(345)

(2,039)

105

(61)

(1,802)

2012  
£m

138

–

(302)

(164)

(1)

(21)

(186)

–

(1,616)

(1,802)

2011 
£m

433

70

(10)

–

(53)

(932)

(1,180)

120

(64)

(1,616)

2011  
£m

87

(10)

(222)

(145)

(5)

(11)

(161)

(29)

(1,426)

(1,616)

Contingent liabilities exist in respect of agreements entered into in the normal course of business, none of which are individually or 
collectively signiﬁcant. 

Details of unprovided contingent tax liabilities are presented in note 36.

41. Operating lease arrangements

The group as lessee

At the balance sheet date, the group had outstanding commitments under non-cancellable operating leases, which fall due as follows:

Within one year

In the second to ﬁfth years inclusive

After ﬁve years

Total operating lease commitments

2012 
£m

133

315

181

629

2011 
£m

138

310

197

645

The group leases a number of its office properties, vehicles and other operating equipment under operating leases. Property leases are negotiated 
over an average term of eight years, at rates reﬂective of market rentals. Periodic rent reviews take place to bring lease rentals in line with prevailing 
market conditions. Some but not all lease agreements have an option to renew the lease at the end of the lease term. Leased vehicles and other 
operating equipment are negotiated over an average lease term of four years. 

Certain leased properties have been sub-let by the group. Sub-leases are negotiated on terms consistent with those of the associated property. 
The total future minimum sub-lease payments expected to be received by the group from sub-let properties amount to £10m (2011: £10m).

128  G4S plc Annual Report and Accounts 2012

 
42. Share-based payments

Shares allocated conditionally fall under either the group’s performance-related bonus scheme or the group’s Performance Share Plan (PSP). Shares 
allocated conditionally under the performance-related bonus scheme vest three years following the date of grant provided certain non-market 
performance conditions are met. Those allocated under the PSP vest after three years, to the extent that (a) certain non-market performance 
conditions are met and (b) certain market performance conditions are met.  The proportion of the allocation of awards to these criteria is described 
in the remuneration report. Vesting occurs after the third anniversary of the date the shares were allocated conditionally.  To the extent that the 
performance criteria have been met and the shares are not forfeited, these shares can only be released upon request after the third anniversary but 
before the tenth anniversary.  

The number of shares allocated conditionally is as follows:

Outstanding at 1 January

Allocated during the year

Transferred during the year

Forfeited during the year

Expired during the year

Performance- 
related bonus 
scheme  
2012 
Number

PSP 
2012 
Number

1,068,455

16,102,450

40,652

5,859,439

(296,907)

–

–

(613,518)

(727,959)

Total 
2012 
Number

17,170,905

5,900,091

(910,425)

(727,959)

Performance- 
related bonus  
scheme 
2011 
Number

1,525,349

121,090

(577,984)

–

–

PSP 
2011 
Number

14,914,806

6,431,172

Total 
2011 
Number

16,440,155

6,552,262

(2,798,491)

(3,376,475)

(727,154)

(1,717,883)

(727,154)

(1,717,883)

(5,031,187)

(5,031,187)

Outstanding at 31 December

812,200

15,589,225

16,401,425

1,068,455

16,102,450

17,170,905

The weighted average remaining contractual life of conditional share allocations outstanding at 31 December 2012 was 16 months 
(2011: 19 months). The weighted average share price at the date of allocation of shares allocated conditionally during the year was 277.1p 
(2011: 253.0p) and the contractual life of all conditional allocations was three years. 

Under the PSP, the vesting of half (2011: one third) of the shares allocated conditionally depends upon Total Shareholder Return (a market 
performance condition) over the vesting year measured against a comparator group. 25% of the allocation vests upon the group’s Total 
Shareholder Return equalling median performance amongst the comparator group. The fair value of the shares allocated subject to this market 
performance condition has therefore been reduced by 75%.

Total expenses of £nil were recognised in the income statement in the year (2011: £1m) in respect of conditional share allocations, the calculation of 
which included an estimate of the number of those shares allocated subject to non-market performance conditions that would vest based upon the 
probable achievement against the performance conditions. 

43. Related party transactions

Transactions and balances with joint ventures and associated undertakings

Transactions between the company and its subsidiaries have been eliminated on consolidation and are not disclosed in this note. Details of 
transactions between the group and other related parties are disclosed below. All transactions with related parties are entered into in the normal 
course of business.

Transactions with joint ventures included revenue recorded of £30m (2011: £22m). Amounts due to related parties include £2m (2011: £2m) 
to associates. Amounts due from related parties include £4m (2011: £5m) from joint ventures and £2m (2011: £2m) from associates.

No expense has been recognised in the year for bad and doubtful debts in respect of amounts owed by related parties. Details of principal joint 
ventures and associated undertakings are shown in notes 21 and 22 respectively. 

The group has a legal interest in a number of joint ventures and joint arrangements, where the economic interest was divested by the Global 
Solutions Group prior to its acquisition by G4S plc. The signiﬁcant transactions with these entities are:

White Horse Education Partnership Limited

Integrated Accommodation Services plc

Fazakerley Prison Services Limited

Onley Prison Services Limited

ECD Cookham Wood Limited

ECD Onley Limited

Stratus Integrated Services Limited

UK Court Services (Manchester) Limited

East London Lift Company Limited

Brent, Harrow & Hillingdon LIFT Company Ltd

Total

2012  
Services/sales to  
£m

2011  
Services/sales to  
£m

2

44

34

14

13

13

7

2

1

–

2

45

32

13

13

12

7

2

1

1

130

128

G4S plc Annual Report and Accounts 2012  129

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Notes to the consolidated ﬁnancial statements continued

43. Related party transactions continued

Transactions with post-employment beneﬁt schemes 

Details of transactions with the group’s post-employment beneﬁt schemes are provided in note 34. Unpaid contributions owed to schemes 
amounted to £1m at 31 December 2012 (2011: £1m). 

Transactions with other related parties

During the prior year the group completed a transaction to sell a property belonging to its Secure Solutions business in Turkey to the then 
non-controlling interest for proceeds of approximately £5m. This transaction was undertaken on an arm’s length basis.

Remuneration of key management personnel 

The group’s key management personnel are deemed to be the non-executive directors and those individuals, including the executive directors, 
whose remuneration is determined by the Remuneration Committee. Their remuneration is set out below. Further information about the 
remuneration of individual directors included within key management personnel is provided in the audited part of the Directors’ Remuneration 
Report on pages 72 to 81. 

Short-term employee beneﬁts

Post-employment beneﬁts

Other long-term beneﬁts

Share-based payment

Total

2012  
£

7,253,734

104,212

41,819

132,289

2011  
£

6,460,187

1,047,125

44,992

693,220

7,532,054

8,245,524

44. Events after the balance sheet date

No signiﬁcant post-balance sheet events have affected the group since 31 December 2012.

45. Signiﬁcant investments

The companies listed below are those which were part of the group at 31 December 2012 and which, in the opinion of the directors, signiﬁcantly 
affected the group’s results and net assets during the year. The directors consider that those companies not listed are not signiﬁcant in relation to the 
group as a whole. A comprehensive list of all subsidiaries will be disclosed as an appendix to the group’s annual return. 

The principal activities of the companies listed below are indicated according to the following key: 

Secure solutions

Cash solutions

S

C

These businesses operate principally in the country in which they are incorporated.

Subsidiary undertakings

G4S Soluciones de Seguridad S.A.

G4S Custodial Services Pty Limited

G4S Secure Solutions AG (Austria)

G4S Secure Solutions SA/NV

G4S Cash Solutions (Belgium) NV

Interativa Service Ltda

Vanguarda Segurança e Vigilância Ltda

G4S Cash Solutions (Canada) Limited

G4S Secure Solutions (Canada) Limited

G4S Secure Solutions Colombia S.A.

G4S Security Services A/S

G4S Aviation Services (UK) Limited

G4S Care and Justice Services (UK) Limited

G4S Cash Centres (UK) Limited

G4S Cash Solutions (UK) Limited

G4S Integrated Services (UK) Limited 

G4S Risk Management Limited

G4S Secure Solutions (UK) Limited

Group 4 Total Security Limited

G4S Utility and Outsourcing Services (UK) Limited  

130  G4S plc Annual Report and Accounts 2012

Product  
segment

Country of 
incorporation

Ultimate  
ownership

S

S

S

S

C

S

S

C

S

S+C

S

S

S

C

C

S

S

S

S

S

Argentina

Australia

Austria

Belgium

Belgium

Brazil

Brazil

Canada

Canada

Colombia

 Denmark

England

England

England

England

England

England

England

England

England

75%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

45. Signiﬁcant investments continued

AS G4S Baltics

G4S Security Services Oy

G4S Cash Solutions S.A.

G4S Keszpenzlogisztikai Kft 
G4S Secure Solutions (India) Pvt. Limited1, 5

G4S Secure Solutions (Ire) Limited

G4S Secure Solutions (Israel) Limited

G4S Security Technologies (Israel) Limited

G4S Kenya Limited

G4S Security Services S.A.R.L
Safeguards G4S Sdn Bhd2, 5

G4S Cash Solutions BV

G4S Beheer BV

G4S Secure Solutions AS

G4S Peru S.A.C.

G4S Secure Solutions (PNG) Limited

al Majal Service Master Co. Limited5

G4S Cash Solutions (SA) (Pty) Limited

G4S Secure Solutions (SA) (Pty) Limited 

G4S Secure Solutions AB

G4S Secure Solutions (Thailand) Limited
Group 4 Securicor Security Services UAE (LLC) G4S5

G4S Government Solutions, Inc.

G4S Integrated Services, Inc.

G4S Secure Solutions (USA) Inc.

G4S Technology LLC

G4S Youth Services LLC

Joint ventures (see note 21)
Bridgend Custodial Services Limited3
Bloemfontein Correctional Contracts (Pty) Limited4

Associated undertakings (see note 22) 

Space Gateway Support LLC

Product  
segment

S+C

S

C

C

S

S

S

S

S+C

S+C

 S+C

C

S

S

S+C

S+C

S

C

S

C

S

S

S

S

S

S

S

S

S

S

Country of 
incorporation

Ultimate  
ownership

Estonia

Finland

Greece

Hungary

India

Ireland

Israel

Israel

Kenya

Luxembourg

Malaysia

Netherlands

Netherlands

Norway

Peru

Papua New 
Guinea

Saudi Arabia

South Africa

South Africa

Sweden

Thailand

UAE

USA

USA

USA

USA

USA

England

South Africa

USA

100%

100%

100%

100%

49%

100%

92%

92%

100%

100%

49%

100%

100%

100%

100%

100%

49%

75%

74%

100%

100%

49%

100%

100%

100%

100%

100%

59%

20%

46%

1 G4S Secure Solutions (India) Pvt. Limited has a year end of 31 March.  
2 Safeguards G4S Sdn Bhd has a year end of 30 June. 
3 Bridgend Custodial Services Limited has a year end of 30 September.  
4 Bloemfontein Correctional Contracts (Pty) Limited has a year end of 30 September. 
5  By virtue of shareholder agreements, options, pre-emption rights and other contractual arrangements, the group has the power to govern the ﬁnancial and operating policies, 

so as to obtain the beneﬁts from the activities of these companies. These are therefore consolidated as full subsidiaries. 

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G4S plc Annual Report and Accounts 2012  131

 
 
 
 
Parent company balance sheet
At 31 December 2012

Fixed assets

Intangible assets

Investments

Current assets

Debtors

Cash at bank and in hand

Creditors – amounts falling due within one year

Bank overdraft (unsecured)

Borrowings (unsecured)

Other creditors

Net current assets

Total assets less current liabilities

Creditors – amounts falling due after more than one year

Borrowings (unsecured)

Other creditors

Net assets

Capital and reserves 

Called up share capital

Share premium and reserves

Equity shareholders’ funds

Notes

2012  
£m

2011  
£m

(b)

(c)

(d)

(e)

(f)

(e)

(f)

37

(i)

16

3,051

3,067

2,930

9

2,939

(9)

(40)

(2,851)

(2,900)

39

3,106

(1,174)

(2)

(1,176)

1,930

353

1,577

1,930

12

3,051

3,063

3,280

36

3,316

(1)

–

(2,887)

(2,888)

428

3,491

(1,451)

(4)

(1,455)

2,036

353

1,683

2,036

The parent company ﬁnancial statements were approved by the board of directors and authorised for issue on 12 March 2013.

They were signed on its behalf by:

Nick Buckles 
Director   

Trevor Dighton 
Director

132  G4S plc Annual Report and Accounts 2012

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Parent company reconciliation of movements in 
equity shareholders’ funds 
For the year ended 31 December 2012

Retained proﬁt for the year

Changes in fair value of hedging derivatives

Dividends declared

Own shares purchased

Equity-settled transactions

Tax on equity movements

Net (decrease)/increase in shareholders’ funds

Opening equity shareholders’ funds

Closing equity shareholders’ funds

2012  
£m

24

(6)

(120)

(6)

–

2

(106)

2,036

1,930

2011  
£m

1,120

7

(114)

(13)

1

(2)

999

1,037

2,036

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G4S plc Annual Report and Accounts 2012  133

 
 
 
 
 
 
 
 
 
 
 
Notes to the parent company ﬁnancial statements

(a) Signiﬁcant accounting policies 

Basis of preparation

The separate ﬁnancial statements of the company are presented as required by the Companies Act 2006. They have been prepared under the 
historical cost convention except for the revaluation of certain ﬁnancial instruments and in accordance with applicable United Kingdom Accounting 
Standards (UK GAAP).

The ﬁnancial statements have been prepared under the going concern basis. 

Exemptions

Under section 408 of the Companies Act 2006 the company is exempt from the requirement to present its own proﬁt and loss account. 

The company has taken advantage of the exemption from preparing a cash ﬂow statement under the terms of FRS 1 Cash Flow Statements.  
The cash ﬂows of the company are included within its consolidated ﬁnancial statements.

The company is also exempt under the terms of the revised FRS 8 Related Party Disclosures from disclosing related party transactions with wholly-
owned subsidiaries within the group.

Intangible ﬁxed assets

Intangible ﬁxed assets are stated at cost net of accumulated amortisation and any provision for impairment. Intangible ﬁxed assets are amortised 
on a straight-line basis over their expected economic life. Software is amortised over periods up to a maximum of eight years.

Fixed asset investments 

Fixed asset investments, which comprise investments in subsidiary undertakings, are stated at cost less amounts written-off.

Financial instruments

Financial assets and ﬁnancial liabilities are recognised when the group becomes a party to the contractual provisions of the instruments. 

External debtors
 Debtors do not carry interest and are stated initially at their fair value. The company provides for bad debts based upon an analysis of those that are 
past due in accordance with local conditions and past default experience.

Cash at bank and in hand and bank overdrafts
Cash at bank and in hand and bank overdrafts comprise cash balances and call deposits.

Interest-bearing borrowings 
Interest-bearing bank overdrafts, loans and loan notes are recognised at the value of proceeds received, net of direct issue costs. Finance charges, 
including premiums payable on settlement or redemption and direct issue costs, are recognised in the proﬁt and loss account on an accrual basis 
using the effective interest method. 

External creditors 
Creditors are not interest-bearing and are stated initially at their fair value. 

Amounts owed to/from subsidiary undertakings
Amounts owed to/from subsidiary undertakings bear interest at prevailing market rates.

Equity instruments 
Equity instruments issued by the company are recorded at the value of proceeds received, net of direct issue costs. 

Derivative ﬁnancial instruments and hedge accounting 

In accordance with its treasury policy, the company only holds or issues derivative ﬁnancial instruments to manage the group’s exposure to ﬁnancial 
risk, not for trading purposes. Such ﬁnancial risk includes the interest risk on the group’s variable-rate borrowings, the fair value risk on the group’s 
ﬁxed-rate borrowings, commodity risk in relation to its diesel consumption and foreign exchange risk on transactions, on the translation of the 
group’s results and on the translation of the group’s net assets measured in foreign currencies. The company manages these risks through a range of 
derivative ﬁnancial instruments, including interest rate swaps, ﬁxed rate agreements, commodity swaps, commodity options, forward foreign exchange 
contracts and currency swaps. 

134  G4S plc Annual Report and Accounts 2012

(a) Signiﬁcant accounting policies continued

Derivative ﬁnancial instruments and hedge accounting continued

Derivative ﬁnancial instruments are recognised in the balance sheet as ﬁnancial assets or liabilities at fair value. The gain or loss on remeasurement to 
fair value is recognised immediately in the proﬁt and loss account, unless they qualify for hedge accounting. Where derivatives do qualify for hedge 
accounting, the treatment of any resultant gain or loss depends on the nature of the item being hedged as described below: 

Fair value hedge 
The change in the fair value of both the hedging instrument and the related portion of the hedged item is recognised immediately in the proﬁt and 
loss account. 

Cash ﬂow hedge 
The change in the fair value of the portion of the hedging instrument that is determined to be an effective hedge is recognised in equity and 
subsequently recycled to the proﬁt and loss account when the hedged cash ﬂow impacts the proﬁt and loss account. The ineffective portion of the 
fair value of the hedging instrument is recognised immediately in the proﬁt and loss account. 

Foreign currencies

The ﬁnancial statements of the company are presented in sterling, its functional currency. Transactions in currencies other than sterling are 
translated at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities which are 
denominated in other currencies are retranslated at the rates prevailing on that date. Non-monetary assets and liabilities carried at fair value which 
are denominated in other currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items 
measured at historical cost denominated in other currencies are not retranslated. Gains and losses arising on retranslation are included in the proﬁt 
and loss account.

Taxation

Current tax is provided at amounts expected to be paid (or recovered) using tax rates and laws that have been enacted or substantively enacted by 
the balance sheet date.

Deferred tax is recognised in respect of all material timing differences that have originated, but not reversed, by the balance sheet date. Deferred tax 
is measured on a non-discounted basis at tax rates that are expected to apply in the periods in which the timing differences reverse based on tax 
rates and laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognised where their recovery is considered 
more likely than not in that there will be suitable taxable proﬁts from which the future reversal of underlying timing differences can be deducted.

Pensions

The company participates in multi-employer pension schemes in the UK, which provide beneﬁts based on ﬁnal pensionable pay. The company is 
unable to identify its share of the schemes’ assets and liabilities on a consistent and reasonable basis. In accordance with FRS 17 Retirement Beneﬁts, 
the company treats the schemes as if they were deﬁned contribution schemes and recognises charges as and when contributions are due to the 
scheme. Details of the schemes are included in note 34 to the consolidated ﬁnancial statements.

Share-based payments 

The company grants equity-settled share-based payments to certain employees. The fair value of share-based payments is determined at the date of 
grant and expensed, with a corresponding increase in equity on a straight-line basis over the vesting period, based on the company’s estimate of the 
shares that will eventually vest. The amount expensed is adjusted over the vesting period for changes in the estimate of the number of shares that 
will eventually vest, save for changes resulting from any market-related performance conditions. 

Dividends 

Dividends are recognised as distributions to equity holders in the period in which they are paid. Dividends proposed but not declared are not 
recognised but are disclosed in the notes to the consolidated ﬁnancial statements. 

Financial guarantees

The company enters into ﬁnancial guarantee contracts to guarantee the indebtedness of other companies within the group. The company treats such 
contracts as a contingent liability unless and until such time as it becomes probable that the company will be required to make a payment under the 
guarantee.

Own shares held by employee beneﬁt trust

Transactions of the company-sponsored employee beneﬁt trust are included in the parent company ﬁnancial statements. In particular, the trust’s 
purchases of shares in the company are debited directly to equity.

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G4S plc Annual Report and Accounts 2012  135

 
 
 
Software 
£m

12

5

17

–

(1)

(1)

16

12

Total  
£m

3,051

2011  
£m

3,141

19

120

3,280

Notes to the parent company ﬁnancial statements continued

(b) Intangible ﬁxed assets  

Cost

At 1 January 2012

Additions at cost

At 31 December 2012

Amortisation

At 1 January 2012

Amortisation charge

At 31 December 2012

Net book value

At 31 December 2012

At 31 December 2011

(c) Fixed asset investments 

The following are included in the net book value of ﬁxed asset investments: 

Subsidiary undertakings

Shares at net book value:

At 1 January and 31 December 2012

Full details of signiﬁcant investments held by the parent company and the group are detailed in note 45 to the consolidated ﬁnancial statements.

(d) Debtors

Amounts owed by group undertakings

Other debtors

Derivative ﬁnancial instruments at fair value

Total debtors

2012  
£m

2,828

–

102

2,930

Included within derivative ﬁnancial instruments at fair value is £77m due after more than one year (2011: £106m). See note (g) for further details.

Included in other debtors is £nil (2011: £3m) with regard to deferred tax comprised as follows:

Employee beneﬁts 

Changes in fair value of hedging derivatives

Total deferred tax

The reconciliation of deferred tax balances is as follows:

At 1 January 2012 

Credited to proﬁt and loss

Charged to equity in relation to changes in fair value of hedging derivatives

At 31 December 2012

2012  
£m

–

–

–

2011  
£m

1

2

3

Total  
£m

3

(2)

(1)

–

136  G4S plc Annual Report and Accounts 2012

(e) Borrowings (unsecured)

 The unsecured borrowings are in the following currencies:

Sterling

Euro

US dollar

Total unsecured borrowings

 The payment proﬁle of the unsecured borrowings is as follows: 

Repayable within one year

Repayable within two to ﬁve years

Repayable after ﬁve years

Total unsecured borrowings

Undrawn committed facilities mature as follows:

Within one year

Within two to ﬁve years

Total undrawn committed facilities

2012  
£m

419

73

722

1,214

2012  
£m

40

402

772

1,214

2012  
£m

–

856

856

2011  
£m

419

204

828

1,451

2011  
£m

–

509

942

1,451

2011  
£m

480

287

767

Borrowings consist of £73m of ﬂoating rate bank loans (2011: £271m) and £1,144m of ﬁxed rate loan notes (2011: £1,180m). Bank overdrafts, bank 
loans and loan notes issued in July 2008 and May 2009 are stated at amortised cost. The loan notes issued in March 2007 are stated at amortised 
cost recalculated at an effective interest rate current at the balance sheet date as they are part of a fair value hedge relationship. The directors 
believe the fair value of the company’s bank overdrafts, bank loans and the loan notes issued in March 2007, calculated from market prices, 
approximates to their book value. US$265m (£163m) of the loan notes issued in July 2008 have a fair value market gain of £31m (2011: £40m). 
The fair value of the remaining notes approximates to their book value.

Borrowing at ﬂoating rates exposes the company to cash ﬂow interest rate risk. The management of this risk is detailed in note (h). 

There were no ﬁnancial liabilities upon which no interest is paid.

(f ) Other creditors

Amounts falling due within one year:

Amounts owed to group undertakings

Other taxation and social security costs

Other creditors

Accruals and deferred income

Derivative ﬁnancial instruments at fair value

Total creditors – amounts falling due within one year

Amounts falling due after more than one year:

Derivative ﬁnancial instruments at fair value

2012  
£m

2011  
£m

2,817

2,849

1

–

31

2

–

1

32

5

2,851

2,887

2

4

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G4S plc Annual Report and Accounts 2012  137

 
 
 
Notes to the parent company ﬁnancial statements continued

(g) Derivative ﬁnancial instruments

 The carrying values of derivative ﬁnancial instruments at the balance sheet date are presented below:

Cross currency swaps designated as cash ﬂow hedges

Interest rate swaps designated as cash ﬂow hedges

Interest rate swaps designated as fair value hedges 

Commodity swaps

Less: Amounts falling due after more than one year

Amounts falling due within one year

Assets 
2012  
£m

31

–

70

1

102

(77)

25

Assets 
2011  
£m

40

–

77

3

120

(106)

14

Liabilities 
2012  
£m

Liabilities 
2011  
£m

–

3

–

1

4

(2)

2

–

6

–

3

9

(4)

5

Derivative ﬁnancial instruments are stated at fair value, based upon market prices where available or otherwise on discounted cash ﬂow valuations. 
The mark to market valuation of the derivatives has decreased by £12m (2011: increase £30m) during the year. 

The interest rate, cross currency and commodity swaps treated as cash ﬂow hedges have the following maturities:

Within one year

In the second year

In the third year 

In the fourth year

In the ﬁfth year or greater

Total carrying value 

Projected settlement of cash ﬂows (including accrued interest) associated with derivatives:

Within one year

In the second year

In the third year 

In the fourth year

In the ﬁfth year or greater

Total cash ﬂows 

Assets 
2012  
£m

Assets 
2011  
£m

Liabilities 
2012  
£m

Liabilities 
2011  
£m

9

–

–

17

6

32

2

10

–

23

8

43

2

2

–

–

–

4

5

2

2

–

–

9

Assets 
2012  
£m

Assets 
2011  
£m

Liabilities 
2012  
£m

Liabilities 
2011  
£m

7

2

–

17

6

32

2

10

–

24

9

45

2

2

–

–

–

4

7

3

2

–

–

12

138  G4S plc Annual Report and Accounts 2012

(h) Financial risk

Currency risk and forward foreign exchange contracts

The group conducts business in many currencies. The group presents its consolidated ﬁnancial statements in sterling and it is in consequence subject to 
foreign exchange risk due to the translation of the results and net assets of its foreign subsidiaries. The company together with G4S International Finance 
plc therefore hedges a substantial portion of the group’s exposure to ﬂuctuations in the translation into sterling of its overseas net assets by holding loans 
in foreign currencies. Translation adjustments arising on the translation of foreign currency loans are recognised in the proﬁt and loss account.

Cross currency swaps with a nominal value of £134m were arranged to hedge the foreign currency risk on US$265m of the second US Private 
Placement notes issued in July 2008, effectively ﬁxing the sterling value on this portion of debt at an exchange rate of 1.9750. 

Assuming a 1% appreciation of sterling against the US dollar, the fair value net gain on the cross currency swaps which hedge part of the currency 
loan notes would be expected to fall by £2m.

Interest rate risk and interest rate swaps

Borrowing at ﬂoating rates as described in note 29 to the consolidated ﬁnancial statements exposes the group to cash ﬂow interest rate risk, which 
the company manages within policy limits approved by the directors. Interest rate swaps and, to a limited extent, forward rate agreements are utilised 
to ﬁx the interest rate on a proportion of borrowings on a reducing scale over forward periods up to a maximum of ﬁve years.  At 31 December 
2012 the nominal value of such contracts was £nil (in respect of US dollar) (2011: £71m) and £73m (in respect of euro) (2011: £121m), their 
weighted average interest rate was nil% (US dollar) (2011: 4.8%) and 3.2% (euro) (2011: 3.6 %), and their weighted average period to maturity 
was one year and two months.  All the interest rate hedging instruments are designated and fully effective as cash ﬂow hedges and movements in 
their fair value have been deferred in equity.  The quantity of interest rate swaps outstanding in the company is expected to continue to decline as 
Treasury activity is increasingly conducted by G4S International Finance plc. 

The US Private Placement market is predominantly a ﬁxed rate market, with investors looking for a ﬁxed rate return over the life of the loan notes. 
At the time of the ﬁrst issue in March 2007, the company was comfortable with the proportion of ﬂoating rate exposure not hedged by interest 
rate swaps and therefore rather than take on a higher proportion of ﬁxed rate debt arranged ﬁxed to ﬂoating swaps effectively converting the ﬁxed 
coupon on the Private Placement to a ﬂoating rate. Following the swaps the resulting average coupon on the US Private Placement is Libor + 60bps. 
These swaps have been documented as fair value hedges of the US Private Placement ﬁxed interest loan notes, with the movements in their fair 
value posted to proﬁt and loss at the same time as the movement in the fair value of the hedged item.

The interest on the US Private Placement notes issued in July 2008 and on the GBP Public Bond issued in May 2009 was kept at ﬁxed rate.

The core company borrowings are held in US dollar, euro and sterling.  Although the impact of rising interest rates is largely shielded by ﬁxed 
rate loans and interest rate swaps which ﬁx a portion of the exposure, some interest rate risk remains.  A 1% increase in interest rates across the 
yield curve in each of these currencies with the 31 December 2012 debt position constant throughout 2013, would lead to an expectation of an 
additional interest charge of £3m in the 2013 ﬁnancial year.

Commodity risk and commodity swaps

The group’s principal commodity risk relates to the ﬂuctuating level of diesel prices, particularly affecting its cash solutions businesses. The company 
acts as a market intermediary, arranging commodity swaps and commodity options with its relationship banks with back to back deals on identical 
terms with its subsidiaries to ﬁx synthetically part of the exposure and reduce the associated cost volatility. 

Counterparty credit risk

The company’s strategy for credit risk management is to set minimum credit ratings for counterparties and monitor these on a regular basis. 

For treasury-related transactions, the policy limits the aggregate credit risk assigned to a counterparty. The utilisation of a credit limit is calculated by 
applying a weighting to the notional value of each transaction outstanding with each counterparty based on the type and duration of the transaction. 
The total mark to market value outstanding with each counterparty is closely monitored against policy limits assigned to each counterparty. 
For short-term transactions (under one year), at inception of the transaction, the ﬁnancial counterparty must be investment grade rated by either 
the Standard & Poor’s or Moody’s rating agencies. For long-term transactions, at inception of the transaction, the ﬁnancial counterparty must have 
a minimum rating of BBB+/Baa1 from Standard & Poor’s or Moody’s. 

Treasury transactions are dealt with the company’s relationship banks, all of which have a strong investment grade rating.  At 31 December 2012 the 
largest two counterparty exposures relating to treasury transactions were £38m and £30m and both were held with institutions with long-term 
Standard & Poor’s credit ratings of A- and A respectively. These exposures represent 37% (2011: 38%) and 29% (2011: 27%) of the carrying values 
of derivative ﬁnancial instruments, with a fair value gain at the balance sheet date.  Both of these banks had signiﬁcant loan commitments outstanding 
to G4S plc at 31 December 2012.

 The company participates in the group’s multi-currency notional pooling cash management system with a wholly-owned subsidiary of an Aa3 rated 
bank. There is legal right of set off under the pooling agreement.

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G4S plc Annual Report and Accounts 2012  139

 
 
 
Notes to the parent company ﬁnancial statements continued

(i) Share premium and reserves

At 1 January 2012

Retained proﬁt

Changes in fair value of hedging derivatives

Dividends declared

Own shares purchased

Own shares awarded

Tax on equity movements

At 31 December 2012

(j) Auditor’s remuneration

Share 
premium  
£m

258

–

–

–

–

–

–

Proﬁt and 
loss account  
£m

1,441

24

(6)

(120)

–

(2)

2

Own 
shares  
£m

(16)

–

–

–

(6)

2

–

Total  
£m

1,683

24

(6)

(120)

(6)

–

2

258

1,339

(20)

1,577

Fees paid to KPMG Audit Plc and its associates for non-audit services to the company itself are not disclosed in its individual accounts because the 
company’s consolidated ﬁnancial statements are required to disclose such fees on a consolidated basis. 

(k) Staff costs and employees

The average monthly number of employees of the company during the year was:

Total staff costs, including directors’ emoluments, were as follows:

Wages and salaries

Total staff costs

2012  
Number

49

2011  
Number

51

2012  
£m

–

–

2011  
£m

1

1

Certain G4S plc staff costs are now borne by G4S Corporate Services Limited and are reported within the separate ﬁnancial statements of 
that company.

140  G4S plc Annual Report and Accounts 2012

 
(l) Share-based payments

The group has one type of equity-settled, share-based payment scheme in place being the conditional allocations of G4S plc shares.  An employee 
beneﬁt trust established by the group holds shares to satisfy the vesting of conditional allocation awards. Reserve for own share disclosures relevant 
to the company are presented within note 38 to the consolidated ﬁnancial statements. Share-based payments disclosures relevant to the company 
are presented within note 42 to the consolidated ﬁnancial statements.

(m) Related party transactions

Certain disclosures relevant to the company are presented within note 43 to the consolidated ﬁnancial statements. Company transactions with 
group undertakings primarily consist of royalty charges, central service charges, group insurance recharges and loan transactions. 

There were no material transactions with non-wholly owned group undertakings in 2012 (2011: none).

(n) Contingent liabilities 

To help secure cost effective ﬁnance facilities for its subsidiaries, the company issues guarantees to some of its ﬁnance providers. 
At 31 December 2012 guarantees totalling £493m (2011: £583m) were in place in support of such facilities.

The company also guarantees the debt obligations of G4S International Finance plc. At 31 December 2012 contingent liabilities of £1,061m were 
outstanding in support of such debt obligations. 

The company is included in a group registration for UK VAT purposes and is therefore jointly and severally liable for all other UK group companies’ 
unpaid debts in this connection. The liability of the UK group registration at 31 December 2012 totalled £19m (2011: £21m).

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G4S plc Annual Report and Accounts 2012  141

 
 
 
Notice of Annual General Meeting

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. 

If you are in any doubt about the contents of this document or the action you should take, you should immediately consult your 
stockbroker, bank manager, solicitor, accountant or other independent professional adviser authorised under the Financial Services and 
Markets Act 2000 if you are resident in the United Kingdom or, if not, from another appropriately authorised independent ﬁnancial 
adviser. If you have sold or otherwise transferred all your shares in G4S plc, please send this notice and the accompanying documents 
to the person through whom the sale or transfer was effected so that it can be passed on to the purchaser or transferee. 

Notice is hereby given that the Annual General Meeting of G4S plc will be held at Salters’ Hall, 4 Fore Street, London EC2Y 5DE 
on Thursday, 6 June 2013 at 2.00pm in order to consider and, if thought ﬁt, to pass the following Resolutions: 

Resolutions 1 to 17 and Resolution 20 will be proposed as ordinary resolutions. Resolutions 18, 19 and 21 will be proposed as special resolutions. 

1.  To receive the ﬁnancial statements of the company for the year ended 31 December 2012 and the reports of the directors and auditor thereon.  

2.  To receive and approve the Directors’ Remuneration Report contained in the annual report for the year ended 31 December 2012.  

3. 

 To declare a ﬁnal dividend for the year ended 31 December 2012 of 5.54p (DKK 0.473) for each ordinary share in the capital of 
the company.  

4.  To elect Ashley Almanza (member of the Risk Committee) as a director.

5.  To elect John Connolly (member of the Nomination and Risk Committees) as a director. 

6.  To elect Adam Crozier (member of the Audit and Nomination Committees) as a director. 

7.    To elect Paul Spence (member of the Audit, CSR and Risk Committees) as a director. 

8.  To elect Tim Weller (member of Audit and Risk Committees) as a director. 

9.  To re-elect Nick Buckles (member of the Risk Committee) as a director. 

10.  To re-elect Mark Elliott (member of the CSR, Nomination and Remuneration Committees) as a director. 

11.  To re-elect Winnie Kin Wah Fok (member of the CSR and Remuneration Committees) as a director. 

12.  To re-elect Grahame Gibson as a director. 

13.  To re-elect Mark Seligman (member of the Audit and Remuneration Committees) as a director. 

14.  To re-elect Clare Spottiswoode (member of the CSR and Remuneration Committees) as a director. 

15.   To re-appoint KPMG Audit Plc as auditor of the company to hold office until the conclusion of the next Annual General Meeting 

of the company.

16.  To authorise the directors to determine the remuneration of the auditor.

17.   That the directors be and are hereby generally and unconditionally authorised pursuant to and in accordance with section 551 of the 
Companies Act 2006 (“the Act”) to exercise all the powers of the company to allot shares in the company or grant rights to subscribe 
for, or convert any security into, shares in the company:

(i)  up to an aggregate nominal amount of £117,555,000; and  

(ii)   comprising equity securities (as deﬁned in section 560 of the Act) up to a further aggregate nominal amount of £117,555,000 provided 
that they are offered by way of a rights issue to holders of ordinary shares on the register of members at such record date(s) as 
the directors may determine where the equity securities respectively attributable to the interests of the ordinary shareholders are 
proportionate (as nearly as may be practicable) to the respective numbers of ordinary shares held or deemed to be held by them on 
any such record date(s), subject to such exclusions or other arrangements as the directors may deem necessary or expedient to deal 
with treasury shares, fractional entitlements, record dates, shares represented by depositary receipts, legal or practical problems arising 
under the laws of any territory or the requirements of any relevant regulatory body or stock exchange or any other matter; 

 provided that this authority shall expire on the date of the next Annual General Meeting of the company, save that the company shall 
be entitled to make offers or agreements before the expiry of such authority which would or might require relevant securities to be 
allotted after such expiry and the directors shall be entitled to allot relevant securities pursuant to any such offer or agreement as if this 
authority had not expired; and all unexpired authorities granted previously to the directors to allot relevant securities under section 551 
of the Act shall cease to have effect at the conclusion of this Annual General Meeting (save to the extent that the same are exercisable 
pursuant to section 551(7) of the Act by reason of any offer or agreement made prior to the date of this resolution which would or 
might require shares to be allotted or rights to be granted on or after that date). 

142  G4S plc Annual Report and Accounts 2012

 
 
 
18.   That the directors be and are hereby empowered, pursuant to section 570 of the Act, subject to the passing of Resolution 17 above, to allot 
equity securities (as deﬁned in section 560 of the Act) for cash pursuant to the authority conferred by Resolution 17 above as if section 561 
of the Act did not apply to any such allotment, provided that this power shall be limited to: 

(i) 

 the allotment of equity securities in connection with an offer or issue of equity securities (but in the case of the authority granted 
under paragraph (ii) of Resolution 17 above, by way of rights issue only) to or in favour of the holders of shares on the register 
of members at such record date(s) as the directors may determine where the equity securities respectively attributable to the 
interests of the shareholders are proportionate (as nearly as may be practicable) to the respective numbers of shares held by them on 
any such record date(s), but subject to such exclusions or other arrangements as the directors may deem necessary or expedient 
in relation to fractional entitlements, treasury shares, record dates, shares represented by depositary receipts, legal or practical 
problems arising under the laws of any territory or the requirements of any relevant regulatory body or stock exchange or any 
other matter; and 

(ii)   the allotment (otherwise than pursuant to sub-paragraph (i) above) of equity securities pursuant to the authority granted under 

Resolution 17(i) above up to an maximum nominal amount of £17,633,000; 

 and shall expire on the expiry of the general authority conferred by Resolution 17 above unless previously renewed, varied or revoked 
by the company in general meeting, save that the company shall be entitled to make offers or agreements before the expiry of such power 
which would or might require equity securities to be allotted, or treasury shares to be sold, after such expiry and the directors shall be 
entitled to allot equity securities or sell treasury shares pursuant to any such offer or agreement as if the power conferred hereby had 
not expired. 

  All previous unutilised authorities under section 570 of the Act shall cease to have effect at the conclusion of this Annual General Meeting. 

19.   That the company be and is hereby generally and unconditionally authorised for the purposes of section 701 of the Act, to make market 
purchases (within the meaning of section 693(4) of the Act) of ordinary shares of 25p each in the capital of the company on such terms 
and in such manner as the directors may from time to time determine, provided that: 

(i)  the maximum number of such shares which may be purchased is 141,066,000; 

(ii)  the minimum price which may be paid for each such share is 25p (exclusive of all expenses); 

(iii)  the maximum price which may be paid for each such share is an amount equal to 105% of the average of the middle market 

quotations for an ordinary share in the company as derived from The London Stock Exchange Daily Official List for the ﬁve business 
days immediately preceding the day on which such share is contracted to be purchased (exclusive of expenses); and 

(iv)  this authority shall, unless previously revoked or varied, expire at the conclusion of the Annual General Meeting of the company to 

be held in 2014 (except in relation to the purchase of such shares the contract for which was entered into before the expiry of this 
authority and which might be executed wholly or partly after such expiry). 

20.   That in accordance with sections 366 and 367 of the Act, the company and all companies which are subsidiaries of the company during 

the period when this Resolution 20 has effect be and are hereby unconditionally authorised to: 

(i)  make political donations to political parties or independent election candidates not exceeding £50,000 in total; 

(ii)  make political donations to political organisations other than political parties not exceeding £50,000 in total; and 

(iii)  incur political expenditure not exceeding £50,000 in total; 

 (as such terms are deﬁned in the Act) during the period beginning with the date of the passing of this resolution and ending at the 
conclusion of the next Annual General Meeting of the company provided that the authorised sum referred to in paragraphs (i), (ii) 
and (iii) above may be comprised of one or more amounts in different currencies which, for the purposes of calculating the said sum, 
shall be converted into pounds sterling at the exchange rate published in the London edition of the Financial Times on the date on 
which the relevant donation is made or expenditure incurred (or the ﬁrst business day thereafter) or, if earlier, on the day in which 
the company enters into any contract or undertaking in relation to the same. 

21.  That a general meeting of the company, other than an Annual General Meeting, may be called on not less than 14 clear days’ notice. 

By order of the board 

Peter David
Secretary 
26 March 2013 

The Manor
Manor Royal
Crawley
West Sussex RH10 9UN
Company No. 4992207  

G4S plc Annual Report and Accounts 2012  143

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Notice of Annual General Meeting continued

Notes

1. 

 Shareholders are entitled to appoint a proxy to exercise all or any of their rights to attend and to speak and vote on their behalf at the 
meeting. A shareholder may appoint more than one proxy in relation to the Annual General Meeting provided that each proxy is appointed 
to exercise the rights attached to a different share or shares held by that shareholder.  A proxy need not be a shareholder of the 
company. A proxy form which may be used to make such appointment and give proxy instructions accompanies this notice.  

2.    Details of how to appoint a proxy are set out in the notes to the enclosed proxy form.  In order to be valid an appointment of proxy 
must be returned with any power of attorney or any other authority under which it is executed, by one of the following methods: in 
hard copy form by post to Capita Registrars, PXS, the Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU; in hard copy form to 
that address by courier or by hand during usual business hours; or, in the case of CREST members, by utilising the CREST electronic 
proxy appointment service as described in paragraphs 8 and 9 below.  In each case the form of proxy must be received by the company 
no later than 2.00pm on 4 June 2013.  To change your proxy instructions you may return a new proxy appointment using the method 
set out above.  The deadline for receipt of proxy appointments also applies in relation to amended instructions.  Persons listed on the VP 
Securities register should follow the instructions on their Voting Request Form.  

3.    The return of a completed proxy form, other such instrument or any CREST Proxy Instruction will not prevent a shareholder attending 

the Annual General Meeting and voting in person if he/she wishes to do so.  

4.    Any person to whom this notice is sent who is a person nominated under section 146 of the Act to enjoy information rights 

(a “Nominated Person”) may, under an agreement between him/her and the shareholder by whom he/she was nominated, have a right 
to be appointed (or to have someone else appointed) as a proxy for the Annual General Meeting. If a Nominated Person has no such 
proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the 
shareholder as to the exercise of voting rights.  

5.    The statement of the rights of shareholders in relation to the appointment of proxies in paragraph 1 above does not apply 
to Nominated Persons. The rights described in this paragraph can only be exercised by shareholders of the company.  

6.  

 To be entitled to attend and vote at the Annual General Meeting (and for the purpose of the determination by the company of the votes 
they may cast), shareholders must be registered in the Register of Members of the company at 5.30pm on 4 June 2013 (or, in the event 
of any adjournment, at 5.30pm on the date which is two working days before the time of the adjourned meeting). Changes to the Register 
of Members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the meeting.  

7.    As at 25 March 2013 (being the latest practicable date prior to the publication of this Notice) the company’s issued share 

capital consisted of 1,410,668,639 ordinary shares, carrying one vote each. Therefore, the total voting rights in the company as 
at 25 March 2013 was 1,410,668,639. 

8.  

9.  

 CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so by using the 
procedures described in the CREST Manual (available via www.euroclear.com/CREST). CREST Personal Members or other CREST sponsored 
members, and those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting service 
provider(s), who will be able to take the appropriate action on their behalf. 

 In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST 
Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s speciﬁcations, and must contain 
the information required for such instruction, as described in the CREST Manual. The message, regardless of whether it constitutes 
the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be 
transmitted so as to be received by the issuer’s agent (ID RA10) by 2.00pm on 4 June 2013. For this purpose, the time of receipt will be 
taken to be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the issuer’s 
agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions 
to proxies appointed through CREST should be communicated to the appointee through other means.  

10.   CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & Ireland Limited 

does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in 
relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member 
is a CREST personal member, or sponsored member, or has appointed a voting service provider, to procure that his CREST sponsor or voting 
service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system 
by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are 
referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.  

11.   The company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5) (a) of the Uncertiﬁcated 

Securities Regulations 2001.  

144  G4S plc Annual Report and Accounts 2012

12.   Voting on all Resolutions will be conducted by way of a poll rather than a show of hands. This is a more transparent method of voting 
as shareholders’ votes are to be counted according to the number of shares held. As soon as practicable following the Annual General 
Meeting, the results of the voting at the meeting and the numbers of proxy votes cast for and against and the number of votes actively 
withheld in respect of each of the Resolutions will be announced via a Regulatory Information Service and also placed on the company’s 
website: www.g4s.com. 

13.   Any corporation which is a shareholder can appoint one or more corporate representatives who may exercise on its behalf all of its 

powers as a shareholder provided that they do not do so in relation to the same shares.  

14.   Under section 527 of the Act members meeting the threshold requirements set out in that section have the right to require the 
company to publish on a website a statement setting out any matter relating to: (i) the audit of the company’s accounts (including 
the auditor’s report and the conduct of the audit) that are to be laid before the Annual General Meeting; or (ii) any circumstance 
connected with an auditor of the company ceasing to hold office since the previous meeting at which annual accounts and reports 
were laid in accordance with section 437 of the Act. The company may not require the shareholders requesting any such website 
publication to pay its expenses in complying with sections 527 or 528 of the Act. Where the company is required to place a statement 
on a website under section 527 of the Act, it must forward the statement to the company’s auditor not later than the time when 
it makes the statement available on the website. The business which may be dealt with at the Annual General Meeting includes any 
statement that the company has been required under section 527 of the Act to publish on a website.  

15.   Any shareholder attending the meeting has the right to ask questions. The company must cause to be answered any such question 
relating to the business being dealt with at the meeting but no such answer need be given if (a) to do so would interfere unduly 
with the preparation for the meeting or involve the disclosure of conﬁdential information, (b) the answer has already been given on 
a website in the form of an answer to a question, or (c) it is undesirable in the interests of the company or the good order of the 
meeting that the question be answered.  

16.   Under sections 338 and 338A of the Act, members meeting the threshold requirements in those sections have the right to require 
the company (i) to give, to members of the company entitled to receive notice of the meeting, notice of a resolution which those 
members intend to move (and which may properly be moved) at the meeting; and/or (ii) to include in the business to be dealt 
with at the meeting any matter (other than a proposed resolution) which may properly be included in the business at the meeting. 
A resolution may properly be moved, or a matter properly included in the business, unless (a) (in the case of a resolution only) 
it would, if passed, be ineffective (whether by reason of any inconsistency with any enactment of the company’s constitution or 
otherwise); (b) it is defamatory of any person; or (c) it is frivolous or vexatious. A request made pursuant to this right may be in 
hard copy or electronic form, must identify the resolution of which notice is to be given or the matter to be included in the business, 
must be authenticated by the person(s) making it and must be received by the Company not later than 24 April 2013, being the 
date six clear weeks before the meeting, and (in the case of a matter to be included in the business only) must be accompanied 
by a statement setting out the grounds for the request. 

17.   A copy of this notice, and other information required by section 311A of the Act, can be found at www.g4s.com  

18.   Any electronic address or web site address is provided in this Notice of Meeting solely for the purpose stated expressly herein and may 
not be used to communicate with the company other than for such purpose.  Notwithstanding any telephone number, fax number 
or email address that appears on this document or elsewhere, neither the company nor Capita Registrars will accept voting instructions 
received via media other than post, electronically via the Share Portal service or by CREST Proxy Instruction in accordance with the 
notes above.

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G4S plc Annual Report and Accounts 2012  145

 
 
 
Recommendation and explanatory notes relating to business to 
be conducted at the Annual General Meeting on 6 June 2013

The board of G4S plc considers that the Resolutions set out in the Notice of Annual General Meeting are likely to promote the success of the 
company and are in the best interests of the company and its shareholders as a whole. The directors unanimously recommend that you vote in 
favour of the Resolutions as they intend to do in respect of their own beneﬁcial holdings.

Explanatory notes in relation to the business to be conducted at the Annual General Meeting are set out below.

1.  Financial statements of the company (Resolution 1)

The chairman will present the ﬁnancial statements of the company for the year ended 31 December 2012 and the reports of the directors and 
auditor thereon to the Annual General Meeting. 

2.  Remuneration report (Resolution 2)

It is mandatory for all listed companies to put their directors’ remuneration report to an advisory shareholder vote.  As the vote is advisory it does 
not affect the actual remuneration paid to any individual director. 

3.  Final dividend (Resolution 3)

A ﬁnal dividend of 5.54p (DKK 0.473) per ordinary share for the year ended 31 December 2012 is recommended for payment by the directors. 
If the recommended ﬁnal dividend is approved, it will be paid on Friday 14 June 2013 to all ordinary shareholders who were on the register of 
members at the close of business on 17 May 2013.

4.  Election and re-election of directors (Resolutions 4 to 14)

Resolutions 4 to 8 deal with the election of those directors who have been or will have been appointed since the company’s last Annual General 
Meeting and who, in accordance with the company’s articles of association, will retire and stand for election.

Resolutions 9 to 14 deal with the re-election of the other directors in accordance with the requirements of the UK Corporate Governance Code 
which provides for all directors of FTSE 350 companies to be subject to re-election by shareholders every year.  Lord Condon, Mr Dighton and 
Mr Lerenius will retire from the board at the conclusion of the meeting and so are not seeking re-election.

Biographies of each of the directors seeking election or re-election are set out on pages 54 to 57 apart from Mr Weller whose biography appears 
on page 64 and Mr Almanza whose biography is set out below.  Mr Almanza will join the board with effect from 1 May 2013 and, in accordance with 
the company’s articles of association and, being eligible, will retire and offer himself for election at the Annual General Meeting which will be the ﬁrst 
such meeting since his appointment. 

The board has conﬁrmed following a performance review that all directors standing for re-election continue to perform effectively and demonstrate 
commitment to their roles. 

Biography of Mr Ashley Almanza
A chartered accountant by training, Mr Almanza, who holds an MBA from London Business School, held a number of senior roles at BG Group from 
1993 to 2012, including Chief Financial Officer from 2002 to 2011 and Executive Vice President from 2009 to 2012.  He was previously chairman 
of the Hundred Group of Finance Directors. Mr Almanza has experience as a long-serving FTSE100 chief ﬁnancial officer, as well as broad-ranging 
international experience and strong ﬁnance skills.

Mr Almanza is currently a non-executive director of Schroders plc and a member of the Advisory Board of Oxford University Centre for 
Business Taxation. 

5.  Reappointment of auditor and auditor’s remuneration (Resolutions 15 and 16)

Resolution 15 relates to the reappointment of KPMG Audit Plc as the company’s auditor to hold office until the next Annual General Meeting of the 
company. Resolution 16 authorises the directors to set the auditor’s remuneration.

6.  Authority to allot shares (Resolution 17)

Resolution 17 seeks shareholder approval for the directors to be authorised to allot shares. 

At the last Annual General Meeting of the company held on 7 June 2012, the directors were given authority to allot ordinary shares in the capital of 
the company up to a maximum nominal amount of £235,110,000.  Of this amount 470,220,000 shares could only be allotted pursuant to a rights 
issue. This authority expires at the end of this year’s Annual General Meeting. 

Resolution 17 will, if passed, renew this authority to allot on the same terms as last year’s resolution.  The board considers it appropriate that 
the directors be granted the same authority to allot shares in the capital of the company up to a maximum nominal amount of £235,110,000 
representing approximately 66% of the company’s issued ordinary share capital as at 25 March 2013 (the latest practicable date prior to publication 
of the Notice of Annual General Meeting).  Of this amount, 470,220,000 shares (representing approximately 33% of the company’s issued ordinary 
share capital) can only be allotted pursuant to a rights issue. The authority will last until the conclusion of the next Annual General Meeting in 2014.

The directors do not have any present intention of exercising this authority. In accordance with best practice, if the directors were to exercise this 
authority so as to allot shares representing more than one third of the current capital of the company, they would all offer themselves for re-election 
at the following Annual General Meeting, although, as noted in 4. above, it is the directors’ current intention to stand for election annually in any event.

As at the date of the Notice of Annual General Meeting, the company does not hold any ordinary shares in the capital of the company in treasury. 
However, the 7,589,853 shares held within the G4S Employee Beneﬁt Trust and referred to on page 127 (note 38 to the consolidated ﬁnancial 
statements) are accounted for as treasury shares.

146  G4S plc Annual Report and Accounts 2012

7.  Disapplication of statutory pre-emption rights (Resolution 18)

Resolution 18 seeks shareholder approval to give the directors authority to allot shares in the capital of the company pursuant to the authority 
granted under Resolution 17 for cash without complying with the pre-emption rights in the Companies Act 2006 (the “Act”) in certain 
circumstances. This authority will permit the directors to allot:

(a)  shares up to a nominal amount of £235,110,000 (representing approximately 66% of the company’s issued share capital) on an offer to existing 
shareholders. However unless the shares are allotted pursuant to a rights issue (rather than an open offer), the directors may only allot shares 
up to a nominal amount of £117,555,000 (representing approximately 33% of the company’s issued share capital) (in each case subject to any 
adjustments, such as for fractional entitlements and overseas shareholders, as the directors see ﬁt); and 

(b)  shares up to a maximum nominal value of £17,633,000, representing approximately 5% of the issued ordinary share capital of the company as at 
25 March 2013 (the latest practicable date prior to publication of the Notice of Annual General Meeting) otherwise than in connection with an 
offer to existing shareholders. 

As with Resolution 17, the terms of Resolution 18 are the same as last year’s resolution.

The directors conﬁrm their intention to follow the provisions of the Pre-emption Group’s Statement of Principles regarding cumulative usage 
of authorities within a rolling three-year period.  The Principles provide that companies should not issue shares for cash representing more than 
7.5% of the relevant company’s issued share capital in any rolling three-year period, other than to existing shareholders, without prior consultation 
with shareholders. 

The authority contained in Resolution 18 will expire upon the expiry of the general authority conferred by Resolution 17 (i.e. at the end of the next 
Annual General Meeting of the company).

8.  Purchase of own shares (Resolution 19)

Resolution 19 seeks to renew the company’s authority to buy back its own ordinary shares in the market as permitted by the Act. The authority 
limits the number of shares that could be purchased to a maximum of 141,066,000 (representing a little less than 10% of the company’s issued 
ordinary share capital as at 25 March 2013 (the latest practicable date prior to publication of the Notice of Annual General Meeting)) and sets 
minimum and maximum prices. This authority will expire at the conclusion of the company’s Annual General Meeting in 2014. 

The directors have no present intention of exercising the authority to purchase the company’s ordinary shares but will keep the matter under 
review, taking into account the ﬁnancial resources of the company, the company’s share price and future funding opportunities. The authority will be 
exercised only if the directors believe that to do so would result in an increase in earnings per share and would be in the interests of shareholders 
generally. No shares were purchased pursuant to the equivalent authority granted to the directors at the company’s last Annual General Meeting. 

As at 25 March 2013 (the latest practicable date prior to the publication of the Notice of Annual General Meeting), there were no options over the 
ordinary shares in the capital of the company.

9.  Political donations (Resolution 20)

Resolution 20 is designed to deal with the rules on political donations contained in the Act. Under the rules, political donations to any political 
parties, independent election candidates or political organisations or the incurring of political expenditure are prohibited unless authorised by 
shareholders in advance. What constitutes a political donation, a political party, a political organisation or political expenditure is not easy to 
decide, as the legislation is capable of wide interpretation. Sponsorship, subscriptions, payment of expenses, paid leave for employees fulﬁlling 
public duties and support for bodies representing the business community in policy review or reform, may fall within this.

Therefore, notwithstanding that the company has not made political donations requiring shareholder authority in the past, and has no intention 
either now or in the future of making any such political donation or incurring any such political expenditure in respect of any political party, political 
organisation or independent election candidate, the board has decided to put forward Resolution 20, which is the same as the resolution on this 
subject which was passed at the company’s Annual General Meeting held on 7 June 2012. This will allow the company to support the community and 
put forward its views to wider business and government interests without running the risk of being in breach of the law. This authority will cover the 
period from the date Resolution 20 is passed until the conclusion of the next Annual General Meeting of the company. As permitted under the Act, 
Resolution 20 also covers political donations made, or political expenditure incurred, by any subsidiaries of the company. 

10.  Period of notice for calling general meetings (Resolution 21)

Resolution 21 is a resolution to allow the company to hold general meetings (other than Annual General Meetings) on 14 days’ notice.

Before the introduction of the Companies (Shareholders’ Rights) Regulations 2009 on 3 August 2009, the minimum notice period permitted by the 
Act for general meetings (other than Annual General Meetings) was 14 days. One of the amendments made to the Act by the Regulations was to 
increase the minimum notice period for general meetings of listed companies to 21 days, but with an ability for companies to reduce this period back 
to 14 days (other than for Annual General Meetings) provided that two conditions are met. The ﬁrst condition is that the company offers a facility 
for shareholders to vote by electronic means. This condition is met if the company offers a facility, accessible to all shareholders, to appoint a proxy 
by means of a website. The second condition is that there is an annual resolution of shareholders approving the reduction of the minimum notice 
period from 21 days to 14 days.

The board is therefore proposing Resolution 21 as a special resolution to approve 14 days as the minimum period of notice for all general meetings 
of the company other than Annual General Meetings. The approval will be effective until the company’s next Annual General Meeting, when it is 
intended that the approval be renewed. The board will consider on a case by case basis whether the use of the ﬂexibility offered by the shorter 
notice period is merited, taking into account the circumstances, including whether the business of the meeting is time sensitive.  

G4S plc Annual Report and Accounts 2012  147

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Group ﬁnancial record

G4S plc was formed in 2004 from the merger of the security businesses of Group 4 Falck and 
Securicor. Since that time, the group has delivered strong ﬁnancial performance and shareholder 
returns as demonstrated by the following ﬁnancial record:

Dividend

Since 2005, G4S has delivered average dividend per share growth 
of 14.2% per annum.

Pence per share

+5%In dividend  

per share in 2012

+14.2%

In dividend per share 
from 2005 to 2012

6.43

4.96

4.21

3.54

8.53

8.96

7.90

7.18

2005

2006

2007

2008

2009

2010

2011

2012

Earnings per share**

Since 2005, G4S has generated average adjusted earnings per share 
growth of 9.7% on a compounded basis. 

(as reported) pence

+3.4%EPS in 2012

+9.7%

EPS CAGR* from 2005 to 2012

16.7

11.2

12.1

13.3

20.2

21.6

20.5

21.2

2005

2006

2007

2008

2009

2010

2011

2012

Revenue**

G4S revenues have grown by an average of 8.5% since 2005. The 
group strategy for enhanced growth has helped deliver strong 
underlying organic growth together with capability-adding acquisitions 
to help drive growth in the future. 

(as reported) £m

+8.1%Revenues in 2012

+8.5%

Revenue CAGR* 
from 2005 to 2012

4,046

4,037

4,484

7,009

7,397

7,297

6,750

5,942

2005

2006

2007

2008

2009

2010

2011

2012

148  G4S plc Annual Report and Accounts 2012

 
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Proﬁt before interest, tax and amortisation**

Operating proﬁt, deﬁned as proﬁt before interest, tax and 
amortisation, has grown by an average of 10.7% since 2005. The 
increase in operating proﬁt has been driven by strong revenue 
growth, a strong cost focus and an improving business mix with 
our higher growth businesses such as government and Developing 
markets having higher than the group average margins.

+6.0%**

PBITA in 2012

+10.7%

PBITA CAGR* from 2005 to 2012

(as reported) £m

255

274

311

500

527

487

516

416

2005

2006

2007

2008

2009

2010

2011

2012

Revenue from developing markets

Our global presence, market shares and experience of working in less 
developed markets is unrivalled in almost any industry. It means that 
we know what it takes to be successful in these markets and are well 
positioned to maximise the structural growth opportunities as they 
develop over time. 

%

28

26

22

24

31

33

+10%Organic growth 

from Developing markets  
in 2012

+20.7%

Revenue from Developing markets 
CAGR* from 2005 to 2012

18

16

2005

2006

2007

2008

2009

2010

2011

2012

2005–2012 share price performance

From 2005 to the end of 2012, the G4S share price has increased 
108.5%, outperforming the FTSE 100 by 73% (see page 78 for its 
comparative TSR performance against that of the FTSE 100 and our 
bespoke peer group). 

+108.5%

G4S share price  
since 2005

+9.1%G4S share price  

CAGR* from  
2005 to 2012

*  CAGR is compound average growth rate

**   2011 and 2012 at 2012 exchange rates, excluding the Olympic Games contract and 

adjusted for discontinued and divested businesses. 2005-2010 as reported.

Value (p)

280

220

160

100

2005 

G4S

2007
2006
FTSE 100 index

2008

2009

2010

2011

2012

G4S plc Annual Report and Accounts 2012  149

 
 
 
 
General information

Financial calendar

Results announcements
Half-year results – August 
Final results – March

Dividend payment
Interim paid – 19 October 2012 
Final payable – 14 June 2013

Annual General Meeting
6 June 2013

Corporate addresses

Registered office
The Manor 
Manor Royal 
Crawley 
West Sussex RH10 9UN 
Telephone +44 (0) 1293 554 400

Registered number
4992207

Auditor
KPMG Audit Plc 
15 Canada Square 
London E14 5GL

Stockbrokers
J.P. Morgan Cazenove 
125 London Wall 
London EC2Y 5AJ

Citigroup Global Markets Limited 
Citigroup Centre 
Canada Square, Canary Wharf 
London E14 5LB 

Financial advisors
J.P. Morgan Cazenove  
125 London Wall 
London EC2Y 5AJ 

Barclays Capital 
5 The North Colonnade 
Canary Wharf 
London E14 4BB

G4S website
www.g4s.com

150  G4S plc Annual Report and Accounts 2012

General shareholder 
information 
Registrars and transfer office
All enquiries relating to the administration 
of shareholdings should be directed to:

Capita Registrars 
The Registry 
34 Beckenham Road 
Beckenham 
Kent  
BR3 4TU 
Telephone: within the UK 0871 664 0300 
(calls cost 10p per minute plus network 
extras); from outside the UK 
+44 20 8639 3399 
Fax: +44 (0) 1484 600 911 
Email: ssd@capitaregistrars.com 
Secure share portal: 
www.capitashareportal.com

Please note that beneﬁcial owners of shares 
who have been nominated by the registered 
holder of those shares to receive information 
rights under section 146 of the Companies 
Act 2006 are required to direct all 
communications to the registered holder of 
their shares rather than to the company or 
the company’s registrar. 

Capita share portal
The share portal is an online facility provided 
by the company’s registrars, Capita Registrars, 
for shareholders to manage their holding 
securely online reducing the need for 
paperwork. By registering for a free portal 
account, shareholders are able to access a 
range of online facilities 24 hours a day 
including those described below. 

View account holding details
Allows shareholders to access their personal 
account, shareholding balance, share 
transaction history, indicative share valuation 
and dividend payment history. It also enables 
shareholders to buy and sell shares.

Change of address, bank mandates, 
downloadable forms
Allows shareholders to update their postal 
address and complete, change or delete bank 
mandate instructions for dividends. A wide 
range of shareholder information, including 
downloadable forms such as stock transfer 
forms, is also available. 

Online proxy voting
Provides shareholders with an online proxy 
voting mechanism to cast proxy votes. 

Dedicated helpline
Capita Registrars also has a helpline to help 
users with all aspects of the service.  
Telephone (from the UK): 0871 664 0391  
Calls cost 10p per minute plus network extras, 
lines are open 8.30am to 5.30pm 
Monday to Friday)  
Telephone 
(outside the UK): +44 (0) 20 8639 3367 
Email: shareportal @capita.co.uk

G4S plc 
The Manor  
Manor Royal 
Crawley 
West Sussex 
RH10 9UN

Telephone: +44 (0)1293 554 400 
Email: investor@g4s.com

Registered in England No: 4992207

For further information visit our website:  
www.g4s.com

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