Integrated Report and Accounts 2017
Securing Your World
FOCUSED
GROWTH
Introduction
G4S provides electronic monitoring equipment to justice
departments in around 20 countries across the world
G
N
I
R
U
C
E
S
demonstrate the values and performance
that make G4S the company of choice for
customers, employees and shareholders.
DOur enduring strategic aim is to
L
R
O
W
R
U
O
Y
We aim to do this by delivering
industry‑leading, innovative solutions
and outstanding service to our
customers, by providing engaging
and rewarding work for employees
and by generating sustainable growth
and returns for our shareholders.
Highlights and contents
HIGHLIGHTS
STATUTORY RESULTS
Revenue
CORE RESULTSa
Revenue
KPI
£7.8bn+3.1%
(2016: £7.6bn)
£7.4bn+3.2%
(2016: £7.2bn)
Adjusted PBITA
£491m+6.5%
(2016: £461m)
Adjusted PBITA
KPI
£496m+4.2%
(2016: £476m)
EPS
15.2p+18.8%
(2016: 12.8p)
Adjusted EPS
KPI
17.9p+5.9%
(2016: 16.9p)
Operating cash fow
£488m-20.7%
(2016: £615m)
Operating cash fow
KPI
£527m-16.7%
(2016: £633m)
Dividend per share
9.70p+3.1%
(2016: 9.41p)
Employee engagement survey
KPI
84%
Favourable response in 2017
Visit: g4s.com for more information.
The Chief Financial Offcer’s review
is on pages 37 to 50.
a. See page 44 for basis of preparation and
defnition of core businesses and for a
reconciliation to statutory results. An
explanation of Alternative Performance
Measures is provided on page 35.
STRATEGIC REPORT
Overview
Highlights
G4S at a glance
1
2
Strategy & Business Review
4
Chief Executive’s review
8
Market-growth drivers
10
Business model
12
Stakeholder engagement
14
Our strategy
32
Key performance indicators
CSR performance
34
Alternative Performance Measures 35
Chief Financial Offcer’s review 37
Regional and service line review 51
Risk management and our
principal risks
60
GOVERNANCE REPORT
66
Chairman’s statement
68
Board of directors
70
Executive committee
72
Corporate governance report
Audit committee report
85
Directors’ remuneration report 93
116
Directors’ report
119
Directors’ responsibilities
FINANCIAL REPORT
133
133
Independent auditor’s report
120
Consolidated income statement 132
Consolidated statement
of comprehensive income
Consolidated statement
of changes in equity
Consolidated statement
of fnancial position
Consolidated statement
of cash fows
Notes to the consolidated
fnancial statements
Parent company statement
of changes in equity
Parent company statement
of fnancial position
Notes to the parent company
fnancial statements
135
203
204
134
202
136
Front cover:
G4S provides technology and physical security services for the three consortia building the
Thames Tideway tunnel. G4S is securing the project as a fully-integrated partner for security
across all 21 construction worksites.
The Thames Tideway tunnel is a £4.2 billion construction project, designed to stop London’s
iconic River Thames from being polluted. A cleaner Thames and a more attractive riverside will
help underpin London’s economic prosperity, attracting more tourists, and boosting the use of
river transport. It is also expected to help revitalise small local businesses and the commercial
fshing industry, by encouraging healthy marine life.
Shareholder information
Group fnancial record
General information
211
212
KPI
Financial KPI
KPI
Other fnancial and non-fnancial KPIs
Please see pages 32 to 33 for
a description of the Group’s
fnancial and non-fnancial KPIs
and how they link to the
Group’s strategic priorities.
Integrated Report and Accounts 2017 G4S plc 1
Strategic report
G4S at a glance
D G4S is the world’s leading global, integrated security
company specialising in the delivery of security and
L
R
related services across six continents.
O
W
We offer a broad range of security products and
services on a single, multi‑service and integrated basis.
We have been investing in technology, software and
systems. The Group’s technology‑related security
revenues were £2.45 billion* in 2017 (2016: £2.2 billion).
R
U
O
Y
G
N
I
R
U
C
E
S
* Technology-related security revenues are from the sale of security technology (£0.7 billion) and security solutions
which combine our people with technology (technology-enabled security: £1.75 billion).
OUR BUSINESSES
SECURE SOLUTIONS
(84% OF CORE BUSINESS
REVENUES)
CASH SOLUTIONS
(16% OF CORE BUSINESS
REVENUES)
SECURITY SERVICES AND TECHNOLOGY (77%)
Our approach
Against the backdrop of growing demand, we design,
Market
G4S operates an integrated security business in more
than 90 countries across the globe. The global security market and deliver a wide range of security and related
market has structural growth qualities (see page 8 for
a description of the growth drivers) and is highly
fragmented; there are few international suppliers and
our competitors are typically smaller local and regional
companies. The security industry is seeing growing
demand for technology-enabled and integrated security
solutions (which combine people and technology)
to deliver cost-effective security, especially in
developed markets.
services and our global footprint provides valuable
access to a highly-diversifed customer base in markets
around the world. Some traditional security markets are
commoditised and signifcant price competition exists
– we aim to differentiate G4S by providing industry-
leading security solutions that are innovative, reliable and
effcient. Our scale and focus on productivity support,
our cost competitiveness and our sustained investment
in professional staff, technology, software and systems
enable us to provide innovative and reliable solutions
for our customers on a stand-alone or integrated basis.
CARE & JUSTICE SERVICES (7%)
Market
G4S Care & Justice Services are concentrated in the
UK and Australia. The market for the private provision
of care and justice services is fairly consolidated with a
small number of large providers. Larger companies are
usually better equipped to deliver the highly specialised
services in this sector, working with a diverse supply
chain including the voluntary sector. In the UK the
market environment is mature with limited growth
opportunities. In the short to medium term we expect
the environment to be more positive in Australia.
CASH SOLUTIONS
Market
G4S Cash Solutions is one of a small number of large,
global cash businesses and is the market leader or
number two in 40 of its 42 markets. Each market is
highly regulated, often by central banks, and the business
requires signifcant infrastructure and expertise. G4S
competes with local, national and a small number
of international competitors. Cash volumes in most
developed markets are fat or gradually declining at an
aggregate market level. Cash usage continues to increase
in emerging markets (see page 8 for cash usage trends).
The Group sees signifcant revenue-growth opportunities
in providing technology solutions to reduce the cost and
increase the ease of using cash for banks and retailers.
Our approach
We aim to achieve positive outcomes for those in the
care and justice system. G4S will only offer custody,
detention, rehabilitation and care services where we
can access a qualifed talent pool and where the
political, legal, human rights and regulatory framework
is consistent with our Group values and results in
acceptable operational, commercial and reputational risk.
Our approach
We transport, process, recycle, store securely and
manage cash, and provide secure international logistics
for cash and valuables. Our strategy is designed to
enable us to aggregate cash-handling volumes through
cost leadership and product and service differentiation.
We invest in technology and sell proprietary
cash-management systems which combine skilled
professionals with software, hardware and operational
support in an integrated, managed service. To support
cost leadership we strive for a consistent operating
model and use shared services to maximise effciency.
We operate around the globe, focusing on markets
where we are able to build and sustain a material
market share in our key service offerings. Outside
the traditional cash market, there remains signifcant
opportunity for retail cash and bank branch automation
– services that have mainly remained in-house until now.
2 G4S plc Integrated Report and Accounts 2017
G4S plays a valuable and an important role in society.
We provide direct employment for over half a million
people around the world and make a difference by
helping people to live and work in safe and secure
environments. G4S takes a fully‑integrated approach to
its strategy and Corporate Social Responsibility. This is
refected in this report and please see page 18 for more
information on our CSR approach and impact on society.
OUR STRATEGY
Our strategy addresses the positive,
long‑term demand for security and related
services, and our enduring strategic aim is
to demonstrate the values and performance
that make G4S the company of choice for
customers, employees and shareholders.
We aim to do this by delivering industry‑
leading, innovative solutions and
outstanding service to our customers, by
providing engaging and rewarding work for
employees and by generating sustainable
growth and returns for our shareholders.
These aims are underpinned by the key
programmes in our strategic plan:
Secure Solutions
Integrated Managed
Services
Security
Software & Hardware
Systems
Integration
Consultancy
Services
Monitoring &
Response
i
n
g
r
a
M
Manned & Mobile
Security, FM
Integration
Care & Justice Services
PEOPLE AND VALUES
CUSTOMERS AND
SERVICE EXCELLENCE
TECHNOLOGY AND
INNOVATION
Monitoring technology
& Services
Custody, Detention
& Rehabilitation
Secure
FM
Forensics &
Secure Health
Patient
Transport
i
n
g
r
a
M
Secure
Transport
Cash Solutions
Integration
Cash Technology and
Services
Cash
Processing
ATM Services
International Secure
Logistics
i
n
g
r
a
M
CIT
Integration
OPERATIONAL EXCELLENCE
AND PRODUCTIVITY
FINANCIAL AND
COMMERCIAL DISCIPLINE
Please see pages 14 and
15 for more details.
OUR VALUES
Our people and values underpin everything we
do. Our ‘One G4S’ model brings all areas of our
business together and is designed to ensure that the
way we go about our business is consistent across
our global operations and is strongly aligned with
our strategy and our values.
We believe that this approach will generate
signifcant benefts for our customers, employees
and shareholders.
Please see pages 22 to 58 for case
studies of our values in action and
sustainable development goals.
Integrated Report and Accounts 2017 G4S plc 3
Strategic report
Chief Executive’s review
H Since 2013, revenues from core businesses
T
W
O
R
G
have grown by 17% and Adjusted EPS by
48% while generating operating cash fow
of £2.5 billion.
The Group’s strong cash generation has enabled
us to invest in growth, pay dividends of more
than £700 million and at the same time
strengthen the Group’s fnancial position,
reducing net debt/Adjusted EBITDA to 2.4x
at the end of 2017.
D
E
S
U
C
O
F
Over the same period we have created
innovative new products and services for our
customers and we greatly improved safety
performance for our employees.
We are continuing to invest in growth,
technology and productivity in order to
capitalise on our strong positions and to
support our aim of delivering sustainable,
proftable growth.
OUR STRATEGY
OUR STRATEGY ADDRESSES THE POSITIVE LONG-TERM
DEMAND FOR SECURITY AND RELATED SERVICES AND
OUR ENDURING STRATEGIC AIM IS TO DEMONSTRATE
THE VALUES AND PERFORMANCE THAT MAKE G4S THE
COMPANY OF CHOICE FOR CUSTOMERS, EMPLOYEES
AND SHAREHOLDERS.
Our business
The Group has two business segments, each with
a number of key service lines:
Secure Solutions, comprising:
• Security: incorporating risk consulting software,
manned security, software and systems and
integrated security solutions
• Facilities management: including integrated
security and FM services
• Care & Justice Services: comprising custody,
health, transportation, care and rehabilitation
in the UK and Australia
Cash Solutions, comprising:
• Cash transportation, cash processing and ATM
services
• Smart safes and cash recycling
• Cash Technology: comprising software and service
solutions
2017 Results highlights – core businesses
Revenues rose by 3.2% to £7.4 billion. The combination
of growing revenues and improved productivity saw the
Group’s adjusted earnings per share rise by 5.9% to
17.9 pence per share. The Group generated operating
cash fow of £527 million, equivalent to 106% of
Adjusted PBITA in line with our guidance of a
normalised rate of over 100%.
4 G4S plc Integrated Report and Accounts 2017
Ashley Almanza, Group Chief Executive Offcer
£2.45bn
Technology‑
related security
revenues in
2017
Zero
harm
Is our health and
safety goal
47%
Reduction
in employee
fatalities from
2016 to 2017
extend and grow new products and services across
our global markets. At the end of 2017 G4S cash
management technology was deployed at over 19,500
locations in North America, Europe, Asia Pacifc and
Africa, an increase of more than 30% over the prior
year. We also made progress in improving productivity
in a number of markets and we now have plans to
apply these improvements across all of our cash
solutions businesses.
I am confdent that our new organisation will enable
G4S to take full advantage of the exciting growth
opportunities in our markets and to successfully
execute our strategy.
Our CSR approach and contribution
to society
As a global leader in security and related services,
corporate social responsibility is very important to G4S
and it forms a key part of our strategy. We are trusted
to care for some of the world’s most valuable assets
and to ensure the safety, protection and welfare
of people around the world, often in complex and
demanding operating environments.
Conducting our business in a way which is ethically
responsible, safe and consistent with the company’s
values and standards, is an essential element of our
business model.
The Group is committed to sustainability and the core
principles of the UN Global Compact are refected in
our policies, values and business activities today.
We recognise that business has an important role in the
achievement of the UN Sustainable Development Goals.
On page 18 of this report we highlight where G4S is
helping to advance these goals and make a positive
difference to society and communities around the world.
We expect all colleagues to uphold G4S’ values in
whatever role they play. In return, our commitment
is to provide meaningful work, fair reward and the
opportunity to develop. Our employees often work
in inherently hazardous environments and we equip
and train our employees to ensure they are as safe
as possible.
We regularly ask stakeholders from inside and outside
the company to provide input into an analysis of our
material CSR issues to help set priorities. See page 83
for more information on the CSR materiality review
that was undertaken in 2017.
Our CSR approach covers a broad range of areas,
with three material priorities: health and safety, human
rights and anti-bribery and corruption.
In June 2017, G4S was selected as a constituent
company of the FTSE4Good Index, recognising our
strong commitment to social responsibility and
sustainable business practices.
PEOPLE AND VALUES
Organisation
Over the past four years we
have invested in sales, business
development, technology and
our support and control systems,
processes and resources. We now have suffcient
strength and depth in these areas to enable us to
implement the next, critical phase of our organisational
development and with effect from1 January 2018 we
have reorganised the Group-wide management of our
core business. The principal features of this change are:
• Creation of a Global Cash Solutions division
• Consolidation of our Secure Solutions businesses
into four regions: Americas, Europe & Middle East,
Africa and Asia
Our new organisation will enable us to strengthen
further our strategic, commercial and operational focus
in each of our core service lines. We will continue to
build and utilise shared services for the provision of
effcient and ft-for-purpose support functions to all
businesses and this element of our organisational
development has signifcant unrealised potential.
The biographies of the leaders of our principal
businesses are set out on pages 70 and 71.
As outlined in the market growth section on pages 8
and 9, technology is a growing part of our Secure
Solutions and Cash Solutions services.
In Secure Solutions, we continue to build our
capabilities to design and deliver integrated security
solutions – combining people and technology to offer
our customers more effcient and valuable security
solutions (see pages 24 to 27). Today we have more
than £2.45 billion technology-related security revenues.
Our integrated approach to designing and delivering
security solutions helps us to differentiate our value
proposition in order to win, retain and grow contracts
with key customers.
Our new Secure Solutions organisation will enable us to
increase collaboration and co-ordination across all of our
markets which, in turn, will enable us to rationalise and
target our product and business development, improve
global account development, harmonise marketing and
transfer operational best practices more rapidly.
Our Care & Justice Services are concentrated in the
UK & Australia where we have signifcant resource
and capability to win and deliver complex public
services. Our focus is on rigorous pre-bid evaluation
of contracts and operational delivery. We expect the
overall cash generation of these services to improve as
certain legacy contracts expire over the next 18 to 24
months.
In our Global Cash Solutions division we have proven
expertise in providing technology-enabled cash solutions
and services that improve the control, ease of use and
effciency of our customers’ cash management. In the
United States we have established a market-leading
position in the provision of cash management
technology for large format retail stores. We believe
that our proven cash management technology and our
people provide G4S with a substantial opportunity to
Integrated Report and Accounts 2017 G4S plc 5
Strategic report
Chief Executive’s review continued
Culture – Embedding our values
Underpinning our culture are the Group’s values which
govern and guide the conduct of everyone at G4S.
Employee‑communication programme
Following the launch of our values in March 2016 we
conducted an extensive employee engagement
programme to raise awareness and deepen understanding
of G4S’ corporate values. We have developed a training
programme for managers and our values are an essential
part of induction and training for new employees. We are
embedding our values into existing processes, governing
all aspects of our business including sales, operations and
performance management. Where actions are required
– for example, an improvement in the safety performance
of a particular business – leaders and managers will have
specifc objectives in order to make sure the actions are
prioritised appropriately (see Key Performance Indicators
page 32).
Speak Out
We continue to encourage colleagues to “Speak Out” if
they are aware of behaviour which is not consistent with
our values or policies. There are many ways in which
colleagues can raise concerns, with supervisors or
managers, with their local HR team or through the
global, independent whistleblowing systems. Our case
management system provides improved visibility of
whistleblowing cases from across the Group, and
provides vital information to our Group Ethics
Steering Committee.
I believe that the conduct of the vast majority of our
employees is consistent with our values and that this has
been – and remains – the cornerstone of our customer
service and commercial success. We know, however,
that even isolated instances of poor conduct are
unacceptable and can be very damaging. It is therefore
important that we continue to promote good conduct
and the use of Speak Out.
Health & Safety
The wellbeing and safety of our employees and those in
our care remains a key priority for the Group executive
and global leadership teams. We work in an inherently
hazardous industry: we travel extensively and many of
our colleagues are trained and deployed to protect our
customers and their property. As a result, road-traffc
accidents and criminal attacks are inherent risks we face
in delivering some of our services. We have therefore
invested in a sustained programme to strengthen our
health and safety policies, practices and training
performance across the Group with the aim of
improving safety.
The number of road-traffc fatalities has decreased
by 48% since 2013 when the frst G4S road-safety
programme was launched. There has also been a
reduction in attack-related fatalities in our Cash
Solutions businesses. However, the number of armed
attacks has not changed and so we continue to work
with the relevant authorities to mitigate the elevated
risk in some of our services. Sadly, during 2017, 25 of
our colleagues lost their lives in work-related accidents
and attacks, compared with 47 fatalities in 2016.
6 G4S plc Integrated Report and Accounts 2017
Although we are pleased that there are clear signs of an
overall cultural shift within G4S in our approach to safety we
also know that there is more to do and our plans refect this.
We are frmly committed to improving our health and safety
performance and our goal remains zero harm.
CUSTOMERS AND SERVICE
EXCELLENCE
In both Secure Solutions and Cash
Solutions we have been investing
in innovative products and service
excellence, to grow the business
with new contracts for new and
existing customers, and to improve customer retention,
which averages around 90%, refecting our exit from some
low-margin contracts and retaining some of the Group’s
largest contracts in 2017 – as discussed in this report.
>£1.4bn
Annual contract
value of new
business won
in 2017
48%
Reduction in
annual road
fatalities since
2013
TECHNOLOGY AND INNOVATION
Increasingly our customer offering
includes technology in the form
of systems and software.
Technology-related security
revenues were £2.45 billion
(2016: £2.2 billion) in 2017.
Overall we won new business with an annual contract
value of £1.4 billion and total contract value of £2.5
billion in 2017.
OPERATIONAL EXCELLENCE
AND PRODUCTIVITY
In 2017, our operational
excellence and productivity
programmes delivered further
benefts, providing the Group
with the fnancial fexibility to
invest in service and product
development as well as improving the Group’s adjusted
proft before interest, tax and amortisation (Adjusted
PBITA) from core businesses by 4.2% to £496 million.
With our more focused business designed around
service delivery, there is further opportunity to
streamline general and administrative processes and
share resources to generate greater effciency. The
Secure Solutions, Global Cash Solutions and Care &
Justice Services segments will share facilities,
infrastructure and functional services. Our detailed
plans will enable us to begin implementing changes
and to realise the frst phase of these benefts
during 2018 and 2019.
One example of where we are introducing more
streamlined processes is in our manned security business
with a new lean-business process called “Javelin” (see
page 29), which combines HR, operations, fnance and
back-offce functions, and should ensure we schedule our
people more effciently and are able to reduce the time
between when we do the work and when we bill for it,
and provide accurate and timely management information
to customers. Javelin was launched in Ireland in
November 2017 and we will be commencing
implementation in the UK during 2018.
FINANCIAL AND COMMERCIAL
DISCIPLINE
The new capital and contract
processes we introduced in 2013
are helping us to apply capital
with greater consistency and
rigour. Strengthening our working
Market Environment
The global demand outlook for security services remains
positive as we outline in more detail on pages 8 and 9.
We expect this positive demand to continue around the
world in 2018 with the possible exception of the Middle
East where the effect of prevailing fscal and macro-
economic conditions remains uncertain.
capital management was also a priority for our fnance
and line management in 2017 and we have maintained
the increased weighting of operating cash fow in our
annual incentive plans. I am pleased to report that at
31 December 2017, our net debt to Adjusted EBITDA
had reduced to 2.4x, down from 2.8x at the end of 2016.
Portfolio programme
The portfolio programme we announced in 2013
has materially improved our strategic focus and the
programme is substantially complete. Since 2013 we
have divested 41 businesses (with annual revenues
of c.£1.3 billion and Adjusted PBITA of £46 million),
realising gross proceeds of approximately £520 million.
In 2017 we closed four businesses and sold a further
nine, realising gross proceeds of £166 million.
Performance
Statutory results
Revenue growth was 3.1% and earnings per share rose
by 18.8%. A more detailed review of the statutory
results can be found on page 38, and a reconciliation
to results from core businesses is provided on page 44.
Core business performance
Supported by the continuous investment in sales and
business development resource and new technology-
enabled services, revenues rose by 3.2% to £7.4 billion.
Consistent with the commercial practice we adopted
several years ago, we have continued to be very
disciplined on contract bidding and, whilst this
constrained revenue growth in some markets, it
underpins sustained proftable growth. The combination
of growing revenues and improved productivity saw the
Group’s adjusted earnings per share rise by 5.9% to 17.9
pence per share. In 2017 the Group generated operating
cashfow of 106% of Adjusted PBITA (2016: 133%).
Net debt
Growth in profts and robust cash fow generation,
together with net disposal proceeds of £156 million,
helped reduce the Group’s net debt to Adjusted
EBITDA to 2.4x (2016: 2.8x) in line with our plans.
In the UK & Ireland region, the Brexit negotiations have
created some uncertainty around UK GDP growth, but,
in this market, we believe G4S is a defensive business,
with a number of long-term contracts. We continue to
invest in innovative products and services for customers
to drive growth in the region.
Outlook
The outlook for the Group is positive. G4S’ strong
market positions, growing technology-enabled revenues,
positive cash generation, commercial discipline and
on-going productivity programmes provide substantial
confdence that the Group is very well positioned to
deliver a strong performance over the next three years.
To realise this potential G4S is investing in:
• Sales, technology and new products, services
and solutions to support our aim of growing
revenues from core businesses by an average of
4-6% per annum
• Restructuring and effciency programmes to deliver
recurring operating gains of £70 million to
£80 million by 2020, through effcient organisation
design and leaner processes. Additional refnancing
gains of around £20 million are also anticipated by
2020. A portion of these gains will be re-invested in
growth, with the majority expected to beneft the
bottom line
We intend to remain soundly fnanced with average
operating cash fow conversion of more than 100% of
Adjusted PBITA and a net debt to Adjusted EBITDA
ratio of less than 2.5x. Priorities for excess cash will be
investment, dividends and, in the near term, further
leverage reduction.
Following the achievement of the Group’s leverage-
reduction target, the directors propose a 5% increase in
the fnal dividend to 6.11p (DKK 0.5097) refecting the
board’s confdence in the Group’s performance and
prospects. Our policy is to increase the dividend in line
with the long-term growth in earnings.
Our customers and our colleagues are at the core of
G4S and, in closing, I would like to thank our customers
for placing their trust in G4S and to pay tribute to our
570,000 colleagues who serve our customers every day.
Ashley Almanza
Group Chief Executive Offcer
Watch our 2017
results and 2018
outlook online at:
www.g4s.com/
investors.
See page 44 for the basis of results of core
businesses and an explanation of Alternative
Performance measures is on page 35.
Integrated Report and Accounts 2017 G4S plc 7
Strategic report
Market‑growth drivers
D
N
A
M
E
D
E
H
T
G
N
I
T
E
E
M
The world continues to face a series
of divergent and emerging threats.
Governments and companies require
holistic approaches to ensure the
security of their people and assets
both at home and abroad.
Third-party commentators such as Freedonia expect
the global security industry to grow 5-6% per annum
from 2015 to 2025 (see chart on page 9). With our
global footprint and attractive array of products and
services we are well positioned to meet this increased
demand.
a. Source: Security Systems Integration Report, IHS Markit 2017.
b. Source: company research and 3rd party data including
RBR, Panteia, Euromonitor International, World Retail Data
and Statistics.
8 G4S plc Integrated Report and Accounts 2017
MARKET-GROWTH
DRIVERS
SECURE SOLUTIONS
Demand for security is increasing
across the globe
The evolving nature of terrorism,
which continues to threaten
societies, has elevated security
risks and concerns in many parts
of the world.
Intense price‑based competition
in basic manned security and basic
equipment installations
Barriers to entry in basic manned
security and basic equipment
installations are low, which can
result in intense competition in
some markets.
Companies like G4S are therefore
looking for ways to increase
differentiation such as global breadth
or technology and productivity
improvement to offset price
pressure.
Customers buying processes
increasingly complex
The increasing use of technology,
globalisation and the growing threat
of cyber security breaches mean that
the procurement of security services
has moved away from operations to
a more strategic role in an increasing
number of customers’ organisations.
The global market for security
systems integration is estimated
to be $80bn by 2021a.
Technology reshaping security
industry
Whilst labour costs have increased
or are increasing, particularly in
developed markets, the cost of
sophisticated security technology
is reducing. Combined with the
additional data and assurance that
comes with technology, it is starting
to reshape the security industry.
CASH SOLUTIONS
Global cash‑usage trends
According to third party research
frm RBR London, cash withdrawn
from automated teller machines
(ATMs) between 2016 and 2021 is
expected to grow by more than 6%
per annum in emerging markets and
between 0 to 1% per annum in
developed markets.
Network consolidation
With lower cash volumes in some
markets together with new higher
value added services partly
cannibalising traditional cash-in-
transit services, it is likely that some,
if not all cash markets will
experience network consolidation.
A number of industry participants
have publicly stated that they are
looking to make acquisitions, and we
have sold some cash businesses to
focus on our key markets with
stronger growth potential. We
believe this market consolidation will
help network effciency and lower
the cost of cash handling.
Retail opportunities
In many markets, retailers operate in
very competitive environments and
are looking to reduce costs including
cash handling and to free up idle
cash sitting in tills, safes, vehicles and
cash-processing centres.
G4S software and service enhanced
smart safes and cash recycling
services can reduce shrinkage costs
for retailers, and eliminate or reduce
the space required for a cash back
offce and cash reconciliation teams.
Through recycling the majority of
cash takings in store, the number
of cash-in-transit journeys can be
reduced by 40% to 60% – with
both cost-saving and environmental
benefts.
As more cash is recycled in store,
less cash is being processed by the
banks so the retailers achieve a
reduction in banking fees.
Strategic report
HOW G4S RESPONDS
• We assist customers in evaluating
and understanding security
trends and their risks through
experience in the market and the
provision of software tools such
as Risk360 and TravelAware. Key
trends are featured in G4S Risk
Consulting publications.
• G4S has been investing in
productivity programmes to
be more effcient and cost
competitive (see page 29).
• G4S designs, builds, operates and
maintains integrated security
solutions. We invest in
technology and innovation which
is changing our sales mix, helping
deliver service excellence to
customers (see pages 24 to 28).
Supplier consolidation
In certain markets (both Manned
Services and Systems) we have seen
some market consolidation and
trends whereby large competitors
aim to provide multi-service
bundled and integrated solutions.
Some competitors have followed
this trend to differentiate away from
the commoditised manned security
market. We believe this may be
helping customers move to more
technology-focused solutions.
Technology-enabled solutions is
a less commoditised market than
traditional manned security
markets with a lower number
of capable suppliers.
Global security market by region ($m)
120,000
100,000
80,000
60,000
40,000
20,000
0
2010
2015
2020
2025
Asia Paciÿc
Western Europe
Latin America
North America
Africa & Middle East
Eastern Europe
Source: Freedonia World Security Services report January 2017
excluding residential security.
Our new products are being
adopted by banks and some of the
world’s leading retailers and we
expect this market will continue to
grow strongly. Industry research
data indicates that our addressable
market for smart safes and recycling
solutions is around £20bn-25bn
per annumb.
Automated processes inside bank
branches
Banks and fnancial institutions are
also under pressure to be more
effcient, lower the cost of handling
cash, reduce their branch network
whilst maintaining customer access
and service.
We have been developing
integrated technology to address
these areas. They combine
hardware, proprietary cash-
management software, real-time
banking integration, same day credit
and customer service and support.
Global presence
(No. of countries)
Secure Solutions
Cash Solutions
100
80
60
40
20
0
82
57
42
41
22
14
23
15
1
2
3
4
1
2
3
4
1. G4S
2. Securitas
3. Garda
4. Prosegur
82
57
22
14
1. G4S
2. Brinks
3. Loomis
4. Prosegur
42
41
23
15
• We provide cash solutions and
services that materially improve
the control and effciency of our
customers’ cash handling. We
continue to invest in innovative
products and services such as
CASH360, Deposita and
bank-branch automation.
• With the signifcant progress
made in some areas of the
business, we have an enormous
opportunity to extend and grow
our new technology and services
right across our global markets.
• At the end of December 2017
we had over 19,500 (2016:
14,600) cash technology
installations deployed in North
America, Europe, Asia Pacifc
and Africa.
• We have also made great
progress in improving
productivity in a number
of markets and we now have
the opportunity to apply these
improvements across all of
our cash businesses.
Integrated Report and Accounts 2017 G4S plc 9
D
L
R
O
W
R
U
O
Y
E
R
U
C
E
S
O
T
L
E
D
O
M
S
S
E
N
I
S
U
B
R
U
O
Business model
WHY G4S
GLOBAL FOOTPRINT
90 countries
We provide a broad range of products and services
across more than 90 countries. This breadth
provides us with a strong understanding and clear
visibility of how security trends are evolving across
the world. This insight is invaluable for positioning
our solutions to address customer needs.
DEEP UNDERSTANDING
100 years’ heritage
We support our knowledge of global security
trends with a deep understanding of our customers’
unique needs. We have a strong heritage of more
than 100 years in the security industry, helping to
distinguish positively the G4S brand in our key
markets around the world. Our dedicated segment
experts, involvement in industry bodies and
academic institutions, strategic customer
relationships and customer-service feedback mean
that we can tailor our solutions to offer maximum
value to our diverse customer base.
SECURITY PROFESSIONALS AND EXPERTISE
570,000 colleagues
We recruit, screen and deploy over 150,000 new
colleagues each year. We have around 570,000
colleagues, whose unique skills and shared values
are focused on delivering high-quality service to
our many thousands of customers.
TECHNOLOGY AND INNOVATION
£2.45bn technology‑related security revenue
We continue to invest in technology to meet the
growing demand for integrated solutions – which
combine consultation, technology (hardware and
software), installation, staffng and maintenance –
and to drive the development of innovative new
solutions for customers.
CUSTOMER SERVICE
c150,000 customers
Service excellence is one of our core values and an
area in which we continue to invest signifcantly. In
the past three years, we have focused in particular
on our capability, processes and performance
measures to drive growth, customer retention
and customer satisfaction.
10 G4S plc Integrated Report and Accounts 2017
OUR APPROACH
In order to grow our provision of security and related
services, we use our unique industry and customer
insight to deliver services that are innovative, effcient,
effective and integrated.
1. ASSESS
2. DESIGN
Solutions design
We employ our growing resource
and capability to design solutions to
meet our customers’ requirements,
protecting and adding value to their
organisation. This may involve a
single service, bundled services (two
or more services including facilities
services in selective markets), or an
integrated security solution from the
G4S portfolio.
Security and risk consulting
We combine our understanding
of our customers’ businesses and
objectives with our security
expertise to assess their security
risks and requirements.
Increasingly using data analytics,
we are able to identify and mitigate
security threats (contextual, criminal
or business) and challenges on a
local, regional and global basis.
Risk consulting allows us to be
seen as a trusted senior adviser to
customers, providing insight and
added value.
?SECURITY PERSONNELELECTRONIC SURVEILLANCEACTIVE SECURITYACCESS CONTROL / SOFTWAREEDUCATION / AWARENESSMECHANICAL SECURITY
Watch our animated
business model on-line at:
www.g4s.com/investors.
E
L
E
C
T
R
O
NIC U
S RVEI L L
E
R
L / SOFTWA
ACCESS
CO T R
N
O
N CE
A
R SONNEL
SECU
RITY P
E
AC
TI
V
E
S
E
C
U
R
I
T
Y
S
S
E
O N / AWAREN
ED
UCA
T I
MECHA
NICA
E
S
L
C URITY
3. BUILD AND INTEGRATE
4. MANAGE
STAKEHOLDER
VALUE CREATED
SOCIETY
G4S delivers a broad range of social
and economic benefts to the
communities in which we work,
many of which are helping to realise
the United Nations Sustainable
Development Goals (see page 18).
CUSTOMERS
£2.5bn
Total contract value of new
business won in 2017
SHAREHOLDERS
5.9%
Growth in Adjusted EPS from core
businesses in 2017 to 17.9p
EMPLOYEES
570,000
People employed by G4S around
the world
SUPPLIERS
55,000
Suppliers provide services and
products to G4S around the world
G4S Solutions portfolio
In some markets, we are seeing
a move towards integrated
solutions where security or
cash-management technology
are delivered under one
integrated solution.
We use both third-party technology
as well as our own world-class
proprietary technology in areas
such as visitor management, identity
and credentials management, access
control, integrated video systems
and risk-management software.
Global security operations
centres (GSOC)
G4S designs, builds and
manages global security operations
centres (GSOC) for customers,
both on a standalone basis and
as part of an integrated offering.
The GSOC receives, analyses
and responds to all the security
intelligence and data for a customer.
Customers may award these
activities to a G4S GSOC in order
to obtain network benefts and
access our security expertise.
Please see pages 12 to 34 for
more details.
Integrated Report and Accounts 2017 G4S plc 11
?SECURITY PERSONNELELECTRONIC SURVEILLANCEACTIVE SECURITYACCESS CONTROL / SOFTWAREEDUCATION / AWARENESSMECHANICAL SECURITYStrategic report
S
R
E
D
L
O
H
E
K
A
T
S
R
U
O
H
T
I
W
I
G
N
G
A
G
N
E
Stakeholder engagement
Our key stakeholders are those who most materially impact our
strategy, or are directly impacted by it. Engagement with stakeholders
is essential for us, as a security business, with our role in society, the
global nature of our business and substantial workforce.
SOCIETY
Key stakeholders
How we engage
CUSTOMERS
SHAREHOLDERS
EMPLOYEES
Our employees touch the lives
of others every day, providing
crucial services to help keep
society safe and secure.
• Operations which promote secure and stable
communities
• CSR Materiality Review with key stakeholders
(see page 83)
• Community-engagement programmes
• Tax and economic contributions
• Government relationships and parliamentary
engagement
• NGO and UN agency engagement
• Industry forums
Through understanding our
customers’ needs we can
offer value‑added, innovative,
cost‑effective security
solutions and build enduring
relationships.
• Relationship management
• c150,000 customers
• Bidding processes
• Customer service
• Net promoter score
The company actively seeks
to engage with shareholders
on a regular basis.
With around 570,000
colleagues, G4S is one of the
world’s largest private sector
employers. Our success is
underpinned by the way
we lead and engage with
our people.
• One-on-one meetings between management and
shareholders
• Group investor meetings hosted by management
• Results announcements and trading updates
• Participation in investor relations association and best
practice events
• Annual governance meetings with the Chairman
• CSR updates with the Chair of the CSR committee
• Annual General Meeting
• HR core standards set the framework for employee
engagement.
• On-boarding, induction and refresher training
• Biennial global all-employee and senior management
engagement surveys
• Works councils and employee representative forums,
including through UNI, the global union, with whom
G4S signed a global Ethical Employment Partnership
in 2008
• Newsletters, videos, employee self-service portals,
and intranets
• Specifc campaigns on health & safety, values and
Speak Out whistleblowing arrangements
• Values recognition schemes
SUPPLIERS
We have a responsible
purchasing policy consistent
with our business ethics.
• 55,000 suppliers
• Contract and relationship management
• Supplier Code of Conduct
• Purchase to Pay process
12 G4S plc Integrated Report and Accounts 2017
Understanding stakeholders’ interests helps us defne our
strategic priorities and guide our initiatives. We run a formal
exercise every two years to identify and prioritise our material
CSR issues (see page 83).
Key areas of interest
Our response and KPIs
• People and Values
• Ethical and sustainable
business practice; including:
• Health & safety
• Human rights
• Anti-bribery & Corruption
• Employee standards and
behaviour
• Slavery and Human Traffcking Statement
• UN Global Compact: Communication on Progress
• Global employee-engagement survey (see page 19)
• Engagement with Parliamentary committees
• Industry forums including: International Security Ligue,
British Security Industry Association, Confederation
of British Industry
• MP surveys and site visits, especially to detention
facilities
• Quality and price of service
• Expertise
• Innovation
• Health & safety
• Business ethics
• 3.2% revenue growth from core businesses in 2017
• Customer retention is on average around 90%
• 24,000 customers surveyed using net promoter
score in 2017, with improvement in most regions
• Feedback from unsuccessful contract bids
• Financial performance
• Strategic direction and
coherence
• Governance and risk
management
• Company performance and
plans
• Compensation and benefts
• Training and career
development
• Health & safety
• Values, CSR and recognition
• CEO and CFO met with shareholders representing
over 65% of the share register and 205 institutions
(see page 79 for more information)
• 3.2% revenue growth from core businesses in 2017
• 5.7% adjusted earnings growth from core businesses
in 2017
• £527 million operating cash fow from core
businesses in 2017
• Final dividend increased 5% in 2017
• Feedback from 428,000 employees in 2017
• Access to survey extended through mobile
technology and number of languages available
• Increase in overall favourable responses from 82%
(2015) to 84% (2017)
• Feedback from consultation committees and
works councils
• Nominations for employee recognition awards
• Reduction in staff turnover from 27.6% in 2016 to
25.3% in 2017
• Fatalities, serious injuries and road traffc incidents
down around 30-50% since focus was applied and
investment was made in these areas
• Supplier performance –
service delivery and product
quality
• Payment terms
• SME engagement
• Rationalised suppliers
• Commitment to the UK Prompt Payment Code
• Member of the UK Government Contract Finder
portal to promote use of SME businesses
Links to policies and case studies:
Business Ethics Policy:
g4s.com/ethicspolicy
Environmental Policy:
g4s.com/environmentalpolicy
Ethical Employment Partnership:
g4s.com/EEP
Human Rights Policy:
g4s.com/humanrightspolicy
HR core standards:
g4s.com/hrstandards
Slavery and Human
Traffcking Statement:
g4s.com/modernslavery
Supplier Code of Conduct:
g4s.com/suppliercode
Tax Strategy:
g4s.com/taxstrategy
Whistleblowing Policy:
g4s.com/whistleblowingpolicy
Business for Peace Case Study:
g4s.com/b4p
Please see examples online on
g4s.com
Link to strategy
People and values
Customers and service excellence
Technology and innovation
Operational excellence and productivity
Financial and commercial discipline
Please see page 12 to 35 for
more details.
Integrated Report and Accounts 2017 G4S plc 13
Strategic report
Our strategy
Our strategy addresses the positive,
long‑term demand for security and
related services and our enduring
strategic aim is to demonstrate the
values and performance that make G4S
the company of choice for customers,
employees and shareholders.
This section summarises our strategic
priorities and how we focus our
resources and expertise in areas where
we can achieve the best results for
customers and sustainable growth and
return for investors. Our CSR approach
covers a broad range of areas, but
we have three material priorities:
Health and safety, Human rights and
Anti‑bribery and corruption which
are covered in the People and
Values section.
Strategic priorities
Watch our 2017 results
and 2018 outlook online at:
www.g4s.com/investors
W
E
I
V
R
E
V
O
E
C
N
A
M
R
O
F
R
E
P
D
N
A
Y
G
E
T
A
R
T
S
Key risks
See Principal risks:
pages 62 to 65
KPI
See page 32 onwards for more
detail and the progress in our
key performance indicators.
The following pages highlight
some of the Group’s fnancial
and non-fnancial KPIs and how
they link to the Group’s
strategic priorities. For more
detail see page 33.
14 G4S plc Integrated Report and Accounts 2017
PEOPLE AND VALUES
We recruit, develop and
deploy the best people in
our industry
CUSTOMERS AND SERVICE
EXCELLENCE
We build long‑term customer
relationships based upon
trust and understanding of
our customers’ businesses
and objectives
• Attracting and retaining the best
• Positive demand for security
people
services
• Large diversifed customer base
and sales pipeline
• Investment in sales leadership
and account management
• Net promoter score and
contract retention
• Failure to understand customers’
changing needs or falling short of
customer expectations
• Creating the right culture
• Defning our societal impact
• Building capability
• Engaging for success
• Promoting the right
organisational culture
• Improving health and safety
• Respecting human rights
• Our trained and skilled people
are hired by competitors or
other companies or do not
behave in line with the Group’s
values, resulting in a negative
impact on customer service or
those in our care
• Negative impacts on our
employees’ health and safety
47%
£1.4bn
Reduction in fatalities from 2016
to 2017
Annual contract value of substantial
new business won
CORPORATE CULTURE BASED ON GROUP VALUES AND…
TECHNOLOGY AND
INNOVATION
OPERATIONAL EXCELLENCE
AND PRODUCTIVITY
FINANCIAL AND
COMMERCIAL DISCIPLINE
We design, market and deliver
innovative, industry‑leading
technology and services that
protect and add value for
our customers wherever
they operate
We have secure, safe, reliable
and effcient operations
We manage risk effectively and
ensure we provide proftable,
cash‑generative services
• Well-positioned for trends
• More focused business – cultural
towards more technology with
disciplined capital allocation
• Secure Solutions – integrated
security
• Investing in world-leading
proprietary products and services
• Cash Solutions – Bank and Retail
cash technology
change
• Reinvesting for growth
• Productivity programmes – good
progress but more to do
• Effcient organisation design
and management de-layering
• Procurement and property
• Operational excellence
• IT-enabled lean processes
• Contract risk management
• Portfolio management
• Operating cash fow
• Strengthening collections
performance
• Managing accounts payable
• Capital allocation
• Changing behaviours
• Failure to market or deliver our
• Failure to comply with our
• Ineffcient capital management
services and technology
effectively or failure to deliver
adequate value for money
standards results in harm, loss of
expertise or investment fails to
deliver beneft
and failure to comply with Group
risk management standards
30%
4.2%
2.4x
Growth in cash management
technology locations in 2017
Increase in Adjusted PBITA from
core businesses in 2017
Net debt/Adjusted EBITDA at
December 2017 in line with our
target set in 2016
COMMITMENT TO CORPORATE SOCIAL RESPONSIBILITY UNDERPIN THE STRATEGY
Integrated Report and Accounts 2017 G4S plc 15
Strategic report
Our strategy continued
S
E
U
L
A
V
D
N
A
E
L
P
O
E
P
With around 570,000 people, G4S is one of
the world’s largest private sector employers.
Our employees and services touch the lives of
others every day, providing crucial services to
keep them safe and secure. Our success is
therefore underpinned by the way we attract,
develop and engage with our people, as well
as the culture and values that shape the way
we work and how our colleagues carry out
their roles.
2017 ACHIEVEMENTS
KPI
KPI
8.3%
Reduction in
voluntary
employee
turnover to
25.3% in 2017
(2016: 27.6%)
428,000
Employees
responded to
our global
engagement
survey
KPI
37%
Reduction in
serious H&S
incidents since
2015 in high
priority
businesses
16 G4S plc Integrated Report and Accounts 2017
Attracting and retaining the best people
Attracting and retaining the best people continues to
give G4S a competitive advantage as well as ensuring
we deliver the best results for our customers. For our
senior population, we know from our management
survey that the most important factor infuencing their
decision to join and then to stay at G4S is the nature
of the roles and the responsibilities on offer. Our global
footprint and operations across a range of product and
service lines helps make the business attractive to the
best candidates. Once appointed, the responsibility,
complexity and opportunities for innovation help retain
our senior people and keep them motivated.
For other levels in the organisation, we have developed
two toolkits which help us attract and retain colleagues
by utilising our expertise and sharing resources across
the Group. The frst relates to recruitment and is
designed to ensure potential candidates for jobs with
G4S have a positive recruitment experience while going
through an effcient and effective hiring process. The
second provides guidance on good retention practices.
Both toolkits are online and contain templates that are
easy to follow and adopt. They emphasise the
importance of ensuring applicants know what will be
expected before they apply, and if they do join G4S
there are robust processes in place to welcome, induct,
train and support them. Feedback from our most recent
global employee survey suggests that our employees
feel well equipped to perform their role, with over 90%
of respondents stating they understand their job
procedures. Often employee turnover is at its highest
in the initial months after appointment, which suggests
there is still more to do to retain our newest colleagues.
In order to build our reputation as a good employer and
attract candidates from the widest talent pools,
CREATING THE RIGHT CULTURE
The G4S values are embedded in the standards,
policies and guidance which we set out to help
employees and managers perform.
To help our front-line operational employees understand the
behaviours we expect, and the decisions they should take in
line with our values, we have launched a range of learning
and awareness materials. These materials include an
animated video, scenario-based fashcards, presentations and
an online exercise. The materials draw on over 90 scenarios
from all product and service lines and are designed to
promote discussion and to guide behaviour in line with our
values. They address topics like harassment, bribery and
corruption, the care and treatment of others, breaches of
health and safety rules and inappropriate use of social media.
To ensure these materials remain relevant we will continue
to add different scenarios whenever new values-based
operational situations are identifed which can help guide
our employees.
Work is now underway on values training materials for our
managers, using our newly revised competency framework.
In line with our values, this refreshed framework defnes
leadership and management behaviours in terms of how
managers should act today, plan for tomorrow, and build
relationships. The framework is used in our selection
processes as well as our 360 degree review process to
assess performance and future potential. It enables us
OUR VALUES
Our values are the standards we set for ourselves and they are
refected in the culture of our organisation through our
behaviours and actions.
Integrity and Respect
Our business activities and relationships
are built on trust, honesty and
openness. We deliver on the promises
we make and treat our colleagues,
customers and those in our care with
the utmost respect.
Safety, Security and Service Excellence
We work in a safe way and take
great care to protect our colleagues
and customers from harm. We are
experts in security and use that
knowledge to protect our customers’
most valuable assets. We are
passionate about delivering high
levels of customer service.
Innovation and Teamwork
We invest in technology and best
practice to improve continually
our service offering. We challenge
ourselves to fnd new ways of helping
our customers.
We work together as a team to achieve
the best results for our customers and
our business. Everyone has a valid
opinion and their contribution
is valued.
countries and regions adopt different approaches to
diversity, reaching out to recruit from under-represented
groups in their businesses. In North America, the
recruitment of veterans who bring relevant skills and an
inherent understanding of security risks continues, whilst
in the UK our businesses are some of the few in the
security sector to have been awarded Disability
Confdent level 2 status as a result of their commitment
to identify and remove barriers which impact on the
employment of people with disabilities.
Overall employee retention continues to improve with
voluntary employee turnover reducing to 25.3% (2016:
27.6%) as closer scrutiny and the implementation of
good retention practices help us improve performance
even in tight labour markets. This is good for service to
our customers, who appreciate working with staff who
know them better and have more experience. While
our employee headcount has reduced from 585,000
to 570,000 as a result of our portfolio management
programme and our drive to improve organisational
effciency, wherever possible we redeploy people and
retain their skills and knowledge. For our front-line
employees, the launch of a new values related global
recognition programme will add a further opportunity
to showcase the amazing work they do for our
customers each and every day. Ensuring we celebrate
success, and share information about the ways in which
our employees behave in line with our values, not only
helps to bring our values to life but also promotes the
expertise and capabilities of our people.
In March 2018, we published our UK Gender Pay
Gap Report for the relevant UK businesses. As well
as explaining the reasons for any gaps, the report also
sets out the actions we are taking to achieve the
progress required as part of our wider diversity and
inclusion strategy.
to gather insight into what colleagues have achieved as well
as whether they have done so in a way which is consistent
with our values.
While having a common set of values helps set G4S apart
from the competition, as a global employer we also
appreciate that having a diverse workforce enables us to
better understand our differing customer needs, and
harnessing this diversity is critical to driving innovation.
Feedback from our latest global employee survey indicates
that 84% of employees who responded believe that the
company values people from different backgrounds, and in
2018 we will continue our focus on diversity to ensure we
maximise the benefts it brings.
Integrated Report and Accounts 2017 G4S plc 17
Strategic report
Our strategy continued
S
E
U
L
A
V
D
N
A
E
L
P
O
E
P
Employees by location as at 31 December 2017 (%)
Employee gender diversity in 2017 (%)
100
80
60
40
20
0
70
83.9
85.3
30
16.1
14.7
d
r
a
o
B
i
r
o
n
e
S
l
a
t
o
T
s
e
e
y
o
p
m
e
l
t
n
e
m
e
g
a
n
a
m
Female
Male
Middle East & India
Africa
Latin America
Asia Paciÿc
North America
Europe
UK & Ireland
31%
22%
12%
10%
10%
8%
7%
Wage infation
In a number of markets, especially developed regions
such as North America and the UK, economic indicators
have highlighted an increase in wage infation – as a
result of tightening labour markets in some areas and
as a result of increases in minimum or living wages.
As a long-established global employer, G4S has many
years of experience of managing periods of wage
infation. We have to be prepared to negotiate price
increases with customers and to look for ways to
continue to be more productive and cost effective. For
example, we believe this trend is helping to drive more
revenue towards integrated solutions, where G4S has a
competitive advantage and barriers to entry are higher.
Building capability
Building industry-leading capability is at the heart of our
people strategy. We want employees at G4S to have
the opportunity to fourish and grow so that they can
contribute to the future success of the organisation.
There are many examples of local development
programmes which enhance the security and technology
expertise in our organisation.
For example, in 2017 the G4S Academy was launched
in Denmark and has provided a structured approach
to skills development and accreditation in line with
industry standards.
DEFINING OUR SOCIETAL IMPACT
We play an important role in society. Through
its services and organisation, G4S delivers a
broad range of signifcant and far‑reaching social
and economic benefts to the communities in
which we work, many of which are helping to
realise the United Nations Sustainable
Development Goals (SDGs).
• We create employment opportunities, and invest in and
develop our employees. We directly beneft them and
our suppliers through the salaries, benefts and payments
we make for goods and services.
•
In our Care & Justice operations, we develop innovative
programmes to rehabilitate offenders and provide them
with the encouragement and skills needed to help them
rebuild their lives once released.
• We deliver a wide range of specialist security services
that mitigate the risk or impact of criminal behaviour
and help to create safer and more stable communities.
• Our colleagues work with governments and non-
governmental organisations in high-risk environments
such as former confict areas, to support humanitarian,
stabilisation and economic-reconstruction efforts.
• Our focus on safety has helped reduce the risk of injury
and fatality.
• We encourage industry standards to be raised. By
embedding our policies and practices into less developed
regions, as well as by supporting new approaches such as
the Ethical Employment Partnership or the International
Code of Conduct for Private Security Providers, we have
helped to improve industry standards around the world.
The SDGs call upon businesses to advance sustainable
development through the investments they make, the
solutions they develop, and the practices they adopt. In this
report, we have mapped case studies against the SDGs to
highlight where G4S is helping to advance the SDGs through
our programmes and operations.
Visit sustainabledevelopment.un.org for more information
on the United Nations Sustainable Development Goals.
18 G4S plc Integrated Report and Accounts 2017
Regional Leadership Programme
On a Group-wide basis, our efforts are focused on
developing the next generation of leaders, primarily
through our fagship Regional Leadership Programme,
which is devised centrally but delivered locally so that it
is tailored to meet our diverse needs. The Programme
offers high-potential individuals, in a range of line,
functional and business-development roles, the
opportunity to enhance their knowledge and strengthen
their leadership skills. So far 90 employees have
graduated from the programme, and a further 59 are
already on course to do so in 2018.
Recruiting and developing women
Recruiting and developing women into line-management
roles for our operations remains a challenge across the
Group as well as the security industry as a whole. We
actively monitor our gender balance and were pleased
that in 2017 an independent business-led review
supported by UK Government (the Hampton-Alexander
Review) showed G4S as the top performing company
in the business services sector in the FTSE 100. There is
more to do in this area and as part of our wider diversity
and inclusion strategy we have identifed a number of
actions to help us to continue to make progress.
Talent reviews
Annual talent reviews and quarterly talent exchange
discussions are helping to identify potential candidates
for future regional programmes early and are ensuring
career opportunities are more widely available to
employees across the Group.
Broadening use of training and development materials
Whilst our investment in training and development has
to be highly focused, we are doing more to promote
the use of materials we already have available to build
wider capability across the entire management
population. For example, in 2017 we launched a
16-week development programme containing relevant
materials such as articles, assessments, online exercises
and e-books relating to a number of specifc topics such
as change management, delegation and coaching skills.
The programme is currently running, with thousands of
employees subscribing. As learning technology evolves,
our ability to provide access to materials in a more
fexible and bite-sized way, to suit our busy managers, is
increasing. For example, for specifc functions like Sales
and Business Development, we are establishing on-line
academies which will help employees identify their own
development gaps and navigate the materials available
to fnd those best suited to meet their needs.
SUSTAINABLE DEVELOPMENT GOALS
Engaging for success
We are in no doubt that having well-trained, engaged
and motivated employees helps us to deliver for our
customers and make G4S a success. Consequently,
we invest a lot of time and effort in listening to our
employees’ views and responding to their feedback.
We do this in a variety of ways including direct dialogue,
consultation forums and our employee survey.
To ensure the survey is accessible to all employees,
it is offered in over 40 languages and three formats
(paper, online and mobile). Engagement levels for senior
managers were also tested in a separate survey targeted
at the leadership team. Response rates for both surveys
remained high in 2017. In the case of the global
engagement survey in 2017 the response rate at 73%
was at the same level as 2015 and for the leadership
survey was higher at 87%, compared with 85% in 2015.
Feedback from the global survey helps identify what
businesses need to stop doing, start doing and continue
to do to improve levels of employee engagement.
The feedback from the management survey showed
improvements in almost every area, suggesting high
levels of confdence and support for the business
strategy, our values and the executive team.
73%
Response rate
to the biennial
employee
engagement
survey
undertaken
in 2017
84%
Favourable
response rating
from the global
employee
engagement
survey
90
graduates from
the regional
leadership
programme
which continues
in 2018
Integrated Report and Accounts 2017 G4S plc 19
Strategic report
Our strategy continued
S
E
U
L
A
V
D
N
A
E
L
P
O
E
P
Union representation
Our union and employee representative forums at global
level are via the global union UNI, and the GMB, with
whom we signed an Ethical Employment Partnership in
2008. At a European level we have a well-established
European Works Council and at a local level there are
a number of union recognition agreements in place.
Working together with our recognised unions helps us
raise standards both internally and, where appropriate,
across the wider industry and identify potential problems
early and address them constructively.
Promoting the right organisational culture
During 2017, 300 cases were raised by colleagues via
Speak Out, our global whistleblowing system. This was
25% fewer than the previous year, but detailed analysis
shows that employee grievances are being reported and
handled more effectively via other channels. We believe
it is very important that employees feel confdent to
speak out confdentially to ensure standards are met
to protect people. All cases reported to Speak Out
are reviewed and are directed to the most appropriate
channel for action.
The majority of matters raised via Speak Out are
grievances which are transferred to the relevant HR
department, as they are best placed to investigate and
resolve the matter promptly. Concerns regarding
operational procedures are investigated by local
management to ensure that relevant standards are
being followed.
Total number of whistle blowing cases
500
400
300
200
100
0
402
300
158
65
14
15
16
17
Anti-bribery and corruption
Investigations relating to other matters, such as
bribery, ethical or fnancial issues, are conducted
by our internal network of investigators or by
independent experts.
Matters of a serious nature are investigated at a senior
and independent level, with 59 investigations completed
during 2017.
The Group Ethics Steering committee has continued
to oversee implementation of our whistleblowing policy,
case management of whistleblowing reports, and to
conduct regular reviews of serious cases, the
investigations’ progress and the resulting actions.
SPEAK OUT
Values:
Integrity and Respect
Safety, Security and Service Excellence
SDGs:
IF YOU SEE OR SUSPECT
WRONGDOING…
…do the right thing and speak out!
Every G4S employee has a responsibility to ensure that we
uphold our core values, adhere to the law and deliver against
the important commitments set out in our business ethics
policy and ethics code.
Speak Out, our global whistleblowing system, is a key
method of ensuring that we maintain a high standard of
ethics, respect and integrity.
Speak Out is hosted by an independent specialist hotline
and case management provider. It enables every employee
to report concerns that they may have about the behaviour
of individuals, or the business operations, which they feel
contravene the ethics code or our core values. We
encourage any employee who wishes to raise a matter of
ethical concern to contact the free telephone hotline or
make a report online. Both channels are available 24 hours
a day, seven days a week, and are completely confdential.
0808-234-8852
www.g4s-speakout.com
IT IS SAFE TO SPEAK OUT!
You are encouraged to report any serious
issues without fear of retaliation. All concerns
raised in good faith will be taken seriously and
treated with respect.
SPEAK OUT is for reporting serious
wrongdoing. Any other concerns (such
as pay queries, uniform issues or general
employment grievances) should be directed
to your line manager, or HR for a quick
resolution.
Securing Your World
20 G4S plc Integrated Report and Accounts 2017
Improving health and safety
The safety of our employees and those in our care is
one of our key priorities.
To enable us to keep our customers and the
communities we serve safe, we must prioritise the
safety as well as the health and wellbeing of our
employees. It is our responsibility to ensure that our
colleagues return home from work safely every day.
There were three non-natural deaths in custody in
2017. All deaths in custody are investigated by the
relevant authorities to determine the cause of death.
One of the incidents was due to self harm.
Pronouncements will be made by the relevant coroner
on the two remaining incidents following their
investigations. In 2016, we disclosed a death in custody
which was later pronounced as due to unintentional
drug overdose by the coroner.
6.7
Per 1,000
employees
lost time injury
incidence
in 2017
65
Human rights
self assessments
completed
in 2017
Respecting human rights
We are proud of our role in society and of the positive
contribution we make to the realisation of human rights
through the range of services we offer and the standards
which we apply.
However, 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, the suppliers we use, or through the
treatment of our own employees and others who
are in our care.
G4S’ human rights policy and its related framework
are based upon the UN Guiding Principles on Business
and Human Rights. Alongside our values of Integrity
and Respect, the framework reinforces the continued
development of a business model which aids the
realisation of the Sustainable Development Goals
through the improvement of industry standards,
employment opportunities and helping to create
secure and stable communities.
By having clear values and standards, and educating
and training colleagues to uphold them, we are creating
a positive culture which means our colleagues can be
trusted to do the right thing and behave in a way which
meets our standards. In cases where colleagues are
deemed not to have upheld those standards, we
undertake swift, thorough and impartial investigations
into the causes of such behaviour and take appropriate
action to remedy them. In addition to this resulting in
consequences for the individual or individuals concerned,
we learn from such instances and enhance our
safeguards to prevent similar issues arising in the future.
The nature of our work and the environments we
operate in mean that safety and security present a
strategic risk to our business. We believe that setting the
highest standards for health and safety across our
industry helps keep our colleagues safe and builds loyalty
and commitment to G4S among our employees.
Leading by example and having expertise in health and
safety gives employees, customers and stakeholders
confdence that we will work in a safe way.
We recognise that our businesses operate in different
contexts and face varying levels of risk. All businesses
within the Group are required to meet a set of core
health and safety standards. We must make sure that
we are constantly learning and continuously enhancing
our processes, in order to continue to keep colleagues
safe despite a changing environment.
Compliance is monitored via audits and reviews of
performance at regional, group and board level via the
CSR committee. Health and safety is included in Group
Internal Audit’s scope as part of non-fnancial risks.
During 2017 we have:
• Continued to improve the performance of
businesses which have had multiple fatalities. Serious
incidents have reduced by 37% in these businesses
since 2015
• Introduced a reporting and tracking process for those
incidents which have the potential to result in a
fatality, and increased the coverage of our injury
reporting to 98% of businesses
• Reviewed our front-line health and safety induction
training and drafted a mandatory syllabus
• Revised the G4S Golden Rules of Safety
Sadly, during 2017, 25 of our colleagues lost their lives
in work-related accidents. On a comparative basis this is
a reduction from 47 fatalities in 2016. The number of
road-traffc fatalities has decreased by 48% since 2013,
when the frst road-safety programme was launched.
While the number of attack-related fatalities decreased
in our Cash Solutions businesses, this has not been due
to a reduction in the number of armed attacks. The
businesses continue to work with the relevant authorities
to introduce new procedures and improved controls.
During 2017 the Group’s lost time injury incidence rate
was 6.7 per 1,000 employees (98% of businesses
reporting). This compares with a rate of 7.7 in 2016
(96% of business reporting).
Integrated Report and Accounts 2017 G4S plc 21
Strategic report
Our strategy continued
S
E
U
L
A
V
D
N
A
E
L
P
O
E
P
G4S ACADEMY
Values:
Innovation and Teamwork
G4S Academy is a recently-launched initiative within G4S
Denmark, focused on creating an intelligent culture that
can embrace and adapt to technological change, and
predict future customer demands by leveraging our unique,
untapped in-house knowledge and sharing it with customers.
The standards set by our human rights policy have
been embedded into our business policies and
processes, such as our ethics policy, HR core
standards, and the group risk and compliance systems.
For example, investment proposals are assessed on
whether they can be achieved in line with our
company values and standards, as well as on the basis
of appropriate operational delivery, commercial risk
and fnancial return.
During 2017, we have:
• Developed and implemented a human rights
awareness programme for senior managers,
beginning with the Group Internal Audit department.
• Conducted 65 human rights control self-assessments
of businesses operating in high-risk countries.
• Commenced a programme of internal audits of
human rights controls of businesses in high-risk
countries, carrying out audits in 2017.
• Assessed operational and other business issues
against our ‘risk universe’, such as human rights
and other CSR risks.
• Published our frst slavery and human-traffcking
statement, setting out the actions we have taken
to help prevent modern slavery within our
business and supply chain, including the
development and implementation of our Supplier
Code of Conduct and our migrant worker policy
(g4s.com/modernslavery).
• Updated our Supplier Code of Conduct
• Commissioned an independent review of Brook
House Immigration Removal Centre following
allegations of unacceptable behaviour and treatment
of detainees by employees (see page 82).
IMPROVING DRIVER SAFETY
Values: Safety, Security and
Service Excellence
Innovation and Teamwork
SDGs:
The number of road-traffc fatalities
has decreased by 48% since 2013 when
the frst road safety programme was
launched. During 2017, we introduced
new high-visibility clothing for our
motorcyclists in Thailand, and brightly
coloured seat belts in Hong Kong which
enabled a visual check.
22 G4S plc Integrated Report and Accounts 2017
Respecting Human Rights
• Review human rights risks across the Group’s
geographic footprint and update our human
rights heatmap.
• Conduct human rights control self assessments
and continue programme of internal audits of
businesses operating in high-risk environments.
• Carry out human rights risk assessment in key
business areas
• Review and implement key actions resulting from
the independent review of Brook House IRC
(see page 82).
• Continue to build awareness of human rights
responsibilities across the Group’s businesses.
Anti-bribery and corruption
• Continue to increase awareness of Speak Out and
create an environment in which colleagues are
confdent that they may raise concerns without
fear of retaliation
ACTIONS FOR 2018
Create and promote the right
organisational culture
• Launch management values training materials,
embed front-line materials and complete update
of HR policies and processes to refect G4S values
• Continue the delivery of regional leadership
programmes and promote development paths
and learning opportunities for employees at
different levels
• Implement action plans from global employee-
engagement survey and address actions from
management survey
• Review opportunities to improve gender balance
and follow up on UK gender pay gap reporting
Improving Health and Safety
• Continue to implement the revised front-line
health and safety induction training
• Introduce updated controls for security offcers
working at entrance gates
• Share and adopt best practice across the Group
in managing critical risk areas
• Develop action plans for businesses which have
had multiple fatalities, as well as monitoring their
implementation
MOUNT GAMBIER PRISON, AUSTRALIA
Values:
Integrity and Respect
Safety, Security and Service Excellence
Innovation and Teamwork
SDGs:
G4S has operated Mount Gambier Prison since 1995 and
in September 2017 was awarded a new fve-year contract
which includes an option of a further term of up to fve years.
Mount Gambier Prison, the only privately-run prison in
South Australia, is a medium-security men’s prison with
a capacity of 493 beds. Taking over as general manager at
the prison is the previous deputy director for G4S-managed
HM Prison Rye Hill in the UK.
As the new contract begins, the team will be developing
new partnerships with the local community. These will
include support services and technology partners.
Rehabilitation and reintegration services will be provided,
as well as programmes aiming to reduce prisoners’ risks of
reoffending, thus supporting the Government’s policy to
achieve a 10% reduction by 2020 and aiding reintegration
back into the community. The prison’s management team
will also continue to work alongside the State on the planned
expansion of the facility, engaging with the community
and providing signifcant employment opportunities
in the region.
Integrated Report and Accounts 2017 G4S plc 23
Strategic report
Our strategy continued
E
C
N
E
L
L
E
C
X
E
E
C
I
V
R
E
S
D
N
A
S
R
E
M
O
T
S
U
C
We build long‑term customer relationships
based upon trust and understanding of our
customers’ businesses and objectives.
2017 ACHIEVEMENTS
KPI
KPI
£1.4bn
New business
won
24,000
Customers
completed net
promoter score
surveys
KPI
£2.45bn
Technology‑
related security
revenue in 2017
New business won
Annual contract value (£bn)
KPI
1.5
1.2
0.9
0.6
0.3
0.0
0.7
0.6
0.6
0.7
0.7
0.7
0.5
0.6
14
15
16
17
H1
H2
24 G4S plc Integrated Report and Accounts 2017
Positive demand for security services
We believe that the long-term demand for our services
remains positive, and we expect to grow revenues on
average by around 4% to 6% per annum over the
medium term. We continue to sustain contract retention
rates of around 90%, have won substantial new business,
and more than replenished our sales pipeline together
with an improved quality of opportunities.
Large diversifed customer base and sales pipeline
One of the strengths of the Group is the diversifed
nature of its contracts and sales pipeline. Our pipeline
is diversifed by service, geography and customer. Our
150,000 customers are spread across many different
types and customer segment. At the end of December
2017, we had won new business with an annual
contract value of £1.4 billion and total contract value
of £2.5 billion.
Our sales pipeline has grown despite an increased
emphasis on pipeline qualifcation, ensuring we focus on
the best opportunities and improve our win rate. As the
Group has invested in innovative products and services,
we also see an improvement in the quality of the sales
pipeline in terms of more technology-related, longer-
term, higher-value-added opportunities.
YALE UNIVERSITY, USA
Values: Safety, Security and Service Excellence
Innovation and Teamwork
SDGs:
Using G4S-owned AMAG technology, Yale University, one
of the world’s best-known and oldest Ivy League institutions,
has carried out, almost unnoticed, a full scale upgrade of its
access-control and site security system across 350 main
campus buildings.
Securing a prestigious university in a busy urban area
presents particular challenges. High expectations by
students, parents and staff, combined with modern security
and environmental factors, demanded an exceptional
security solution.
The innovative AMAG approach was to use their Symmetry
SR Retroft System, which is designed so that the customer
can use their existing wiring and card readers to avoid a
disruptive, prolonged, expensive and complex upgrade and
without damage to the historic Yale buildings. This unique
“plug and play” design allowed Yale to replace old
controllers with Symmetry SR Controllers, and provides
Yale with a range of advanced integration options so
that additional security measures can be added if and
when required.
Investment in sales leadership and account
management
Since 2013, we have invested in sales leadership, sales
and service training, customer relationships, account
management and a mandatory sales management
system. Our understanding of customer requirements
has increasingly resulted in opportunities to sell more
technology-enabled solutions. This is particularly the
case in developed markets, where higher wages and
lower hardware costs have made technology solutions
more cost-effective.
We have also invested in capturing global customer
opportunities, which has delivered success by winning
new work or new customers such as Bank of America
(see case study overleaf).
Net promoter score and contract retention
Since 2016, we have embarked on a group-wide Net
Promoter Score (NPS) survey process with existing
customers. In 2017, using automated survey tools, we
doubled the number of surveys conducted, with over
24,000 surveys, including our top 20 customers in most
countries, conducted successfully in 29 languages and
we improved NPS scores in most countries compared
with 2016.
ACTIONS FOR 2018
• Improve win rate
• Improve contract retention
• Improve net promoter scores
MAJOR REDEVELOPMENT,
UNITED STATES
Values: Safety, Security and Service
Excellence
Innovation and Teamwork
SDGs:
4-6%
Per annum
revenue
growth over
the medium
term
Since 2016, G4S has been providing detailed risk and threat
assessment as well as an integrated solution and unifed
security at the largest multi-use redevelopment programme
in the United States. This includes access control, systems
integration, monitoring (fre, video, intrusion), Risk360,
SecureTrax, design and management of the security and
operating centre, and manned security offcers.
£2.5bn
Total contract
value of new
business won
in 2017
CARGILL, BRAZIL
Values: Safety, Security and
Service Excellence
Innovation and Teamwork
SDGs:
Cargill has been providing food, agriculture, fnancial and
industrial products and services across 70 countries for the
last 150 years. In Brazil, it has 10,000 employees across 17
states and G4S Brazil has been providing electronic security
services (CCTV and access control) to Cargill since 2016.
After an in-depth study, G4S Brazil designed a CCTV and
access control solution in 2017 for each Cargill site in
countryside locations. This can be challenging due to
isolation of the sites and the requirement for power
generators to be used. This solution will be expanded from
the current ten sites to 130 sites over the next three years.
350
buildings
Integrated Report and Accounts 2017 G4S plc 25
Strategic report
Our strategy continued
N
O
I
T
A
V
O
N
N
I
D
N
A
Y
G
O
L
O
N
H
C
E
T
Since its formation in 2004, G4S has positioned
itself as a leader in integrated security,
providing a combination of manpower and
technology, systems and software. Through
our customer relationships and insight, we
have increased focus on investing in the
development and marketing of new technology
and services to strengthen our service offering,
to support growth and to improve margins
over time.
2017 ACHIEVEMENTS
KPI
KPI
30%
growth in cash
automation
locations
globally
26%
growth in retail
cash solutions in
North America
KPI
11.4%
Growth in
technology‑
related revenues
in 2017
26 G4S plc Integrated Report and Accounts 2017
Well‑positioned for trends towards more technology
solutions with disciplined capital allocation
Increasingly our bespoke offering for customers includes
technology in the form of systems and software. For
some customers, we own the equipment in their facilities
but for others, usually larger customers, we tend to sell
the required equipment to the customer, underpinned
by long-term management and maintenance contracts.
Some of our services and technology solutions, which
have commercial momentum in key markets, are
featured in this section.
Secure Solutions – Integrated Security
G4S positions itself, not as a technology company but,
as a security systems integration company:
Revenue by customer type in 2017 (%)
Major corporates & industrials
Government*
Financial Institutions
Retail
Private energy/utilities
Consumers
Transport & Logistics
Ports & airports
Leisure & Tourism
34%
20%
18%
10%
6%
6%
2%
2%
2%
* Our work for Goverment is c7% Care & Justice. The remainder is embassy
security, local goverment, support for disaster relief, charity and NGO work,
border protection and landmine clearance.
BANK OF AMERICA, NORTH AMERICA
Innovative long‑term security partnership with
one of the world’s largest banks
Values: Safety, Security and Service Excellence
Innovation and Teamwork
SDGs:
Leading global fnancial institution Bank of America is one of
G4S’ largest commercial customers. Bank of America serves
47 million consumers and small businesses across 4,500 retail
fnancial centres in 35 countries around the world.
During 2017, our North America business renewed its
integrated secure solutions contract with the bank, including
a new region covered by the contract, and including access
to the Group’s proprietary RISK360 software, with a
resultant 10% growth in revenue.
Investing in world‑leading proprietary products
and services
In our Secure Solutions segment, we continue to invest
in product and service innovation combined with sales
and operational support in the following areas:
• Software tools including evidence-based risk
assessment, incident management and travel advisory
systems such as RISK360. For example, a global
fnancial organisation used RISK360 to reduce
incident reporting time by 50%.
• Proprietary security systems such as Symmetry
Connect access control systems (see Yale case study
on page 24) and visitor management systems.
Technology-related security revenues are now
£2.45 billion.
Cash solutions – Retail Solutions, bank‑branch
automation
For our fnancial and retail customers, we have
developed a number of innovative and effcient services.
We have over 19,500 cash technology installations,
often combined with our software and managed service
and have a strong and growing pipeline:
• Automated cash solutions for retailers – this
bespoke solution covers smart safes and cash
recyclers, including our own Deposita equipment
in emerging markets through to full cash
management automation solutions for some
of the world’s largest retailers.
• Automated bulk-teller solution for banks – the
Deposita solution of hardware, proprietary
software and managed service is also being used
in bank branches.
• Mobile banking service – due to the increase in
electronic payments and internet banking, traditional
bank branch usage has declined in some markets,
resulting in bank branch closures. However, the
banks recognise the value of personal interaction
with customers and so in some developed and
emerging markets G4S has launched a mobile
banking service using the skills and feet of our
traditional cash-in-transit business in a more
integrated and innovative way.
ACTIONS FOR 2018
• Improve cross-market innovation and growth
• Continue to drive market penetration of
integrated security solutions
• Build on our market leadership in cash
automation services with more customers
in more markets
• Continue to invest in innovative and effcient
services for customers
• Cross-selling and up-selling within and
across markets
• Continued investment in people, technology,
software and systems
10%
Growth in our new
renewed contract with
Bank of America. The
three year integrated
security solutions contract
is the Group’s largest
individual contract.
Integrated Report and Accounts 2017 G4S plc 27
Strategic report
Our strategy continued
Y
T
I
V
I
T
C
U
D
O
R
P
D
N
A
E
C
N
E
L
L
E
C
X
E
L
A
N
O
I
T
A
R
E
P
O
Our productivity programmes have
started to show clear benefts and we have
increased confdence that there remain many
more opportunities to be a more effcient
organisation. In August 2017, we announced
that we expected to deliver recurring
operating and fnancing effciencies of £90
million to £100 million per annum by 2020.
2017 ACHIEVEMENTS
KPI
KPI
130
business units across
90 countries completed
organisation
benchmarking
£90m-100m
effciency savings per
annum by 2020
1,300
re‑negotiations
with suppliers
1st
pilot launched in the
entire Irish manned
security business
in November 2017,
combining HR,
operations and fnance
in one streamlined
IT‑enabled process
28 G4S plc Integrated Report and Accounts 2017
More focused business – cultural change
Historically a signifcant part of the Group’s strategy
and development was growth through bolt-on
acquisitions and, in many cases, these acquisitions were
not fully integrated into the Group. With the Group
offering many services in a large number of countries,
this resulted in an ineffcient organisation, with many
management layers built up over time, resulting in
ineffciency and lack of accountability.
The Group is now more focused, on two core business
segments, and we are implementing programmes to
ensure our organisation and operational costs are just
as focused – with support functions as shared-service
centres. This requires a substantial cultural change in
the organisation and has to be done methodically
and properly.
Reinvesting for growth
A signifcant proportion of the gains we have made
from our effciency programmes have been reinvested
in the business to improve governance, increase the
opportunities for growth as well as in processes to drive
further effciency. We have increasing confdence in
being able to deliver further effciencies as outlined
in the “programme progress table opposite” and we
expect the majority of these will increasingly fow
through to the bottom line.
Effcient organisation design and management
de‑layering
Following benchmarking in 130 business units across
90 countries in 2017, we have begun delayering the
management frameworks in the business and are now
working to have more effcient regional, functional and
operational frameworks as follows:
Procurement and property
The Group procurement team has continued driving its
activities throughout the different regions with a category-
focused and regionally-deployed strategic approach.
Key areas of improvement included supplier base
rationalisation, standardisation of procurement
processes and demand management, renegotiation
of payment terms and the delivery of savings across all
categories. Globally, in 2017, the team delivered over
HINKLEY POINT C, UK
Values: Safety, Security and Service Excellence
Innovation and Teamwork
SDGs:
Hinkley Point C will be the frst nuclear plant to be built in
the UK in over 20 years. The build project will last ten years
and involves a high level of complexity and risk, with over
5,600 workers on site. G4S will be providing an integrated-
security solution covering physical security and facilities
management, access control, CCTV, RISK360, control room,
vetting, incident response – command & control, contractor
on-boarding, risk audits and protester management.
Programme progress – helping to deliver between £70 million and £80 million sustainable operational cost
savings per annum by 2020, with an additional c£20 million from re‑fnancing:
Programme
Safety performance
Status
Organisational effciency: operations and support functions
Procurement and property
IT-enabled automation and shared-service centres
One G4S; standardised operating and functional processes
Progress
Foundations laid: building culture and
improving performance
Benchmarked 130 business units across
90 countries
• >1,300 supplier negotiations
• Reduced suppliers and demand
• Rationalising property
• IT service management model
• Progressive, disciplined programme
Signifcant opportunity
1,300 individual re-negotiations with tangible results in
all regions and savings in excess of 50% in some cases.
New procurement tools were implemented to provide
more effcient and controlled procurement, such as the
tool rolled out in the UK to manage the procurement
of contingent labour. This will be progressively rolled out
to other regions.
In 2018 focus will remain on consolidating the supplier
base, standardisation of procurement processes,
demand management and delivering savings.
Operational excellence
We have a number of initiatives in place to introduce
standardised operational and functional processes.
We are also using IT-enabled automation and shared-
service centres to improve productivity. One example
of this is Javelin.
Lean‑process design – Javelin
Project Javelin is a new operating model for our business
which takes the best working practices and processes
from across G4S. Javelin replaces our previous systems
and processes for recruitment, core HR, talent
management, procurement, fnance, contract
management, payroll, billing, scheduling, tele-contact,
IVR platform and operational control systems with a
single Cloud based platform.
The pilot for Javelin was launched in Ireland in
November 2017. The purpose of the pilot programme
was to learn how to best deliver this complex change
programme within our business, identify areas
of our combined processes that work well and capture
areas for improvement before further roll-out. The
enhanced version of Javelin encompassing all of the
lessons learned will be deployed into Ireland before
implementation commences in the UK later this year.
Automating our core processes for HR (screening,
payroll), operations (scheduling, holidays and leave)
and fnance (billing) will reduce the amount of time
between the work we do for customers and billing
for those services.
ACTIONS FOR 2018
• Continue with restructuring and organisational
effciency programmes
• Commence roll-out of Javelin in the UK
• Continue to focus on consolidating the supplier
base, standardisation of procurement processes,
demand management and delivering savings
Ten-year
Contract to provide
integrated security at
Hinkley Point C.
Integrated Report and Accounts 2017 G4S plc 29
Strategic report
Our strategy continued
E
N
I
L
P
I
C
S
I
D
L
A
I
C
R
E
M
M
O
C
D
N
A
L
A
I
C
N
A
N
I
F
Through a strong focus on cash management
and portfolio management, net debt/Adjusted
EBITDA reduced to 2.4x at the end of 2017
from 2.8x at the end of 2016, in line with our
target set in 2015.
2017 ACHIEVEMENTS
KPI
KPI
2.4x
Net debt/
Adjusted
EBITDA at end
of 2017, within
our target of
<2.5x
106%
operating cash
fow from core
businesses as a
proportion of
Adjusted PBITA
£527m
operating cash
fow from core
businesses
£156m
in net disposal
proceeds
received
in 2017
30 G4S plc Integrated Report and Accounts 2017
Operating cash fow
Operating cash fow from core businesses in 2017 was
£527 million, down from £633 million in 2016 as
expected. Operating cash fow in 2016 was particularly
strong, refecting the benefcial impact of better terms
and conditions with a large number of suppliers and the
recovery of weak cash fow performance at the end of
2015. Our 2017 cash fow conversion performance of
106% of Adjusted PBITA (2016: 133%) was in line with
our guidance that average operating cash fow
conversion will be more than 100% of Adjusted PBITA.
We continue to focus on improved working capital
management through strengthening bid evaluation
frameworks to increase focus on frequency of invoicing
and shorter payment terms.
Reducing the time between event to billing
• Improving processes and automating event billing
information such as hours worked (for example
Project Javelin on page 29), milestones met, collections
and deliveries in the cash solutions business.
• Centralising of billing events of global and strategic
accounts in some countries.
• Automation of invoices removing the resource and
delay of a manual process.
• Seeking to distribute invoices electronically, at lower
cost and quicker than via post.
Contract risk management
Our contract risk management model was implemented
in 2014, and aims to ensure we sign contracts that we
can deliver effciently and effectively and is shown in the
pie chart below:
G4S CONTRACT RISK MANAGEMENT AND
GOVERNANCE MODEL
Board risk committee
The board Risk Committee
will undertake a review of a
major contract at each of
its meetings.
Bid risk assessment
Based on fnancial, legal,
reputational and operational
risk criteria. Referred to the
region, Group or board as
appropriate for review
and approval.
Group internal audit
Internal audit conducts
audits of selected
contracts.
Bid approval
Bids’ customer value
propositions, commercial terms
and risk mitigation strategies
are challenged. Expected
risk-weighted return is assessed
before approval is given
or withheld.
On-going contract
assurance
Contracts subject to
on-going scrutiny at
regional or Group level
based on commercial
scale and level of risk.
Contract mobilisation
Key contractual
requirements and risk-
mitigation strategies, based
on complexity and risk
profle of mobilisation, are
mapped to accountable
contract managers.
Strengthening collections performance
• Changed incentive plans in 2016 with greater
emphasis on cash-fow generation.
Changing behaviours
Cash-fow generation is an important part of
management incentive plans.
• Improved management information to increase
accountability and infuence behaviour.
• Weekly calls with fnance and operations to drive
cash collection.
Managing accounts payable
• The Group’s days’ payable outstanding is 42 days
(2016: 35 days) which is still shorter than days’
sales outstanding of 52 days (2016: 46 days), but
the gap is reducing. This shows that, despite the
progress made, there is still an opportunity
to improve further.
• Ensuring that supplier contracts are linked with
customer contracts.
• Re-negotiating improved terms through
procurement teams.
Capital allocation – on‑going priorities for use of cash
All investment is reviewed to ensure that the Group’s
return on investment targets are met, and all major
capital investment projects are approved by the
appropriate authority in line with delegation limits.
Other measures, such as whether we are able to
achieve the benefts of the project in line with the
Group values and whether the commercial risks are
acceptable, are also considered.
We intend to remain soundly fnanced with average
operating cash fow conversion of more than100% of
Adjusted PBITA and a net debt to Adjusted EBITDA
ratio of less than 2.5x. Priorities for excess cash will
be investment, dividends and, in the near term, further
leverage reduction.
CAPITAL ALLOCATION
• Net debt/Adjusted EBITDA of below 2.5x
• Priority uses of any surplus cash fow:
Investment in growth and productivity
•
• Dividend growth
• Leverage reduction
Portfolio management
The Group made further progress with its portfolio
management programme in 2017. The programme has
greatly improved the Group’s strategic focus and has
also realised over £500 million in disposal proceeds in
relation to the 41 businesses sold to date. This includes
gross proceeds of £166 million in 2017 relating to the
disposal of the Group’s businesses in Israel and Bulgaria,
the Group’s cash businesses in Peru and Paraguay, the
US Youth Services business and the UK children’s
homes business.
The proceeds from these disposals have reduced the
Group’s leverage and have been reinvested in an organic
growth and productivity programme from which we
expect to see good returns.
Pension defcit repair plan
G4S had a net defned pension defcit for accounting
purposes of £318 million (2016: £368 million) net of
applicable tax as at 31 December 2017. For more details
see page 173. The lower defcit refects a small increase
in the discount rate assumption used and the payment
of defcit repair contributions of £40 million during the
year under the current defcit repair plan. The triennial
review of the scheme and pension contributions will
begin in 2018 and is expected to be completed in 2019.
Debt refnancing
G4S had gross debt of £2.5 billion (2016: £2.6 billion)
and net debt of £1.5 billion at the end of 2017 (2016:
£1.7 billion). Around £548 million of the £1 billion debt
which matures in 2018/2019 incurs post-hedging average
interest rates of between 6.90% and 7.75% (see page 41).
The Group has good access to capital markets and a
diverse range of fnance providers and as a result began
to refnance its debt at much lower rates in 2017 and
early 2018 which should result in a material reduction
in the Group’s interest charge from 2019 onwards.
FINANCIAL OUTLOOK
• Average organic revenue growth of 4-6%
per annum
• Restructuring and effciency programmes to
deliver £70m-80m annual costs savings from
2020 and around £20m of refnancing cost
reduction per annum by 2020
• Compounding beneft of investment,
growth and productivity to deliver strong
earnings growth
• Operating cash fow from core businesses
of over 100% of Adjusted PBITA
• Continued focus on cash management and
working capital
• Continued disciplined approach to capital
investment – expect to invest £100m-£150m
per annum
• Maintain net debt/Adjusted EBITDA below 2.5x
• Dividends increasing in line with long-term
growth in earnings
Integrated Report and Accounts 2017 G4S plc 31
Strategic report
S
R
O
T
A
C
I
D
N
I
E
C
N
A
M
R
O
F
R
E
P
Y
E
K
Key performance indicators
Our progress in implementing our strategic
objectives is measured using key performance
measures aligned to those objectives and to the
Group values:
FINANCIAL – CORE BUSINESSES
KPI
Revenue1 (£bn) growth since 2013
Adjusted PBITA1 (£m) growth since 2013
£7.4bn +17%
£496m +31%
7.2
7.4
6.4
6.6
6.8
8
7
6
5
4
3
2
1
0
496
476
435
415
379
500
400
300
200
100
0
13
14
15
16
17
13
14
15
16
17
We have an organic growth strategy based on strong
market positions in structural growth markets.
We have invested in improved customer service,
innovation and sales and business development
capabilities. There is also great potential to sell more
complex solutions which tend to have longer
contract terms and higher margins. Over the medium
term we expect to grow revenues on average by 4%
to 6% per annum.
In 2017, revenues grew 3.2% to £7.4bn (2016:
£7.2bn), with developed markets growing 4.3%,
refecting strong growth in North America and
modest growth in Europe and the UK.
Emerging markets grew 1.5% with good growth
across Africa, Asia Pacifc and Latin America offset
by a decline in the Middle East & India region.
The Group has implemented a number of
productivity programmes that are now driving
effciency and operational improvement across the
Group. These include effcient organisation design,
management de-layering, lean operating processes,
effcient reporting and assurance processes, upgraded
IT systems and effcient procurement.
In 2017, Adjusted PBITA grew 4.2% to £496m
(2016: £476m) as a result of revenue growth of
3.2% and our productivity initiatives having tangible
compounding benefts. Adjusted PBITA in emerging
markets was down 4.8% due to the challenging
environment in Middle East & India whilst in developed
markets Adjusted PBITA increased by 9.1%.
Description
Performance
in 2017
Link to strategic
objectives
Link to long term
incentive plan
Link to annual
performance
bonus
32 G4S plc Integrated Report and Accounts 2017
Strategic report
OTHER FINANCIAL AND NON-FINANCIAL
KPI
An analysis of net debt: Adjusted EBITDA
performance is provided on page 30. In addition
to the fnancial KPIs, the Group has a set of
performance measures aligned to its strategic
priorities. These measures include employee
retention, contract and customer retention,
lost-time injuries and other health and safety
measures. A description of these performance
measures and our progress against them is
shown throughout the strategic report.
See pages 14 to 25 for more information.
PEOPLE AND
VALUES
CUSTOMERS AND
SERVICE EXCELLENCE
TECHNOLOGY
AND INNOVATION
OPERATIONAL EXCELLENCE
AND PRODUCTIVITY
FINANCIAL AND
COMMERCIAL DISCIPLINE
Link to strategy
People and
values
Customers
and service
excellence
Technology
and innovation
Operational
excellence and
productivity
Financial and
commercial
discipline
Operating cash fow1 (£m) growth since 2013
Adjusted EPS1 (pence per share) growth since 2013
£527m +20%
17.9p +48%
633
527
480
441
391
700
600
500
400
300
200
100
0
18
15
12
9
6
3
0
17.9
16.9
14.3
13.0
12.1
13
14
15
16
17
13
14
15
16
17
A key priority for the Group is to drive improved
cash generation, through enhanced working capital
management and capital discipline and embedding
a “cash matters” culture throughout the Group.
Greater emphasis has been placed on cashfow
generation in management incentive plans
since 2016.
G4S is aiming to deliver sustainable growth in
adjusted earnings over the long-term. Adjusted EPS
growth is a component of both the annual and
long-term management incentive plans.
Operating cash fow was £527m (2016: £633m),
down 16.7% as expected following a higher than
normal cash generation in 2016. The cash conversion
rate was 106% (2016: 133%), in line with our guidance
of over 100% of Adjusted PBITA. Good cash fow
and working capital management performances were
delivered across most of the Group.
Helped by revenue growth, improved Adjusted
PBITA margins and lower non-controlling interests,
adjusted earnings from core businesses increased
5.7% to £277m (2016: £262m) in 2017.
Adjusted EPS from core businesses increased 5.9%
to 17.9p (2016: 16.9p).
1. For details of the basis of preparation of results from core businesses and an explanation of Alternative Performance Measures (APMs)
used, see page 35. Results from core businesses are reconciled to statutory results on page 44.
For more detail on the Group’s strategic priorities please see pages 14 to 31. For more detail on 2017 fnancial
performance please see the Chief Financial Offcer’s review on pages 37 to 50.
Integrated Report and Accounts 2017 G4S plc 33
W
E
I
V
R
E
V
O
E
C
N
A
M
R
O
F
R
E
P
R
S
C
CSR performance
Key priority
based on 2017
stakeholder
materiality
exercise
(see page 83)
HEALTH AND SAFETY
HUMAN RIGHTS
The safety of our employees
and those in our care is one
of our corporate values and
a priority for the Group.
Our respect for human rights
is core to the sustainable
success of the business and
continues to be an important
part of our risk‑assessment
and mitigation process.
ANTI-BRIBERY
AND CORRUPTION
We continue to develop and
encourage a workplace
culture in which all employees
understand the company’s
standards of ethics and feel
confdent that they may raise
ethical concerns.
KPIs
47%
Reduction in employee fatalities
65
Human rights control self
assessments of businesses
operating in high‑risk countries
300
Cases reported and managed via
our global whistleblowing system
Speak Out during 2017
KEY CSR INDICATORS
Number of employees
Percentage of female managers
Percentage of frontline female employees
Work-related fatalities
Attack
Non-attack
Road-traffc incident
Lost time incidence rate
(per 1,000 employees)
Non-natural deaths in custody (UK/Australia)
Coverage by collective agreements (%)
Employee turnover (%)
Number of human rights control self-assessments
in high-risk countries
Number of human rights audits in high-risk countries
Number of whistleblowing cases
t/CO2e GHG emissions per £m revenue
Total GHG emissions t/CO2e
Scope 1 t/CO2e
Scope 2 t/CO2e
Scope 3 t/CO2e (air travel)
Visit g4s.com for more information.
2017
570,000
22.8%
14.2%
25
8
6
11
6.7
3
31%
25.3%
65
37
300
62.9
501,467
297,211
103,915
20,368
2016
585,000
25.5%
13.6%
47
20
10
17
7.7
9
32%
27.6%
54
–
402
68.1
514,466
296,543
108,369
15,261
2015
610,000
23.4%
13.4%
46
17
9
20
8.5
2
33%
29.4%
–
–
158
72.3
526,403
304,551
108,398
16,088
2014
623,000
23.4%
12.8%
41
14
8
19
–
–
30%
30.8%
Index
p17
p18-19
p18-19
p21
p21
p21
p21
p21
p21
p20
p17
–
–
65
p21-22
p21-22
p20
75.0 p117-118
542,429 p117-118
312,708 p117-118
107,232 p117-118
17,573 p117-118
34 G4S plc Integrated Report and Accounts 2017
A
L
T
E
R
N
A
T
I
V
E
P
E
R
F
O
R
M
A
N
C
E
M
E
A
S
U
R
E
S
(
A
P
M
S
)
Alternative Performance Measures (APMs)
The Group applies the basis of preparation for its
statutory results shown on page 136. As explained
below, the Group makes use of Alternative
Performance Measures (APMs) in the management of
its operations and as a key component of its internal and
external reporting. Whilst broadly consistent with the
treatment adopted by both the Group’s business sector
peers and by other businesses outside of the Group’s
business sector, these APMs are not necessarily directly
comparable with those used by other companies.
Business reporting structure
Since 2016, the Group has reported its results across
three distinct components, in line with its strategy for
managing the business:
• Core businesses (formerly referred to as
“Continuing businesses”), which comprise the
Group’s on-going activities;
• Onerous contracts, which are being managed
effectively to completion:
The onerous contracts component largely comprises
a small number of material legacy onerous contracts
that were identifed by management as loss-making
and are being run to completion. The results of these
contracts are presented separately so that
stakeholders can clearly assess their fnancial impact
on the Group as well as consider them separately
when assessing the fnancial performance which the
Group is likely to deliver into the future; and
• Portfolio businesses, which are being managed
for sale or closure, as part of the portfolio
rationalisation programme announced by the
Group in November 2013.
Businesses are classifed as portfolio businesses when
the Group Executive Committee, having considered
their performance, market conditions, competitive
environment etc., considers that shareholder value
is most likely to be maximised through a sale
transaction rather than through continuing use. These
businesses are available for immediate sale in their
present condition, but do not represent a major line
of business or geographical area of operation and
hence do not meet the defnition of a discontinued
operation under IFRS 5.
Due to the scale and breadth of the Group, together
with the complex changing environment in the
different countries where the Group operates, the
portfolio businesses programme is dynamic. Changes
in performance and market conditions subsequent
to the original launch of the portfolio businesses
programme have led the Group Executive
Committee to consider that some additional
businesses should be sold or closed. In certain cases,
changes in market conditions or business
performance have provided suffcient evidence for
the Group Executive Committee to conclude that
shareholder value will best be maximised through
retention of some businesses previously categorised
as portfolio businesses, and hence such businesses
have been re-classifed as core businesses.
Since 30 June 2017 there have been no changes to the
portfolio businesses other than the completion of some
minor disposals. The portfolio programme is considered
to be substantially complete at 31 December 2017.
Going forwards no further transfers into or out of the
portfolio businesses will occur.
When presenting these three components separately,
the objective is to provide additional information and
analysis to enable a fuller understanding of the Group,
the way it is managed, and to identify easily the
performance of those businesses that are expected to
form part of the Group in the long term. These three
components, together with the impact of restructuring
costs, specifc items and other items disclosed separately
from Adjusted PBITA (see below) on the face of the
Consolidated income statement, constitute “continuing
operations” under IFRS.
Discontinued operations, in accordance with IFRS 5,
represent areas of the business which are being
managed for sale or closure but which represent
material business segments or entities. The Group now
has minimal operations that meet the IFRS 5 defnition
of discontinued operations.
The comparative results for each component of
continuing operations, and for discontinued operations,
are re-presented for consistency to refect the impact
of businesses re-classifed between components or sold
during the current period.
Financial performance indicators
The key fnancial measures used by the Group in
measuring progress against strategic objectives are set
out below, and are reconciled for the current and prior
year to the Group’s statutory results on page 44.
a. Revenue
Statutory revenue arising in each of the three
business components. Revenue from core businesses
is a Key Performance Indicator (“KPI”).
b. Adjusted proft before interest, tax and
amortisation (“Adjusted PBITA”)
The Group uses Adjusted PBITA as a consistent
internal and external reporting measure of its
performance, as management views it as being more
representative of fnancial performance from the
normal course of business and more comparable
period to period. Adjusted PBITA excludes strategic
restructuring costs, goodwill impairment and
amortisation of acquisition-related intangible assets
and specifc and other separately disclosed items,
which the Group believes should be disclosed
separately by virtue of their size, nature or incidence,
as explained on page 36.
Restructuring costs:
These costs relate to the wider strategic transformation
of the Group and are excluded from Group and
regional Adjusted PBITA since they refect Group
decisions and are not considered to be refective of the
underlying fnancial performance of the individual
businesses. This programme is of a strategic nature and,
as such, is monitored and approved by the Group
Executive Committee. During 2016 and 2017 activities
under the programme have focused primarily on
Integrated Report and Accounts 2017 G4S plc 35
Strategic report
Alternative Performance Measures (APMs) continued
transforming the operating model in the regions of UK
& Ireland and Europe. Going forwards, the Group has
announced a three-year plan to 2020 to implement
effcient organisational design and leaner processes,
which is likely to require further restructuring
investment. Local, non-strategic restructuring costs in
the businesses continue to be included within Adjusted
PBITA, consistent with prior years.
Goodwill impairment and Amortisation of acquisition-
related intangible assets:
The goodwill and acquisition-related intangible assets
(mainly related to the capitalised value of customer lists),
which resulted in these charges, arose when the Group
acquired a number of its current businesses. As a
contrast, organically-developed businesses in the Group,
whilst clearly benefting from intangible assets such as
talent and customer relationships, do not have any
associated goodwill or acquisition-related intangible
assets recognised in the Group’s Consolidated
statement of fnancial position.
Impairment and amortisation of goodwill and
acquisition-related intangible assets are excluded from
Adjusted PBITA as they relate to historical acquisitions
activity rather than the underlying trading performance
of the business, and this presentation enables effective
comparison of business performance across the Group,
regardless of whether businesses were acquired or
developed organically. This approach provides
management with comparable information for day-to-
day decision making. The income and trading profts
earned from previously-acquired businesses are,
however, included within Adjusted PBITA, and this
treatment may differ from how other groups present
profts and amortisation of intangible assets relating
to businesses acquired.
The Group reports amortisation of all non-acquisition-
related intangible assets, which are mainly related to
development costs and software, as a charge within
Adjusted PBITA, to refect the amortisation of capital
expenditure invested in these assets to deliver the
day-to-day operations, consistent with the treatment
of depreciation of capital expenditure invested in
property, plant and equipment.
Specifc items:
These items are those that, based on management’s
judgment, need to be disclosed separately in arriving
at operating proft by virtue of their size, nature or
incidence. They are excluded from the Group’s adjusted
performance measures since they are not considered
to be representative of the underlying fnancial
performance of the business. In determining whether
an event or transaction is specifc, management
considers quantitative as well as qualitative factors
such as the frequency or predictability of occurrence.
All items that are reported as specifc items are
evaluated and approved by the Group’s Audit
Committee prior to being separately disclosed. The
Group seeks to be balanced when reporting specifc
items for both debits and credits, and any reversal of
excess provisions previously created as specifc items is
recognised consistently as a specifc item. The associated
tax impact of specifc items is recorded within the
specifc items tax charge. In addition, tax-specifc charges
or credits, such as those arising from changes in tax
legislation which have a material impact, and which are
unrelated to net specifc items, are also included within
the specifc items tax charge. Consistent with the
treatment of pre-tax specifc items, signifcant tax
charges or credits that occur, which are not related
to core businesses but which would have a signifcant
impact on the Group’s tax charge, would also be
classifed as tax-specifc items.
Profts and losses on disposal or closure of subsidiaries
and losses from discontinued operations:
These items are excluded from the Group’s adjusted
performance measures since they are not refective of
the underlying fnancial performance of the Group.
Further details regarding these excluded items can be
found in note 8 on page 148.
Adjusted PBITA from core businesses is a KPI.
c. Operating cash fow
Net cash fow from operating activities of continuing
operations, adjusted to exclude strategic
restructuring spend and cash fows from portfolio
operations and onerous contracts. Operating cash
fow from core businesses is a KPI.
d. Earnings
Proft attributable to equity shareholders of G4S plc.
Adjusted earnings from core businesses excludes specifc
and separately disclosed items and is a KPI.
e. Earnings per share (“EPS”)
Proft attributable to equity shareholders of G4S plc,
per share, from continuing operations. Adjusted EPS
from core businesses excludes specifc and separately
disclosed items, and is a KPI.
f. Net debt to Adjusted EBITDA
The ratio of total net debt, including investments,
fnance lease liabilities and cash and overdrafts within
net assets of disposal groups held for sale, to
adjusted earnings attributable to equity shareholders
before interest, tax, depreciation and amortisation.
This ratio is a determinant factor in the board’s
assessment of the fnancial strength of the Group,
and is a key measure of compliance with covenants
in respect of the Group’s borrowing facilities.
Certain of these fnancial performance indicators in
respect of core businesses also form a signifcant
element of performance measurement used in the
determination of performance-related remuneration
and incentives, as follows:
• Adjusted PBITA – annual bonus plans for senior
managers in regional management;
• Operating cash fow – annual bonus plans and
long-term incentive plan for all senior management
including executive directors;
• Adjusted earnings – annual bonus plans for executive
directors and functional directors who are members
of the Group Executive Committee; and
• Adjusted EPS growth – long-term incentive plan for
all senior management including executive directors
36 G4S plc Integrated Report and Accounts 2017
F
O
C
U
S
E
D
O
N
L
O
N
G
-
T
E
R
M
D
E
L
I
V
E
R
Y
Chief Financial Offcer’s review
“We made good progress in 2017
and our core businesses delivered
revenue growth of 3.2% and
adjusted earnings growth of 5.7%.”
Tim Weller, Chief Financial Offcer
FINANCIAL HIGHLIGHTS
STATUTORY RESULTSe
Revenue
£7.8bn+3.1%
(2016: £7.6bn)
Earningsc
£236m+19.2%
(2016: £198m)
Adjusted PBITA
£491m+6.5%
(2016: £461m)
Final dividend
6.11p +5.0%
(2016: 5.82p)
CORE BUSINESSESa
Revenue
KPI
£7.4bn+3.2%
(2016: £7.2bn)
Adjusted Earningsa
KPI
£277m+5.7%
(2016: £262m)
Adjusted PBITA
KPI
£496m+4.2%
(2016: £476m)
Operating cash fow
KPI
£527m-16.7%
(2016: £633m)
Net debt: Adjusted EBITDAd
Resulting in a total dividend of
2.4x
(2016: 2.8x)
9.70p +3.1%
(2016: 9.41p)
Chief Financial Offcer’s review
Introduction
Revenue
Adjusted PBITAb
Adjusted PBITAb margin
Earningsc
Earnings Per Sharec
Operating Cash Flow
Statutory Resultsd
Actual Foreign Exchange Rates
Core Businessesa
Constant Foreign Exchange Rates
2017
£7,828m
£491m
6.3%
£236m
15.2p
£488m
2016
£7,590m
£461m
6.1%
£198m
12.8p
£615m
%
+3.1
+6.5
–
+19.2
+18.8
(20.7)
2017
£7,427m
£496m
6.7%
£277m
17.9p
£527m
2016
£7,195m
£476m
6.6%
£262m
16.9p
£633m
%
+3.2
+4.2
–
+5.7
+5.9
(16.7)
a. See notes on page 44 for a reconciliation of group results.
b. Adjusted PBITA is explained and defned on page 35 in the basis of preparation of Alternative Performance Measures.
c. Earnings is defned as proft attributable to equity shareholders of G4S plc. Adjusted earnings and adjusted earnings per share (“EPS”) from core businesses
exclude specifc and other separately disclosed items, as explained on page 36, and are reconciled to statutory earnings and EPS on page 44.
d. Net debt to Adjusted EBITDA is an Alternative Performance Measure as defned on page 36 and is adjusted to exclude specifc and separately disclosed items.
e. See page 136 for the basis of preparation of statutory results.
Integrated Report and Accounts 2017 G4S plc 37
Strategic report
Chief Financial Offcer’s review continued
Basis of preparation
The following discussion and analysis on pages 38 to 50 is based on, and should be read in conjunction with, the consolidated fnancial
statements, including the related notes, that form part of this annual report. The consolidated fnancial statements have been prepared
in accordance with IFRS as adopted by the EU as explained on page 136.
Business Performance – statutory results
Statutory results at actual exchange rates
Revenue
Adjusted proft before interest, tax and amortisation (Adjusted PBITA)
Specifc items (net)
Restructuring costs
Proft on disposal/closure of subsidiaries/businesses
Goodwill impairment
Acquisition-related amortisation
Operating proft
Interest costs (net)
Proft before tax
Tax
Proft after tax
Loss from discontinued operations
Proft for the year
Non-controlling interests
Earnings (proft attributable to equity holders of the parent)
EPS
Operating cash fow
2017
£m
7,828
491
(34)
(20)
74
–
(10)
501
(115)
386
(128)
258
(6)
252
(16)
236
15.2p
488
2016
£m
7,590
461
(13)
(12)
7
(9)
(32)
402
(106)
296
(76)
220
(3)
217
(19)
198
12.8p
615
YoY
3.1%
6.5%
24.6%
8.5%
30.4%
68.4%
17.3%
100.0%
16.1%
(15.8%)
19.2%
18.8%
(20.7%)
Revenue
Revenue increased by 3.1% compared with the prior year statutory reported results presented at historical exchange rates. On a
constant-currency basis, revenue decreased by 1.2%, refecting a reduction in revenue from businesses identifed for sale or closure of
£335m primarily due to businesses disposals in the current and prior years including the Group’s US Youth Services business and its
business in Israel (see page 39 and note 17) in 2017. Revenue from onerous contracts was slightly higher than the prior year at £119m
(2016: £115m). Excluding revenue from onerous contracts and from businesses identifed for sale or closure, revenue grew by 3.2% at
constant exchange rates.
Business performance is discussed in more detail by region on page 51.
Adjusted PBITA
Adjusted PBITA of £491m (2016: £461m) was up 6.5% including the benefts of exchange rate movements in the year. On a constant-
currency basis, Adjusted PBITA increased 1.9% refecting the strong performance of the Group in developed markets, improved product
mix and the results of our on-going productivity programmes, partially offset by the weakness in the Middle East & India and a reduction
in Adjusted PBITA from businesses held for sale or closure of £11m primarily due to business disposals in the current and prior years
(see page 44). Excluding Adjusted PBITA from onerous contracts and businesses identifed for sale or closure, Adjusted PBITA increased
by 4.2% at constant exchange rates.
38 G4S plc Integrated Report and Accounts 2017
Net specifc items
Specifc items resulted in a net charge of £34m (2016: £13m), of which £19m (2016: £4m) primarily relates to the anticipated total
losses over the next 15 to 20 years in respect of certain UK contracts. The net specifc item charge also includes £6m relating to the
estimated cost of settlement of subcontractor claims from commercial disputes in respect of prior years, and £9m relating mainly to the
settlement of labour-related disputes in respect of prior years, in North America and Latin America. Specifc items in 2016 included a
£10m charge due to the revision of estimates relating to legacy acquisitions and labour claims in Latin America, £7m relating to
commercial restructuring in Middle East & India, and a net £4m supplementary onerous contract provision primarily in respect of the
Compass asylum seekers contract, all offset by an £8m credit relating mainly to the recovery of a legal claim in Europe and of certain
disputed debtor balances in the UK.
Restructuring costs
The Group invested £20m (2016: £12m) in restructuring programmes during the year, mainly in the UK & Ireland and Europe regions
as part of the multi-year strategic productivity programme being implemented across the Group, which is now drawing to a close. In
addition, the Group incurred non-strategic severance costs of £10m (2016: £9m) which are included within Adjusted PBITA. Going
forwards the Group has announced a three-year plan to 2020 to implement effcient organisational design and leaner processes, which
is likely to require further restructuring investment.
Proft on disposal and closure of subsidiaries and goodwill impairment
As part of the portfolio programme, the Group realised a net proft of £74m (2016: £7m) relating to the disposal of a number of its
operations including the businesses in Israel and Bulgaria, the US Youth Services business, the UK children’s homes business and the
Group’s cash businesses in Peru and Paraguay. In 2016, the Group recorded a goodwill impairment charge of £9m in relation to
businesses identifed for sale or closure.
Acquisition‑related amortisation
Acquisition-related amortisation of £10m (2016: £32m) is lower than the prior year as certain intangible assets recognised on a number
of legacy acquisitions became fully amortised in 2016.
Net interest costs
Net interest payable on net debt was £92m (2016: £90m). The increase in 2017 was primarily due to a temporary increase in gross
borrowings (matched by an increase in cash balances) following the issuance of a €500m Public Bond in November 2016 and a €500m
Public Bond in June 2017 that were used mainly to re-fnance the March and May 2017 debt maturities in addition to drawings under
the Revolving Credit Facility. Net other fnance costs of £12m (2016: £6m) increased compared with the prior year due to an additional
£2m relating to discount unwound on provisions, a £2m charge in relation to overseas tax settlements, and a £2m indebtedness-related
foreign exchange gain recognised in 2016.
The pension interest charge, related to the unwinding of discount in relation to long-term pension liabilities, was £11m (2016: £10m),
resulting in a total net interest cost of £115m (2016: £106m).
Integrated Report and Accounts 2017 G4S plc 39
Strategic report
Chief Financial Offcer’s review continued
Tax
The statutory tax charge of £128m (2016: £76m) for 2017 includes a tax charge of £92m (2016: £85m) on the adjusted profts of core
businesses, as explained on page 46, a tax credit on onerous contracts of £4m (2016: £nil), a tax charge of £7m (2016: £2m) in respect
of portfolio businesses, a net tax charge of £18m (2016: tax credit of £9m) in respect of acquisition-related amortisation and other
separately disclosed items, and a tax charge of £19m (2016: £nil) in respect of the tax impact of the US tax reform (see page 49).
The Group’s statutory tax charge represents an effective rate of 33% (2016: 26%) on proft before tax of £386m (2016: £296m). The
effective tax rate is a function of a variety of factors, with the most predominant being the geographic mix of the Group’s taxable profts
and the respective country tax rates, profts arising on the disposal of certain subsidiaries being taxed at a higher rate, the recognition of,
and changes in the value of, deferred tax assets and liabilities, permanent differences such as expenses disallowable for tax purposes, and
irrecoverable withholding taxes.
The higher effective tax rate compared with the prior year is primarily driven by a one-off charge relating to the re-measurement and
impairment of US deferred tax assets arising as a result of US tax reform (as explained on page 49), together with profts arising on the
disposal of certain subsidiaries being taxed at a higher tax rate.
The effective tax rate on the Group’s statutory profts was also signifcantly higher than the effective tax rate on the adjusted profts of
core businesses (explained on page 46), primarily due to two non-core factors. Firstly, the impact of US tax reform, which is excluded
from the tax charge on adjusted profts from core businesses, and secondly, as a result of profts arising on the disposal of certain
subsidiaries being taxed at a higher rate.
Non‑controlling interests
Proft attributable to non-controlling interests was £16m in 2017, a decrease from £19m for 2016. The decrease compared with the prior
year refects the non-controlling partners’ share in the lower level of proftability of certain businesses in the Middle East & India region.
Proft for the year
The Group reported proft for the year attributable to equity holders of the parent (“statutory earnings”) of £236m (2016: £198m), an
increase of 19.2% compared with the prior year including the benefts of improved Adjusted PBITA, the proft on disposal of subsidiaries
and the impact of foreign exchange movements. On a constant-currency basis, earnings increased by 14.0%.
Earnings per share
Statutory earnings per share increased to 15.2p (2016: 12.8p), based on the weighted average of 1,548m (2016: 1,546m) shares in issue.
A reconciliation of the Group’s statutory proft for the year to EPS is provided below:
Proft for the year
Non-controlling interests
Proft attributable to equity holders of the parent (earnings)
Average number of shares (m)
Statutory earnings per share
Statutory
2017
£m
252
(16)
236
1,548
15.2p
Earnings per share
Statutory 2016
at actual exchange rates
£m
217
(19)
198
1,546
12.8p
Adjusted Statutory 2016 at
constant exchange rates
£m
227
(20)
207
1,546
13.4p
Review of the Group’s consolidated statement of fnancial position
Signifcant movements in the consolidated statement of fnancial position
Non-current loan notes were £1,486m (2016: £1,715m), refecting the re-classifcation of certain US Private Placement notes repayable
in July 2018 and the €500m Public Bond repayable in December 2018 as current liabilities, offset by the addition of the new €500m
Public Bond issued in June 2017 and repayable in 2024.
The following movements in the Group’s consolidated statement of fnancial position are set out elsewhere in this report, as follows:
• cash, cash equivalents and overdrafts are explained on page 41;
• net debt is analysed on page 50;
• provisions are analysed in note 33 on page 179; and
• retirement beneft obligations are explained on page 43.
40 G4S plc Integrated Report and Accounts 2017
Total equity
Total equity at 31 December 2017 was £854m (2016: £863m). The main movements during the year were: proft for the year of
£252m (2016: £217m), other comprehensive losses of £47m (2016: income of £109m) which included a re-measurement gain on
deferred retirement beneft schemes of £26m (2016: loss of £169m) as explained on page 43, an exchange loss on translation of
foreign operations of £125m (2016: gain of £429m) and a gain from changes in the fair value of cash fow hedging fnancial instruments
of £56m (2016: loss of £197m) and dividends paid in the year of £179m (2016: £162m).
The signifcant foreign currency gain of £228m (net of changes in fair value of cash fow hedging fnancial instruments) recognised in the
consolidated statement of comprehensive income in the prior year was mainly as a result of the weakening of Sterling compared with
the US dollar and Euro following the UK referendum result in June 2016. In 2017, Sterling strengthened compared with the US dollar,
partially offset by a further weakening against the Euro, resulting in a net foreign exchange loss of £69m recognised in the Consolidated
statement of comprehensive income for the year.
Review of the Group’s cash fow and fnancing
Consolidated statement of cash fow
Net cash fow from operating activities of continuing operations was £488m (2016: £615m), a decrease compared with the prior year
as the Group reverted to a more customary level of operating cash generation following the particularly strong performance in the prior
year, net cash infow from total operating activities was £402m (2016: £522m), net cash generated by investing activities was £81m
(2016: net cash outfow of £18m), including £156m (2016: £82m) of net business disposal proceeds and net cash outfow from
fnancing activities was £570m (2016: £307m). Cash, cash equivalents and overdrafts at 31 December 2017 were £571m (2016:
£672m), a net decrease including the impact of exchange rate movements of £101m (2016: net increase of £284m). The Group’s
statutory cash fow is presented in full on page 135.
Net debt
The Group’s net debt as at 31 December 2017 was £1,487m (December 2016: £1,670m). The Group’s net debt to Adjusted EBITDA
ratio improved to 2.4x (2016: 2.8x). A detailed reconciliation of movements in net debt is provided on page 50.
Net debt maturity
In May 2017, the Group’s credit rating was affrmed by Standard & Poor’s as BBB- (negative). As of 31 December 2017 the Group had
liquidity of £1,571m (2016: £1,692m) comprising cash, cash equivalents and bank overdrafts of £571m (2016: £672m) and unutilised
but committed facilities of £1bn (2016: £1bn). The Group issued a €500m Public Bond in June 2017 which matures in June 2024 and
pays an annual coupon of 1.5%.
The next debt maturities are £44m and $224m US Private Placement notes due in July 2018 and a €500m Public Bond due in
December 2018. The Group has good access to capital markets and a diverse range of fnance providers. Borrowings are principally
in Sterling, US dollars and Euros, refecting the geographies of signifcant operational assets and profts.
The Group’s main sources of fnance and their applicable rates as of 31 December 2017 are set out below:
Debt instrument/Year
of issue
US PP 2008
US PP 2007
US PP 2008
Public Bond 2012
Public Bond 2009
Public Bond 2016
Public Bond 2017
Revolving Credit
Facility 2015c
Nominal
amounta
£44m
US$250m
US$298.5m
€500m
£350m
€500m
€500m
£1bn
(multi-currency)
Issued
interest rate
7.56%
5.96% – 6.06%
6.78% – 6.88%
2.63%
7.75%
1.5%
1.5%
Post hedging
average interest rate
7.56%
2.20%
6.90%
2.62%
7.75%
2.24%
3.21%
2018
44
154
417
Year of redemption and amounts (£m)b
2019
2020
2021
2022
2023
2024
78
55
107
350
448
421
Total
44
185
209
417
350
448
421
Undrawn
Undrawn
615
457
55
–
78
448
–
421 2,074
a. Nominal debt amount, for fair value carrying amount see note 31.
b. Translated at exchange rates prevailing at 31 December 2017, or hedged exchange rates where applicable.
c. £964m of the original £1bn multi-currency revolving credit facility matures in January 2022, with the remainder maturing in January 2021. As at 31 December 2017
there were no drawings from the facility.
Integrated Report and Accounts 2017 G4S plc 41
Strategic report
Chief Financial Offcer’s review continued
The Group’s average cost of gross borrowings in 2017, net of interest hedging, was 4.1% (2016: 4.1%).
Financing and treasury activities
The Group’s treasury function is responsible for ensuring the availability of cost-effective fnance and for managing the Group’s fnancial
risk arising from currency and interest rate volatility and counterparty credit. Group Treasury is not a proft centre and is not permitted
to speculate in fnancial instruments. The treasury department’s policies are set by the board. Treasury is subject to the controls
appropriate to the risks it manages, which are discussed in note 31 on pages 168 to 172.
To assist the effcient management of the Group’s interest costs, the Group operates a multi-currency notional pooling cash
management system with a wholly-owned subsidiary of an A-rated bank. The Group presents pooled cash and overdrafts gross in the
Consolidated statement of fnancial position.
Other information
Signifcant exchange rates applicable to the Group
The Group derives a signifcant portion of its revenue and profts in the currencies shown below, with their respective closing and
average rates:
£/US$
£/€
£/South Africa Rand
£/India Rupee
£/Israel Shekel
£/Brazil Real
As at
31 December 2017
1.3524
1.1250
16.7557
86.3531
4.6951
4.4794
At 2017
average rates
1.2964
1.1453
17.3187
84.3570
4.6484
4.1506
As at
31 December 2016
1.2345
1.1705
16.9500
83.8670
4.7483
4.0165
At 2016
average rates
1.3558
1.2265
19.8742
91.0371
5.1912
4.7252
Applying December 2017 closing rates to the Group’s statutory results for the year to 31 December 2017 would result in a decrease in
revenue of 1.9% to £7,680m (for the year ended 31 December 2016: increase of 2.5% to £7,782m) and a decrease in Adjusted PBITA
of 1.9% to £482m (for the year ended 31 December 2016: increase by 2.5% to £473m).
The weakening of average Sterling exchange rates compared with the prior year led to an increase in revenue of 4.5% and an increase
in Adjusted PBITA of 4.7% as explained above. The impact of exchange rate movements reduced the Group’s net debt by £21m
compared with the prior year.
Dividend
In assessing the dividend, the board considers:
• future investment requirements;
• the Group’s pension obligations;
• net debt to Adjusted EBITDA;
• the availability of distributable reserves in the parent company; and
• reward to shareholders.
Following the achievement of the Group’s leverage-reduction target, the directors propose a 5% increase in the fnal dividend to 6.11p
(DKK 0.5097) per share (2016: 5.82p per share; DKK 0.5029) refecting the board’s confdence in the Group’s performance and prospects.
Our dividend policy is to increase the dividend in line with the long-term growth in earnings. The interim dividend was 3.59p (DKK 0.2948)
per share and the total dividend, if approved, will be 9.70p (DKK 0.8045) per share, an increase of 3.1% compared with 2016 (for the year
ended 31 December 2016, the interim dividend was 3.59p; DKK 0.3143 and the total dividend was 9.41p; DKK 0.8172).
The proposed dividend cover is 1.8x (2016: 1.8x) on adjusted earnings from core businesses.
42 G4S plc Integrated Report and Accounts 2017
Pensions
As at 31 December 2017 the net defned beneft pension obligation in the Consolidated statement of fnancial position was £381m
(2016: £437m) of which £283m (2016: £341m) related to material funded defned beneft schemes. Net of related deferred tax
balances, the Group’s net pension obligation was £318m (2016: £368m).
The most signifcant of the Group’s pension schemes is in the UK and accounts for over 88% (2016: 94%) of the Group’s total material
scheme obligations. The scheme has approximately 30,000 members and further details of the make-up of the scheme are given in note
32 on page 174.
Scheme assets
Obligations
Net UK obligations
2017
£m
2,345
(2,595)
(250)
2016
£m
2,339
(2,659)
(320)
The reduction in the UK scheme net obligations refected a decrease in the scheme obligations of £64m partially offset by an increase of
£6m in the value of scheme assets. The decrease in the obligations is a result of the discount rate used for valuation purposes increasing
to 2.55% (2016: 2.50%), the projected pension infation rates decreasing to 3.2% (2016: 3.3%), and the payment of scheduled defcit
repair contributions of £40m (2016: £39m) during the year. The Group will pay pension defcit repair contributions of £41m in 2018
in line with the agreed contribution schedule. The next funding valuation is due in 2018, following which future contributions will be
subject to review and potential renegotiation.
Interest-rate risk and interest-rate swaps
The Group’s investments and borrowings at 31 December 2017 were a mix of fxed rates of interest and foating rates of interest
linked to LIBOR and EURIBOR.
The March 2007 and July 2008 private placement notes and the May 2009, December 2012, November 2016 and June 2017 public
notes were all issued at fxed rates, whilst the Group’s 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 fx a proportion of its interest exposure on a sliding scale in US dollars, Sterling and
Euro, using the natural mix of fxed and foating interest rates emanating from the bond and bank markets and by utilising interest-rate
and cross-currency swaps. Part of the proceeds of the private placement and public notes have been swapped to foating interest rates,
and accounted for as fair-value hedges, with a net gain in the hedges at 31 December 2017 of £14m (2016: net gain £27m). The
market value of the pay-fxed receive-variable swaps and the pay-fxed receive-fxed cross-currency swaps outstanding at 31 December
2017, accounted for as cash-fow hedges and net-investment hedges, was a net asset of £59m (2016: net asset of £31m).
Foreign currency
The Group has many overseas subsidiaries and joint ventures, denominated in various different currencies. Treasury policy is to manage
signifcant translation risks in respect of net operating assets and its consolidated net debt/Adjusted EBITDA ratio by holding foreign-
currency denominated loans, cross-currency swaps and to a lesser extent forward-currency contracts.
At 31 December 2017, the Group’s US dollar and Euro net assets were approximately 91% and 90% respectively, hedged by foreign
currency debt. As at 31 December 2017, net debt held in US dollars and Euros, and in those currencies offcially pegged to these two
currencies, equated broadly to a ratio of 2.3x Adjusted EBITDA generated from these currencies (2016: 2.2x Adjusted EBITDA).
Tax policy
The Group’s tax policy is set out at g4s.com/taxstrategy
Corporate governance
The Group’s policies regarding risk management and corporate governance are set out in the Risk management section on pages 60
to 65 and in the Corporate governance report on page 84.
Integrated Report and Accounts 2017 G4S plc 43
Strategic report
Chief Financial Offcer’s review continued
Business performance – Alternative Performance Measures (APMs)
Basis of preparation
In the following review, to aid comparability, 2016 prior year results are presented on a constant-currency basis by applying 2017
average exchange rates, unless otherwise stated.
Summary Group results
Year ended 31 December 2017 (at 2017 average exchange rates)
£m
Revenue
Adjusted PBITAa
Proft before tax
Tax
Proft after tax
Earningsd
EPSd
Operating cash fowe
Core businessesa
7,427
496
383
(92)
291
277
17.9p
527
Onerous
contracts
119
–
(19)
4
(15)
(15)
(1.0)p
(13)
Year ended 31 December 2016 (at 2017 average exchange rates)
£m
Revenue
Adjusted PBITAa
Proft before tax
Tax
Proft after tax
Earningsd
EPSd
Operating cash fowe
Core businessesa
7,195
476
375
(90)
285
262
16.9p
633
Onerous
contracts
115
–
–
–
–
–
–
(10)
Year ended 31 December 2016 (at 2016 average exchange rates)
£m
Revenue
Adjusted PBITAa
Proft before tax
Tax
Proft after tax
Earningsd
EPSd
Operating cash fowe
Core businessesa
6,896
455
354
(85)
269
247
16.0p
633
Onerous
contracts
112
–
–
–
–
–
–
(10)
Portfolio
businessesb
282
(5)
(7)
(7)
(14)
(15)
(1.0)p
(7)
Portfolio
businessesb
617
6
1
(3)
(2)
(3)
(0.2)p
10
Portfolio
businessesb
582
6
1
(2)
(1)
(2)
(0.1)p
10
Acquisition‑related
amortisation
and otherc
Restructuring
(20)
4
(16)
(16)
(1.0)p
(19)
49
(37)
12
5
0.3p
–
Acquisition‑related
amortisation
and otherc
Restructuring
(13)
3
(10)
(10)
(0.6)p
(18)
(52)
9
(43)
(42)
(2.7)p
–
Acquisition‑related
amortisation
and otherc
Restructuring
(12)
2
(10)
(10)
(0.6)p
(18)
(47)
9
(38)
(37)
(2.4)p
–
Statutory
7,828
491
386
(128)
258
236
15.2p
488
Adjusted
statutoryf
7,927
482
311
(81)
230
207
13.4p
615
Statutory
7,590
461
296
(76)
220
198
12.8p
615
a. Results from core businesses, presented at constant exchange rates other than for operating cash fow, exclude results from portfolio businesses identifed
for sale or closure and from onerous contracts. For the Group’s 2017 results, continuing businesses have been renamed ‘core’ businesses to provide a clear
distinction from the Group’s statutory results from continuing operations. In addition, PBITA has been renamed ‘Adjusted PBITA’ to refect the exclusion
of specifc and separately disclosed items set out on page 35. Core businesses and Adjusted PBITA are defned and calculated in exactly the same way as
continuing businesses and PBITA were previously defned and calculated. The basis of preparation of results of core businesses and an explanation of
Alternative Performance Measures, including Adjusted PBITA, are provided on page 35.
b. Portfolio businesses that remain part of the Group, having not yet been sold or closed, contributed £158m revenue (2016: £167m at 2017 average exchange
rates; £155m at 2016 average exchange rates) and a loss of £9m to Adjusted PBITA (2016: loss of £21m at 2017 average exchange rates; £20m at 2016
average exchange rates).
c. Other includes net specifc items (other than those presented within onerous contracts), net proft on disposal/closure of subsidiaries/businesses, the results
of discontinued operations and, in 2016, goodwill impairment. The associated tax impact of these net specifc items is recorded within the tax charge within
“other”. In addition, tax-specifc charges or credits, such as those arising from changes in tax legislation which have a material impact, and which are unrelated
to net specifc items, are also included within the tax charge within “other”. The full accounting policy regarding specifc and other separately disclosed items
is provided on page 36.
d. Earnings is defned as proft attributable to equity shareholders of G4S plc. Adjusted Earnings and Adjusted Earnings per share (“EPS”) from core businesses
exclude specifc and other separately disclosed items, and likewise the tax impact of those specifc and other separately disclosed items and the impact of
tax-specifc charges or credits unrelated to those specifc and other separately disclosed items, as explained on page 36. Adjusted Earnings and Adjusted EPS
from core businesses are reconciled to statutory earnings and statutory EPS above.
e. Operating cash fow is defned on page 36 and is stated after pension defcit contributions of £40m (2016: £39m) and for the year ended 31 December 2016
is presented at 2016 average exchange rates. Operating cash fow from core businesses is reconciled to the Group’s movements in net debt on page 50.
Statutory operating cash fow is net cash fow from operating activities of continuing operations.
f. The ‘adjusted statutory’ fgures represent the comparative 2016 statutory results translated at 2017 average exchange rates (other than for operating cash fow)
but should not be considered as or used in place of the Group’s statutory results.
44 G4S plc Integrated Report and Accounts 2017
Results from core businesses
At 2017 average exchange rates (other than operating cash fow)
Revenue
Adjusted proft before interest, tax and amortisation (Adjusted PBITAa)
Adjusted PBITAa margin
Interest
Adjusted proft before taxa
Tax
Adjusted proft after taxa
Non-controlling interests
Adjusted earningsa (proft attributable to equity holders of the parent)
Adjusted EPSa
Operating cash fowa,b
2017
£m
7,427
496
6.7%
(113)
383
(92)
291
(14)
277
17.9p
527
2016
£m
7,195
476
6.6%
(101)
375
(90)
285
(23)
262
16.9p
633
YoY
%
3.2%
4.2%
+10b.p.
11.9%
2.1%
2.2%
2.1%
(39.1)%
5.7%
5.9%
(16.7)%
a. Alternative Performance Measures (“APMs”) for core businesses are explained on pages 35 and 36 and are reconciled to the Group’s statutory results on page 44.
b. Operating cash fow for 2016 is shown at actual 2016 exchange rates.
Revenue
At £2.7bn, emerging markets' revenues increased 1.5% on the prior year, with growth in all regions except for Middle East & India, and
represented 37% of Group revenue (2016: 37%). Developed markets’ revenues were 4.3% higher than the prior year with 6.0% growth
in North America, 3.9% in Europe and 2.1% in UK & Ireland. Revenue from Cash Solutions was up 2.3% on 2016 and from Secure
Solutions was up 3.4% on 2016.
Adjusted PBITA
Adjusted PBITA of core businesses of £496m (2016: £476m) was up 4.2%. This growth refects the strong performance of the Group
in developed markets, improved product mix and the results of our on-going productivity programmes, partially offset by the weaker
trading in the Middle East & India. Overall, the Adjusted PBITA margin increased to 6.7% (2016: 6.6%) with improvements delivered in
six out of the seven regions.
Interest
Net interest payable on net debt from core businesses was £90m (2016: £85m). The increase in 2017 was primarily due to a
temporary increase in gross borrowings (matched by an increase in cash balances) following the issuance of a €500m Public Bond in
November 2016 and a €500m Public Bond in June 2017 that were used mainly to re-fnance the March and May 2017 debt maturities
in addition to drawings on the Revolving Credit Facility. Net other fnance costs of £12m (2016: £6m) increased compared with the
prior year due to an additional £2m relating to discount unwound on provisions, a £2m charge in respect of overseas tax settlements,
and a £2m indebtedness-related foreign exchange gain recognised in 2016.
The pension interest charge, related to the unwinding of the discount in relation to long-term pension liabilities, was £11m (2016: 10m),
resulting in a total net interest cost of £113m (2016: £101m).
Tax
A tax charge of £92m (2016: £90m) was incurred on the adjusted profts of core businesses of £383m (2016: £375m) which
represents an effective tax rate of 24% (2016: 24%). The effective tax rate is a function of a variety of factors, with the most
predominant being the geographic mix of the Group’s taxable profts and the respective country tax rates, the recognition of, and
changes in the value of, deferred tax assets and liabilities, permanent differences such as expenses disallowable for tax purposes, and
irrecoverable withholding taxes.
At any point in time, the Group is typically subject to tax audits in a number of different countries. In situations where a difference of
opinion arises between the Group and a local tax authority in respect of its tax flings, the Group will debate the contentious areas and,
where necessary, resolve them through negotiation or litigation. The Group relies upon advice and opinions from the Group tax
department, local fnance teams and external advisors, to ensure that the appropriate judgments are arrived at in establishing
appropriate accounting provisions in relation to such disputes.
Integrated Report and Accounts 2017 G4S plc 45
Strategic report
Chief Financial Offcer’s review continued
Non‑controlling interests
Proft from core businesses attributable to non-controlling interests was £14m in 2017, a decrease from £23m for 2016, refecting the
non-controlling partners’ share of the lower level of proftability of certain businesses in the Middle East & India region.
Adjusted proft for the year (“adjusted earnings”) – core businesses
The Group generated adjusted proft from core businesses attributable to equity holders (“adjusted earnings”) of £277m (2016:
£262m), an increase of 5.7% for the year ended 31 December 2017.
Adjusted earnings per share
Adjusted earnings per share from core businesses increased to 17.9p (2016: 16.9p), based on the weighted average of 1,548m
(2016: 1,546m) shares in issue. A reconciliation of adjusted proft for the year from core businesses to Adjusted EPS is provided below:
Adjusted proft for the year from core businesses
Non-controlling interests
Adjusted proft attributable to equity holders of the parent (earnings)
Average number of shares (m)
Adjusted earnings per share – core businesses
Adjusted earnings per share – core businesses
2016 at
actual
exchange
rates
£m
269
(22)
247
1,546
16.0p
2016 at
constant
exchange
rates
£m
285
(23)
262
1,546
16.9p
2017
£m
291
(14)
277
1,548
17.9p
Onerous contracts
The Group’s onerous contracts generated revenues of £119m (2016: £115m) for the year ended 31 December 2017. The Group
recognised additional provisions of £19m (2016: £4m), classifed as specifc items, primarily related to the anticipated total losses over
the next 15 to 20 years in respect of certain UK contracts. It is expected that around 60% of the Group’s total provision for onerous
customer contracts of £62m will be utilised by the end of 2020.
Portfolio operations
The Group made further progress with its portfolio management programme in the year. This programme has greatly improved the
Group’s strategic focus and has also generated approximately £510m in disposal proceeds in relation to the 38 businesses sold up to
31 December 2017. Disposals in the year include the Group’s businesses in Israel and Bulgaria, its cash businesses in Peru and Paraguay,
the US Youth Services business and the UK children’s homes business, generating total gross proceeds of £166m. Since the year end,
and up to the date of this report, a further three businesses have been sold, generating additional gross proceeds of £9m. The portfolio
programme is considered to be substantially complete at 31 December 2017. Since 30 June 2017 there have been no changes to the
portfolio businesses other than the completion of some minor disposals. Going forwards no further transfers into or out of the portfolio
businesses will occur.
46 G4S plc Integrated Report and Accounts 2017
2017 core businessa reconciliation
The table below reconciles 2017 results from core businesses as they would have been presented based on the core businesses
classifed as such in 2016 to 2017 results from core businesses as presented in the 2017 results.
Results from core businesses
For the year ended 31 December 2017
Revenue
Africa
Asia Pacifc
Latin America
Middle East & India
Emerging markets
Europe
North America
UK & Ireland
Developed markets
Total revenue
Adjusted PBITA
Africa
Asia Pacifc
Latin America
Middle East & India
Emerging markets
Europe
North America
UK & Ireland
Developed markets
Total Adjusted PBITA before corporate costs
Corporate costs
Total Adjusted PBITA
Earnings
Operating cash fowf
a. See basis of preparation on page 44.
2017 Results
based on 2016
core
businesses
£m
New onerous
contracts in
2017b
£m
Onerous
contracts
re-classifed
to core
businesses in
2017c
£m
Businesses
re-classifed to
portfolio in
2017d
£m
Businesses
re-classifed
from portfolio
in 2017e
£m
2017 Results
based on
2017 core
businesses
£m
457
736
700
845
2,738
1,356
2,006
1,251
4,613
7,351
46
65
29
58
198
104
123
118
345
543
(49)
494
276
532
–
–
–
–
–
–
–
(5)
(5)
(5)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
73
73
73
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(7)
–
(7)
–
–
–
–
(7)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(6)
(1)
–
–
–
–
–
–
–
15
15
15
–
–
–
–
–
–
–
2
2
2
–
2
1
2
457
736
693
845
2,731
1,356
2,006
1,334
4,696
7,427
46
65
29
58
198
104
123
120
347
545
(49)
496
277
527
b. In 2017 the performance of an additional contract in the UK & Ireland, previously categorised within core businesses, has deteriorated such that it is now
considered onerous. We have therefore reported the results of this contract in onerous contracts in 2017 and have re-presented the 2016 results accordingly.
c.
In 2017 the performance of three UK & Ireland contracts previously categorised as onerous has improved such that they are no longer onerous. We have
therefore reported the results of these contracts in core businesses in 2017 and have restated the 2016 results accordingly.
d. Also in 2017, we determined that the Group would exit three minor operations in Latin America, and the results of these businesses are therefore reported
within portfolio businesses in 2017, with the 2016 results re-presented accordingly overleaf.
e.
In 2017, the performance of a business in the UK & Ireland, previously categorised within portfolio operations, improved such that the Group formally
concluded to retain it. We have therefore reported the results of this business in core businesses in 2017 and re-presented the 2016 comparatives accordingly.
f. Operating cash fow is stated after pension defcit contributions of £40m and is shown at actual 2016 exchange rates.
Integrated Report and Accounts 2017 G4S plc 47
Strategic report
Chief Financial Offcer’s review continued
Re‑presentation of prior year results from core businessesa
The table below reconciles revenue and Adjusted PBITA from core businesses as reported previously to the re-presented prior year
revenue and Adjusted PBITA from core businesses.
Results from core businesses
For the year ended 31 December 2016
Revenue
Africa
Asia Pacifc
Latin America
Middle East & India
Emerging markets
Europe
North America
UK & Ireland
Developed markets
Total revenue
Adjusted PBITA
Africa
Asia Pacifc
Latin America
Middle East & India
Emerging markets
Europe
North America
UK & Ireland
Developed markets
Total Adjusted PBITA before corporate costs
Corporate costs
Total Adjusted PBITA
Earnings
Operating cash fowe
a. See basis of preparation on page 44.
Onerous
contracts
re-classifed
to core
businesses
in 2017b
£m
As previously
reported
£m
Businesses
re-classifed
to portfolioc
£m
Businesses Re‑presented
at 2016
re-classifed
exchange
from
portfoliod
rates
£m
£m
Exchange rate
movements
£m
Re-presented
at 2017
exchange rates
£m
422
679
621
842
2,564
1,224
1,817
1,218
4,259
6,823
42
57
23
76
198
85
111
110
306
504
(50)
454
246
638
–
–
–
–
–
–
–
70
70
70
–
–
–
–
–
–
–
–
–
–
–
–
–
(6)
–
–
(9)
–
(9)
–
–
–
–
(9)
–
–
(1)
–
(1)
–
–
–
–
(1)
–
(1)
–
(1)
–
–
–
–
–
–
–
12
12
12
–
–
–
–
–
–
–
2
2
2
–
2
1
2
422
679
612
842
2,555
1,224
1,817
1,300
4,341
9
36
43
48
136
81
75
7
163
431
715
655
890
2,691
1,305
1,892
1,307
4,504
6,896
299
7,195
42
57
22
76
197
85
111
112
308
505
(50)
455
247
633
1
3
2
5
11
6
4
–
10
21
–
21
15
–
43
60
24
81
208
91
115
112
318
526
(50)
476
262
633
b. In 2017 the performance of three UK & Ireland contracts previously categorised as onerous has improved such that they are no longer onerous. The results of
these contracts are therefore reported in core businesses in 2017 and the 2016 results re-presented accordingly.
c.
In 2017 we determined that we would exit three minor operations in Latin America and the results of these businesses are therefore reported in portfolio
businesses in 2017 and the 2016 results re-presented accordingly.
d. Also in 2017, the performance of a business previously reported as a portfolio business in UK & Ireland has improved, and management formally concluded that
this business will be retained. The results of this business are therefore reported in core businesses in 2017 and the 2016 results re-presented accordingly.
e. Operating cash fow is stated after pension defcit contributions of £39m and is shown at actual 2016 exchange rates.
48 G4S plc Integrated Report and Accounts 2017
Restructuring
The Group invested £20m (2016: £13m) in restructuring programmes during the year, mainly in the UK & Ireland and Europe regions,
relating to the multi-year strategic productivity programme being implemented across the Group which is now drawing to an end. In
addition, the Group incurred non-strategic severance costs of £10m (2016: £9m) which are included within Adjusted PBITA from core
businesses. Going forwards the Group has announced a three-year plan to 2020 to implement effcient organisational design and leaner
processes, which is likely to require further restructuring investment.
Acquisition‑related amortisation, specifc and separately disclosed items
Net specifc items
Net proft on disposal/closure of subsidiaries/businesses
Goodwill impairment
Acquisition-related amortisation
Acquisition-related amortisation, specifc and separately disclosed items before tax
Tax charges arising on acquisition-related amortisation, specifc and separately disclosed items
Tax impact of US Tax Cuts and Jobs Act
Acquisition-related amortisation, specifc and separately disclosed items after tax
Loss from discontinued operations
Non-controlling interests’ share of acquisition-related amortisation, specifc and separately
disclosed items
Total acquisition-related amortisation, specifc and separately disclosed items – impact on earnings
2016 at
constant
exchange
rates
£m
(14)
5
(9)
(34)
(52)
9
–
(43)
(3)
2016 at
actual
exchange
rates
£m
(13)
7
(9)
(32)
(47)
9
–
(38)
(3)
4
(42)
4
(37)
2017
£m
(15)
74
–
(10)
49
(18)
(19)
12
(6)
(1)
5
Net specifc items
Specifc items resulted in a net charge of £15m (2016: £14m) comprising £6m related to the estimated cost of settlement of
subcontractor claims from commercial disputes in respect of prior years, and £9m related mainly to the settlement of labour-related
disputes in respect of prior years in North America and Latin America. Specifc items in 2016 included an £11m charge due to the
revision of estimates relating to legacy acquisitions and labour claims in Latin America, £7m relating to commercial restructuring in
Middle East & India, and a net £4m supplementary onerous contract provision primarily in respect of the Compass asylum seekers
contract, all offset by an £8m credit relating mainly to the recovery of a legal claim in Europe and of certain disputed debtor balances
in the UK.
Proft on disposal and closure of subsidiaries/businesses and goodwill impairment
As part of the portfolio programme, the Group realised a net proft of £74m (2016: £5m) relating to the disposal of a number of the
Group’s operations including the Group’s businesses in Israel and Bulgaria, the US Youth Services business, the UK children’s homes
business and the Group’s cash businesses in Peru and Paraguay. The Group recorded a goodwill impairment charge in the prior year
of £9m in relation to businesses to be sold or closed.
Acquisition‑related amortisation
Acquisition-related amortisation of £10m (2016: £34m) is lower than the prior year as certain intangible assets recognised on a number
of legacy acquisitions became fully amortised in 2016.
Tax charges arising on acquisition‑related amortisation, specifc and other separately disclosed items
Tax charges arising on acquisition-related amortisation, specifc and other separately disclosed items of £18m (2016: tax credit of £9m)
relate primarily to the disposal of subsidiaries in the United States, Peru and Paraguay.
Tax impact of US Tax Cuts and Jobs Act (“US tax reform”)
On 22 December 2017, the US tax legislation known as the Tax Cuts and Jobs Act was signed into law by the US President and
introduced signifcant changes in US tax laws with effect from 1 January 2018. As this legislation is considered to be substantively
enacted as at 31 December 2017, any tax effects of the legislation arising in 2017 have been taken into account.
For 2017, the changes in legislation resulted in a separately disclosed one-off charge to the income statement of £19m arising from the
re-measurement and impairment of deferred tax assets due to the reduction in the US Federal tax rate, and from the impairment of
foreign tax credits which are no longer expected to be recovered in future periods against foreign source income.
On the basis of information currently available and from analysis completed since the legislation was enacted, the above are likely to
be the most signifcant impacts for the Group. However, as more detailed analysis and future legislative guidance become available, it
is possible that the Group may be further impacted in the current and subsequent years by the legislative changes.
Integrated Report and Accounts 2017 G4S plc 49
Strategic report
Chief Financial Offcer’s review continued
Reconciliation between statutory operating proft and net debt
A reconciliation between operating proft as presented in the Group’s Consolidated income statement to movement in net debt is
presented below with 2017 amounts presented at actual rates for the year and the prior year amounts presented at 2016 average
exchange rates.
Operating proft
Adjustments for non-cash and other items (see page 135)
Net working capital movement
Net cash fow from operating activities of continuing operations (page 135)
Adjustments for:
Restructuring spend
Cash fow from continuing operations
Analysed between:
Core businesses
Onerous contracts
Portfolio businesses
Investment in the business
Purchase of fxed assets, net of disposals
Restructuring investment
Disposal of subsidiaries/businesses
Acquisition of subsidiaries
Net debt in disposed/acquired entities
New fnance leases
Net investment in the business
Net cash fow after investing in the business
Other uses of funds
Net interest paid
Tax paid
Dividends paid
Purchase of own shares
Cash used by discontinued operations
Transactions with non-controlling interests
Other
Net other uses of funds
Net decrease in net debt before foreign exchange movements
Net debt at the beginning of the year
Effect of foreign exchange rate fuctuations
Net debt at the end of the year
2017
£m
501
40
(53)
488
19
507
527
(13)
(7)
(104)
(19)
156
(1)
(11)
(3)
18
2016
£m
402
126
87
615
18
633
633
(10)
10
(107)
(18)
82
(1)
(15)
(7)
(66)
525
567
(78)
(86)
(179)
(10)
–
(16)
6
(363)
(96)
(84)
(162)
–
(9)
(2)
8
(345)
162
222
(1,670)
21
(1,487)
(1,782)
(110)
(1,670)
Cash fow from continuing operations before restructuring spend was £507m (2016: £633m). Cash outfow from portfolio businesses
held for sale or closure was £7m (2016: £10m infow), and cash outfow from onerous contracts was £13m (2016: £10m), both of
which were excluded from operating cash fows for core businesses. Operating cash fow from core businesses reduced to £527m
(2016: £633m) as the Group reverted to a more customary level of operating cash generation following the particularly strong
performance in the prior year.
The Group invested £104m (2016: £107m) in net capital expenditure and received net proceeds of £156m (2016: £82m) from the
disposal of businesses. The Group made no signifcant acquisitions during the year.
Net cash infow after investing in the business was £525m (2016: £567m). The Group’s net cash outfow after investing in the business,
fnancing, tax, dividends and pensions was £162m (2016: infow of £222m).
The Group’s net debt as at 31 December 2017 was £1,487m (December 2016: £1,670m).
Tim Weller
Chief Financial Offcer
50 G4S plc Integrated Report and Accounts 2017
2017 REGIONAL AND SEGMENTAL REVIEW – CORE BUSINESSES
At 2017 average exchange rates
Africa
Asia Pacifc
Latin America
Middle East & India
Emerging markets
Europe
North America
UK & Ireland
Developed markets
Revenue
2017
£m
457
736
693
845
2,731
1,356
2,006
1,334
4,696
Revenue
2016
£m
431
715
655
890
2,691
1,305
1,892
1,307
4,504
YoY
%
6.0%
2.9%
5.8%
(5.1%)
1.5%
3.9%
6.0%
2.1%
4.3%
Total Group before corporate costs
Corporate costs
Total Group
7,427
7,195
3.2%
3.2%
7,427
7,195
3.2%
3.2%
Organic
growth*
%
6.0%
2.9%
5.8%
(5.1%)
1.5%
Adjusted
PBITA 2017
£m
46
65
29
58
198
Adjusted
PBITA 2016
£m
43
60
24
81
208
3.9%
6.0%
2.1%
4.3%
104
123
120
347
545
(49)
496
91
115
112
318
526
(50)
476
YoY
%
7.0%
8.3%
20.8%
(28.4%)
(4.8%)
14.3%
7.0%
7.1%
9.1%
3.6%
2.0%
4.2%
* Organic growth is calculated based on revenue growth at 2017 average exchange rates, adjusted to exclude the impact of any
acquisitions or disposals during the current or prior year.
Regional and service line fnancial performance
The Group’s business performance reporting for internal
management presents results for core businesses,
onerous contracts and portfolio operations both
separately and in total, analysed between segments
based on geographic regions. The Group’s segmental
results for core businesses are presented above,
excluding onerous contracts and portfolio operations
identifed for sale or closure. A reconciliation between
results from core businesses and statutory results by
segment is presented below, and a reconciliation at total
Group level can be found on page 44. All commentary,
results and tables on pages 51 to 59 are presented for
results from core businesses only, with prior year
comparatives presented at constant exchange rates,
unless stated otherwise.
Regional summary (see pages 52 to 58)
During 2017, Group revenues grew 3.2% to £7.4bn,
with strong growth in North America (up 6.0%),
helped by Retail Cash Solutions, broad growth in
most emerging markets except Middle East & India
and in Europe (3.9%), and stable growth in the UK &
Ireland region at 2.1%. Adjusted proft before interest,
tax and amortisation (Adjusted PBITA) increased 4.2%
to £496m, with the Adjusted PBITA margin 10 b.p.
higher at 6.7% with weak performance in Middle East
& India offsetting strong performances in the other
six regions which were helped by revenue growth and
productivity improvements.
6.0%
Organic revenue
growth in North
America in 2017
For the year ended 31 December 2017
For the year ended 31 December 2016
Statutory
results
£m
Portfolio
operations
£m
Onerous
contracts
£m
Core
businesses
£m
Statutory
results
£m
Portfolio
operations
£m
Onerous
contracts
£m
Core
businesses at
2016 average
exchange
rates
£m
Exchange
movements
£m
Core
businesses at
2017 average
exchange
rates
£m
Revenue
Africa
Asia Pacifc
Latin America
Middle East & India
Europe
North America
UK & Ireland
Total revenue
Adjusted PBITA
Africa
Asia Pacifc
Latin America
Middle East & India
Europe
North America
UK & Ireland
Total Group before
corporate costs
548
761
732
852
1,490
2,029
1,416
7,828
39
65
28
56
109
124
119
540
(91)
(25)
(39)
(7)
(93)
(23)
(4)
(282)
–
–
–
–
(41)
–
(78)
(119)
7
–
1
2
(5)
(1)
1
5
–
–
–
–
–
–
–
–
457
736
693
845
1,356
2,006
1,334
7,427
46
65
29
58
104
123
120
501
714
660
859
1,441
1,904
1,511
7,590
35
56
15
76
95
115
119
(79)
(35)
(48)
(17)
(176)
(87)
(140)
(582)
7
1
7
–
(10)
(4)
(7)
545
511
(6)
–
–
–
–
(41)
–
(71)
(112)
–
–
–
–
–
–
–
–
422
679
612
842
1,224
1,817
1,300
6,896
42
57
22
76
85
111
112
9
36
43
48
81
75
7
299
1
3
2
5
6
4
–
505
21
431
715
655
890
1,305
1,892
1,307
7,195
43
60
24
81
91
115
112
526
Integrated Report and Accounts 2017 G4S plc 51
Strategic report
Regional and service line review continued
2017 HIGHLIGHTS – CORE BUSINESSES
+6.0%
Organic growth
$8bn
Africa security
market in 2015*
119,000
Employees
7.0%
Adjusted PBITA
growth
Revenue
£m
Adjusted PBITA
£m
2017
457
2016
YoY %
431 +6.0%
2017
46
2016
43
YoY %
7.0.%
* Freedonia World Security Services Report January 2017.
A
C
I
R
F
A
t
e
k
r
a
m
g
n
i
g
r
e
m
E
Key customer sectors – mining, oil and gas,
retail, energy, agriculture and fnancial services
G4S is the largest provider of integrated security
solutions in the region, with operations in 23
African countries. The region’s largest countries
by revenue are South Africa and Kenya.
Revenue growth across the Africa region was 6.0%, with
growth in both secure solutions and cash solutions. Cash
solutions revenue growth benefted from continued
strong growth in cash volumes and retail solutions such as
Deposita, which uses technology and software to service
the retail and banking sectors. Adjusted PBITA increased
by 7.0%.
New and renewed contracts won across the region include
manned security, security technology and systems and risk
management services work for multi-lateral agencies.
Our sales and business development opportunities in
Africa is broad based, covering more than 20 countries
and key sectors such as aviation, banking, mining,
consumables, telecomms and oil and gas.
CAPITEC/DEPOSITA
Values: Safety, Security and
Service Excellence
Innovation and Teamwork
Following a number of years in
development, G4S subsidiary Deposita
launched a bank-branch automation
solution in 2017 for Capitec, the
fastest-growing banking group in
Africa. We have the technology
installed and operating in 160 branches
of this major bank, and we expect that
to continue to grow with this client and
with others. The technology reduces
the cost of handling cash and improves
customer service. We provide
hardware, software, real-time banking
integration, same day value for the
clients of our bank customers, service
in the branch or support in the launch
stage of this product, and then remote
service and support.
52 G4S plc Integrated Report and Accounts 2017
2017 HIGHLIGHTS – CORE BUSINESSES
+2.9%
Organic growth
$42bn
Asia Pacifc security
market in 2015*
56,000
Employees
8.3%
Adjusted PBITA
growth
Revenue
£m
Adjusted PBITA
£m
2017
736
2016
YoY %
715 +2.9%
2017
65
2016
60
YoY %
8.3%
* Freedonia World Security Services Report January 2017.
Key customer sectors – banking, retail,
government, manufacturing and energy
G4S is the leading security provider in the Asia
Pacifc region with operations in 21 countries.
Our largest countries by revenue are Australia,
Hong Kong and Thailand.
Revenue growth in Asia Pacifc was 2.9% and Adjusted
PBITA increased by 8.3%, refecting the benefts of our
productivity programmes and a favourable revenue mix.
We secured new and renewed contracts across a broad
range of sectors including fnancial services, consumer
products and government services in Australia. We won
our 100th customer for retail and banking solutions in
the region in February 2018.
Across the region we have a diverse set of new business
opportunities in security, cash management and care
and, in Australia, justice services.
E
m
e
r
g
i
n
g
m
a
r
k
e
t
A
S
I
A
P
A
C
I
F
I
C
STANDARD CHARTERED BANK/ASIA PACIFIC,
MIDDLE EAST & INDIA
Values: Safety, Security and Service Excellence
Innovation and Teamwork
Building on an existing strong relationship with Standard
Chartered Bank (SCB) which has been in place for more
than 20 years and where currently G4S provides Cash and/or
Secure Solutions support in more than 20 countries for SCB.
In 2017 SCB embarked on a group project with G4S to
address the bank’s strategic goal of digitising the cash
collection process for its corporate customers using the
CASH360 solution.
The programme will launch in Q1 2018 in Indonesia
where there is a signifcant appetite from their large
corporate clients to deploy cash depositary machines in
client premises, with plans to roll-out the model in a
structured manner across other SCB franchise markets.
Where appropriate the Deposita hardware, software and the
G4S managed service solution enables SCB to provide same
day credit for the customer cash deposited in the CASH360
device with the cash returning directly to the G4S cash
processing centre.
The solution provides mutual growth opportunities and
improves the effciency and security of the corporate
customer cash handling processes as well as improving the
customer’s cash fow.
Integrated Report and Accounts 2017 G4S plc 53
Strategic report
Regional and service line review continued
2017 HIGHLIGHTS – CORE BUSINESSES
+5.8%
Organic growth
$14bn
67,000
Employees
20.8%
Latin America security
market in 2015*
Adjusted PBITA
growth
Revenue
£m
Adjusted PBITA
£m
2017
693
2016
YoY %
655 +5.8%
2017
29
2016
24
YoY %
20.8%
* Freedonia World Security Services Report January 2017.
A
C
I
R
E
M
A
t
e
k
r
a
m
g
n
i
g
r
e
m
E
N
I
T
A
L
Key customer sectors – fnancial services,
extractive, retail, embassies and manufacturing
G4S is a leading integrated Cash Solutions and
Secure Solutions provider for commercial and
government customers across 16 countries in
Latin America, with Brazil, Colombia and
Argentina being our largest markets in the
region by revenue.
Our revenue growth across Latin America markets was
5.8%, principally driven by growth in Brazil, Argentina
and Colombia.
We improved productivity across the region, particularly
in Brazil and Adjusted PBITA increased by 20.8%.
During 2017, we continued expanding our footprint and
leveraging our expertise, winning new contracts in
manned security and cash solutions for the banking,
retail and mining sectors. Of note is the success winning
and retaining US Embassy contracts, renewing the
contracts for Barbados, Granada, Trinidad & Tobago
and Colombia and growing in the region to Argentina,
Paraguay, Saint Lucia, Martinique, Antigua and Peru.
The focus on marketing Integrated Solutions brought
signifcant improvements for the technology business.
Whilst competition remains robust and wage infation
needs proactive management, demand for our security
and FM services is expected to be positive during 2018
and our businesses are well positioned in our key markets.
LOCALIZA, BRAZIL, LATAM
Values:
Innovation and Teamwork
Localiza is the biggest car-rental
company in Latin America and is one
of the largest in the world by size of its
feet. Previously, Localiza car-rental
branches had a cleaning team for each
branch, no matter the size or opening
hours, which resulted in high costs and
complex management. Following an
in-depth study by the G4S facilities
management business in Brazil, we
won a new contract which uses mobile
cleaning teams, reducing Localiza costs
by 20%, increasing effciency, and
ensuring they maintain high-quality
standards of cleaning which are
recognised as part of Localiza’s
service excellence.
54 G4S plc Integrated Report and Accounts 2017
2017 HIGHLIGHTS – CORE BUSINESSES
-5.1%
Organic growth
$8bn
Middle East security
market in 2015*
172,000
Employees
-28.4%
Adjusted PBITA
decline
Revenue
£m
Adjusted PBITA
£m
2017
845
2016
890
YoY %
(5.1%)
2017
58
2016
81
YoY %
(28.4%)
* Freedonia World Security Services Report January 2017.
Key customer sectors – oil and gas, retail,
energy, banking and agriculture
G4S is the leading security provider in the
Middle East & India region, with operations in
19 countries. Our largest countries by revenue
are India, Saudi Arabia and UAE.
Revenue in the Middle East & India region was down
5.1% on the prior year as the macro-economic and fscal
environment weighed on the trading in the Gulf. As
previously reported, our business in India was adversely
impacted in 2017 by the effects of demonetisation and
by changes to regulatory processes.
Adjusted PBITA was 28.4% lower across the region,
refecting the decline in revenue. Our businesses in this
region have been adjusting to the challenging trading
environment and we expect trading to begin to stabilise
during 2018.
E
m
e
r
g
i
n
g
m
a
r
k
e
t
I
M
D
D
L
E
E
A
S
T
&
I
N
D
I
A
KUWAIT-AL ZOUR REFINERY
Values: Safety, Security and
Service Excellence
SDG:
In 2017, G4S Risk Consulting led a G4S
Kuwait bid to win a contract to provide
security during the construction of a new
world-class refnery to be built by the
Kuwait National Petroleum Company.
The refnery will supply both domestic
and global market demand for
ultra-low sulphur petroleum products.
The new refnery is expected to be
completed in 2019. G4S won the
contract with a consultancy-led
security solution, integrating
manpower and electronic security
equipment to deliver the optimum
level of security and cost effciency.
Integrated Report and Accounts 2017 G4S plc 55
Strategic report
Regional and service line review continued
2017 HIGHLIGHTS – CORE BUSINESSES
+3.9%
Organic growth
$37bn
European security
market in 2015*
45,000
Employees
14.3%
Adjusted PBITA
growth
Revenue
£m
Adjusted PBITA
£m
2017
1,356
2016
YoY %
1,305 +3.9%
2017
104
2016
91
YoY %
14.3%
* Freedonia World Security Services Report January 2017.
E
P
O
R
U
E
t
e
k
r
a
m
d
e
p
o
e
v
e
D
l
Key customer sectors – automotive, energy,
fnancial services, aerospace, defence, chemicals,
biotechnology, food, aviation and retail
G4S Europe has activities in 21 countries in
Scandinavia, Benelux, Southern Europe and
Eastern Europe. It has strong market positions
in Cash Solutions and around 20% of the
region’s revenues are security systems‑related.
Our sustained investment in Europe in sales, technology
and service continued to produce positive results, and
revenues rose by 3.9% across all service lines. Adjusted
PBITA rose by 14.3% in the region, refecting the
compound benefts of revenue growth and successful
productivity programmes.
We established a technology academy in Denmark
where our growing technology business has become
one of our technology centres of excellence, supporting
product and service development across the region.
In Cash Solutions, we continued to grow our annuity
revenues from CASH360, won a large new CASH360
contract with one of the largest retailers in the
Netherlands, to be implemented from Q1 2018. We
have also recently launched a new service in Europe,
G4S Pay, which includes an electronic payment module
with CASH360 and is in over 400 locations.
We succeeded in winning new security contracts for
aviation and retail customers, electronic monitoring
equipment, systems security for infrastructure and cash
management and we retained some of the largest
contracts in the region through successful rebids in the
aviation and banking sectors. Our European pipeline has
a large number of opportunities across a diversifed
range of customer segments.
BRUSSELS AIRPORT
Values: Safety, Security and Service Excellence
Innovation and Teamwork
SDG:
In 2017, G4S Belgium won a six-year contract to continue
to provide security services at Brussels Airport, one of
Europe’s busiest travel hubs. With a team of 900
employees, G4S will provide terminal security, passenger
and remote screening, hold-baggage screening, access
control for VIPs, crew and general aviation personnel,
and supervisor presence inside the airport authority’s
operations centre. A ground-breaking approach to the
contract helped G4S secure the win. The team developed
an ‘output’-based contract, working closely with the
customer to establish their key performance indicators.
Confdent that G4S can deliver over and above the
customer’s requirements, G4S is paid for the services
which are successfully delivered.
G4S provides aviation and security services in 120 airports,
across 45 countries, as well as working for 85 airlines.
In Belgium, G4S also secures Brussels South Charleroi
Airport, providing 400 highly-trained personnel.
56 G4S plc Integrated Report and Accounts 2017
2017 HIGHLIGHTS – CORE BUSINESSES
+6.0%
Organic growth
$46bn
North American
security market
in 2015*
54,000
Employees
7.0.%
Adjusted PBITA
growth
Revenue
£m
Adjusted PBITA
£m
2017
2,006
2016
YoY %
1,892 +6.0%
2017
123
2016
115
YoY %
7.0%
* Freedonia World Security Services Report January 2017.
G4S North America is an integrated Secure
Solutions business for commercial customers,
with some government contracts including
border protection, and has a market‑leading
innovative cash management solution for
retail customers.
l
D
e
v
e
o
p
e
d
m
a
r
k
e
t
N
O
R
T
H
A
M
E
R
I
C
A
In North America, our revenues grew by 6.0%, with
good growth rates in both our Cash Solutions and
Secure Solutions businesses.
In Cash Solutions, G4S technology-enabled cash
management services are now delivered to over 6,900
retail locations across the United States, including over
5,000 in large store formats where G4S has established
a market-leading position. We believe that our retail
cash solution offers unique customer value and this
is refected in a substantial pipeline and active
pilot programmes.
Our Secure Solutions business produced revenue
growth of around 5% as our integrated security
solutions continued to fnd traction in the market place.
This rate of revenue growth was constrained as we
continued to apply commercial discipline in those
market locations facing tight labour conditions. In
North America we continue to monitor and manage
wage infation, particularly in Canada following recent
minimum-wage increases.
Overall in the United States we are managing wage
infation pressure through productivity improvements
and commercial discipline, and we believe that increased
unit labour costs are encouraging customers to move to
our integrated security solutions combining G4S security
professional personnel with technology. We continue to
see good demand for our products and services across
the US and Canada.
Adjusted PBITA increased by 7.0%, helped by a
favourable revenue mix and effciency gains, partially
offset by the cost of investing in capacity to support
our growing integrated secure solutions and retail
solutions businesses.
MAJOR RETAILER, US
Values: Safety, Security and
Service Excellence
Innovation and Teamwork
In 2017, G4S won a new fve-year retail
solutions contract for a major US chain
of membership-only retail warehouse
clubs. The technology began to be
installed from the end of September.
The benefts for both our bank and
retail customers include:
• Reduced labour costs – our proprietary
software automates the compilation
of cash till foats and processing
•
Improved cash fow – the retailer
obtains ‘same-day’ credit and our
cloud-based cash management
software platform is integrated
with the customer’s back offce,
point-of-sale and accounting
programmes
• Reduced transportation costs –
cash is recycled in store
• Reduced bank processing fees
Integrated Report and Accounts 2017 G4S plc 57
Strategic report
Regional and service line review continued
2017 HIGHLIGHTS – CORE BUSINESSES
+2.1%
Organic growth
$6bn
40,000
Employees
7.1%
UK & Ireland security
market in 2015*
Adjusted PBITA
growth
Revenue
£m
Adjusted PBITA
£m
2017
1,334
2016
YoY %
1,307 +2.1%
2017
120
2016
112
YoY %
7.1%
* Freedonia World Security Services Report January 2017.
t
e
k
r
a
m
d
e
p
o
e
v
e
D
l
D
N
A
L
E
R
I
&
K
U
G4S is the leading provider of Cash and Secure
Solutions in the region, with a broad range of
expertise covering specialist‑event security,
provision of services to the UK Government
including Care & Justice services, and
Cash Solutions.
Revenue in the UK & Ireland increased by 2.1%, with a
solid performance in our core businesses, including
double-digit growth in our security technology business.
The deployment of integrated security solutions,
combining technology and manned security, was
instrumental in retaining and expanding a number of our
existing contracts and is increasingly relevant in winning
new business. We are able to draw on substantial
expertise in our UK & Ireland security systems business,
supported by product research and development at our
UK technology centre.
Revenue from our Care & Justice services and FM
businesses was broadly fat as we maintained a disciplined
and selective approach to new contract bidding.
Adjusted PBITA increased by 7.1%, refecting the
combination of revenue growth and the beneft of our
on-going productivity programmes.
The roll-out of our lean process design for the back-
offce operations of our manned security business
commenced in Ireland in the third quarter of 2017 and
we expect it to be implemented in the UK during 2018.
JOBCENTRE PLUS, UK
Values:
Integrity and Respect
Safety, Security and Service Excellence
Innovation and Teamwork
SDGs:
In 2017, G4S UK&I won the integrated security contract for
the job centres in the UK for the Department of Work &
Pensions (DWP). G4S previously had the manned security
contract through Telereal Trillium and managed the access
control system across most of the estate.
The DWP’s objective was to procure a security service
allowing for a potential reduction in the number of sites from
900 to around 700, and so is fexible and supports the DWP’s
transformation programme plan over the next two years.
The DWP transformation programme aims to reduce
costs whilst maintaining safety of the users of its properties.
We have modernised the way in which security is provided
using an Effects-Based Methodology, which has been aligned
with the Centre for the Protection of National Infrastructure
(CPNI) best practice. Essentially we are looking to minimise
threats by reducing and better managing anxiety of
members of the public at DWP sites, reducing the likelihood
of incidents occurring.
58 G4S plc Integrated Report and Accounts 2017
2017 REGIONAL AND SEGMENTAL REVIEW – CORE BUSINESSES CONTINUED
2017 REVENUE AND ADJUSTED PBITA BY REGION – CORE BUSINESSES
Revenue (%)
Adjusted PBITA (%)
Revenue
6%
Africa
10%
Asia Paciÿc
9%
Latin America
Middle East & India 12%
18%
Europe
27%
North America
18%
UK & Ireland
Adjusted
PBITA
8%
12%
5%
11%
19%
23%
22%
SERVICE LINE OPERATING REVIEW – CORE BUSINESSES
SECURE SOLUTIONS
At 2017 average exchange rates
Emerging markets
Developed markets
Total
Revenue
2017
£m
2,343
3,875
6,218
Revenue
2016
£m
2,277
3,736
6,013
Adjusted PBITA Adjusted PBITA
2016
£m
149
225
374
2017
£m
143
242
385
YoY
%
2.9%
3.7%
3.4%
Our services range from conventional manned security offerings to risk consulting, highly sophisticated security
technology, security systems and integrated solutions. We are investing in the resources and capabilities which
enable us to innovate and apply technology in the design and delivery of integrated solutions for our customers, and
this is refected in the increasing share of revenue from these solutions. Our technology-related security revenues
for the Group grew by 11.4% to £2.45 billion (2016: £2.2bn).
Our Secure Solutions business segment also includes our Care & Justice and FM services. Our Care & Justice
business is concentrated in the UK and Australia and provides custody, detention, rehabilitation, education and
transport services, typically in complex operating environments.
As previously reported, our Secure Solutions businesses faced challenging trading conditions in the Middle East &
India region and this partially offset the good rates of proftable growth in our other markets. Overall, the Secure
Solutions businesses delivered 3.4% growth in revenue and 2.9% growth in Adjusted PBITA.
YoY
% 7.6%
(4.0%)
7.6%
2.9%
Increase in
developed
markets Secure
Solutions
Adjusted PBITA
in 2017
CASH SOLUTIONS
At 2017 average exchange rates
Emerging markets
Developed markets
Total
Revenue
2017
£m
388
821
1,209
Revenue
2016
£m
414
768
1,182
YoY
%
(6.3%)
6.9%
2.3%
Adjusted PBITA Adjusted PBITA
2016
£m
59
93
152
2017
£m
55
105
160
Revenues in Cash Solutions grew 2.3% and Adjusted PBITA rose by 5.3%.
The overall growth in revenue and proft was driven by strong volume growth, particularly in our Retail Cash
Solutions business in North America, CASH360 in Europe and Deposita in Africa and Asia. At the end of January
2018, we had an installed base of over 19,500 cash automation solutions at retail and banking customers, around a
30% increase compared with 14,600 in 2016. The strong growth in Adjusted PBITA in our developed markets
refects the benefts of our systematic restructuring and productivity programmes which have been implemented
over the past three years, partially offset by investment in sales and business development.
The robust growth in developed markets was partially offset by the effect of weak trading in our Middle East & India
region, where our businesses have been adjusting to the challenging trading environment and where we expect
trading to begin to stabilise during 2018.
CORPORATE COSTS
Corporate costs comprise the costs of the G4S plc board and the central costs of running the Group including
executive, governance and central support functions, and were slightly lower compared with the prior year.
(6.8%)
12.9%
5.3%
YoY
% 12.9%
Increase in
developed
markets
Adjusted
PBITA in
Cash Solutions
developed
markets
Integrated Report and Accounts 2017 G4S plc 59
Strategic report
Risk management and our principal risks
Our aim is to identify material risks that could
impact us, and to focus management attention
on effective mitigation of the signifcant risks
to achievement of our strategic objectives and
safeguard our reputation.
An evolving risk landscape
During 2017 we continued to see challenges from
uncertainty and changes in political leadership, terrorist
events, weak economic recovery, geopolitical shifts,
general migration and the on-going instability in the
Middle East. These have created risks and opportunities
for the security industry. G4S continues to face
operational and health and safety risks often particular
to the security industry, along with fnancial and
commercial risks common to all multinational
companies. Regulations on data privacy continue to be
tightened with high fnes for non-compliance. Our drive
for increased growth through delivering signifcant cost
savings and innovative service excellence to customers
may lead to a changed risk profle.
We continue to assess that the risk to G4S from the
vote for the UK to leave the EU is not signifcant as we
mainly operate within national boundaries with around
83% of total Group revenues outside the UK and
minimal cross-border trading. However, depending on
the terms of the UK’s exit from the EU there might be
a range of business factors that could affect us including
the availability of labour, regulations and taxation. It is
also possible that continuing uncertainty during the
negotiation period reduces economic growth in the UK
and Europe, further affecting both our customers and
our competitors. We continue to monitor developments
through our risk and governance framework.
What we did in 2017
Progress continues to be made on increasing risk
awareness and ensuring accountability for risk
management rests with business management teams.
The Group’s mandated control standards have been
further enhanced to ensure they address our key risks,
with appropriate training and challenge to facilitate their
effective performance. Control self-assessments were
completed by all businesses. These are reviewed,
challenged and best practice shared by region and group
functional experts, and compliance has been tested
through internal audits. Our quarterly Regional Audit
Committees continued to focus on fnancial judgments
and to address internal and external audit fndings,
which has enabled further improvement in fnancial
control awareness and effective performance.
60 G4S plc Integrated Report and Accounts 2017
What we will do in 2018
We will continue to refne our key standards and
controls, and through support and training we will help
all businesses operate them effectively. Functional teams
will use the results of control self-assessments to assist
countries with full compliance. In addition, internal audits
will continue to test the operational effectiveness of our
standards and controls. Regional Audit Committees will
continue to review, challenge and direct improvements
in the performance of control standards, fnancial
judgments and reporting. Through continued
engagement and review by country, region and
Group management, we will enhance the quality and
timeliness of the identifcation of risks and the delivery
of mitigating actions.
During the year we will further improve the reporting
of risks and use metrics to assist with risk identifcation.
Risk Management and Appetite
As in prior years we have undertaken a bottom-up
review, with businesses completing an assessment of
their major risks and developing mitigating actions to
reduce the likelihood of those risks crystallising. These
reviews require management teams to identify the
essential controls needed to mitigate high inherent risks
to acceptable residual risk levels, in line with the group’s
risk appetite, further encouraging effective compliance
with the Group’s core standards and controls. These risk
assessments are reviewed, challenged and amended as
necessary by regional teams, who are also responsible
for monitoring delivery of required improvements. This
is combined with a top-down review from group
functional leaders, to ensure that the risks captured are
complete and appropriately assessed. The risks are then
summarised and presented to the Risk Committee for
consideration before being presented to the board for
review. The resulting principal residual risks, with any
identifed changes and mitigating actions, are outlined in
the following pages 62 to 65. The residual risk level has
not changed signifcantly compared to the prior year.
G4S operates in high-risk areas of business, in which
our core competence and value-add to customers is
managing those risks effectively. We have a higher risk
appetite for growing and transforming businesses in
which we have the expertise to deliver and to achieve
a good commercial return for the risk we are accepting.
We have a low to very low risk appetite for non-
compliance with laws and regulations, appropriate
culture and values, health and safety and people risks,
as these are priority areas for our stakeholders and
failure in these key risk areas could have a material
impact on our business.
ENTERPRISE RISK MANAGEMENT GOVERNANCE MODEL
BOARD
The board has responsibility for ensuring risk-management processes are effective by reviewing the most critical
risks and controls.
RISK COMMITTEE
The Risk Committee meets four times per year and
reviews the Group’s risk appetite, assesses the
Group’s principal residual risks and assesses the
overall enterprise risk management process.
AUDIT COMMITTEE
The Audit Committee meets four times per year and
ensures the Group’s control framework is operating
effectively.
GROUP EXECUTIVE COMMITTEE
REGIONAL AUDIT COMMITTEES
The Group Executive Committee oversees the
management of the Group’s principal residual risks.
The committees meet four times a year, also
attended by the external auditor, and review:
1. The progress of closing internal and external
audit fndings; and
2. Reports on status of fnancial controls
and signifcant accounting judgments.
The committees are responsible for whistleblowing and related investigations across the regions.
GROUP AND REGIONAL ETHICS COMMITTEES
OPERATING COMPANIES AND SHARED-SERVICE FUNCTIONS
Our operating companies and shared-service functions
identify and assess the risks to their business objectives management team meetings and trading reviews.
and plan appropriate mitigating actions. These are
recorded in our Group-wide risk management tools.
A thorough review is conducted as part of the annual
Control self-assessments of compliance with Group
control standards are completed annually (bi-annually
for fnancial control standards).
planning process with updates made in senior
Operating
companies
We employ
three lines
of defence
to control
and manage
risks across
the Group.
1ST LINE: BUSINESS OPERATIONS AND SUPPORT
Responsibility for the frst line sits with the managers
of our businesses, whether line management or
support. The senior management team within each
business is responsible for implementing and
maintaining appropriate controls across their business.
Result: Ensures standards expected by the Group, our
customers and other stakeholders are met.
2ND LINE: CONTROL AND OVERSIGHT FUNCTIONS
The second line consists of oversight functions at both
regional and Group level including: risk, fnance, legal,
human resources, operations, information technology,
commercial and CSR.
Result: Provides support to business managers.
3RD LINE: INTERNAL INDEPENDENT ASSURANCE
The third line comprises the internal audit function.
As part of its annual programme of work, internal
audit conducts regular reviews of risk management
processes and gives advice and recommendations
on how to improve the control environment.
Result: Provides independent assurance over the
design and operation of controls.
Financial reporting risks are considered as part of the external audit.
EXTERNAL AUDIT
Integrated Report and Accounts 2017 G4S plc 61
Strategic report
Risk management and our principal risks continued
Principal risk
Link to strategy
We reviewed the appropriateness of our ‘Golden Rules’ which
refect critical safety risks and are mandatory for all G4S businesses,
and failure to adhere to them is linked to our disciplinary
procedures. Good practice and progress in delivering H&S
improvements are recognised and rewarded, while poor practice
and insuffcient progress lead to close executive scrutiny, and can
impact performance-related pay for business leaders if appropriate.
Mitigation priorities for 2018
We will continue to refne our standards, policies and controls
where we see an opportunity to reduce H&S risks further. The
compliance with these group requirements will again be self
assessed during 2018 and reviewed by H&S and internal audit
teams. A revised H&S training programme for our front-line
employees is under development which supplements existing
training provided by businesses on key H&S risks. Safety
improvement plans are required for all businesses. Business
leaders take responsibility for leading safety performance and
putting H&S at the forefront of their day-to-day activities.
opportunity to raise concerns themselves. In 2017, our
whistleblowing hotline and case-management system received
a total of 300 reports from our employees (2016: 402). Matters
of a serious nature were investigated at a senior and independent
level, with 59 investigations completed during 2017 (2016: 55).
Mitigation priorities for 2018
For our front-line employees, we will extend the values-based
training materials already developed to refect common
experiences or particular challenges which come to light from
whistleblowing cases, internal grievances or feedback from the
global employee-engagement survey conducted in 2017.
For managers, the newly-revised competency framework has
helped guide the development of on-line training, which is due to
be launched in 2018. The training uses realistic scenarios in which
participants are required to make value-based decisions from a
range of options in order to achieve the right outcomes. The
training will be mandatory, and cascaded to all managers to
complete before the end of 2018.
Our reward and recognition schemes will continue to be aligned
to the values, to ensure they are promoted in everything we do.
A new group-wide scheme will supplement local efforts and
enable us to showcase the types of behaviour which exemplify
the values and refect the great work that our employees do.
HEALTH AND SAFETY (H&S)
Risk
The provision of security services to protect valuable assets, often
in hostile or dangerous circumstances, presents health and safety
challenges. In addition to the signifcant impact on individuals, a
serious breach of health and safety could disrupt the Group’s
business, have a negative impact on our reputation and lead to
fnancial and regulatory costs. In 2017, 25 (2016: 47) employees
lost their lives in work-related incidents, of which eight (2016: 20)
were as a result of armed attacks and 11 (2016: 17) were
road-traffc incidents as the year-on-year improvement in road
safety continued. There were three (2016: 9) non-natural deaths
of people in our custody.
Risk mitigation
We are committed to protecting the health, safety and well-being
of our staff, people in our care or custody and third parties. The
Group’s mandatory H&S standards target the critical safety risks
in the Group including road and frearm safety and are
supplemented by training for front-line staff through to business
leaders. During 2017 the annual self-assessment by countries of
compliance with our standards was supported by site reviews
from local, regional and Group H&S managers and was included
in the scope of country internal audit visits. Reporting was
enhanced to include high potential incidents which are investigated
thoroughly. Controls are reviewed in light of lessons learned from
serious incidents.
CULTURE AND VALUES
Risk
G4S provides security for people, premises and valuable assets.
The Care & Justice services business provides services to
detainees, victims of crime, people needing assistance, and other
members of the public. We operate in many different countries
with a diversity of local and national cultures. Having an
appropriate set of values strongly embedded as our corporate
culture is very important to ensure staff meet our high
expectations including compliance with our ethical business
conduct standards. Failure to do so risks not delivering on our
commitment to our colleagues, customers and other stakeholders
and may fail to comply with legislation and international standards.
Risk mitigation
We have a set of values, detailed on page 17, which are continually
reinforced to all employees through a variety of key processes
including recruitment, induction training, and recognition schemes
as well as communications materials. Nominated values
ambassadors in businesses are helping to cascade values-related
communications. HR and learning and development leaders have
assisted in the production of materials for increasing awareness and
understanding of our values. In everything we do, no matter how
challenging the circumstances, we require our people to behave in
line with our values and to be prepared to use our whistleblowing
facility, Speak Out, if they become aware that others are not doing
so. Ethics steering committees at a Group level and in each region
oversee the whistleblowing investigation process and provide
constructive guidance to countries on ethical matters. We continue
to focus on building awareness of the importance of our corporate
values and whistleblowing, particularly in places where we work
with people who may be more vulnerable and have less
62 G4S plc Integrated Report and Accounts 2017
Principal risk
PEOPLE
Link to strategy
Risk
In a global and diverse security business such as ours, there are
risks associated with recruiting, training, engaging, rewarding and
managing people, as well as ensuring we retain critical talent to
deliver increasingly sophisticated services through our 570,000
employees. Screening and vetting is a particular challenge in some
territories which lack supporting infrastructure from the relevant
authorities. Any incident where our people fail to meet
expectations of customers and other stakeholders could lead to
fnancial and reputational damage to the Group’s business. Whilst
our controls are robust we still face the risk of an employee not
behaving in line with our values.
Risk mitigation
The Group’s mandatory human resource standards cover core
requirements for delivering the HR strategy, such as ensuring
there are effective organisational structures in place, that
employees are screened, inducted and trained to perform their
jobs, and that there are appropriate mechanisms in place for
managing on-going performance and recognising great
performance. During 2017 the annual self-assessment by countries
of compliance with our standards was supported by site reviews
from local and regional teams, and included in the scope of
country internal audit visits.
MAJOR CONTRACTS
Risk
The Group operates a number of long-term, complex, high-value
contracts with multinational companies, governments or strategic
partners. Key risks include; accepting onerous contractual terms;
poor mobilisation of contracts; not transitioning effectively from
mobilisation to on-going contract management; not delivering
contractual requirements; inaccurate billing for complex contracts;
ineffective contract-change management; and not managing
sub-contractors appropriately.
Risk mitigation
During 2017 we updated our strict thresholds for the approval
of major bids, involving detailed legal review and senior
management oversight. For a selection of our most signifcant
contracts in the UK, we perform 360° reviews of all aspects
of contract management and performance. We also perform a
quarterly fnancial review of the top 25 and low-margin contracts
in each region.
We review in detail the performance and potential of managers
across the Group to help identify development needs and build
succession plans. We also deliver regional leadership programmes
to nurture talented individuals early in their careers, and help
develop them into more senior roles as they move through the
organisation. Staff turnover is a key indicator to us of employee
satisfaction, and reducing it improves service excellence and
reduces recruitment costs. During the year staff turnover reduced
from 27.6% in 2016 to 25.3% in 2017 (see page 17).
Mitigation priorities for 2018
We will use the information from our ffth global employee survey
to help develop initiatives to enhance standards further and ways
in which to ensure the standards are embedded. Compliance with
our Core HR Standards will again be self-assessed during 2018
and reviewed by local, regional and group teams as well as tested
by internal audit. Direct support will be provided as necessary to
enhance compliance with our standards.
For our large multinational customers, account managers oversee
performance of these contracts across relevant countries and have
regular updates with customers to ensure we deliver against
contractual terms.
Mitigation priorities for 2018
While great improvements have been made in reducing the risk
of taking on onerous contracts, as the impact can be signifcant,
we will continue to enhance the quality of the analysis used in
the bidding process and ensure that lessons are learned from
underperforming contracts. We will also embed into the
SalesForce opportunity management tool our updated approval
requirements to make compliance and monitoring effective.
Link to strategy
People and values
Customers and service excellence
Growth and innovation
Operational excellence and productivity
Financial and commercial discipline
Integrated Report and Accounts 2017 G4S plc 63
Strategic report
Risk management and our principal risks continued
Principal risk
LAWS AND REGULATIONS
Link to strategy
Risk
G4S operates under many complex and diverse regulatory
frameworks, some of which have extraterritorial reach and many
where regulations change regularly. Risks include: new or changed
restrictions on foreign ownership; diffculties obtaining all relevant
licences to operate; complying with employment legislation
covering a wide range of requirements; complying with often
complex and broad ranging local tax regulations; increasing
litigation and class actions; bribery and corruption and complying
with human rights legislation. Failure to meet the required
standards can lead to higher costs from claims and litigation;
inability to operate in certain jurisdictions, through either direct
ownership or joint ventures; loss of management control; damage
to our reputation; and loss of customer confdence.
Risk mitigation
Our policies and procedures clearly set out the requirement for
local management teams to comply with all relevant laws and
regulations. Group and regional leadership, together with our
Ethics Committees at Group and regional level provide oversight
and support our businesses to mitigate the risks. Group legal and
regional leadership closely monitor changes in foreign ownership
laws and make appropriate plans to respond. G4S continues to
liaise with relevant governments and authorities to infuence
positively the regulatory environments in which we work.
Mitigation priorities for 2018
We will continue to focus on seeking full compliance with laws
and regulations across all jurisdictions we operate in and ensure
that concerns are addressed appropriately by local management
with support and guidance from Group and regional leaders.
GROWTH STRATEGY
Risk
Our focus is on investing in the development and marketing of
innovative and integrated products and services and improving
business effciency to strengthen service excellence and support
improved margins over time. There are risks with adopting such
a strategy: that we fail to create higher-value solutions that
differentiate us from local commoditised competitors; that we
fail to deliver our core services effectively and consistently; that we
lose contracts or growth opportunities through price competition
and market changes; that we fail to enter target markets
successfully; that we become over-reliant on large customers;
and that our business transformation initiatives do not deliver
as expected.
Risk mitigation
We continue to focus on delivering excellent service through the
best-practice service delivery guidelines in place for both Secure
Solutions and Cash Solutions service lines. Our newly developed
information systems supporting the end-to-end order-to-cash
process in our Secure Solutions service line, including fnance,
human resources and operational delivery, was launched in Ireland
in 2017. We use our centres of excellence to develop innovative
solutions for customers, particularly in electronic security and
CASH360 in Cash Solutions. We leverage our global network to
offer integrated solutions internationally and our global accounts
programme supports and promotes our multinational accounts
initiatives. Our consistent focus on delivering excellent service to
customers has led to an increase in our Net Promoter Scores.
We are able to mitigate local reduction in growth opportunities
through the diversity of industries and markets we serve, and by
leveraging our portfolio of products to offer alternative cost-
effcient solutions. All our product development initiatives and
business transformation projects are closely monitored by Group
and regional teams, with appropriate challenge and approval to
maximise the opportunity and minimise the risks.
Mitigation priorities for 2018
In 2018, we will focus our investments in innovative product
development and in transforming the effciency of our business and
the capabilities of our people and systems. Customer satisfaction
reviews will guide how we deliver integrated solutions to existing
and potential customers across all businesses. This would include:
proprietary security systems, video and intelligent camera systems,
video management systems, global security intelligence systems and
software tools including incident-management systems such as
RISK360 in our Secure Solutions business. For Cash Solutions,
development would include: retail solutions, CASH360, Deposita
cash-recycling systems and solutions for our smaller retailers. Our
new information systems for the Secure Solutions service line will
be implemented in the UK in 2018, with plans to expand into
other countries once proven to deliver as expected. Focused
business transformation projects will also be implemented to drive
further effciency and improve margins. Oversight, challenge and
approval of detailed business cases for all such initiatives will be
enforced by Group and regional teams.
Link to strategy
People and values
Customers and service excellence
Growth and innovation
Operational excellence and productivity
Financial and commercial discipline
64 G4S plc Integrated Report and Accounts 2017
Principal risk
GEOPOLITICAL
Link to strategy
Risk
We operate in many countries across the world, with wide-ranging
government and political structures, different cultures with varying
degrees of compliance with laws and human rights, particularly within
confict and post-confict zones. The risk factors include: political
volatility, including the outcome of elections and referendums
affecting trade rules and regulations and changes in policies towards
business, revolution, terrorism, military intervention, mistreatment of
migrant workers and employees working for our suppliers. These
risks impact us in many ways: the health and safety of our staff and
customers; the continued operation of our businesses; and the ability
to secure our assets and recover our profts.
Risk mitigation
We collaborate with our local partners; conduct early risk
assessments before and during security assignments; develop
robust operating procedures; and work closely with our local
and global customers in managing the risks of operating in such
environments. We have clear standards on human rights which
all businesses must comply with. Those based in high-risk countries
self assess their compliance with these standards annually, with
this assessment reviewed by Group and checked by internal audit.
We have a mandatory supplier code of conduct which includes
anti-bribery and modern slavery requirements. Our G4S Risk
Management business has particular expertise in providing secure
solutions in very high risk, low infrastructure environments.
Mitigation priorities for 2018
In markets where potential government policy or trade agreements
may have a signifcant impact on our ability to trade we will
continue to engage with national and international governments to
promote the benefts that G4S brings to a market and an economy,
to ensure that we minimise the impact of any trade restrictions or
trade policy. We will increase the number of countries that
complete human rights control self-assessments and carry out
human rights risk assessments in all key business areas. We will also
work to build awareness of human rights responsibilities across the
business and our partners and increase engagement with suppliers
to ensure they are also complying with human rights.
INFORMATION SECURITY
Risk
Increased regulations and sanctions relating to the potential failure to
secure sensitive and confdential data, which we are entrusted with
by customers, staff, suppliers and other stakeholders, have increased
our risks in this area. Like all organisations, we face cyber attacks from
a variety of sources which, if successful, could result in censure and
fnes by national governments; loss of confdence in the G4S brand
and specifc loss of trust by customers, especially those in
government and fnancial sectors. Additionally, we face the risk of
disruption to service delivery from system failures, incomplete backup
routines, inadequate business continuity and disaster recovery plans.
Risk mitigation
We have “defence-in-depth” technologies (i.e. multiple layers of
defence) in key systems to protect business information entrusted
to us. During 2017 we brought our IT function under direct
management of the Group team, to enhance the way our systems
are supported and run. This will ensure policies and best practice
are applied consistently across all operating businesses. In late
2017 we commenced a programme of investment in Cyber
defence tools, to improve the levels of compliance for managing
these risks across the many systems and infrastructures that exist
globally. We are also introducing additional standards and
guidance to ensure compliance with General Data Protection
Regulation (GDPR) across the UK and Europe.
Mitigation priorities for 2018
We will continue to strengthen the effective performance
of our IT processes through the centrally-managed IT structure,
and complete the implementation of our new Cyber Tools
programme to increase the security of our IT systems and
infrastructure, including managed cyber security products,
centralised infrastructure management tools and cyber
vulnerability assessments.
CASH LOSSES
Risk
We provide a wide range of cash-management services, including
cash processing, ft-sorting of notes for recycling, holding funds on
behalf of customers, secure storage, a range of ATM services, as
well as transporting high values of cash and valuables including
international shipments and fully-outsourced cash-management
solutions such as CASH360. Our cash business is at risk of
external attacks, internal theft, poor cash reconciliations and weak
management supervision, which could lead to loss of proft,
increased cost of insurance and health and safety considerations
for our staff and the public.
Risk mitigation
During 2017 we refned the standards for Reconciliation and
Operational Cash Controls and continued through an ‘e-learning
academy’ and direct support, to ensure wide-spread awareness
and effective performance of these controls. Self assessments
against these standards are performed twice a year by each
branch and head offce and compliance is supported and
monitored by regional teams and through internal audit. We also
have clearly-defned standards for physical cash security for our
employees, vehicles and processing centres. The Group and
regional cash security teams are responsible for monitoring
compliance with these through self-assessments performed by
branches and visits to country; for monitoring attacks and other
cash losses; and for communicating lessons learned. Innovative
security-defence products such as cash-box tracking, vehicle
protection foam and protective boxes are used in a number
of businesses.
Mitigation priorities for 2018
Our new Global Cash Solutions division will give additional focus
to drive improvement in the effective performance of physical
security and cash reconciliations throughout our cash businesses,
to reduce both the number and value of losses.
Integrated Report and Accounts 2017 G4S plc 65
Strategic report
Chairman’s statement
S I am delighted that, building on the
S
E
C
C
U
S
foundations laid in recent years,
the Group has improved both its
performance and fnancial position
in 2017. This is particularly notable,
in light of the challenging trading
conditions that prevailed in the
Middle East & India markets.
E
L
B
A
N
I
A
T
S
U
S
O
T
Y
E
K
–
E
R
U
T
L
U
C
E
C
N
A
N
R
E
V
O
G
G
N
O
R
T
S
A
As shown in the business review
section of this report, the Group
has made substantial progress on its
strategic priorities. The board is pleased
with the focus, energy and leadership
that the executive team brings to
the Group.
Strong governance culture
Ensuring that G4S is resilient and agile and therefore
able to deal with constant change and evolving
economic and geo-political situations, is of paramount
importance. This can only be achieved with a skilled
and experienced board and management team and
an appropriate culture and governance structure.
The board and I see strong governance, adapted to
the Group’s needs, circumstances and business model,
as a source of competitive advantage. G4S is a large,
geographically diverse organisation, doing business in
complex and sometimes sensitive environments. Sharing
a common understanding of the company’s purpose and
values is essential. To promote this, the board continues
to support the application of G4S values throughout the
organisation. A strong governance culture is supported
by continuous monitoring, review and promotion of the
Group’s values, standards and policies. It is also essential
that directors feel able to provide not only support but
also constructive challenge.
BOARD AREAS OF FOCUS IN 2017
In my statement last year, I listed six areas of focus for
the board. These were:
• Annual review of Group strategy and
management’s execution of the strategy
• Induction and integration of new board members
• Board and management succession planning
• Monitoring business performance
• Continued understanding of the Group’s businesses
and management teams
• Maintaining emphasis on risk management and
effcient structures
We made good progress in all these areas and further
information on the key areas of activities for the board
in 2017 are set out in the governance report.
66 G4S plc Integrated Report and Accounts 2017
John Connolly, Chairman
Therefore we strive to foster open and effective
communication within the boardroom and with the
executive team. This process is informed by best
practice as well as feedback received and views collated
from our key stakeholders. There are a number of ways
in which the board gathers stakeholders’ views, which
are set out on pages 78 and 79. This year, as in previous
years, I met with major shareholders as part of our
annual programme of governance meetings.
Given the business undertaken by the Group and the
complex markets in which we operate, it is essential to
understand the key risks faced by the organisation and
to ensure that the company has appropriate policies,
systems, processes and management action plans to
mitigate these risks to an acceptable level. The board
therefore maintains a Risk Committee, which is separate
from the Audit Committee, to provide the necessary
focus on risk management and mitigation.
Supporting change
Planning for the future requires us to review the board's
composition regularly to ensure that it remains ft to
support the changing needs of the Group. Management
development and succession planning are also key areas of
interest for the board. This was also particularly important
this year, as management implemented important
organisational changes, with the Secure Solutions business
segment now organised into four regions and the creation
of a global Cash Solutions division.
In 2017, the board visited the Americas business and the
technology business in the UK. Further details of these
visits can be found on pages 78 and 79. In both
instances, the board and I were impressed with the
quality of the products and services offered and the
importance of technology both in creating new services
and also enhancing offerings when combined with
traditional security and cash services.
As chairman, it is my role to ensure that the board has
the right skills to understand, support and challenge
these developments. We give careful consideration
to this need during the board members recruitment
process but also when reviewing committees
composition, as we did in December. I am confdent
that the board has signifcant, diverse and relevant skills
and experience, with strong international exposure and
knowledge of a signifcant number of industries (further
information on the board balance is set out on page 74).
Our statutory results showed a 3.1% increase in
revenue, which rose to £7.8 billion, Adjusted PBITA
up 6.5% to £491 million and earnings up 19.2% to
£236 million benefting primarily from a combination
of proftable growth in our core businesses and profts
on disposal of a number of businesses as our portfolio
rationalisation programme drew to a close.
Performance evaluation
Our externally facilitated performance evaluation was
conducted between July and December 2017. The
results confrmed that the board and its committees
continue to operate well, with all directors contributing
to the overall success of the Group. I led the
performance evaluation process, with assistance from
the Senior Independent Director and the company
secretary. All the directors participated. The knowledge
gained from the previous external evaluation allowed
us to conduct a more focused evaluation this year. The
board and committees performance review process is
described in detail on page 77 and I am pleased to
confrm that no signifcant issues were raised.
Changes to the board
Due to continued ill health, Ian Springett retired from
the board on 20 June 2017. We were very sorry that
Ian was unable to join our board and we wish him well
for the future. Paul Spence, who was already a member
of the Audit Committee, served as interim chair with
effect from 20 January. I am very grateful to Paul for
his strong stewardship.
The Nomination Committee oversaw the process to
fnd a new non-executive director qualifed to act as
chairman of the Audit Committee, which led to John
Ramsay joining the board on 1 January 2018. I am
pleased to welcome John, whose experience in highly
international, innovation-focused businesses and his
extensive background in fnance and accounting will
be very valuable to our board and in leading our
Audit Committee.
As announced in December 2017, after eight years
on the board, Clare Spottiswoode will step down after
the company’s annual general meeting on 15 May 2018.
I would like to thank Clare for her thoughtful
contributions to the board and her strong commitment,
as chair of the CSR Committee since 2014, to help
the company develop and promote CSR policies
and processes. The Nomination Committee has initiated
a search to fnd a new non-executive director to join
the board.
Further information about the work of the Nomination
Committee during the year under review is set out on
page 80.
Results
I am pleased to report on another year of good fnancial
progress with continued growth in revenue and earnings
and, importantly, a reduction in net debt with
achievement of the Group’s leverage target of below
2.5 times net debt to Adjusted EBITDA by the end
of the year.
As noted elsewhere, our core businesses in all regions
apart from the Middle East & India grew revenue and
Adjusted PBITA such that total Group revenue from
core businesses was up 3.2% to £7.4 billion and
Adjusted PBITA grew by 4.2% to £496 million.
The management team’s continued focus on cash and
working capital enabled the Group to deliver good
operating cash fow conversion and this, coupled with
net proceeds from disposal of a number of portfolio
businesses of £156 million offset by organic capital
investment of over £100 million, meant that the
Group’s net debt to Adjusted EBITDA ratio reduced
from 2.8 times at the end of 2016 to 2.4 times at the
end of 2017, in line with the board’s stated leverage
reduction target.
The board is confdent in the Group’s outlook and
proposes to increase the fnal dividend by 5% to 6.11p
(DKK 0.5097) per share, payable on 15 June 2018.
With an interim dividend of 3.59p (DKK0.2948) paid
on 13 October, this will bring the total dividend for
the year to 9.70p per share.
People
The Group has around 570,000 employees in over 90
countries, often providing complex services in diffcult
environments. This can create signifcant challenges.
It is therefore pleasing that the outcome of the 2017
employee engagement survey, which consisted of
questions relating to G4S’ new corporate values,
provided an 84% favourable response rate.
On behalf of the board, I wish to thank the employees
of G4S for their engagement, enthusiasm, hard work
and dedication.
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 April 2016
edition of the UK Corporate Governance Code (the “Code”),
which is available on the Financial Reporting Council’s
website (frc.org.uk).
The company complied throughout the year under review
with the provisions of the Code, except in relation to the
composition of the Audit Committee. This matter is
addressed on page 85. The Corporate governance report,
together with the Audit Committee report, the Risk
Committee report and the Directors’ remuneration report,
describe how the board has applied these provisions.
Integrated Report and Accounts 2017 G4S plc 67
Governance
before joining British American Tobacco
(BAT) in 1994 and held various executive
leadership positions worldwide over the
next 20 years at BAT including COO &
Regional Director for Asia Pacifc.
Current external commitments:
Non-executive Chairman of Britvic plc and
non-executive director of Ferguson plc.
4.Winnie Kin Wah Fok
Non-Executive Director
Appointment to the board: October 2010
Committee membership: CSR Committee
and Remuneration Committee
Skills and experience: An auditor by training,
with a Bachelor of Commerce degree
from the University of New South Wales,
Australia and fellowship or membership of
accounting bodies in Australia, Hong Kong
and England.
Career experience: International board and
senior management experience with
extensive knowledge of Asian markets and
strong involvement in Scandinavia. Involved
in management positions in fnance, audit
and corporate advisory work and has had
a wide range of roles in private equity
frms investing with a particular focus
in Asia.
Current external commitments: Senior
advisor to Wallenberg Foundations AB;
non-executive director of Volvo Car
Corporation; and SEB AB and investment
committee member for the HOPU
Investment Fund.
5. Steve Mogford
Non-Executive Director/Senior
Independent Director
Appointment to the board: May 2016
Committee membership: Audit Committee,
Nomination Committee and Risk
Committee
Skills and experience: First Class BSc
Honours Degree in Astrophysics, Maths
and Physics from Queen Elizabeth College,
University of London. Extensive experience
of delivery of complex programmes in the
defence, infrastructure and utilities market.
Career experience: Served a 30-year career
with British Aerospace, later BAE Systems,
during which time he held several senior
management positions before becoming
COO, with particular responsibility for
programmes, major projects and customer
support, and a member of the BAE
Systems plc board. Chief executive of
SELEX Galileo for four years prior to
joining United Utilities Group plc in 2011
as CEO.
Current external commitments: CEO
of United Utilities Group plc.
6. John Ramsay
Non-Executive Director
Appointment to the board: January 2018
Committee membership: Audit Committee
(chair) and CSR Committee.
Skills and experience: A chartered accountant
with extensive international experience in
innovation-focused businesses.
D
R
A
O
B
R
U
O
Board of directors
1. John Connolly
Non-Executive Director/
Chairman of the board
Appointment to the board: June 2012
Committee membership: Nomination
Committee (chair) and Risk Committee
Skills and experience: A chartered
accountant with extensive experience
working in a global business environment
and in sectors with strategic relevance to
the Group.
Career experience: Spent his career until
May 2011 with global professional services
frm Deloitte, was Global Managing
Director and then Global Chairman
between 2007 and 2011. He was Senior
Partner and CEO of the UK Partnership
from 1999 until his retirement from
the frm.
Current external commitments: Chairman
of the Great Ormond Street Hospital
Charity board of trustees and director
of a number of private companies.
2. Ashley Almanza
Chief Executive Offcer
Appointment to the board: May 2013
Committee membership: Risk Committee
Skills and experience: Degree in Commerce
from University of Natal and an MBA from
the London Business School. Extensive
board and executive management
experience in complex international
businesses.
Career experience: A number of senior
executive roles at BG Group from 1993
to 2012, including CFO from 2002 to 2011
and Executive Vice President from 2009
to 2012, during which he led BG Group’s
UK, European and Central Asian
businesses and the group’s commercial
strategy in Central Asia. A non-executive
director of Schroders plc between 2011
and 2016.
Current external commitments:
Non-executive director of Noble
Corporation and Board member of the
International Security Ligue.
3. John Daly
Non-Executive Director
Appointment to the board: June 2015
Committee membership: Remuneration
Committee (chair) and Audit Committee
Skills and experience: Diploma in marketing
and an MBA from the University of Dublin.
Signifcant executive management
experience in major international
businesses with extensive knowledge
of Asia and the Middle East.
Career experience: Worked in sales and
marketing in the pharmaceutical industry
1
2
3
4
5
68 G4S plc Integrated Report and Accounts 2017
Career experience: Began his career at
KPMG and developed his experience in
emerging markets, working in Malaysia and
Latin America for the manufacturer ICI. In
1993 was appointed Finance Head, Asia
Pacifc for Zeneca Agrochemicals and later
promoted to Group Financial Controller.
In 2000 he joined Syngenta AG, as Chief
Financial Controller, later being promoted
to CFO until his retirement in 2016. Whilst
at Syngenta he also served as interim CEO
for nine months.
Current external commitments: Member of
the Supervisory Board of Koninkijke DSM
N.V and a director of RHI Magnesita N.V.
7. Paul Spence
Non-Executive Director
Appointment to the board: January 2013
Committee membership: Risk
Committee (chair), Audit Committee
and CSR Committee
Skills and experience: Degree in economics
and decision science from the Wharton
School, University of Pennsylvania.
In-depth knowledge of outsourcing in
both the public and private sectors and
extensive international experience in key
emerging markets.
Career experience: Served a 30-year career
with Capgemini, starting as managing
partner of mid-Atlantic information and
technology for Ernst & Young. He went on
to gain signifcant international experience
for 16 years as managing partner of Ernst
& Young Consulting Australia, CEO of
Capgemini Ernst & Young in Asia and
then CEO in the UK. Then served on
Capgemini’s executive management
committee for eight years as deputy group
CEO and then CEO of Capgemini Global
Outsourcing Services.
Current external commitments:
Non-executive director of Actual
Experience plc.
8. Clare Spottiswoode
Non-Executive Director
Appointment to the board: June 2010
Committee membership: CSR Committee
(chair) and Remuneration Committee
Skills and experience: MA degree in
mathematics and economics from
Cambridge University and M. Phil. degree
in economics from Yale University.
Considerable experience in the public
sector, the energy markets and the
fnancial services sector.
Career experience: Worked for the UK
Treasury, director general of Ofgas, the UK
gas regulator, a policyholder advocate for
Norwich Union’s with-profts policyholders
at Aviva and a member of the Independent
Commission on Banking and the Future of
Banking Commission.
Current external commitments:
Non-executive director of Ilika plc,
BW Offshore Limited, Just Group plc
and Naftogaz, the Ukrainian state-owned
oil and gas company as well as being
a director of a number of other
private companies.
9. Barbara Thoralfsson
Non-Executive Director
Appointment to the board: July 2016
Committee membership: Nomination
Committee and Remuneration Committee
Skills and experience: MBA in marketing and
fnance, Columbia University, New York
and a BA in psychology, Duke University,
North Carolina. International executive
and senior management experience in
using technology to meet customers’
needs and develop new business models.
Strong knowledge of North America,
Latin America, Scandinavia and Asia.
Career experience: After an early career in
marketing, held senior management roles
in the consumer goods and
telecommunications sectors including CEO
of NetCom ASA, Norway’s second largest
mobile network operator, between 2001
and 2005 and has subsequently served
on the board of several international
technology companies.
Current external commitments:
Non-executive chair of ColArt Holdings
Limited and non-executive director of
Svenska Cellulosa Aktiebolaget SCA (publ),
Essity Aktiebolag (publ) and Hilti AG.
10. Tim Weller
Chief Financial Offcer
Appointment to the board: October 2016
having previously served as non-executive
director since April 2013.
Committee membership: Risk Committee
Skills and experience: BSc (Hons)
Engineering Science degree from the
University of Exeter. An accountant by
training and a Fellow of the Institute of
Chartered Accountants in England and
Wales with signifcant experience of the
energy and utilities sectors.
Career experience: Joined KPMG in 1985,
rising to partnership in 1997 before joining
Granada plc as director of fnancial control.
He held CFO positions with Innogy. a
leading integrated energy company at the
time, RWE Thames Water and United
Utilities Group plc. He was CFO of Cable
& Wireless Worldwide plc between 2010
and 2011 and CFO of Petrofac Limited
between 2011 and October 2016.
Current external commitments:
Non-executive director of the
Carbon Trust.
6
7
8
9
10
Integrated Report and Accounts 2017 G4S plc 69
Governance
5. Graham Levinsohn
Regional CEO, Europe and Middle East
6. Jenni Myles
Group HR Director
Appointed: November 2017
Skills and experience: Graham has more
than 20 years’ experience in the security
industry, having joined Securicor Cash
Services in 1994. He has held a number of
commercial and line management positions
in both the cash and security lines of the
business. Graham was responsible for the
creation of the UK cash centres
outsourcing business in 2001 and divisional
managing director for G4S Cash Services
UK. He became Group strategy and
development director in 2008 and joined
the executive committee in 2010. He then
assumed responsibility for Europe as
Regional CEO in November 2013 before
assuming responsibility for the Europe and
Middle East Region in November 2017. He
is a director of CoESS and a director of the
International Security Ligue. Graham is a
Fellow of the Chartered Institute of
Marketing.
Appointed: July 2015
Skills and experience: Jenni has extensive
experience in employee engagement,
talent management and organisational
development, having held HR leadership
roles in G4S business units and regions
across both developed and emerging
markets. She also spent a number of years
in head offce as Director of Employee
Engagement & HR, leading the Group’s
employee engagement and labour relations
strategy. Prior to joining G4S in 1998,
Jenni held HR positions in a variety of
business sectors such as automotive,
FMCG and consulting. She is a Fellow
of the Chartered Institute of Personnel
& Development (FCIPD).
7. Søren Lundsberg‑Nielsen
Group General Counsel
Appointed: 2001
Skills and experience: Søren began his
career as a lawyer in Denmark and since
1984 he has had a wide range of legal
Executive committee
1. Ashley Almanza
Chief Executive Offcer
See page 68 for full biography
2. Tim Weller
Chief Financial Offcer
See page 69 for full biography
3. Mel Brooks
Regional President, Africa
Appointed: May 2015
Skills and experience: Mel joined G4S in
2012 and his roles included Group
Strategy & Commercial Director and CEO
for G4S India, where he led the
transformation of the business, improving
operations, customer service and sales.
Prior to joining G4S, Mel held a number of
senior line and functional roles in the
defence and technology industries where
he was responsible for service line and
commercial strategies, technology
development and leadership of a number
of business unit turnaround programmes.
4. John Kenning
Regional CEO, Americas
Appointed: January 2018
Skills and experience: John has extensive
commercial experience. He holds a
bachelor’s degree in business from
Miami University and prior to joining G4S
in 2014, John’s previous roles included
executive vice president and president,
commercial business for the global
division of OffceMax. He was also
president, North America
Commercial for ADT/Tyco Security
Services, where he led the
transformation of the business to a
technology services leader. He is a
board member for Miami University
Advisory Athletic Board and a past
board member of the Make-a-Wish
Foundation.
1
2
3
4
5
70 G4S plc Integrated Report and Accounts 2017
experience as general counsel for
international groups in Denmark, Belgium
and the US before joining Group 4 Falck in
2001 as Group General Counsel. He was
involved in the Group 4 Falck merger with
Securicor and a number of other
acquisitions by the Group. Søren has
overall responsibility for all internal and
external legal services for G4S as well as
the Group’s insurance programme. Søren
is non-executive director of Basico A/S, a
member of the Danish Bar and Law
Society, a member of the advisory board
of the Danish-UK Association and author
of the book Executive Management
Contracts, published in Denmark.
8. Peter Neden
Divisional CEO, Care & Justice Services &
UK Facilities Management
Appointed: January 2018
Skills and experience: Peter joined G4S in
2001. His roles included responsibility for
the business development programme in
the UK and Africa regions, as well as a
number of senior positions in both the
commercial and government businesses
across the Group, including Regional
President UK & Ireland. Prior to the
merger between Group 4 Falck and
Securicor, Peter was Securicor’s
development director. He has a degree
in economics from the University of
Nottingham and his early career included
a number of sales, marketing and general
management roles within Centrica.
9. Jesus Rosano
Divisional CEO, Global Cash Solutions
Appointed: January 2018
Skills and experience: Jesus joined G4S in
March 2014 as Latin America Chief
Operating Offcer and since January 2016
was Group Strategy and Commercial
Director. Jesus holds a bachelor’s degree
in Engineering and Administration from
ITESM University, Mexico. Prior to joining
G4S he held senior line, functional and
regional roles at DHL, in a number of
markets in Latin America and North
America over an 11-year period. Before
DHL, Jesus worked in strategy consulting
and investment banking.
10. Sanjay Verma
Regional President, Asia
Appointed: January 2018
Skills and experience: Sanjay joined G4S
in May 2017 as Regional President Secure
Solutions – Asia Pacifc. Sanjay has
extensive business experience operating
across Asia Pacifc having been based in
India, China and Hong Kong. Sanjay joined
G4S from Cushman & Wakefeld, a global
real estate services frm. During his 17
years in that company he held a number of
leadership roles including CEO, Asia Pacifc
and Chief Executive, Global Occupier
Services, covering 16 countries in the Asia
Pacifc region. Sanjay is a graduate in
electrical engineering and has a MBA in
fnance & marketing.
11. Debbie Walker
Group Corporate Affairs Director
Appointed: March 2004
Skills and experience: Debbie is responsible
for the corporate communications team
which focuses on the Group’s key
audiences – media, government,
employees and customers. She is also
responsible for the Group’s CSR and
human rights strategies. Debbie is
Chairman of the CBI Southeast
Regional Council. Prior to the
merger between Group 4
Falck and Securicor, she held
a number of senior marketing
and communications roles
within the Securicor
group, having joined
in 1993.
6
7
8
9
10
11
Integrated Report and Accounts 2017 G4S plc 71
Governance
Corporate governance report
The board oversees the Group’s
governance framework, reviews
and approves the strategy,
monitors management’s
performance against agreed
targets and ensures appropriate
controls are in place and
operating effectively.
The board ensures leadership through
effective oversight and review.
Executive decisions, and development
and implementation of strategy are
delegated to management.
The board fulfls a number of its
responsibilities directly (see the list of
matters reserved to the board overleaf)
and others through its committees.
K
R
O
W
E
M
A
R
F
E
C
N
A
N
R
E
V
O
G
R
U
O
BOARD
Role and responsibilities
• Review and approve the
company’s strategy
• Monitor management’s
performance against agreed targets
• Review, approve and promote the
company’s values and standards
• Review its own performance on
a yearly basis
CHIEF EXECUTIVE OFFICER
GROUP EXECUTIVE COMMITTEE
NOMINATION COMMITTEE
Role and responsibilities
• Review board composition
• Lead the process for new board and committee appointments
• Review board succession-planning processes
See page 80.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
Role and responsibilities
• Review and approve the company’s CSR strategy or
recommend policies to ensure these remain an integral part
of the Group’s strategy
• Monitor compliance with CSR policies throughout the Group
and the integration of CSR processes within the Group’s risk
management and approval processes
See page 82.
RISK COMMITTEE
Role and responsibilities
• Advise the board on the Group’s overall risk appetite and
tolerance
• Oversee the company’s risk management framework and
review its effectiveness
• Review major contracts and projects
See page 84.
AUDIT COMMITTEE
Role and responsibilities
• Oversee the fnancial reporting process and ensure the
integrity of the company’s fnancial statements
• Monitor internal audit
• Approve external audit scope and fee, review and monitor
external auditor’s independence
See page 85.
REMUNERATION COMMITTEE
Role and responsibilities
• Approve remuneration of chairman of the board, the
executive directors, other members of the executive
committee and the company secretary of the board
• Monitor level and structure of remuneration of other senior
management of the Group
See page 93.
GROUP RISK
AND INTERNAL
AUDIT
FUNCTION
72 G4S plc Integrated Report and Accounts 2017
The board is responsible for a number of specifc matters in the following areas:
MATTERS RESERVED TO THE BOARD
• Strategy and management
• Structure and capital
• Financial reporting and controls
• Risk and internal controls
• Material contracts
• Communication
• Board membership and other
appointments
• Remuneration
• Delegation of authority
• Corporate governance matters
• Policies
• Other matters – such as settling
material litigation
The work of the board’s committees is described below in this report and the terms of reference of each of the committees are
available on the company’s website at g4s.com/investors.
To ensure a clear division of responsibilities
Chairman of the board
• Responsible for promoting good
corporate governance and ensuring
board compliance with regulatory
requirements
• Ensures board effectiveness on all
aspects of its role
• Promotes a culture of challenge,
debate, openness and support
• Ensures NEDs receive a
comprehensive induction and
on-going training to support the
performance of their duties
• Maintains regular contact with major
shareholders and conveys their views
to the board
KEY ROLES IN OUR GOVERNANCE FRAMEWORK
Chief Executive Offcer
• Responsible for developing and
implementing the Group’s strategy
and plans
• Responsible for the overall
management and promotion of
the Group
• Manages the Group’s risk profle in
accordance with the risk appetite set
by the board
• Ensures effective communication
between the board and the business
Chief Financial Offcer
• Manages fnancial risks in accordance
with the risk appetite set by the
board and implements effective
internal fnancial control processes
across the Group
• Responsible for fnancial planning
to support the company’s strategic
objectives
• Leads the Group’s fnance, internal
audit, procurement, information
technology, tax and treasury functions
• Provides regular fnancial reporting
to the board
Senior Independent Director
• Acts as a sounding board for the
chairman and as intermediary for the
other directors when needed
• Maintains a balanced understanding of
the views of major shareholders
• Maintains regular and effective
communication with other directors
Independent non‑executive
directors (NEDs)
• Challenge constructively
• Monitor management’s performance
against agreed targets
• Satisfy themselves on the integrity of
fnancial information and that fnancial
controls and systems of risk
management are effective
• Leads the yearly appraisal of the
• Determine appropriate levels of
chairman’s performance
• Chairs the Nomination Committee
when it is considering issues directly
affecting the chairman
remuneration of executive directors
• Prime role in appointing directors and
in board succession planning
Company Secretary
• Secretary to the board and its
committees
• Responsible for advising the
board through the chairman on
all governance, regulatory and
legislative matters
• Ensures all directors have access to
the advice and services of the
company secretariat and external
advice if necessary
• Responsible for ensuring compliance
with board procedures and processes
• Supports the chairman and chief
executive offcer in preparing and
organising induction programmes
for NEDs
Integrated Report and Accounts 2017 G4S plc 73
Governance
Corporate governance report continued
Board composition, roles and attendance (as at 31 December 2017)
Meetings attended
Chairman
John Connolly
Executive Directors
Chief Executive Offcer
Ashley Almanza
Chief Financial Offcer
Tim Weller
Non‑Executive Directors
John Daly
Winnie Fok1
Steve Mogford2 (Senior Independent Director)
Paul Spence
Ian Springett3
Clare Spottiswoode
Barbara Thoralfsson
Board Nomination
CSR*
7/7
4/4
7/7
7/7
7/7
7/7
6/7
7/7
n/a
7/7
7/7
4/4
4/4
4/4
4/4
4/4
Risk
4/4
4/4
4/4
4/4
n/a
Audit Remuneration*
4/4
3/4
3/4
4/4
n/a
4/4
4/4
4/4
4/4
* Three meetings of the Remuneration Committee and the CSR Committee were scheduled during the year and one additional meeting
for each committee took place in January 2017.
1. Ms Fok was unable to attend one meeting of the Audit Committee due to a clash with another engagement.
2. Mr Mogford was unable to attend one board meeting and one meeting of the Audit Committee due to a commitment made prior
to his appointment to the board.
3. Mr Springett was appointed to the board with effect from 1 January 2017 and shortly thereafter had to take an extended leave of
absence to undergo treatment for a medical condition, therefore he was not expected to attend board meetings during this time.
Due to continued ill health, Mr Springett retired from the board on 20 June 2017.
BOARD BALANCE AND DIVERSITY
Diversity
The Group’s workforce refects the
wide range of countries, cultures and
environments in which the Group
operates. The Group has long recognised
that diversity can enhance decision making
and performance and promotes diversity
within the organisation. The result is a
diverse mix of gender, age, race, religion,
nationality, language, background and
experience across the workforce.
Diversity, including gender diversity, in the
senior management population remains
an area of particular focus for the board.
As well as being diverse in terms of gender
and nationality, the board also includes
members with diverse skills, personal
attributes and experience. While most
members have international assignment
experience, others bring extensive
experience of a variety of industries.
In addition, the board has a mix of both
long-serving and new members. These
differences greatly enrich debate in the
boardroom, bring fresh perspectives
and understanding.
Although the board has not adopted a
formal board diversity policy, nor has it
set any specifc targets in this respect,
diversity is a key consideration for the
board. Recruitment of any new member
to the board is always based on merit,
against objective criteria, which take
account of the diversity benefts each
candidate can bring to the board. Further
information in this regard is set out in the
report of the Nomination Committee on
pages 80 and 81.
The board also considers diversity as part
of its annual review of talent management
and succession plans for the board and
senior management team. As part of this
review gender diversity, as well as
initiatives in place or being developed to
promote greater representation of
women and an increase in cultural and
ethnic diversity across the Group’s global
leaders are also discussed.
The board is mindful of its obligations
under both DTR7.2.8 and Code Provision
B.2.4 and is considering adopting a formal
board diversity policy to capture the
Board balance
Non-
Executive
directors
Executive
80%
directors 20%
Gender
Male
Female
70%
30%
board’s approach to diversity and setting
out the principles it follows in considering
board appointments, board composition,
and succession planning.
However, the board is committed to
ensuring that any such policy is informed
by the results of the Group’s diversity and
inclusion strategy review taking place in
2018. Therefore the board will keep this
matter under review during the year.
74 G4S plc Integrated Report and Accounts 2017
Board composition
As at the date of this report, the board comprises 10
members: the non-executive chairman (John Connolly),
seven other non-executive directors and two
executive directors.
The names of the directors serving as at 31 December
2017 and their biographical details are set out on pages
68 and 69. All these directors served throughout the
year under review, apart from Ian Springett, a non-
executive director who retired from the board on
20 June 2017, and John Ramsay, who was appointed
to the board on 1 January 2018.
Clare Spottiswoode, having completed nearly eight
years as a non-executive director of the company, will
retire from the board after the company’s AGM in
2018. The process of seeking a candidate for a new
non-executive director role is on-going.
Independence
The board considers all the non-executive directors
to be independent and to bring objective oversight
and challenge.
The board acknowledges the recommended term
within the Code and is mindful of the need for planned
and orderly succession whenever possible. Therefore
clear records of the tenure and skill set for each
non-executive director are maintained.
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 frst time stand for re-election at each annual general
meeting. However, in accordance with the Code’s
provision on re-election of directors, all continuing
directors stand for re-election every year. With the
exception of Clare Spottiswoode who will step down at
the end of the 2018 AGM, all continuing directors intend
to stand for election or re-election, as the case may be,
at the company’s upcoming AGM.
Potential conficts
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 conficts or may
confict with the interests of the company. In accordance
with the company’s articles of association, the board has
authorised such matters. Should a director become aware
that they may have an interest in an existing transaction
with G4S, they should notify the board in writing or
declare it at the next meeting. The company has
procedures in place for managing such situations. The
affected director will not vote on a matter in which they
have an interest and the board may impose additional
conditions if deemed appropriate. The board reviews
such matters on a regular basis.
Industry experience
Business services
Energy/utilities
Finance
FMCG
Logistics
Manufacturing/
operations
Technology
Pharmaceutical/
biotechnology
Geographical experience
Africa
Asia Pacifc
Europe
Latin America
Middle East & India
North America
UK & Ireland
Board tenure 2017
2 years
or less
> 2 yrs
30%
< 4 yrs 10%
< 6 yrs 40%
< 8 yrs 20%
> 6 yrs
> 4yrs
Integrated Report and Accounts 2017 G4S plc 75
Governance
Corporate governance report continued
Board meetings
Seven scheduled board meetings were held during the
year ended 31 December 2017. Each year, one of these
meetings is an extended two-day meeting at which, in
addition to normal board business, the board and
executive committee review the Group strategy.
Prior to each board meeting, comprehensive papers
are circulated to the directors addressing not only the
regular agenda items on which the executives will
report, but also details of any matters requiring approval
or decisions, such as signifcant transactions or other
matters reserved to the board.
At each meeting, the board receives regular reports and
in-depth presentations from line and functional
executives and the board makes visits to business sites
from time to time.
After meetings of the board committees, the respective
chairs report to the board on the matters considered by
each committee.
After each board meeting the chairman holds a meeting
attended solely by the non-executive directors.
There are seven board meetings scheduled for 2018
including a two-day board and strategy meeting.
2017 BOARD ACTIVITIES IN FOCUS
• Appointed one new non-executive director
• Reviewed results of employee engagement survey
underpinned by group values
• Held a two-day strategy forum with Group
executive, in October
• Discussed succession plans for board members
and reviewed succession planning and senior
management development
• Oversaw the review of organisational structure
• Received regular reports from the chair of the
nomination, risk, CSR, audit and remuneration
committees
• Approved half-year results and year-end results
• Monitored and reviewed developments
in governance
• Reviewed and approved Group treasury policy
and Group tax policy
• Approved Slavery and Human traffcking
statement
• Conducted visits to two customer sites in the US,
(for further details see page 78), as well as
business sites in the US and the UK
• Took part in various engagements with
shareholders and investors during the year
– see page 79
• Reviewed the 2017 AGM proxy voting fgures
INDUCTION, INFORMATION AND DEVELOPMENT
A tailored induction is provided to new directors
joining the board. The induction is designed to ensure
directors joining the board have the necessary
understanding of their role and how they can
maximise their effectiveness. It is therefore tailored
to the needs of each director and those of the role
they will fulfl on the board.
To build on the induction programme, directors
receive further briefngs both to help in their own
development and also to enhance their awareness
of the different elements of the business.
Briefngs are provided to board members on legal,
governance, compliance and reporting developments
and to members of board committees from time
to time on matters relevant to their work on
those committees.
In addition, non-executive directors learn about
the Group’s business and meet employees and
management through site visits.
Information about the interactions between members
of the board, in particular non-executive directors, and
the business during the year, are set out on pages 78
and 79.
Tailored induction – Audit Committee chair
Upon joining the board on 1 January 2018, a
tailored induction programme was prepared for
John Ramsay who took on the role of chair of the
Audit Committee.
A four-step programme was devised. Step 1 focused
on promoting a good understanding of the business
by providing access to information about the
company, group structure, management team, board
governance, minutes of board and committee
meetings and risk management. Step 2 developed
an understanding of the company’s business, markets
and main relationships. Over a day, Mr Ramsay had
individual sessions with members of the group
executive team and senior managers. Areas covered
included strategy and investor relations, governance
and corporate social responsibility as well as legal,
human resources and health and safety. Step 3 had
a strong fnancial focus and consisted of a day
dedicated to meetings with the group chief fnancial
offcer, group fnancial controller, chief information
offcer, director of risk and internal audit as well as
the external auditor. Step 4 will consist of site visits
due to be arranged during the course of H1 2018.
76 G4S plc Integrated Report and Accounts 2017
BOARD AND COMMITTEES PERFORMANCE REVIEW
In accordance with guidance from the Code, the board
and its committees are assessed yearly with the support
of an external facilitator. During 2017, a fully externally-
facilitated exercise was carried out by Oliver Ziehn and
Merlin Underwood of Lintstock. Oliver Ziehn, Merlin
Underwood and Lintstock have no other connection
with the company.
Stage 1
A thorough brief was provided by the chairman and
company secretary in July 2017. Lintstock was given
access to information about the board and particular
areas of focus. Tailored questionnaires were then
developed for the board and each committee.
In early October, each of the directors, company
secretary, Group HRD, Group Corporate Affairs
Director, Director of Risk and Internal Audit,
Group Financial Controller, Director of Compensation
and Benefts, other regular board committee
attendees, audit partners from PwC and Deloitte
(remuneration consultant) was invited to complete
the questionnaires online.
In late October and early November, the Lintstock team
conducted detailed interviews with each board director
and the company secretary.
Stage 2
The Linstock team compiled a report based on
information and views gathered through replies to the
questionnaires and follow-up interviews. Lintstock also
reported on the performance of each of the directors
and separately on that of the chairman.
Stage 3
The reports, conclusions and recommendations were
considered and discussed by the board and each of the
board’s committees when reviewing their performance
and informed the planning for the board and
committees’ priorities in 2018.
As part of this process, the individual director reviews
were used as the basis for the chairman’s individual
discussion with each of the directors about their
performance and any training and development needs.
The results of the board review were considered as part
of the review of the committees’ composition by the
Nomination Committee in December.
The report on the chairman was used to inform the
discussion amongst the non-executive directors
conducted by the Senior Independent Director about
the chairman’s performance, without the chairman
being present.
BOARD ACTION PLAN 2018
The board action plan for 2018 was informed among
other things by the results of the board evaluation
process and will include:
• Annual review of Group strategy and execution
of the strategy
• Monitoring the effectiveness and performance
of the organisation
• Application of security technology in the business
• Induction and integration of new board members
• Board and management succession planning
• Maintaining understanding of the Group’s
stakeholders, including customers, employees and
shareholders
• Continued focus on corporate culture
BOARD REVIEW OUTCOME
Board
The conclusions of this year’s review were positive and
confrmed that the board operates effectively, with the
board dynamics notably enhanced by recent additions
to the board and by good information fow. Other areas
which received positive feedback included the board’s
relationship with senior management, time management
and board support.
A number of areas for further focus were also identifed.
These included greater focus on succession planning,
monitoring the implementation of strategy and the use
of technology, gaining a better understanding of certain
stakeholders’ views, particularly those of customers,
continued focus on corporate culture and fostering an
environment conducive to the reporting of serious
concerns through the available channels.
Committees
The committees of the board were also reviewed and
the results of the evaluation were also positive with
committees perceived to be running effciently and
making effective decisions.
Further information about the results of each committee
review and how these results inform the following
year’s plan can be found in each of the board
committee reports.
Chairman
The chairman’s performance was highly rated and his
relationship with all board members identifed as a
particular strength.
Integrated Report and Accounts 2017 G4S plc 77
Governance
Corporate governance report continued
STAKEHOLDERS
SOCIETY
With about 570,000 employees
operating in a variety of sectors
in over 90 countries, often in
challenging environments, the
Group has a large and rich
stakeholders’ network.
The board’s engagement with
the Group’s stakeholders
takes a variety of forms and
provides invaluable feedback
that informs the board’s
decision‑making process.
CUSTOMERS
• The CSR Committee received
a presentation on CSR activities
in developing countries and
discussed these activities in light
of the results of the materiality
exercise undertaken during
the year.
• The board received an update on
Africa’s pan-regional project,
focusing on development through
sport initiatives and in particular
rugby. The project runs in several
countries where G4S partners
with Bhubesi Pride Foundation
to carry out annual rugby
coaching events, providing
support including delivering talks
on topics such as health and
safety, career, life-skills and
the environment.
• Two customer-site visits were
organised during the year and
members of the board were
able to meet and receive
direct feedback.
• The board sought to understand
customer constraints and
requirements as part of
consideration of large contracts
bid or renewal.
• The CEO and other senior
• The CEO, CFO and chairman
executives provided customer
feedback and information to the
board during the year.
attended a number of meetings
with customers.
EMPLOYEES
• The board met employees
during visits to other parts of
the business, such as the board
visit to the Americas at which
the board met the senior
management team as well as line
management and operational
employees both at the regional
offce and during customer site
visits. Further details of the
board’s trip to the Americas
businesses are set out below.
• A number of board members
attended the Global Leadership
forum in London in March 2017.
• The board received regular health
and safety reports.
• The results of the biennial
employee survey were presented
to the board.
SUPPLIERS
• During the year, the Supplier
code of conduct was reviewed
and reinforced to ensure greater
alignment with our values.
BOARD TRIP TO NORTH AMERICA
Values:
Integrity and Respect
Safety, Security and
Service Excellence
In April 2017, the board meeting was
held at the Group’s North America
headquarters located in Jupiter, Florida.
The board met with the North America
senior management team as well as the
Latin America management team. The
board received in-depth presentations
from both management teams and had
the opportunity of meeting the senior
team informally as well.
During the trip, the board saw a
demonstration of the retail cash
solutions suite of products offered
by the business and visited a
customer facility at which such
solutions are deployed.
In addition, the board visited a customer
location at which integrated security
solutions are provided, meeting both
G4S personnel and customers.
78 G4S plc Integrated Report and Accounts 2017
SHAREHOLDERS
• The primary means used by the board for
communicating with all company shareholders are
the annual report, annual results, half-year results
and the AGM.
• In addition, during the year, the chairman, director
of investor relations and company secretary met with
major shareholders as part of an annual round of
governance meetings.
• The section of the website dedicated to investor
• The chairman reported on those meetings to
relations is also a useful tool, facilitating
communication with institutional and private
investors. It can be found at g4s.com/investors and
includes material shared with institutional
shareholders and analysts at company meetings.
Analyst and investor meetings and presentations
• Presentations as well as analyst and investor meetings
are held following the release of the company’s
annual results and half-year results announcements.
These are also streamed via live webcast for those
unable to attend in person.
• After each such event, the presentation is made
available in the Investor Relations section of
the website.
Other shareholder meetings
• The company actively seeks to engage with
shareholders and during 2017 the chief executive
offcer and the chief fnancial offcer had contact via
one-on-one meetings, group meetings and telephone
conference calls with current and potential
shareholders as well as with analysts.
• The shareholders covered represented around 65%
of the total share register (which includes passive
funds) and over 205 institutions. The number of
meetings is driven by demand. These meetings tend
to be focused primarily on the Group’s trading
operations and the implementation of its strategy.
the board.
• The chair of the CSR Committee, Clare
Spottiswoode, and relevant senior executives
organised a meeting with a group of Socially
Responsible Investors in June 2017, updating them
on the Group’s corporate responsibility programme.
She reported feedback received to the board.
Annual general meeting
• The company’s annual general meeting is an important
opportunity for communication between the board
and shareholders, particularly private shareholders.
• The next annual general meeting is due to take place
on 15 May 2018, at the Holiday Inn in Sutton, and
details of the meeting and the resolutions to be
proposed are set out in the Notice of Meeting
available to download from the website. It is intended
that all the directors will attend and be available to
answer questions from shareholders.
• The meeting will be informed of the number of
proxy votes cast and the fnal results of votes on
the resolutions will be published subsequently on
the website.
STRATEGY SESSION AT UK
TECHNOLOGY CENTRE
Values: Safety, Security and
Service Excellence
Innovation and
Teamwork
In October 2017, the board and group
executive team held a two-day strategy
session at the G4S Technology Centre
in Tewkesbury, England. The business
had just exhibited at ASIS, the largest
tradeshow in North America and
launched a number of new products,
including ‘RISK360’ version 7 and a
number of AMAG products.
Senior management at the technology
centre provided demonstrations of
these products, which enabled the
board to gain a deeper understanding
of the Group’s technology solutions.
Integrated Report and Accounts 2017 G4S plc 79
Governance
Corporate governance report continued
THE NOMINATION COMMITTEE
John Connolly
Nomination Committee Chairman
“2017 was again a busy year for the Nomination
Committee. Adjustments to committee composition
were required after a sudden onset of ill-health forced a
newly appointed non-executive director to take a leave
of absence before retiring from the board. Subsequently
a new non-executive director qualifed to act as
chairman of the Audit Committee was recruited.
The committee also focused on identifying and planning
for the long-term needs of the company.”
Committee membership during 2017
John Connolly (Chairman)
Steve Mogford
Barbara Thoralfsson
Member since
June 2012
May 2016
July 2016
The Nomination Committee meets on an ad hoc basis, when the
need arises. In 2017, the committee met four times.
Members’ attendance at committee meetings is shown on
page 74.
Main activities of the Nomination Committee
during the year (%)
Recruitment of NEDs (55%)
Succession planning (20%)
Reviewing board committee
(20%)
membership
Independence and
extending terms
of appointment
(5%)
Responsibilities
The Nomination Committee’s remit covers broadly fve
areas, namely, board composition, making
recommendations to the board on appointments with
a view to maintaining a balance of skills and experience
on the board and its committees, succession planning,
board performance evaluation and annual reporting.
The committee’s terms of reference are available
at g4s.com/investors.
80 G4S plc Integrated Report and Accounts 2017
Board composition
In January 2017, the Nomination Committee met to
discuss the adjustments that should be made to the
composition of the Audit Committee following the
sudden onset of a medical condition, which prevented
Ian Springett from taking on his role as chair of the
Audit Committee.
Based on the information available at the time, the
Nomination Committee considered the interim steps
that should be taken to ensure the Audit Committee
carried on operating effectively. Mindful of the Code and
DTR 7.1 requirements with regard to the composition
of the Audit Committee, the committee reviewed the
skills and experience of the board members and
identifed Paul Spence, who had strong and effective
leadership and communication skills, and was already a
member of the Audit Committee as well as chair of the
Risk Committee, and Winnie Fok, who had accounting
qualifcations and audit experience and who was
previously a member of the Audit Committee.
The Nomination Committee went on to recommend to
the board Paul’s appointment as interim chair of the Audit
Committee and that of Winnie as an additional member.
On 20 June 2017, due to continued ill-health, Ian
Springett retired from the board. The Zygos Partnership
(Zygos) was appointed to assist with the search for a
new non-executive director qualifed to act as the
chairman of the Audit Committee. Zygos, who has no
connection with the company other than as provider
of recruitment consultancy services to the Nomination
Committee, was provided with a brief, setting out the
requirements for the role to be flled and preferred
attributes of potential candidates. In selecting candidates,
consideration was given to the skills and competence
required to fll the role, the need to maintain and
enhance diversity of relevant skills and experience
on the board, as well as corporate culture and ft.
Shortlisted candidates were then interviewed by the
chairman, the members of the committee as well as
the chief executive offcer and the chief fnancial offcer.
The recruitment process initiated by the Nomination
Committee led to the appointment on 1 January 2018
of John Ramsay.
Succession planning
Succession planning is very much a matter for the board
as a whole and is considered by the board at least once
a year. This year, as in previous years, the entire board
reviewed succession plans as well as talent management
and development for the senior management team.
In addition, at its December meeting, the Nomination
Committee reviewed and discussed the results of the
board evaluation, current skills and experience available
on the board. Discussing what further skills or
experience may be useful to enable the board to
support the developing needs of the Group helps inform
future board recruitments.
The committee also gave further consideration to board
succession plans. Clare Spottiswoode having indicated
that she would not seek re-election at the company’s
2018 AGM, the committee initiated a search for a new
non-executive director to join the board in due course
and Zygos was appointed to assist with the search. A
tailored brief, setting out the particular requirements for
the role was developed and provided to Zygos.
Consideration was given to the need for potential
candidates to possess a range of skills and experience
allowing them to make a meaningful and broad
contribution to the board.
Diversity
Diversity is a matter for the board as a whole and is an
integral part of succession planning and recruitment for
the board and senior management team. The board’s
approach to diversity is set out on page 74.
The Nomination Committee seeks assistance from
executive search agencies which are signatories of the
Voluntary Code of Conduct to help ensure the most
diverse talent pools are reached and an approach in line
with best practice is adopted.
Consideration is also given to diversity when reviewing
board composition and the result of the annual board
performance evaluation.
Directors’ length of service
As part of its annual review of the board composition,
the Nomination Committee reviews the directors’
length of service. In line with our Remuneration Policy,
executive directors have a rolling service contract,
whereas non-executive directors are appointed for an
initial term of two years. Further information about the
key feature of the executive directors’ service contracts
and non-executive directors’ letters of appointment can
be found on page 112.
The table below sets out the date of appointment and
(where applicable) unexpired term remaining for current
members of the board.
Independence and re-election to the board
John Daly’s term of appointment, which was due to
expire in June 2017, was considered by the Nomination
Committee in May. The committee was satisfed that
John continues to remain independent and committed
to his role as a director and as chairman of the
Remuneration Committee.
In coming to this conclusion, the committee took into
account his experience, qualities and skills, as well as his
other commitments. The committee recommended to
the board that his appointment be extended.
Committees composition
In December, the committee reviewed the composition
of the committees of the board. Taking into account the
balance of skills and experience on each committee, it
was felt that Steve Mogford, as a current serving CEO
with experience of delivery of complex programmes,
would bring additional relevant expertise to the Risk
Committee and that John Ramsay’s extensive
experience in emerging markets would enable him to
make a valuable contribution to the CSR Committee.
Committee performance
The performance of the Nomination Committee was
reviewed as part of the process undertaken by each of
the board committees, with assistance from Lintstock.
Although the committee was considered to be effective,
greater emphasis on succession planning was identifed
as an area for increased focus, and is included as a key
area for the committee’s work in 2018. The committee
will also continue to ensure that it has appropriate plans
for board and executive succession, which promote
diversity of gender and social and ethnic backgrounds.
Director
Executive directors
Ashley Almanza
Tim Weller
Non-executive directors
John Connolly
John Daly
Winnie Fok
Steve Mogford
John Ramsay
Paul Spence
Clare Spottiswoodec
Barbara Thoralfsson
Date of appointment
Unexpired term
1 May 2013a
1 April 2013b
8 June 2012
5 June 2015
1 October 2010
27 May 2016
1 January 2018
1 January 2013
14 June 2010
1 July 2016
n/a
n/a
3 months
15 months
7 months
3 months
22 months
10 months
3 months
4 months
a. Ashley Almanza was appointed to the board on 1 May 2013 as chief fnancial offcer and took on the role of chief executive offcer
on 1 June 2013.
b. Tim Weller joined the board on 1 April 2013 as a non-executive director until 24 October 2016, when he became chief fnancial offcer.
c. Clare Spottiswoode will retire from the board at the conclusion of the company’s AGM on 15 May 2018.
Integrated Report and Accounts 2017 G4S plc 81
Governance
Corporate governance report continued
THE CSR COMMITTEE
Clare Spottiswoode
CSR Committee Chair
“Our people and values underpin everything we do.
Our updated values are the standards which we have
set for ourselves, the organisation as a whole and our
stakeholders. In 2016 they were re-launched across the
Group supported by a targeted communications
programme, awareness building and training materials.
The committee will continue to work to ensure that the
values are embedded frmly throughout the entire
organisation. This is my last statement as chairman of
the CSR Committee. After almost eight years as a
non-executive director, I will step down from the board
and its committees at the conclusion of the company’s
annual general meeting in May. I am pleased that since
joining G4S in 2010, CSR has become frmly embedded
in the Group’s processes and forms an integral part of
our overall strategy.
Despite a distinct improvement in work-related fatalities
in 2017, the committee’s focus on health and safety will
continue to remain a key part of its activity during 2018,
as we re-affrm our goal of zero-harm.”
Committee membership during 2017
Clare Spottiswoode (Chair)
Winnie Kin Wah Fok
Paul Spence
Member Since
January 2012
March 2012
January 2013
John Ramsay joined the board and the CSR Committee on
1 January 2018.
Other regular attendees include the chief executive offcer for
care & justice services, the regional president for the Africa
region, the group corporate affairs director and the group
HR director.
There were three scheduled meetings and one unscheduled
meeting of the CSR Committee during 2017. Members’
attendance at committee meetings is shown on page 74.
Main activities of the CSR Committee during
the year (%)
Current issues
(30%)
Health and Safety (25%)
CSR reporting
(20%)
Values/
Culture Ethics/
Whistleblowing
Materiality
assessment
(15%)
(10%)
82 G4S plc Integrated Report and Accounts 2017
Responsibilities
The Group takes a holistic approach to corporate and
social responsibility. The scale of the Group, geographic
spread of its activities and the complex environments
our employees operate in creates a variety of challenges.
The CSR Committee was established in 2011 to review
and monitor the Group’s CSR approach, which includes
developing policies on various CSR-related matters for
consideration by the board and to review and monitor
how the Group performs against relevant policies.
It oversees reporting on CSR matters and progress
made during the year. Further details of the committee’s
responsibilities can be found in the committee’s terms
of reference which are available at g4s.com/investors.
Specifc issues
The CSR Committee receives regular updates on current
issues from the human resources and CSR teams.
In late August 2017, G4S became aware of allegations
regarding the conduct and behaviour of a number of
staff at Brook House Immigration Removal Centre.
In response to these allegations, G4S took immediate
action to strengthen the safeguarding of detainees at
Brook House. Together with the UK Home Offce, an
action plan was agreed and a joint working party created
to oversee its implementation. The actions outlined in
the plan are well underway and many have been
completed. The key objective throughout has been
to ensure that detainees are safe at Brook House.
Investigations into staff conduct resulted in the dismissal
of six members of staff. The committee has received
regular updates on the measures that have been taken
to address the issues raised, and on progress of
investigations and operational improvement plans. I
visited the centre personally in December to discuss the
issues with managers, staff and detainees on site and to
see the progress frst hand.
We have commissioned Verita, a specialist consultancy,
to carry out an independent review to understand the
extent and root causes of the issues at Brook House. The
review is examining G4S’ management, operational and
staffng arrangements and the practices and behaviour of
G4S’ staff. It is also assessing how G4S oversees the care
and welfare of detainees, including in relation to
mental-health issues, self-harm, violence prevention,
use of force and proper reporting of incidents.
The review is led by Kate Lampard CBE, a former
barrister and vice chair of the South of England Strategic
Health Authority and of the Financial Ombudsman
Services Limited. The fndings will be presented directly
to the Home Offce and the CSR Committee.
Culture and values
As a principal risk for the Group, culture and values
as well as ethical compliance were reviewed by the
board as a whole during the year. In addition, the CSR
Committee oversees the programme supporting the
embedding of the values across the Group including
in all HR processes, from recruitment through to
evaluation and performance management. The
committee also reviewed and discussed the various
initiatives that supported the launch of the values,
including training for management and front-line
employees and enhanced communication of the
whistleblowing arrangements to all employees.
Health and safety
As part of the CSR Committee’s focus on health and
safety during the year, the committee oversaw an
initiative to refresh health and safety induction training
for front-line employees and the re-issue of a simplifed
frearms policy across the Group.
As part of its normal cycle of work, the committee
received regular health and safety reports including
updates on on-going initiatives and details of future plans
and summaries of incidents.
Sadly, in 2017, 25 employees lost their lives in work-
related incidents. Although this is a signifcant reduction
over previous years, in part, as a result of a reduction in
road traffc accident fatalities, the focus and work of
health and safety professionals and management teams
in this area will continue. We will build on this progress
and re-affrm our goal of zero harm. To further this
endeavour and as mentioned last year, in 2017 the CSR
Committee reviewed and supported the adoption of a
new and consistent defnition of High Potential Incidents
(“HPIs”) and the embedding of HPIs reporting across
the Group. Work to ensure consistent reporting of HPIs
is on-going, so as to ensure valuable insight is captured
and efforts are focused preventatively.
Materiality Assessment
In order to ensure that G4S’ approach to CSR remains
focused on the areas that are most relevant to the
business and its stakeholders, a wide-ranging materiality
assessment of ethical and sustainability issues is carried
out. The committee’s work also included overseeing this
process, which is conducted with the support of an
external facilitator every two years.
CSR Materiality Matrix
The results, which inform future reporting and strategy,
confrmed three core priority ethical and sustainability
areas for the Group during 2018 and 2019:
1) Health and safety
2) Human rights
3) Anti-bribery and corruption
The assessment reinforced the importance of G4S’
ethics, culture and values, as well as employee standards
and behaviour in preventing issues and poor
performance across the Group’s core priorities and
other CSR matters.
Further information can be found at g4s.com/csr.
Integrated CSR reporting
The Group’s approach to corporate and social
responsibility is now frmly embedded in the Group’s
business processes, from employee recruitment and
supplier management to bidding and contract delivery. As
a result, during the year the CSR Committee considered
whether the CSR approach and activities should continue
to be reported on a standalone basis in a separate report
or whether it was more appropriate to integrate CSR
activities fully with the company’s annual report and
accounts. It was decided that a fully-integrated report was
more representative of the Group’s approach.
Committee performance
The assessment of the committee’s performance,
conducted as part of the overall board review process
with assistance from Lintstock, concluded that the
committee continued to provide good oversight and
challenge over the Group’s CSR strategy.
For 2018, the committee will review the scope of its
remit and activities, and continue to support the
communication of the Group’s values and whistleblowing
arrangement. In addition, informed by the result of the
materiality assessment, the committee will continue to
focus its work on issues that are material for the Group.
Ethics
Environment
Economic
Geopolitical
Employment
H
G
H
I
S
R
E
D
L
O
H
E
K
A
T
S
O
T
E
C
N
A
T
R
O
P
M
I
Climate Change
Environmental Management
LOW
Human rights
Health, safety and
protection of employees
and people under G4S’
care
Ethics & values
Anti-bribery & corruption
Labour relations
Governance &
compliance
Valuing & developing employees
Employee standards &
behaviours
Employee recruitment &
screening
Data protection &
information security
Secure & stable
communities
Diversity & inclusion
Government relationships
Risk management
Customer trust &
delivery
Promoting industry
standards
Economic & tax contribution
Technology & innovation
Responsible supply chain
IMPACT ON G4S
HIGH
Integrated Report and Accounts 2017 G4S plc 83
Governance
Corporate governance report continued
RISK COMMITTEE REPORT
Paul Spence
Risk Committee Chairman
“The creation of sustainable value for our stakeholders
requires effective risk management.
The Risk Committee’s oversight of the Group’s risk
management framework seeks to balance a robust
approach to risk management, in particular risk
mitigation, with the need to encourage and support
the entrepreneurial spirit that drives growth”.
Committee membership during 2017
Paul Spence (Chairman)
Ashley Almanza
John Connolly
Tim Weller
Member since
January 2013
May 2013
January 2013
April 2013
Steve Mogford joined the Risk Committee on 1 January 2018.
Other regular attendees include the group director of risk and
internal audit.
There were four scheduled meetings held during the year
ended 31 December 2017. Members’ attendance at committee
meetings is shown on page 74.
Main activities of the Risk Committee during
the year (%)
In depth review of
speciÿc high risk
contracts/projects (30%)
Risk Governance/Internal
(30%)
Control
Contract Risk
Management
(25%)
Committee governance
and reporting
(15%)
Responsibilities
Formed in 2013, the Risk Committee advises the board
on the Group’s overall risk appetite, reviews and
approves the Group’s risk management strategy, advises
the Audit Committee and the board on risk exposures
and reviews the level of risk within the Group. The Risk
Committee also assesses the effectiveness of the
Group’s risk management systems and reports thereon
to the Audit Committee.
The committee’s composition ensures that a broad set
of skills and experience comes together to look at how
the Group manages risk in the business. Further details
can be found in the committee’s terms of reference
available at g4s.com/investors.
84 G4S plc Integrated Report and Accounts 2017
Risk governance
As part of its continued focus on risk governance,
the committee reviewed and discussed proposed
amendments to Group risk management policies.
The committee also reviewed both the process and
results of control self-assessments (CSAs) completed
by business units across the Group on a regular basis.
The CSAs, which cover many of the control standards
addressing the Group’s high inherent risks, are seen
as a positive way in which to ensure that key controls
specifed by the Group to reduce such risks are
embedded and compliance enhanced. During the
process, regional functional leaders review and challenge
the results of the business units. The internal audit
function also performs tests to identify and correct any
potential discrepancy between the results of CSAs and
its fndings. The committee also reviewed the Group’s
risk appetite and recommended its approval by
the board.
The committee also reported to the Audit Committee
to confrm that it was satisfed that the Group’s risk
management processes were appropriate.
Principal risks
During the year, the Risk Committee received regular
updates on the progress of and in mitigating the Group’s
principal risks set out on pages 62 to 65.
Presentations on information security, laws and
regulations, cash losses and culture and values covering
the inherent risk, mitigations in place and management
of the residual risk, were also received. Further details of
the signifcant risks and uncertainties facing the business
are set out on pages 60 to 65.
Major contracts and projects
Contract-risk management continues to remain a key
area of focus for the company and the committee,
which undertakes a review of a major contract at each
of its meetings.
In addition, the committee has particular oversight for
the project developing lean-order-to-cash processes
through the development and implementation of a
standard IT system for the manned-security operations,
Project Javelin. The committee receives regular reports
on this project and oversaw the launch of the pilot
project in Ireland in the last quarter of 2017. Further
information about this project is set out on page 29.
Committee performance
The committee’s performance is assessed every year.
In 2017, the result of the assessment performed by
Lintstock showed that the committee continued to be
effective and to provide valuable oversight of the risk
management framework.
In 2018, the committee will continue its focus on major
contracts and projects as well as principal residual risks.
The committee also plans to increase its focus on
operational risk and to reinforce its oversight of
technology and innovation as well as cyber-risk.
The Audit committee report
THE AUDIT COMMITTEE
John Ramsay
Audit Committee Chairman
“As announced in December 2017, I joined the board on
1 January 2018 and succeeded Paul Spence as chairman
of the Audit Committee from the same date. Paul, who
remains a member of the committee, was very
supportive during the transition process and I am very
grateful for his continued support.
During the year, the Audit Committee’s work
continued to focus on enhancing the Group’s control
environment, the quality of our group fnancial
reporting and the effectiveness of the external and
internal audit processes.”
Committee membership during 2017
Paul Spence (Chairman)
John Daly
Winnie Fok
Steve Mogford
Ian Springett
Member since
January 2013
May 2015
January 2017a
May 2016
January 2017b
a. Winnie Fok was previously a member of the committee
between October 2010 and December 2012. She stepped
down from the Audit Committee on 1 January 2018.
b. Due to continued ill health, Ian Springett retired from the
Audit Committee and the board on 20 June 2017.
On 1 January 2018, John Ramsay joined the board and took
over the role of chair of the Audit Committee.
Regular attendees include the chief fnancial offcer, the group
fnancial controller, the company secretary, the group director
of risk and internal audit and representatives of the Group’s
external auditor. The chief executive offcer also attends
meetings from time to time when invited by the chairman.
During 2017, the chairman of the board, a chartered
accountant who spent his executive career with Deloitte,
also attended most meetings.
There were four scheduled meetings held during the year
ended 31 December 2017. Members’ attendance is shown
on page 74.
Main activities of the Audit Committee during
the year (%)
Effectiveness of ÿnancial
controls and risk management
procedures
(30%)
Financial reporting (30%)
Internal audit
(20%)
External audit and
non-audit services (15%)
Whistleblowing /
fraud allegations
(5%)
Committee membership
As reported previously, Ian Springett was appointed
to the board and as chair of the Audit Committee with
effect from 1 January 2017. Unfortunately, in January
2017 Ian had to take an extended leave of absence in
order to undergo treatment for a medical condition.
Accordingly with effect from 20 January 2017, Paul
Spence was appointed as chairman of the Audit
Committee and Winnie Fok became a member. Paul
was already a member of the committee and Winnie
brought an accounting and audit background.
The board was satisfed that Paul and Winnie together
with the other members of the committee brought
signifcant and relevant experience gained at senior-
management level and that the committee’s composition
met the requirements of DTR7.1 during the year. Their
skills and experience are set out on pages 68 and 69.
However the Audit Committee did not have a member
with recent fnancial experience. Mindful of the need
to ensure continued application of main principle C.1
of the code, additional steps were taken, including
further support and training provided to the chair as
well as the promotion of greater interaction with the
external auditor.
In June, due to continued ill health Mr Springett stepped
down from the Audit Committee and the board.
Following a search for a new non-executive director
qualifed to act as chairman of the committee,
John Ramsay was appointed to the board and as chair
of the Audit Committee on 1 January 2018.
Responsibilities
The committee ensures that there is effective governance
of the Group’s fnancial reporting and internal controls to
safeguard the integrity of its fnancial statements and the
adequacy of related disclosures, and assists the board in
relation to its consideration of whether or not the annual
report of the Group is fair, balanced and understandable.
The committee also has oversight of the performance of
both the internal audit function and the external auditor.
During the year, the terms of reference of the Audit
Committee were reviewed, following which a minor
amendment was made. The terms are available at
g4s.com/investors.
The committee has an annual agenda, which includes
standing items that the committee considers regularly,
as well as specifc matters that require the
committee’s attention.
At the end of each meeting, a private session is held
by the Audit Committee with representatives of the
Group’s external auditor or with the Group director
of risk and internal audit, without members of the
executive management team being present.
After each meeting, the chairman of the committee reports
to the board on the matters which have been discussed.
Integrated Report and Accounts 2017 G4S plc 85
Governance
The Audit committee report continued
Signifcant judgments and issues considered by the Audit Committee
The primary judgments and issues considered by the committee in the 2017 fnancial statements, and how these
were addressed, were:
ONEROUS CONTRACT PROVISIONS
Description
The Group delivers certain long-term outsourcing
services that are complex in nature. Some of those
contracts may evolve to become loss-making, such that
net unavoidable losses are expected over their life. This
requires determining the net present value of estimated
future losses in order to calculate an appropriate
onerous contract provision. The identifcation and
measurement of such provisions require signifcant
judgment, given the extended time periods often
involved and the number of variables that are not all
within the Group’s control.
In particular, judgment is required in assessing the future
expected revenue and costs, including: determining the
expected impact of any proft improvement plans (PIPs),
the level of any related lifecycle funds and the estimated
costs for the remaining life of the contract, and an
appropriate discount rate to apply to material future
cash fows.
Details of the outcome of the assessment of contract
provisions are set out in the Chief Financial Offcer’s
Review on page 37.
Action taken
The committee reviewed in respect of each onerous
contract, the critical assumptions provided by
management and enquired about the judgments made,
the robustness of the assumptions, the sensitivities to
changes in the assumptions and the disclosure provided
in relation to the key material judgments.
The committee also reviewed the disclosure provided
in relation to these contracts, and in particular in relation
to a dispute with a subcontractor in respect of one of
these onerous contracts.
Conclusion
The Audit Committee was satisfed that the level
of provisions and the related disclosures as at
31 December 2017 were appropriate.
COMPLIANCE WITH FOREIGN-OWNERSHIP RESTRICTIONS AND CONSOLIDATION OF UNDERTAKINGS
Description
In markets where foreign ownership restrictions (FORs)
apply, the Group seeks to ensure that it complies with
foreign ownership laws and regulations and meets the
relevant accounting standards (IFRS10). Professional
advisors are typically retained to establish and maintain
contractual ownership structures, which comply with
local laws and regulations relating to foreign ownership.
In addition, the board reviewed the monitoring process
in place for key markets, discussed relevant changes in
law and regulations, their potential impact on the
Group, and, where relevant, reviewed mitigation plans.
Action taken
The committee reviewed the Group’s portfolio of
investments in countries where FORs apply.
When restrictions apply to direct share ownership, the
Group also exercises infuence or control through
arrangements, including shareholder agreements.
FORs can limit the Group’s ability to do business or
invest in certain markets and could result in a loss of
management control.
The committee also received specifc reports in relation
to a number of countries.
Conclusion
The committee was satisfed with the Group’s
processes and approach to foreign ownership and
consolidation of undertakings.
Consolidation of any of these entities would be at risk if
the Group’s ability to enforce its rights of control were
to be undermined by FORs.
This will remain an area of focus to ensure that the
committee remains abreast of changes in laws,
regulations and standards.
86 G4S plc Integrated Report and Accounts 2017
ALTERNATIVE PERFORMANCE MEASURES
Description
The Group uses Adjusted PBITA as a consistent internal
and external reporting measure of its fnancial
performance, given that management views it as being
more representative of the normal course of business
and more comparable period to period. Adjusted PBITA
excludes strategic restructuring costs, amortisation of
acquisition-related intangible assets and specifc and
other separately disclosed items which the Group
believes should be disclosed separately by virtue of their
size, nature or incidence (see page 35 for further details).
Judgment is required when defning those items to be
disclosed separately and when applying the classifcation
criteria to each period’s results. Further details on
separately disclosed items are set out in note 8.
Action taken
The Audit Committee reviewed and challenged, in light
of the guidance issued by the FRC in December 2013,
October 2016 and November 2017, and the results of
the FRC review of the 2016 Integrated Report and
Accounts, the enhanced disclosures prepared by
management in the 2017 Integrated Report and
Accounts (pages 35 and 36) in relation to alternative
GOODWILL IMPAIRMENT TESTING
Description
The total value of the Group’s goodwill as at
31 December 2017 was £1.9bn, a signifcant proportion
of which 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.
The Group tests tangible and intangible assets, including
goodwill, for impairment on an annual basis or more
frequently if there are indications that an impairment
may be needed. The impairment analysis consists of the
estimation of the recoverable amount of goodwill
supported by the Group’s cash generating units, which
requires signifcant judgment, primarily in relation to the
achievability of long-term business plans and future cash
fows. Such achievability is dependent on circumstances
both within and outside management’s control, in
relation to the discount rates adjusted to refect risks
specifc to individual assets used, and in relation to the
macro-economic assumptions and related modelling
assumptions underlying the valuation process.
As a result of the annual review of the carrying value
of goodwill, no impairment charge to goodwill was
required (see notes 4 and 18 to the consolidated
fnancial statements). The full methodology and results
of the Group’s impairment testing, including an analysis
of the sensitivity of goodwill to the key assumptions, are
provided in note 18.
performance measures (APMs) and specifc items.
The committee observed that the Group’s accounting
policies were being applied consistently from year to
year, and considered whether specifc items were being
identifed in line with Group policies and that these
items included both debits and credits as appropriate.
The committee also reviewed information from
management to satisfy itself that changes in estimates
related to items that were classifed as specifc items
were treated equally and consistently as specifc
items, in particular for both increases and decreases
of provisions.
Conclusion
The committee was satisfed that the Group’s defnition
of APMs, and in particular in relation to specifc and
other separately disclosed items, had been applied
correctly and that the designation of specifc items
was subject to objective and balanced criteria. The
committee noted the enhanced disclosure and
explanation on APMs and considered that these give
a meaningful and balanced view of the operations of
the Group.
Action taken
The Audit Committee reviewed the methodology and
results of the impairment tests prepared by management.
The Audit Committee reviewed the assumptions used
in relation to long-term growth, the resulting headroom
and the sensitivities applied by management. In addition,
these results were considered against alternative
valuation bases such as reference to transactions for
similar assets in similar locations, both within the Group
and external to the Group.
For those businesses that are expected to be sold as
part of the strategic portfolio management programme,
the Audit Committee reviewed the recoverable value
on the basis of expected sale price less costs to sell.
Finally, the Audit Committee considered the adequacy
of the disclosures provided, particularly in respect of
cash generating units where changes in key assumptions
could give rise to an impairment.
Conclusion
The committee was satisfed with the carrying value of
goodwill and related disclosures as at 31 December 2017.
Integrated Report and Accounts 2017 G4S plc 87
Governance
The Audit committee report continued
TAXATION
Description
The Group operates in around 90 countries and is
therefore subject to numerous reviews by individual tax
authorities in the ordinary course of business. In some
countries, tax legislation is not consistently applied and
under some complex contractual structures, the
responsibility for tax arising is not always clear.
Judgments and estimates are required to determine
the appropriate amount of tax to provide for and any
required disclosure around contingent tax liabilities at
each period end.
Provisions for tax liabilities are estimated for existing
matters under dispute with local tax authorities, as well
as for matters which it is considered may be disputed by
them, where it is probable that a future liability will arise.
In some instances, tax reviews may result in claims being
raised by tax authorities. Any claims are handled by the
local legal entity in the frst instance. More complex
cases are reviewed by the Group tax function and
provisions, where necessary, are made based on the
best estimate of the likely outcome.
The Group recognises deferred tax assets in respect
of temporary timing differences, mainly in relation to
pension arrangements, fxed assets and carried forward
losses. At 31 December 2017, total deferred tax assets
were £240m (2016: £285m). Recognising such assets
requires an assessment of their likely recovery through
utilisation, which includes an assessment of the taxable
profts expected to be made in each of the relevant
jurisdictions in the future. Deferred tax assets can be
affected by changes in legislation and in tax rates.
LAWS AND REGULATIONS
Description
The Group operates in many jurisdictions globally, with
complex and diverse regulatory frameworks. Due to
such operations, the Group faces many associated risks,
including increasing litigation and class actions; bribery
and corruption; obtaining operating licences; complying
with local tax regulations; changes to and application of
employment and employee remuneration legislation;
complying with human rights legislation; and new or
changed restrictions on foreign ownership. Furthermore,
the Group may face new or changing regulations which
may require modifcation of its processes and staff
training. Not being compliant with applicable laws and
regulations can have far-reaching consequences,
including higher costs from claims and litigation; inability
to operate in certain jurisdictions; loss of management
control; and damage to the Group’s reputation.
Action taken
The Audit Committee reviewed the Group’s tax
strategy, including the tax report and tax risk
management processes and the board approved the
tax policy, which complies with the UK Confederation
of British Industry’s seven tax principles.
The committee also reviewed information prepared
by management in relation to existing or potential tax
exposures, the adequacy of the provisions recorded,
their treatment and disclosure in the fnancial statements
and emerging matters arising from the OECD’s Base
Erosion and Proft Shifting framework.
The committee reviewed information prepared by
management supporting the recoverability of deferred
tax assets, considered the period of time under which
these assets would be recovered and made enquiries
of the external auditor on the appropriateness of the
Group’s tax position. The committee reviewed the
impact of the US tax reform and in particular to the
recognition and re-measurement of US deferred tax
assets, and reviewed the disclosure provided in this area.
Conclusion
The committee was satisfed with the Group’s
approach to tax, with the assessment of recoverability
of deferred tax assets and with the accounting
treatment and disclosure of tax exposures.
The committee was satisfed that the disclosure
provided in connection with the US tax reform was
clear and appropriate
Action taken
During the year the committee received a report from
the Group General Counsel, analysing signifcant areas
of exposure to claims and areas where in particular
labour laws and regulations are complex and there
is therefore an inherent risk to the judgment made
when applying those laws and regulations. For the
most material items, the committee was provided
with regular updates throughout the year.
Conclusion
The committee was satisfed that the provisions
booked at 31 December 2017 were appropriate.
The committee was satisfed that the disclosure for the
judgments made in relation to contingent liabilities was
clear and appropriate.
88 G4S plc Integrated Report and Accounts 2017
RISK OF ACCOUNTING ERRORS AND MANAGEMENT OVERRIDE OF INTERNAL CONTROLS
Description
The Group operates in around 90 countries and has
around 600 legal entities, with a signifcant number of
local fnancial systems and processes. This leads to an
inherently-diverse set of processes and controls that rely
on local capabilities for implementation and execution of
the controls. As set out on page 61, the Group has
adopted a three-lines-of-defence model to control and
manage risks across the Group.
regular updates on the overall control environment
of the Group, including results of internal audits, training
and up-skilling of capabilities across the Group, as well
as the regular reports from the external auditor and the
output of the whistleblowing process.
The committee confrmed in particular that controls had
been strengthened to minimise the risk of re-occurrence
of control failures that required the restatement of the
2014 annual results and balance sheet in the 2015
Integrated Report and Accounts. The committee also
considered progress made to reduce reliance on manual
controls, by developing and integrating fnancial and
operational systems across the Group.
Over the course of the last four years the Group has
made signifcant investment in strengthening capability in
fnance, internal audit and risk, and has introduced
additional internal controls and enhanced Group
oversight to mitigate these risks. These include monthly
reviews of the quality of earnings, a comprehensive
internal audit plan and a regular cycle of reviews of local
business unit or country balance sheets and controls.
Action taken
The committee oversaw the progress made over
embedding minimum fnancial controls and received
Viability statement
At the March 2018 meeting, the committee reviewed
a paper prepared by management which examined the
longer-term solvency and viability of the Group. The
committee tested the underlying assumptions and
analysis performed by management, reviewed assurance
work carried out and considered the appropriateness of
the timeframe of the assessment. The committee was
satisfed that the three-year period covered by the
viability statement remains appropriate in that it aligns
with the Group’s regular business planning period, over
which management has a reasonable level of confdence
in its projections refecting the life cycle of the majority
of the Group’s contracts, and takes account of the
limited visibility on material bidding opportunities in
the pipeline beyond that period. The committee also
reviewed and challenged the outcome of the stress-
testing of projections by management.
The committee recommended to the board that the
directors confrm that they have a reasonable
expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over
the three-year period of the assessment, as set out
on page 92.
Fair, balanced and understandable
One of the key compliance requirements of a group’s
fnancial statements is for the annual report, taken as
a whole, to be fair, balanced and understandable.
Guidelines on Alternative Performance Measures
(APMs) were issued by the European Securities and
Conclusion
The committee acknowledged the progress made in
relation to the strengthening of controls and the plans
in place to reduce the number of systems and reliance
on manual controls across the Group, but noted that,
although good progress has been made to date,
signifcant work remains to be done.
Markets Authority (ESMA) and have been applicable
since July 2016. In addition, the FRC issued a “Frequently
Asked Questions” guidance document and published
the results of its thematic review on this matter in
November 2017. The committee considered each of
the above in assessing whether the Group’s annual
report was fair, balanced and understandable.
The committee reviewed a paper setting out the
approach taken by management in the preparation
of the annual report to ensure it met the requirements
of the FRC’s Code and the ESMA guidance, including
the reasons for and clear explanation of the non-GAAP
measures used by the Group in reporting its results
for the year. The paper described the process and
procedures followed and detailed the steps taken in
each of the sections of the annual report to ensure that
the information presented was complete and accurate.
This paper also described the review processes carried
out internally to ensure that the annual report is fair,
balanced and understandable. In addition, an external
verifcation exercise was carried out to confrm that
the information contained in the annual report is
supported either by factual evidence, or by confrmation
from management where such information is a
statement of belief or intent.
The committee was satisfed with the work performed
and advised the board that the annual report, taken as
a whole, presents a fair, balanced and understandable
view of the business and its performance for the year
under review.
Integrated Report and Accounts 2017 G4S plc 89
Governance
The Audit committee report continued
Internal control
Since 2013, the Group has had a heightened focus
on improving systems of internal control and risk
management for fnancial reporting. The main features
of these control systems include clearly-defned reporting
lines and authorisation procedures, a comprehensive
budgeting and monthly reporting system, written policies
and procedures and the use of a single global
consolidation system for internal management reporting,
budgeting and planning as well as for external reporting.
The system is designed to ensure the integrity of
fnancial reporting and the committee’s responsibility is
to ensure that these internal controls remain effective.
The committee does this primarily through receiving
reports from management, from the internal audit
function and from the external auditor.
The committee reviewed progress on the strengthening
of internal controls, and on plans to continue progress,
which included a targeted audit plan for 2017 from
Group Internal Audit for those areas where issues
have been identifed.
The committee also considered the plans being
implemented by management to reduce reliance on
manual controls, through the gradual implementation
and integration of new fnancial systems.
Further details on internal controls are set out on page
61. The Audit Committee confrmed to the board that
although it is satisfed that the Group’s risk management
and internal control processes and procedures are
appropriate and effective, the need for continued focus
on enhancing the internal control environment remains.
Internal audit
During 2017, the internal audit function focused on
assessing the effectiveness of a broader set of mandated
controls including Minimum Financial Controls, HR Core
Standards, Driver and Firearms Controls, Human Rights
and Anti-Bribery and Corruption, with the goal of
focusing local management on the most material control
issues specifc to their local environment.
The Group fnance function and Regional Audit
Committees also provided support to assist in driving
improvements where appropriate.
The internal audit function continued to provide support
and guidance to business units to improve awareness
of and compliance with Minimum Financial Controls.
In 2018, internal audits will continue to test the
operational effectiveness of the Group’s standards and
controls. Precise coverage in each country will be
determined through risk assessment.
External audit
Following an audit tender process during 2014
PricewaterhouseCoopers LLP (PwC) was appointed as
the Group’s new external auditor for the 2015 fnancial
year. PwC was subsequently re-appointed for the 2016
fnancial year and at the 2017 AGM to hold offce until
the next AGM. Richard Hughes has been lead audit
partner since the beginning of 2015.
During the year, the committee reviewed PwC’s Group
audit plan including the scope to be undertaken as well
as their reports on external audit fndings, with particular
focus on the areas set out above. The committee also
had private sessions with the external auditor both during
the year and at the end of a number of Audit Committee
meetings, and approved the fee for the external audit.
The committee also considered and approved the
representation letter to be issued to the auditor.
In addition, in March 2017, the committee reviewed the
report of the FRC on its review of PwC’s audit of the
2015 Integrated Report and Accounts.
Non-audit services
To ensure that the independence of the audit is not
compromised, the committee has put a policy in place
covering the non-audit services that can be provided by
the external auditor, the relevant approval process for
certain services, and detailing those services which the
auditor is prohibited from providing.
In essence, the external auditor is prohibited from
providing services that could create a confict of interest,
result in the audit frm auditing its own work, or result in
the performance of management functions. Examples
of non-permitted services are actuarial services, book-
keeping services, internal audit outsourcing services and
legal services.
The committee has pre-approved certain services which
can be provided by the auditor subject to specifed fee
limits, above which further approval is required. All other
services would require prior approval by the committee.
Every year, the Audit Committee reviews its policy on the
provision of non-audit services by the external auditor.
The auditor, PwC, has written to the Audit Committee
confrming that, in its opinion, it was independent for
the period through to 8 March 2018.
Details of the fees paid for audit services, audit-related
services and non-audit services can be found in note 10
to the consolidated fnancial statements.
Effectiveness of the external auditor
A combination of formal and informal processes is used
in the assessment of the effectiveness of the external
audit process.
A formal questionnaire is completed at the end of the
audit by members of the Audit Committee, by the
Group fnance department and by the fnance directors
of signifcant operations across the Group, and the
results of those questionnaires are reviewed by the
Audit Committee. The assessment of the external audit
for 2017 concluded that it remained effective and that
the external auditor is independent.
FRC review of the 2016 Integrated Report and
Accounts
During the year, the Group received a letter from the
FRC confrming that the Annual Report for the year
ended 31 December 2016 had been subject to a limited
review by its Conduct Committee, which is responsible
for reviewing and investigating the annual accounts,
directors’ and strategic reports of UK public companies.
90 G4S plc Integrated Report and Accounts 2017
The key areas of focus were in relation to the use of
alternative performance measures and compliance with
the ESMA Guidelines and the commentary provided on
IFRS measures in the strategic report.
As a result of on-going discussions with the FRC as part
of its enquiry, we have considered the labelling of the
alternative performance measures used and provided
enhanced disclosure and explanations on page 44. We
have also provided further and clearer narrative on
fnancial performance based on statutory measures,
on pages 38 to 43.
Committee performance
The assessment of the committee’s performance,
conducted with assistance from Lintstock, concluded
that the committee had performed well during 2017,
in particular in reviewing the quality of the Group’s
fnancial reporting.
In 2018, the committee will support the induction of its
new chair, review internal and external audit coverage
in light of the changing shape of the Group and in
conjunction with the CSR Committee, refne the
whistleblowing process further.
CMA Order Compliance
The G4S Group audit was put out to tender in 2014,
following which PwC were appointed with effect
from 2015.
The committee confrms that the company has
complied with the Audit Services for Large Companies
(Mandatory Use of Competitive Tender Processes and
Audit Committee Responsibilities) Order 2004.
John Ramsay
Audit Committee Chairman
Corporate governance report
RISK MANAGEMENT AND INTERNAL CONTROL
The directors acknowledge their responsibility for the
Group’s systems of risk management and internal
control and for reviewing their effectiveness each year.
The main features of these control systems include
clearly-defned reporting lines and authorisation
procedures, a comprehensive budgeting and monthly
reporting system, written policies and procedures and
the use of a single global consolidation system for
internal management reporting, budgeting and planning
as well as external reporting. While the Audit
Committee has primary responsibility on the board’s
behalf, a separate committee of the board, the Risk
Committee, was set up in 2013 as part of the Group s
heightened focus on improving systems of internal
control and risk management.
’
The board, through the Risk Committee, has carried
out a robust assessment of the principal risks facing the
company and of how those risks might affect the
prospects of the company. The principal risks and their
possible impact on the company and the mitigations
taken, are set out on pages 62 to 65.Through the Audit
Committee, the board conducted a review of the
effectiveness of the systems of internal control during
the year. The systems are 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 enterprise risk management governance
model, described on page 61 sets out some of the key
features of the Group’s risk-management process
which was in place throughout the year under review.
During the year, the Risk Committee reviewed the
Group’s risk appetite, which was considered and
approved by the board. Further information on the
work of the Risk Committee in relation to the risk
management framework, including the Group’s risk
appetite, can be found in the report of the Risk
Committee on page 84.
Whilst further improvement has been made in the
effective performance of internal controls during
the year, given the number of countries in which the
Group operates and the variety of systems used there
is still opportunity for improvement in the operational
effectiveness of mandated controls and this will
continue to be a focus during 2018.
The Audit Committee has confrmed that, although
it is satisfed that the Group’s risk management and
internal control processes are appropriate and
effective, the need for continued focus on enhancing
the internal control environment remains. Further
information on the work of the Audit Committee in
this respect can be found in the Audit Committee
report on page 85. The board has reviewed the
Group’s risk management and internal control systems
for the year to 31 December 2017 by considering
reports from the Audit Committee and the Risk
Committee and has also taken account of events since
31 December 2017.
Integrated Report and Accounts 2017 G4S plc 91
Governance
Corporate governance report continued
FAIR BALANCED AND UNDERSTANDABLE
The preparation of the Integrated Report and Accounts
is co-ordinated by the fnance, investor relations and
company secretariat teams with group-wide support
and input from other areas of the business.
The board has separately considered the disclosures
in the Integrated Report and Accounts and has
concluded that they are fair, balanced and
understandable.
Comprehensive reviews were undertaken at regular
intervals throughout the process by senior
management and other contributing personnel
within the Group.
The process was reviewed by the Audit Committee
and the board has reviewed a paper setting out the
governance relating to the preparation of the report
prepared by management.
VIABILITY STATEMENT
In accordance with provision C.2.2 of the UK
Corporate Governance Code 2016, the directors have
assessed the viability of the Group over a three year
period, aligned with that of the Group’s rolling planning
cycle, taking into account the Group’s current position
and the potential impact of the principal risks
documented on pages 62 to 65. Extension of viability
testing beyond three years is seen by the Group as
being of limited value because of the following factors:
• The majority of the Group’s contracts are less than
three years in duration;
• The correlation of demand for security services
with the global economy; and
The statement required to be given by the directors
by Code provision C.1.1 can be found on page 119.
capital needs of the business, as well as the principal
residual risks.
The vast majority of the Group’s risks exist at an
individual country level and are individually immaterial.
The principal residual risks described on pages 62 to
65 are an aggregate view of individual risks captured in
country, region and Group functional risk registers.
These wide-ranging risks are highly unlikely to
crystallise simultaneously and it is therefore unlikely
that such risks would have a material impact on the
Group’s fnancial position. Nevertheless, the Group
has sensitised its three-year fnancial projections for
the following risks:
• The impact of the Group’s on-going productivity
a) Potential loss of certain of the Group’s top
programme.
customers;
b) Potential adverse changes in foreign ownership
legislation resulting in cessation of material
business lines;
c) Potential claims from major contracts resulting in
material settlement payments; and
d) Litigation or Class Action claims resulting in material
legal costs and settlement payments.
The directors consider that this stress-test assessment
of the Group’s prospects is reasonable in the
circumstances. The directors have also considered the
debt maturities in 2019 and 2020 as indicated on page
31 under the stress test scenarios and concluded that
the Group would be able to meet its maturities as
they fall due with the existing facilities currently in
place, without the need to access the fnancial markets.
Based on this assessment, the directors have
a reasonable expectation that the Group will be
able to continue in operation and meet its liabilities
as they fall due over the three fnancial years to
31 December 2020.
The Group’s prospects are assessed primarily through
its bottom-up strategic planning process. The overall
strategy for the Group was refreshed comprehensively
in November 2013 and the board has monitored
progress closely against this strategy as well as the risks
to its success. The 2017 process commenced in June
with each country and business unit updating its rolling
three-year strategic plan and considering the risks to
achievement of that plan. These plans were reviewed
and refned by regional management and then by the
Group Executive Committee before being reviewed
by the board in October 2017. The key assumptions
in the fnancial forecasts, refecting the overall
strategy, include:
• A continued demand for security services, as set
out on page 8 of the strategic report;
• An ability to continue to drive through our
productivity programmes and to fex the cost base,
as set out on pages 28 to 29; and
• Continuing to deliver good operating cash fow
performance as set out on pages 30 and 31.
The output of this plan is used as the baseline for
stress-testing covenant and headroom analysis. This
analysis includes sensitivity analysis to changes in
trading conditions affecting proft growth and the
92 G4S plc Integrated Report and Accounts 2017
Directors’ remuneration report
THE REMUNERATION COMMITTEE
John Daly
Remuneration Committee Chairman
“We believe our remuneration framework is aligned
with the Group’s strategic objectives and promotes the
interests of our shareholders and the long-term success
of the organisation, by rewarding the creation of
sustainable value, with particular focus on our customers,
people and values.”
Committee membership during 2017
John Daly (Chairman)
Winnie Fok
Clare Spottiswoode
Barbara Thoralfsson
Member since
June 2015
(chair since May 2016)
October 2010
June 2010
July 2016
There were three scheduled meetings and one additional
meeting held during the year ended 31 December 2017.
Members’ attendance at committee meetings is shown on
page 74
The committee consists entirely of independent
non-executive directors and the committee membership
during 2017 is set out in the table above. Biographies
of the members of the committee are set out on pages
68 and 69. As announced previously, at the 2018 AGM,
Clare Spottiswoode will retire from the board. I would
like to thank Clare for her valuable support and her
contributions to the work of the committee.
Main activities of the Remuneration Committee
during the year (%)
Performance
and Incentives
Governance
Reporting
35%
30%
15%
Executives’ base pay
/Chairman fee
10%
Below board level
10%
Responsibilities
The Remuneration Committee is responsible for
overseeing all elements of the remuneration of
the executive directors, other members of the
Group Executive Committee and the chairman
of the board.
It also agrees with the board the framework
and policy for the remuneration of other senior
managers of the Group and reviews and
recommends to the board the remuneration
of the company secretary.
In determining remuneration policy, the committee
takes into account a variety of legal and regulatory
requirements and the relevant provisions of the
UK Corporate Governance Code.
The committee also determines policy on the
duration, notice period and termination payments
under the contracts with the executive directors,
with a view to recognising service to the company
whilst ensuring that failure is not rewarded and
that the duty to mitigate loss is recognised.
The committee approves the design and
determines the measures and formulae for
performance-related pay schemes operated by
the company. It approves the eligibility of
executive directors and other Group Executive
Committee members for annual bonuses and
benefts under long-term incentive plans and
assesses performance against the objectives of
those plans. No directors are involved in
determining their own remuneration.
The committee’s terms of reference are available
on the Company’s website at g4s.com/investors.
Our remuneration approach
We seek to attract and retain the best people
whilst ensuring that the remuneration policy and
practice drive behaviours that are in the long-
term interests of the company and its
shareholders.
Fixed pay
• base pay
• retirement benefts
• other benefts
Short-term incentives
• annual bonus plan (one year) with deferred
element (three years)
Long-term incentives
• long term incentive plan (three years)
Integrated Report and Accounts 2017 G4S plc 93
Governance
During 2017, the committee undertook a further review
of our current remuneration practices taking account of
the overall approach and structure of employee reward
across the Group, developments in remuneration for
executives in the global market as well as views of the
investor community. The committee together with its
advisor is developing a package of measures, in relation
to which consultation with major shareholders will take
place during the latter part of 2018, with a view to
fnalising an up-to-date policy for submission to
shareholders’ approval at our AGM in 2019. Key areas
where changes are being considered include the
introduction of a two-year holding period post vesting
of shares for awards to the Group executive committee
under our long-term incentive plan and an increase in
the shareholding requirements. The level of company
pension contributions for future executive appointments
is also under review.
Our stakeholders
The committee considers shareholders’ views via
consultation and wider stakeholders’ views through
reviews of regular reports from the committee’s advisor
on market and governance developments. During the
year, the committee also reviewed the analysis and
results of the UK gender pay gap reporting
requirements. It is also aware of institutional investors’
views, including the Investment Associations’ Principles
of Remuneration published in November 2017 and
intends to consider the implications of the revised UK
Corporate Governance Code once it is fnalised and
published later in the year.
Governance
With a view to refocusing the work of the committee
and updating some of the committee’s duties such
as its reporting obligations, the committee reviewed
and approved for recommendation to the board, a
number of amendments to its terms of reference.
The committee’s revised terms of reference are
available on the company’s website at g4s.com/investors.
UK Code Compliance
The company had in place malus and clawback before
their introduction became a feature of the revised UK
Corporate Governance Code. These are explained
on page 111.
The committee is also conscious of the Code’s
requirement that executive directors’ remuneration
should be designed to promote the long-term success
of the company – and that performance-related
elements of remuneration should be transparent,
stretching and applied rigorously.
Directors’ remuneration report continued
Business context and performance
In 2017, management delivered another year of
proftable growth and good cash generation, enabling
continued investment in growth, technology and
productivity programmes, while continuing to strengthen
the balance sheet. Our leadership team continues to
demonstrate commitment to the long-term success
of the business and I am pleased to report that they
produced core business revenue growth of 3.2%,
Adjusted PBITA increase of 4.2%, Adjusted EPS growth
of 5.9% and a reduction in net debt to Adjusted
EBITDA of 2.4x from 2.8x at the end of 2016. Further
details are set out in the chief executive offcer’s
introduction to the Strategic Review on pages 4 to 7.
2017 Remuneration outcomes
Pay review – As reported last year, the CEO’s salary
was increased by 1.5% effective from 1 January 2017
and that of the CFO, who was appointed in October
2016, remained the same. The increase awarded to the
executive directors was in line with the increase
applicable to Group employees and most managers
based in the UK.
Annual Bonus – The Group’s fnancial performance,
together with individual performance against strategic
objectives, supports a high level of annual bonus pay-out
for the executive directors. Recognising the impact of
trading conditions in the Middle East & India during
2017, the executive directors recommended a
reduction equivalent to 10% of base pay be applied to
their bonus payments. The Remuneration Committee
commended this initiative and approved the proposal,
which resulted in payments, after adjustment, of 79.5%
of maximum opportunity for the CEO and 69.5% of
maximum opportunity for the CFO.
Long term incentive plan – In line with our commitment
to ensure that our remuneration framework aligns with
our strategy and promotes the long-term success of
G4S, a signifcant part of performance-related reward is
delivered through shares. Given the growth in earnings
and strong operating cash-fow over the three years
from 2015 to 2017, awards that were granted in 2015
vested at a level of 62%.
Further information on the levels of executive
remuneration earned in 2017, including performance
against the relevant targets, is given on pages 96 to 98.
Key areas of focus in 2017
Remuneration Policy and approach
During 2016, the committee carried out a thorough
review of our remuneration policy and found that the
policy approved by shareholders in 2014 continued to
operate effectively. Therefore, no substantive changes
were made to the Directors’ Remuneration Policy
submitted for shareholders’ approval at our AGM last
May. The policy received a high level of support with
97.26% of favourable votes, for which I am grateful.
94 G4S plc Integrated Report and Accounts 2017
Details of the process for board and committee
performance evaluations are set out on page 67.
The review concluded that the committee continues to
be effective and to perform well. It also highlighted the
committee’s awareness of its key role, as the Group’s
new organisational structures bed in and delivery of the
strategic objectives gains momentum, in continuing to
focus on ensuring that the Group’s remuneration
practices enable the Group to attract, retain and reward
the high calibre individuals and talent it needs to deliver
long-term sustainable success.
Voting on remuneration
The annual report on remuneration will be put to an
advisory vote at this year’s AGM, and we look forward
to receiving shareholders’ support once again this year.
I will be available to answer questions and listen to the
views of our shareholders at the forthcoming AGM.
John Daly
Remuneration Committee Chairman
8 March 2018
Implementation of remuneration in 2018
Pay review
For 2018, the CEO and CFO’s base pay has been
increased by 2%. This pay review took account of
market salary trends as well as salary increases
elsewhere in the Group.
The increase awarded to the executive directors was
in line with the increase applicable to Group employees
and most managers based in the UK.
Incentives
The bonus opportunity and LTIP award levels remain
unchanged in 2018, both of which are subject to caps
as set out in the Remuneration Policy on pages 107
to 115.
In relation to bonus, the committee seeks to set targets
that support the overarching strategy, refecting the
business context for the relevant period. Targets are
also intended to be stretching whilst remaining
achievable and are compatible with the Group’s risk
appetite. The committee is confdent that the targets
set meet these criteria.
The long-term incentive plan introduced in 2014
received overwhelming support from shareholders and
will continue to operate in 2018.
The committee’s performance
Consistent with our practice every year, a formal review
of the committee’s performance was carried out at the
end of 2017.
Remuneration policy
The company’s remuneration policy for directors is set out on pages 107 to 115 of this report and on the
company’s website at g4s.com. It was approved by shareholders at the company’s annual general meeting held
on 25 May 2017 with 97.26% of all votes cast in favour. The long term incentive plan referred to in the policy
was approved at the 2014 annual general meeting with 96.88% of all votes cast in favour. The remuneration
policy came into effect on 26 May 2017 and will continue to apply for up to three fnancial years unless a new
or revised policy is approved by shareholders in the meantime.
Integrated Report and Accounts 2017 G4S plc 95
Governance
Directors’ remuneration report continued
ANNUAL REPORT ON REMUNERATION
SINGLE TOTAL FIGURE OF REMUNERATION (AUDITED INFORMATION)
Executive directors
£
Base pay
Benefts
2017
2016
2017
2016
Annual Bonus
2017
2016
LTIP
Pension related
benefts
Total
2017
2016
2017
2016
2017
2016
Ashley
Almanza
Tim Weller 643,750 172,179
939,755 925,867 110,112 109,985 1,120,168 1,347,136 1,441,515 2,175,179 234,939 231,467 3,846,489 4,789,634
24,429 1,655,763 369,572
670,774 166,945 182,787
n/a 128,750
29,702
6,019
Notes:
1. The 2016 base pay fgure for Mr Weller includes £122,145 received between the date of his appointment as an executive director
on 24 October 2016 until the end of the year, as well as fees in an amount of £50,034 for his role as a non-executive director of
the company.
2. Benefts include car allowance, business-related travel, healthcare, disability and life assurance. Beneft values include the cost of certain
travel, overnight accommodation, meals and memberships which HMRC treats as a taxable beneft and on which the company has
paid, or will in due course pay, as it does not consider such expenses to be benefts in the ordinary tax sense. The grossed-up amounts
for 2017 are £71,706 (2016: £61,544) for Ashley Almanza. Beneft values also include local travel costs of £10,420 (2016: £17,384) for
Ashley Almanza who bears the tax himself, and contain other business costs which HMRC deems to be benefts.
3. Any bonus due above 50% of the individual’s maximum bonus entitlement is awarded as deferred shares, which vest after a period of
three years unless the individual ceases employment prior to the third anniversary and qualifes as a good leaver, in which case release
of such deferred shares occurs shortly after termination of employment. 2017 bonus fgures are adjusted fgures, following the exercise
of the committee’s discretion to reduce bonus pay-outs, as recommended by the executive directors. Further information regarding
2017 bonus performance and resulting pay-outs is set out on page 97 and 98.
4.
In addition, for 2017, Ashley Almanza received a fee of $88,500 from Noble Corporation from his non-executive directorship referred
to on page 112, and retained such remuneration (2016: $95,000 and $316,674 of fee and shares respectively). For 2016, Mr Almanza
also received £37,618 from Schroders plc before stepping down from its board in April 2016. Mr Weller received and retained
£17,000 from the Carbon Trust for his non-executive directorship during the year under review (2016: £3,214).
5. Values in the LTIP column relate to the 2015 LTIP due to vest on 20 March 2018. Since the share price on the date of vesting is unknown
at the date of this report, the fgures provided are estimates calculated using the average market value over the last quarter of the year
under review, i.e. 266.59p per share. Further information regarding performance and vesting of the 2015 LTIP is set out on page 99.
Non-executive directors
The following table shows a single total fgure of remuneration in respect of qualifying services for the 2017 fnancial
year for each non-executive director, together with the comparative fgures for 2016. Aggregate non-executive
directors’ emoluments are shown in the last column of the table.
£
Base fee
SID
John Connolly
John Daly
Winnie Fok
Steve Mogford
Paul Spence
Ian Springett
Clare Spottiswoode
Barbara Thoralfsson
2017
2016
375,000 370,000
61,750
61,750
61,750
61,750
36,733
61,750
61,750
61,750
n/a
28,816
61,750
61,750
30,875
61,750
2017
n/a
n/a
n/a
15,000
n/a
n/a
n/a
n/a
Chair of Committee
2016
n/a
11,005
n/a
n/a
18,500
n/a
18,500
n/a
2017
n/a
18,500
n/a
n/a
37,500
4,750
18,500
n/a
2016
n/a
n/a
n/a
8,923
n/a
n/a
n/a
n/a
2017
4,770
3,259
15,243
1,531
16,452
0
2,315
24,101
2016
Total
Total
2016
2017
99,279 379,770 469,279
75,780
83,509
3,025
70,448
76,993
8,698
45,941
78,281
285
88,971
8,721 115,702
33,566
n/a
81,649
82,565
32,033
85,851
n/a
1,399
1,158
Benefts
Notes: The above fees were pro-rated where the appointments or retirements were part way through the year.
1. Beneft values include the cost of overnight accommodation, travel and meals, which HMRC treats as taxable benefts and on which the
company has paid, or will in due course pay, tax as it does not consider such expenses to be benefts in the ordinary tax sense.
2. For 2016, beneft values for Mr Connolly include the grossed-up costs for security measures, as well as the installation of a security
system at his home, of £97,506.
3.
John Daly took over as chair of the Remuneration Committee on 27 May 2016.
4. 2017 benefts fgures for Winnie Fok include professional fees in relation to tax and social security compliance.
5. Steve Mogford was appointed as a non-executive director on 27 May 2016 and is the Senior Independent Director.
6.
In addition to his role as chair of the Risk Committee, during 2017 Mr Spence also chaired the Audit Committee.
7. Fees for Ian Springett cover the period of his appointment to the board, between 1 January and 20 June 2017. In addition, for his role
as chair of the Audit Committee, fees were paid during the frst quarter of the year.
8. For Barbara Thoralfsson, 2016 fgures cover the period from the date of her appointment to the board on 1 July 2016. 2017 fgures
include professional fees in relation to tax and social security compliance.
96 G4S plc Integrated Report and Accounts 2017
2017 Annual bonus
During the fnancial year ended 31 December 2017, the performance measures relating to the annual bonus
scheme rules were consistent with the Remuneration Policy, with 85% of the bonus for Ashley Almanza and
70% for Mr Weller being based on achievement of challenging fnancial performance measures. The fnancial
performance measures were based on budgeted Group earnings (excluding specifc and other separately disclosed
items) and budgeted Group operating cash fow before capital expenditure. For threshold performance, 35% of
maximum entitlement would pay out with on-target performance resulting in a payment of 60% of maximum
entitlement, with 100% only being earned in the event of achievement of a stretch performance signifcantly in
excess of budget. The element of bonus determined for each fnancial performance measure is calculated by
interpolating actual achievement against the range between the minimum i.e. entry threshold and the maximum
target to achieve maximum performance.
The remaining 15% of the bonus for Mr Almanza and 30% for Mr Weller was linked to objectives relating to
non-fnancial performance. These consisted of personal objectives or related to the organisation and were linked to
specifc elements of the Group’s strategy for which the particular director had responsibility. Each executive director
has a number of strategic performance measures linked to areas that the committee has agreed for the year. The
committee reviews the progress in each area and then makes an assessment as to whether the executive has
performed in accordance with expectations.
The maximum bonus potential remained unchanged from 2016 at 150% of base pay for both Messrs Almanza and
Weller. Bonuses are paid in cash up to 50% of maximum entitlement. Where the bonus amount is in excess of 50%
of the maximum bonus potential, the amount which exceeds 50% is delivered in the form of a deferred share award
which vests after a period of three years.
The tables below show how pay was linked to performance in 2017 and set out details of each of the fnancial
measures, the targets in respect of these measures and the actual outcomes:
2017 annual bonus – Performance conditions and outcomes
Ashley Almanza
Financial measures
Group Earnings
Group OCF
Total
Weighting
(% of maximum
bonus)
50%
35%
85%
Threshold to
earn bonus
£251.1m
£486.9m
n/a
Target
£258.9m
£501.9m
n/a
To achieve
full vesting
£266.7m
£517.0m
n/a
Achievement
£267.9m
£506.8m
n/a
Score achieved
(% of total for
each measure)
50%
25.5%
75.5%
Personal objectives
Mr Almanza was able to earn up to 15% of the maximum bonus potential for achieving personal objectives. These
were designed to align with the strategic priorities for 2017 (see pages 32 and 33) and were set out in the 2016
Directors' Remuneration report.
Mr Almanza’s 2017 personal objectives consisted of improving health and safety performance, updating the growth
and innovation strategy, continuing to strengthen the global leadership team and achieving substantial completion of
the strategic portfolio programme.
Personal Objective
Health and safety
Achievement
Clear and visible focus and leadership on safety has resulted
in signifcant performance improvement in 2017 with 25
work related fatalities, a reduction from 47 in 2016. This
demonstrates the results of a culture change programme
incorporating leadership behaviour, capability building and
performance management.
Performance Rating
As a result of the signifcant improvements
and progress in these areas the assessment
against non-fnancial objectives for the
Group CEO was agreed as 11 out
of 15 points.
Global leadership team With effect from 1 January 2018, the group-wide management
of our core business has been reorganised. This resulted in new
appointments for fve of the Group Executive Committee,
including a new external hire. The new organisation will enable
the further strengthening of strategic, commercial and operational
focus in each of the core service lines.
The Group made clear progress growing new technology
services in both Cash Solutions and Secure Solutions
The Group has substantially completed the strategic portfolio
programme established a few years ago. This has improved
proftability and raised over £500 million in gross proceeds.
Growth and Innovation
Portfolio programme
Integrated Report and Accounts 2017 G4S plc 97
Governance
Directors’ remuneration report continued
Tim Weller
Financial measures
Group Earnings
Group OCF
Total
Weighting
(% of maximum
bonus)
35%
35%
70%
Threshold to
earn bonus
£251.1m
£486.9m
n/a
Target
£258.9m
£501.9m
n/a
To achieve
full vesting
£266.7m
£517.0m
n/a
Achievement
£267.9m
£506.8m
n/a
Score achieved
(% of total for
each measure)
35%
25.5%
60.5%
Personal objectives
Mr Weller was able to earn up to 30% of the maximum bonus potential for achieving personal objectives. The
personal objectives for the CFO role were set at the beginning of the year to align with the strategic priorities for
2017. These were set out in the 2016 Directors Remuneration report and focused on three key areas, namely
organisational effciency and fnance functions, delivery of integrated IT systems and procurement effciency.
Performance Rating
As a result of the improvements and
progress in these areas the assessment
against non-fnancial objectives for the
Group CFO was agreed as 16 out
of 30 points.
Personal Objective
Organisation effciency
Integrated IT systems
Procurement effciency
Achievement
There has been continued focus on effciency across the Group,
with particular focus on the fnance function, and steps taken
to embed streamlined reporting and management information
as well as de-layering have resulted in signifcant
effciency improvements.
The pilot of the Javelin IT-enabled operating model was
launched in Ireland in 2017 and the enhanced version of Javelin
encompassing all of the lessons learned will be deployed into
Ireland before roll-out to the UK commences later this year.
Procurement programmes continued to operate across the
Group with a category focused approach across all regions.
Key areas of improvement included continued supplier base
rationalisation, demand management and implementation
of new procurement tools providing more effcient and
controlled procurement.
The table below sets out the annual bonus awards which were made to executive directors in respect of the
fnancial year ended 31 December 2017, based on the performance described on the previous pages. As mentioned
earlier in the report, the executive directors suggested their bonus pay-outs be reduced by an amount equivalent
to 10% of their base pay. The Remuneration Committee, which commended their initiative, was fully supportive
and used its discretion to reduce the awards accordingly. The annual bonus awards set out below are shown
after adjustment:
Ashley Almanza
Tim Weller
Ashley Almanza
Tim Weller
2017 annual bonus
£1,120,168
£670,774
2017 annual bonus
(% of salary)
119%
104%
2017 annual
bonus deferred
(% of salary)
44.2%
29.2%
Cash
£704,816
£482,813
Deferred shares
£415,352
£187,961
98 G4S plc Integrated Report and Accounts 2017
Long term incentive plan (LTIP)
The 2017 and 2016 values shown in the fourth column of the single-fgure table relate to the LTIP awards made in
March 2015 and July 2014 respectively. The performance measures and targets of these awards are set out below:
Performance measures and targets for the LTIP awards
40% of each award granted
30% of each award granted
30% of each award granted
Average annual
growth in EPS
period ending on
31 December
in the third year
Less than 5% pa Nil
5% pa (15%
over 3 years)
+ 5 to 12% pa
25%
Proportion of
allocation vesting
Pro-rata
between 25%
and 100%
100%
Greater than +
12% pa (36%
over 3 years)
Ranking against the
bespoke comparator
group by reference
to TSR
Below median
Median
Proportion of
allocation vesting
Nil
25%
Average operating
cash fow
<105%
105%
Proportion of
allocation vesting
Nil
25%
Between median
and upper
quartile
Upper quartile
Pro-rata
between 25%
and 100%
100%
Between 105%
and 125%
125%
Pro-rata
between 25%
and 100%
100%
The table below illustrates the company’s performance against the 2014 award targets and the resulting pay-out as
shown in the 2016 values in the fourth column of the single fgure table:
Measure
Average annual growth in EPS
Relative TSR
Average OCF
Total vesting
Performance
Increase of 15.3% pa
Ranked between 43rd and 44th in
peer group
129%
Vesting (% of element)
100%
0%
100%
70% of maximum
The table below illustrates the company’s performance against the 2015 award targets and the estimated pay-out as
shown in the 2017 values in the fourth column of the single fgure table:
Measure
Average annual growth in EPS
Relative TSR
Average OCF
Total vesting
Performance
Increase of 10% pa
Ranked between 41st and 42nd in
peer group
125%
Vesting (% of element)
80%
0%
100%
62% of maximum
Vesting under the 2015 LTIP was 62% of maximum of the award. Maximum performance was achieved for the
average OCF component and 80% of the portion allocated to average annual EPS growth vested. Dividend
payments to shareholders were maintained throughout the performance period, however relative TSR performance
was affected by share price fuctuations so did not result in any pay-out for this measure.
Total pension entitlements (audited information)
None of the executive directors have any prospective entitlement to a Group defned beneft pension nor is either
a member of the Group’s pension plan, which is a defned contribution group personal pension plan available to all
UK employees. Instead the CEO and CFO receive cash allowances of 25% and 20% of their base pay, respectively.
Integrated Report and Accounts 2017 G4S plc 99
Governance
Directors’ remuneration report continued
SCHEME INTERESTS AWARDED DURING THE FINANCIAL YEAR
(AUDITED INFORMATION)
Awards under the LTIP approved by the shareholders at the company’s AGM in June 2014 were made in March
2017 consistent with the company’s normal grant policy. In June 2017, in accordance with the terms of his contract
of employment, Mr Weller was granted a conditional award over 100,000 ordinary shares of 25 pence each in the
company following the forfeiture of his 2016 bonus from his previous employer. The deemed date of grant for this
award is March 2016 and the vesting of such award will be subject to the achievement of performance conditions
measured over a three-year period beginning in the deemed year of grant, i.e. 2016.
Details of the awards made to the executive directors are summarised in the table below and further details are
given in the table on directors’ shareholdings and interests on page 101:
Director
Award type
Number
of shares
Ashley Almanza
Conditional shares
795,862
Tim Weller
Conditional shares
436,144
Tim Weller
Conditional shares
100,000
Notes:
Face
EPS,TSR and AOCF % vesting at
threshold
2,349,385
value (£) Performance condition Performance period
01/01/2017
– 31/12/2019
01/01/2017
– 31/12/2019
01/01/2016
– 31/12/2018
40% EPS/30%
TSR/30% AOCF
40% EPS/30%
TSR/30% AOCF
40% EPS/30%
TSR/30% AOCF
183,830
1,287,497
25%
25%
25%
1. The face-value calculation for all awards deemed granted in March 2017 was based on a share price of £2.952 which represents the
average closing share price during the three business days following the announcement of the company’s 2016 fnancial results.
2. Awards of conditional shares under the 2017 LTIP were granted in accordance with the Directors' Remuneration Policy. As a result,
conditional share awards representing 250% of base pay and 200% of base pay were granted to Messrs Almanza and Weller respectively.
3. The face-value calculation for the 100,000 share award for Mr Weller, deemed granted in March 2016, was based on a share price of
£1.8383 which represents the average closing share price during the three business days following the announcement of the company's
2015 fnancial results.
4. Further details of performance conditions are set out in the table below.
Performance measures for long-term incentives awarded in 2017
The bespoke comparator group consists of companies constituent of the FTSE 100 index corrected to exclude
fnancial institutions and companies in the extractive sector, and include competitor companies which are outside
that index.
The company’s current policy is to use market-purchased shares to satisfy LTIP awards. Participants in the LTIP will
receive a further share award with a value equivalent to the dividends which would have been paid in respect of
LTIP awards vesting at the end of the performance period.
The company calculates whether the EPS performance target has been achieved by reference to the Group’s
audited accounts, which provide an accessible and objective measure of the Group’s earnings per share. The
average OCF performance target is calculated by reference to the relevant defnition set out in the LTIP rules
approved by shareholders. The committee may alter the terms of the EPS measure if it feels that it is no longer
a fair measure and is no longer incentivising. TSR ranking will be verifed externally.
40% of each award granted
30% of each award granted
30% of each award granted
Average annual
growth in EPS
period ending on
31 December
in the third year
Less than 5% pa Nil
5% pa (15%
over 3 years)
+ 5 to 12% pa
25%
Proportion of
allocation vesting
Pro-rata
between 25%
and 100%
100%
Greater than +
12% pa (36%
over 3 years)
Ranking against the
bespoke comparator
group by reference
to TSR
Below median
Median
Proportion of
allocation vesting
Nil
25%
Average operating
cash fow
<105%
105%
Proportion of
allocation vesting
Nil
25%
Between median Pro-rata
and upper
quartile
Upper quartile
between 25%
and 100%
100%
Between 105%
and 125%
125%
Pro-rata
between 25%
and 100%
100%
100 G4S plc Integrated Report and Accounts 2017
Statement of directors’ shareholdings and share interest (audited information)
The executive directors are required to build up a minimum shareholding in G4S, as explained in the remuneration
policy. Shares in the table below are valued at the year-end price, which was 267p per share at 31 December 2017.
2017
907,678
53,663
2016
466,777
37,570
Share ownership
requirements
(% of salary)
200%
150%
Shareholding
requirements
achieved at
31/12/17
258%
22%
Number of
Deferred shares
held as at
31/12/17
588,035
n/a
Total shares under
LTIP awards subject
to performance at
31/12/17
2,843,603
1,430,880
Ashley Almanza
Tim Weller
Notes:
1.
Includes any shares owned by persons closely associated with the directors.
2. Deferred share awards and LTIP awards do not include the further shares with a value equivalent to the dividends which are paid in
respect of shares received. The number of shares is gross and will be subject to tax when they are released.
3.
4.
In relation to Mr Almanza, the total shares under LTIP awards subject to performance column consists of an award of 788,627 conditional
shares under the LTIP 2015, as well as an award of 1,259,114 conditional shares under the LTIP 2016 and an award of 795,862
conditional shares granted under the LTIP 2017.
In relation to Mr Weller, the total shares under LTIP awards subject to performance column includes awards made in accordance with
Mr Weller’s remuneration arrangement upon becoming CFO on 24 October 2016. Further details of such arrangements are set out
on page 90 of the Integrated Reports and Accounts 2016 and resulted in awards of shares granted in 2016, as follows: an award of
350,000 conditional shares granted on 8 November 2016, 100,000 of which were deemed granted in March 2015 and 250,000 of
which were deemed granted in March 2016 following his relinquishing 2014 and 2015 performance share plan awards from his
previous employer and an award of 544,736 conditional shares granted on 22 November 2016 under the company’s LTIP on a
pro-rata basis, with a vesting period of 36 months and a deemed date of grant of March 2016 relative to his start date as CFO on
24 October 2016. In addition, in March 2017, Mr Weller received an award of 436,144 conditional shares under the LTIP 2017 and
an award of 100,000 shares on equivalent terms to the G4S 2016 LTIP was granted on 9 June 2017 as compensation for the forfeiture
of Mr Weller’s annual bonus from his previous employer.
5.
In addition to the above, each of the directors has a deemed interest in the total number of shares held by the company’s employee
beneft trust. As at 31 December 2017, the trustees of the employee beneft trust held 4,362,068 shares (2016: 4,844,243 shares).
6. On 14 March 2018, Mr Almanza will receive, with respect to the 2017 annual bonus scheme, shares to the value of £415,352 for
deferral to March 2021. Mr Weller will receive, with respect to the 2017 annual bonus scheme, shares to the value of £187,961 for
deferral to March 2021. On 16 March 2018, Mr Almanza will receive 246,022 shares (before selling suffcient shares to pay the
withholding taxes) relating to the deferred shares granted under the 2014 annual bonus scheme in March 2015. On 20 March 2018,
Mr Almanza will receive an estimated 540,725 shares (before selling suffcient shares to pay the withholding taxes) relating to the 2015
LTIP granted in March 2015. Mr Weller will receive an estimated 68,565 shares (before selling suffcient shares to pay the withholding
taxes) relating to the award of 100,000 conditional shares under the 2015 LTIP granted to him as compensation for the forfeiture of his
2014 Petrofac Performance Share Plan.
The shareholdings for non-executive directors are shown below.
John Connolly
John Daly
Winnie Fok
Steve Mogford
Paul Spence
Clare Spottiswoode
Ian Springett
Barbara Thoralfson
As at 31.12.2017 As at 31.12.2016
309,642
30,000
20,000
0
20,000
4,681
n/a
–
336,642
30,000
30,000
10,000
20,000
4,681
n/a
–
There are no requirements for the non-executive directors to hold shares nor for any former directors to hold
shares once they have left the company.
Mr Ramsay who joined the board on 1 January 2018 holds 38,000 shares in G4S.
Integrated Report and Accounts 2017 G4S plc 101
Governance
Directors’ remuneration report continued
PAYMENTS TO PAST DIRECTORS (AUDITED INFORMATION)
Grahame Gibson
Grahame Gibson, who stepped down as a director of the company on 4 June 2015, ceased to be an employee on
20 October 2015. Details of payments for loss of offce in prior years are set out on page 87 of the company’s
integrated report and accounts 2015 available at g4s.com.
Awards made to Mr Gibson under the company’s long term incentive plans were pro-rated to 20 October 2015.
As disclosed in last year’s report, the award made in 2014 vested on 20 March 2017, when Mr Gibson received
187,092 shares. The last remaining award under the 2015 LTIP was also subject to performance, which was tested
at the normal vesting dates. Such award is due to vest on 20 March 2018 and Mr Gibson will receive an estimated
56,729 shares (before selling suffcient shares to pay withholding taxes).
Himanshu Raja
Himanshu Raja stepped down from the board of the company and his role as chief fnancial offcer on
1 October 2016. He ceased to be an employee on the same date. Details of payments for loss of offce in 2016
are set out on page 95 of the company’s Integrated Report and Accounts 2016 available at g4s.com.
In April 2017, he received the sum of £349,322 as second instalment of the payment in lieu of his 12 month notice
period that he was entitled to contractually.
Awards made to Mr Raja under the company’s long term incentive plan were pro-rated to 1 October 2016. All
such awards remain subject to performance, to be tested at the normal vesting dates. On 20 March 2017, Mr Raja
received 344,499 shares following the vesting of the LTIP award made in 2014. On 20 March 2018, Mr Raja will
receive an estimated 151,889 shares (before selling suffcient shares to pay withholding taxes) following the vesting
of the LTIP award made in 2015. The last remaining award under the 2016 LTIP remains subject to performance,
which will be tested at the normal vesting date in March 2019.
PERFORMANCE GRAPH AND TABLE
The line graph below shows the ten-year annual Total Shareholder Return (TSR) performance against the FTSE 100
index. 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 Group and the fact that the company is itself a member
of the FTSE100.
2008 – 2017 Total Shareholder Return
250
200
150
100
50
0
08
09
10
11
12
13
14
15
16
17
G4S
FTSE 100 index
102 G4S plc Integrated Report and Accounts 2017
CEO’s pay in last ten fnancial years
Year
2008
Nick
Buckles
2009
Nick
Buckles
2010
Nick
Buckles
2011
Nick
Buckles
2012
Nick
Buckles
2013
Nick
Buckles
2013
Ashley
Almanza
2014
Ashley
Almanza
2015
Ashley
Almanza
2016
Ashley
Almanza
2017
Ashley
Almanza
2,376 3,248 2,823 1,542 1,186
514 1,459 2,521 2,738 4,790 3,846
83%
74%
53%
0%
0%
0%
72%
98%
70%
97% 79.5%
100% 100%
58%
14%
0%
0%
n/a
n/a
27%
70%
62%
Incumbent
CEO’s total single
fgure of annual
remuneration (£’000)
Bonus % of
maximum awarded
PSP % of
maximum vesting
Notes:
1. Nick Buckles stepped down as CEO on 31 May 2013 and Ashley Almanza took over as CEO from 1 June 2013.
2. After July 2011, the CEO’s total single fgure of annual remuneration included payment in lieu of pension. This was 40% of base pay for Nick
Buckles and is 25% of base pay for Ashley Almanza. Prior to July 2011, a notional sum equal to 40% of relevant base pay has been included.
3. The value of shares that vested in the relevant year under the PSP (or a notional value in the case of shares vested but unexercised)
has been included in the prior year’s CEO’s total fgures, since that is the most relevant year for measurement of performance.
4. The fgures before 2013 did not include taxable expenses.
5. Bonus % of maximum awarded fgure for 2017 is the adjusted fgure after a reduction equivalent to 10% of base pay was applied, as
recommended by the executive directors and approved by the Remuneration Committee.
PERCENTAGE CHANGE IN CEO’S REMUNERATION
The table below shows how the percentage change in the CEO’s salary, benefts and bonus between 2016 and
2017 compared with the percentage change in the average of each of those components of pay for UK-based G4S
employees. The Remuneration Committee has chosen all employees in the UK who were in employment during
the two-year period – 2016 and 2017 – as the group which should provide the most appropriate comparator, as
the Group CEO is based in the UK.
CEO
Average change for all other UK employees
Notes:
Percentage change in remuneration between 2016 and 2017
Salary
1.5%
3.1%
Benefts
0.1%
See note
below
Bonus
-16.8%
See note
below
1. The core beneft composition and the underlying employee entitlements remain unchanged over the two-year period, with changes
linked to increases in premium rates and costs of procurement.
2.
Information on bonuses is not readily available for all other UK employees.
RELATIVE IMPORTANCE OF SPEND ON PAY
The table below illustrates the relative importance of spend on pay compared with other disbursements from proft.
Dividends paid
Total employee costs
There were no share buy-backs effected in either year.
2017
£145m
£5,363m
2016
£145m
£5,240m
Change
–
+2.3%
Integrated Report and Accounts 2017 G4S plc 103
Governance
Directors’ remuneration report continued
STATEMENT OF IMPLEMENTATION OF REMUNERATION POLICY IN 2018
Decisions were taken on the basis of the directors’ remuneration policy approved at the company’s 2017 AGM set
out on pages 107 to 115.
Executive directors’ remuneration
Base pay
For 2018, at the annual pay review, it was decided to increase Messrs Almanza and Weller’s base pay by 2% from
£939,755 to £958,550 and £643,750 to £656,625 respectively. These changes took effect from 1 January 2018.
Annual Bonus Scheme
The annual bonus for the 2018 fnancial year will operate on the same basis as that for 2017 and will be consistent
with the existing remuneration policy. The maximum bonus opportunity remains at 150% of base pay for both
Ashley Almanza and Tim Weller. The fnancial measures of group earnings and operating cash fow remain and
revenue will also be included in the fnancial measures for 2018. These have been selected as they support the
company’s key strategic objectives. As for last year, the fnancial measures are allocated weightings of 85% for Ashley
Almanza. They have increased to 80% for Tim Weller. The non-fnancial measures will therefore account for up to
15% and 20% of the maximum bonus opportunity for Messrs Almanza and Weller respectively.
These non-fnancial measures are based on the Group’s strategy and core values and include the following
key areas:
Ashley Almanza
Mr Almanza’s personal objectives for 2018 cover three key areas, namely strategy, productivity and organisation and
are as follows:
• Strategy – Continue to develop the Group’s use of technology in its products and services.
• Productivity – Develop and initiate the next phase of the Group productivity programme.
• Organisation – Embed new organisation to ensure new teams operate effectively.
Tim Weller
For 2018, Mr Weller’s personal objectives cover productivity and IT.
• Productivity – Contribute to Group programme with effciency improvements in key support functions.
• IT – Deliver lean process IT project.
Details of the performance measures and targets are deemed to be commercially sensitive since they relate to the
2018 fnancial year. To the extent that they are no longer commercially sensitive, targets and performance levels
against them will be disclosed in the company’s 2018 integrated report and accounts.
The proposed target levels for 2018 have been set to be challenging and align with the Group’s strategic priorities
and business plan. In reviewing the targets, the committee took into account a number of factors, including for
example the fact that in relation to group earnings, the minimum target that needs to be met in order for any bonus
to be payable must be at least equal to the earnings in 2017.
The committee considered the proposed targets relating to non-fnancial measures and concluded that these were
also demanding.
Long Term Incentive Plan
The level of awards due to be granted in the 2018 fnancial year under the LTIP approved by shareholders at the
2014 AGM will be consistent with the existing remuneration policy.
As for 2017, the committee considers that a combination of earnings per share growth, total shareholder return and
average cash fow targets are the most appropriate performance measures for the 2018 awards, as they provide a
robust method of assessing the company’s performance, both in terms of underlying fnancial performance and
returns to shareholders.
Awards granted under the LTIP during the 2018 fnancial year are subject to the performance conditions listed in
the table on page 105.
104 G4S plc Integrated Report and Accounts 2017
Performance measures for long-term incentives awarded in 2018
40% of each award granted
30% of each award granted
30% of each award granted
Average annual
growth in EPS
period ending on
31 December
in the third year
Less than 5% pa Nil
5% pa (15%
over 3 years)
+ 5 to 12% pa
25%
Proportion of
allocation vesting
Pro-rata
between 25%
and 100%
100%
Greater than +
12% pa (36%
over 3 years)
Ranking against the
bespoke comparator
group by reference
to TSR
Below median
Median
Proportion of
allocation vesting
Nil
25%
Average operating
cash fow
<105%
105%
Proportion of
allocation vesting
Nil
25%
Between median
and upper
quartile
Upper quartile
Pro-rata
between 25%
and 100%
100%
Between 105%
and 125%
125%
Pro-rata
between 25%
and 100%
100%
The company’s current policy is to use market-purchased shares to satisfy LTIP awards.
Participants in the LTIP will receive a further share award with a value equivalent to the dividends which would have
been paid in respect of LTIP awards vesting at the end of the performance period.
The company calculates whether the EPS performance targets have been achieved by reference to the Group’s
audited accounts, which provide an accessible and objective measure of the Group’s earnings per share.
Adjustments to EPS will be made in respect of:
• Constant exchange rates – in line with previous years, these will be normalised to the rates in the base year
• Acquisitions – earnings will be added to the EPS base at the level used in the acquisition business case
• Disposals – earnings will be removed from the EPS base at the business plan rate
• Share buy-back – the company will only execute buy-backs if the investment is economically accretive and it is
in the interest of the company. The adjusted EPS for the purposes of calculating performance against the LTIP
target shall be further adjusted by:
(a) increasing the average number of shares in issue during the performance year by the number of shares
bought back during the past three years
(b)decreasing the net interest cost in the performance year in respect of the interest charge on the cash cost
of any share buy-backs during the past three years. Interest will be calculated at the Group’s average costs
of funds for the year.
The Remuneration Committee will apply discretion in the event of impairment. If the impairment is not a result of
management failure, then it will not impact the pay-out.
The Remuneration Committee may alter the terms of the EPS measure if it feels that it is no longer a fair measure
and is no longer incentivising.
Operating cash fow is a measure taken before capital expenditure and investments – to ensure that management
is not incentivised to under-invest in growth opportunities – and before pension defcit repayment. Operating cash
fow is expressed as EBITDA +/- working capital and provisions movement as a percentage of EBITDA. Average
operating cash fow is the average over three years.
TSR ranking will be verifed externally.
Integrated Report and Accounts 2017 G4S plc 105
Governance
Directors’ remuneration report continued
Non-executive directors’ remuneration
The fees payable to the non-executive directors other than the chairman are set by the executive directors who
receive input from the chairman. The fees payable to the non-executive chairman are set by the Remuneration
Committee. In both cases, fees are reviewed annually. Fees were last increased in July 2016 for the chairman and
July 2015 for non-executive directors.
In July 2017, it was decided to postpone the exercise to the end of the year, so that it would take place at the same
time as the pay review for executive directors and employees in general. The review carried out at the end of 2017
received input from the Remuneration Committee’s advisor, Deloitte.
As a result of the review, the Remuneration Committee considered and approved a proposed increase of the
chairman’s fee, in line with the increase applicable to group employees based in the UK, of 2% from January 2018.
The review also resulted in a proposed increase to the basic fee for non-executive directors of 2.8%, from £61,750
to £63,500. Such increase was within the range of market practice in the FTSE 100 and in line with increases for
other employees over the same period. Consistent with market median for companies ranked 31 – 100 in the FTSE
index and in recognition of the increased demands of the role, the fee for the chair of the Audit Committee
increased from £19,000 to £20,000. There was no proposed increase to the fees for the role of Senior Independent
Director or other committee chairs. All increases took effect from 1 January 2018.
The table below, sets out the fees for the non-executive chairman and other non-executive directors applicable for
2018 as well as the percentage increase, where relevant, applied following the annual fee review.
Annual fee
Chairman
Basic fee
SID
Chair of Audit Committee
Other chairs
2018 in
£
382,500
63,500
15,000
20,000
18,500
Increase on
prior year in
%
2
2.83
No change
5.26
No change
ADVISORS TO THE REMUNERATION COMMITTEE
Deloitte was appointed by the Remuneration Committee as its advisor in 2014. Such appointment is reviewed
every year and was confrmed in August 2017. The committee received advice from Deloitte on executive and
senior management remuneration matters throughout the year under review. The committee has satisfed itself as
to the independence of Deloitte. Deloitte is a member of the Remuneration Consultants Group and operates
voluntarily under its code of conduct in the UK.
Advisor
Deloitte
Appointment
2014
Fees for services
Services provided to
Remuneration Committee
to Rem Co
Advice on executive £45,900
remuneration
Other services provided to Company
Advice on controls, tax advice on expatriate and
share plans, and other consulting services. These
services were provided by different parts of Deloitte.
Fees for services to the Remuneration Committee are at an agreed rate based on time involved and paid as incurred
The group chief executive, Ashley Almanza, provided guidance to the committee on remuneration packages for
senior executives within the Group. Further guidance was received from the Group’s HR director, Jenni Myles, and
the director of compensation and benefts, Sok Wah Lee. Neither the group chief executive nor the group HR
director participated in discussions regarding their own remuneration.
The committee is satisfed that the advice it received during the year was objective and independent based on the
experience of its members generally.
Information about who are the members of the Remuneration Committee and their attendance at meetings of the
committee during the year under review can be found on pages 74 and 93.
STATEMENT OF VOTING AT GENERAL MEETING
A resolution to approve the Directors’ Remuneration Policy as set out in the company’s annual report for the year
ended 31 December 2016 was passed at the company’s annual general meeting held on 25 May 2017. In addition,
a resolution was passed to approve the Directors’ Remuneration Report (other than the part containing the
Directors’ Remuneration Policy) for the year ended 31 December 2016.
The results of the votes on these resolutions are set out in the table below:
Resolution
Directors’ Remuneration Policy – 2017 AGM
Directors’ Remuneration Report – 2017 AGM
For
97.26%
97.05%
Against
2.74%
2.95%
Withheld
131,465
118,840
106 G4S plc Integrated Report and Accounts 2017
DIRECTORS’ REMUNERATION POLICY
Remuneration policy for executive directors
BASE PAY
Purpose and link to strategy
Base pay is set at competitive levels in order to recruit
and retain high calibre executives with the skills required
in order to manage a company of the size and global
footprint of G4S.
The level of pay will refect a number of factors
including individual experience, expertise and role.
Operation
Reviewed annually and fxed for 12 months
commencing 1 January. Interim salary reviews may be
carried out following signifcant changes in role, scope
or responsibility or at any other time at the
committee’s discretion.
The fnal salary decision may also be infuenced by role,
experience, individual and company performance,
internal relativities and increases for Group employees.
Maximum opportunity
Actual base pay for each executive director is disclosed
each year in the Directors’ remuneration report.
In determining salary increases, the committee considers
market salary levels including those of appropriate
comparator companies.
Ordinarily, annual salary increases would be no more
than the average annual increase across the Group.
However, in exceptional circumstances a higher level
of increase may be awarded, for example:
• following a signifcant change to the nature or scale
of the business;
• following a signifcant change to the nature or scope
of the role; or
• for a new appointment, where the base pay may initially
be set below the market level and increased over time,
as experience develops and with reference to the
individual’s performance in the frst few years in the role.
Where exceptional increases are made we will fully
disclose and explain the rationale for such increases.
Performance measures and clawback
None, although individual performance may have a
bearing on salary increases.
BENEFITS
Purpose and link to strategy
As with base salary, a suitable range of benefts is made
available in order to recruit and retain high calibre
executives.
Operation
Executives are entitled to a number of benefts
comprising paid holiday, healthcare for themselves and
their family and life insurance of up to four times base
salary, car allowance, business related transport, limited
fnancial advice from time to time and expatriate
benefts where relevant. A relocation allowance
refecting reasonable costs actually incurred will be paid.
Other benefts may be granted at the discretion of the
Remuneration Committee.
Reasonable business expenses in line with G4S’
expenses policy (e.g. travel, accommodation and
subsistence) will be reimbursed and in some instances
the associated tax will be borne by the company.
Maximum opportunity
Maximum benefts per director per annum:
• holidays – 30 days
• car allowance – £20,000
• business related local transport – £40,000
• for fnancial advice, expatriate benefts and relocation
expenses, the expense will refect the cost of the
provision of benefts from time to time but will be
kept under review by the committee
• other benefts granted at the discretion of the
committee up to 3% of base pay per annum
per director
• reasonable business expenses are not subject to
a maximum, since these are not a beneft to
the director
Any allowance in relation to relocation will provide for
the reimbursement of reasonable costs incurred.
Performance measures and clawback
None.
Integrated Report and Accounts 2017 G4S plc 107
Governance
Directors’ remuneration report continued
Directors’ remuneration policy – continued
ANNUAL BONUS
Purpose and link to strategy
Rewards the achievement of annual fnancial and strategic
business targets and delivery of personal objectives.
Performance measures and clawback
Typically, executive directors’ bonus measures are
weighted so that:
Deferred element encourages long-term shareholding
and discourages excessive risk taking.
Operation
Awarded annually based on performance in the year.
Targets are set annually and relate to the Group and/or
the business managed by the executive.
Bonus outcome is determined by the committee
after the year end, based on annual performance
against targets.
Bonuses are paid in cash, but executives are required
to defer any bonus payable in excess of 50% of their
maximum bonus entitlement into shares. Deferral is
for a minimum period of three years. Dividends or
equivalents accrue during the deferral period on
deferred shares.
Bonuses are not pensionable.
Maximum opportunity
Maximum opportunity of 150% of base pay per annum
for the CEO and the CFO.
125% of base pay per annum for any other executive
director.
• between 70% and 85% of the bonus is based on
achievement of challenging fnancial performance
measures (e.g. proft before tax and amortisation,
organic growth, cash-fow measures, etc.), with each
measure operating independently of the others; and
the remainder is linked to personal and/or non-
fnancial measures, which are strategic or operational
in nature.
Each year, the committee may use its discretion to vary
the exact number of measures, as well as their relative
weightings, and this will be disclosed in the annual
remuneration report.
As a result of the number of factors taken into account
in determining bonus, there is no minimum pay-out level.
For illustrative purposes, in the event that only threshold
has been achieved, pay-out would be 35% of maximum,
rising to full pay-out should achievement of a stretch
performance level be achieved for all measures assuming
the non-fnancial performance measures were satisfed.
The deferred element of the bonus is not subject to any
further performance measures but is subject to
clawback in certain circumstances. The non-deferred
part of the bonus, which is settled in cash, is also subject
to clawback (see separate section on page 111).
LONG TERM INCENTIVE PLAN
Purpose and link to strategy
Incentivises executives to achieve the company’s
long-term fnancial goals, as well as focus on value
creation, whilst aligning the interests of executives
with those of shareholders.
Operation
Executive directors are granted awards on an annual
basis, which vest over a period of at least three years
subject to continued service and the achievement of
a number of key performance measures.
The Remuneration Committee reviews the quantum
of awards to be made to each executive each year to
ensure that they remain appropriate.
Dividends or equivalents accrue during the vesting
period on awards that vest.
The award is settled by the transfer of market-
purchased shares to the executive directors.
All the released shares (after tax) must be retained
until the minimum shareholding requirement is met.
Currently, the minimum shareholding requirement is
200% of base salary for the CEO and 150% for the
other executive directors.
108 G4S plc Integrated Report and Accounts 2017
Maximum opportunity
Maximum opportunity of 250% of base pay per annum
for the CEO.
Maximum opportunity of 200% of base pay per annum
for other executive directors.
Performance measures and clawback
Awards vest based on performance over a period of at
least three fnancial years commencing with the fnancial
year in which the award is made.
Performance will be measured based on a combination
of earnings per share growth, total shareholder return
against a comparator group and average operating cash
fow. For awards made in 2017, these were in the
proportion of 40%, 30% and 30% respectively.
However, the committee retains the fexibility to amend
these proportions, provided that no single measure will
be a signifcantly greater proportion than the others.
At threshold, 25% of the relevant portion vests. This
increases on a straight-line basis up to 100% for
performance in line with maximum. Targets are set out
on page 99.
Awards are subject to clawback in certain circumstances
(see below on page 111).
RETIREMENT BENEFITS
Purpose and link to strategy
As with base salary and other benefts, making available
a suitable retirement benefts package aids the
recruitment and retention of high calibre executives,
allowing such executives to provide for their retirement.
Operation
G4S operates a defned contribution Group-wide
personal pension plan in the UK in which executives
may participate. Alternatively, G4S may provide a cash
allowance in lieu of a contribution into such plan.
The current executive directors receive cash allowances.
The CEO receives 25% of base pay as a cash allowance;
the CFO and other executive directors receive 20% of
base pay.
Remuneration policy for non-executive directors
CHAIRMAN’S FEE
Purpose
To attract and retain a high calibre chairman by offering
a market-competitive fee, which also refects the
responsibilities and time commitment. There are no
performance-related elements.
Operation
The chairman’s fee is disclosed each year in the
Directors’ remuneration report. The fees are reviewed
annually by the committee. The annual fee is an
all-inclusive consolidated amount. The committee retains
the discretion to review the chairman’s fee at any other
time if appropriate. The chairman’s fee is reviewed
against other companies of a similar size.
The level of award is kept under review by the
committee and is intended to be broadly market
comparable for the roles.
Maximum opportunity
Maximum opportunity of up to 25% of base pay for
the CEO and 20% for other executive directors.
Performance measures
None.
Maximum opportunity
Ordinarily, any increase in the chairman’s fee would
be in line with other increases for similar roles in
other companies.
Fees payable to the chairman and other non-executive
directors in aggregate per annum shall not exceed the
maximum specifed in the company’s articles of
association for the relevant year.
NON-EXECUTIVE DIRECTORS’ FEES (EXCLUDING THE CHAIRMAN)
Purpose
To attract and retain high calibre non-executive directors
(NEDs) by offering market-competitive fees which
should refect the responsibilities and time commitment.
There are no performance-related elements.
Operation
NED fees including any additional fee for any additional
role listed below are disclosed each year in the
Directors’ remuneration report.
With the exception of the chairman, the fees for NEDs
are structured by composition build-up consisting of:
• a base fee
• an additional fee for chairing a committee
• an additional fee for the role of senior independent
director
The NED fees are reviewed annually by the executive
directors. The board retains the discretion to review the
NED fees at other times, as appropriate, to refect any
changes in responsibilities or commitment.
The basic fee covers committee membership and each
NED is expected to participate in one or more board
committees. All the fees are reviewed against other
companies of a similar size.
Maximum opportunity
Ordinarily, any increase in the NEDs’ fees would be in line
with other increases for similar roles in other companies.
Fees payable to non-executive directors (including the
chairman) in aggregate per annum shall not exceed the
maximum specifed in the company’s articles of
association for the relevant year.
Integrated Report and Accounts 2017 G4S plc 109
Governance
Directors’ remuneration report continued
Directors’ remuneration policy – continued
Remuneration policy for non-executive directors
BENEFITS
Purpose
Benefts may be provided from time to time in
connection with the chairman and other NEDs
performing their roles, such as business travel,
subsistence and entertainment, accommodation and
professional fees for tax and social security compliance,
and other ancillary benefts.
Operation
Reasonable business expenses in line with G4S
expenses policy (e.g. travel, accommodation and
subsistence) will be reimbursed and in some instances
the associated tax will be borne by the company.
Maximum opportunity
Reasonable business expenses are not subject to a
maximum, since these are not a beneft to the director.
Benefts and expenses will refect the actual cost
of provision.
Notes to the directors’ remuneration policy
1. Performance measures
Annual Bonus Plan – The actual performance measures
and targets are set by the Remuneration Committee at
the beginning of each year. The performance measures
used for our annual bonus plan have been selected to
refect the Group’s key performance indicators.
The committee aims to ensure that the measures
appropriately encourage the executive directors to
focus on the company’s strategic priorities, whilst the
targets are set to be stretching but achievable.
The aim is to strike an appropriate balance between
incentivising annual fnancial and strategic business
targets, and each executive director’s key role-specifc
objectives for the year.
Long Term Incentive Plan – In choosing the
performance measures for the Long Term Incentive
Plan, the committee aims to fnd a balance of measures
which refect the company’s long-term fnancial goals as
well as incentivise executives to create sustainable,
long-term value for shareholders.
Legacy plans – The committee reserves the right to
make any remuneration payments and/or payments for
loss of offce (including exercising any discretions
available to it in connection with such payments)
notwithstanding that they are not in line with the
policy set out above where the terms of the payment
were agreed
(i) before 5 June 2014 (the date the company’s frst
shareholder-approved directors’ remuneration policy
came into effect);
(ii) before the policy set out above came into effect,
provided that the terms of the payment were consistent
with the shareholder-approved directors’ remuneration
policy in force at the time they were agreed; or
(iii) at a time when the relevant individual was not a
director of the company and, in the opinion of the
committee, the payment was not in consideration for
the individual becoming a director of the company.
For these purposes, payments may include the
committee satisfying awards of variable remuneration.
In cases where all or part of the variable remuneration
award was in the form of shares, the payment terms are
those agreed at the time the award was granted.
Details of the vesting of the awards will be published in
the annual remuneration report each year.
The non-executive directors do not participate in any
incentive schemes nor do they receive any benefts
other than those referred to in the above table.
110 G4S plc Integrated Report and Accounts 2017
2. Malus and claw-back mechanisms
Since 2010, any cash and/or shares awarded under the
annual bonus plans and the previous Performance Share
Plan may be subject to clawback.
The Long Term Incentive Plan and the annual bonus plan
may be subject to malus or clawback from the executive
director concerned if the Remuneration Committee so
determines and, in the case of misstatement of accounts,
where the Audit Committee concurs.
The time period in which the clawback can be operated
depends on the reason for the overpayment as set out
in the table below.
The amount to be clawed back directly from the
executive director will be the overpaid amount, but the
Remuneration Committee retains the discretion to claw
back the “net” (i.e. post-tax) amount of the award
received by the executive director.
Malus and claw-back
Material misstatement of
group fnancial accounts
Misconduct
Fraud
Annual Bonus Plan
(including deferred elements)
Since 2015 plan
up to 2 years after the
payment of the cash
element
up to 6 years after the
payment of the cash
element
unlimited
Principles and approach to recruitment and
internal promotion of directors
When hiring a new executive director, or promoting to
the board from within the Group, the committee will
offer a package that is suffcient to retain and motivate
and, if relevant, attract the right talent whilst at all times
aiming to pay no more than is necessary. Ordinarily,
remuneration for a new executive director will be in line
with the policy set out in the table summarised above.
However, discretion may be required for exceptional
circumstances such as dealing with remuneration
relinquished in a previous job.
The maximum level of on-going variable pay that may
be awarded to new executive directors on recruitment
or on promotion to the board shall be limited to 400%
of base salary as set out in the policy above (calculated
at the date of grant, excluding any buy-out awards – see
below). Remuneration and any buy-out arrangements
will be announced as far as possible at the time a new
executive director or chairman is appointed, or in the
following Directors’ remuneration report.
When determining the remuneration of a newly-
appointed executive director, the Remuneration
Committee will apply the following principles:
The on-going remuneration package to be designed in
accordance with the policy above.
• New executive directors will participate in the annual
bonus scheme and Long Term Incentive Plan on the
same basis as existing executive directors.
• The Remuneration Committee has discretion to
grant one-off cash or share-based awards to
executive directors where it determines that such an
award is necessary to secure the recruitment of that
Long term incentive plan (LTIP)
PSP (previous)
up to 2 years after vesting
(except where due to
fraud or reckless
behaviour when it shall be
6 years after vesting)
Current LTIP
up to 2 years after vesting
up to 6 years after vesting
unlimited
executive director and where it is in the best
interests of the company to do so. Such awards
would only be made as compensation for
remuneration relinquished under a previous
employment (i.e. buy-out arrangements) and would
be intended to mirror forfeited awards as far as
possible by refecting the value, nature, time horizons
and performance measures attached. In such
circumstances, the company will disclose a full
explanation of the detail and rationale for such
one-off awards.
• In certain circumstances, it may be necessary to buy
out long notice periods of previous employment.
• With regard to internal promotions, any
commitments made before promotion and
unconnected with the individual’s promotion may
continue to be honoured even if they would not
otherwise be consistent with the policy prevailing
when the commitment is fulflled.
• For external and internal appointments, the
Remuneration Committee may agree that the
company will meet certain relocation expenses
(including legal fees), as set out in the policy.
• In determining the approach for all relevant elements,
the Remuneration Committee will consider a number
of factors, including (but not limited to) external
market practice, current arrangements for existing
executive directors and other internal relativities.
Integrated Report and Accounts 2017 G4S plc 111
Governance
Directors’ remuneration report continued
Service contracts
Shareholders are entitled to inspect a copy of executive
directors’ service contracts at the company’s head offce
and at the AGM.
Executive directors’ service contracts all have the
following features:
• Contracts are drafted in line with best practice at
the time the executive directors were appointed.
• Terminable on 12 months’ notice by either party.
Specifc provisions for Ashley Almanza and Tim Weller’s
contracts (dated 2013 and 2016 respectively) include:
• Messrs Almanza and Weller are each allowed to
hold one external non-executive appointment and
retain the fees paid to them for such appointments.
Mr Almanza is a non-executive director of Noble
Corporation and Mr Weller is a non-executive
director of the Carbon Trust.
• Mitigation obligations on termination payments are
explicitly included in the executive directors’
contracts. Notice payments for Ashley Almanza and
Tim Weller are payable monthly.
Non-executive directors’ letters of appointment:
• Appointment is subject to the provisions of the
articles of association of the company, as amended
from time to time regarding appointment, retirement,
fees, expenses, disqualifcation and removal of
directors.
• All continuing non-executive 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.
• Initial period of appointment is two years.
• All reasonably-incurred expenses will be met.
• Fees are normally reviewed annually.
Loss-of-offce payment
The duration of the notice period in the executive
directors’ contracts is 12 months.
The Remuneration Committee would consider the
application of mitigation obligations in relation to any
termination payments.
The contracts do not provide for the payment of
a guaranteed bonus in the event of termination.
Neither Ashley Almanza nor Tim Weller will be eligible
for bonus accrual during any period of garden leave.
In relation to Mr Almanza, the value of the termination
payment would cover the balance of any salary and
associated benefts payments due to be paid for the
remaining notice period, the value of which will be
determined by the Remuneration Committee.
In relation to Mr Weller, the value of the termination
payment would amount to the balance of any salary due
to be paid for the remaining notice period multiplied by
1.25 to refect the value of contractual benefts during
such period.
The Remuneration Committee would also retain the
discretion to make appropriate payments necessary to
fnalise any settlement agreement, but in exercising such
discretion the Remuneration Committee would remain
mindful to ensure that there was no reward for failure.
The fees for outplacement services and reasonable legal
fees in connection with advice on a settlement
agreement may be met by the company.
112 G4S plc Integrated Report and Accounts 2017
The table below illustrates how each component of pay would be calculated under different circumstances:
Plan
Annual bonus
(cash element)
Automatic “good leaver” categories
All leavers other than voluntary
resignation and summary dismissal.
Annual bonus
(deferred share
element)
Long Term
Incentive Plan
• Injury, disability or ill health
• Redundancy
• Retirement
• Death
• Termination without cause
• Change of control or sale
of employing company
or business
• Any other circumstances
at the discretion of the
Remuneration Committee
• Injury, disability or ill health
• Redundancy
• Retirement
• Death
• Change of control or sale
of employing company
or business
• Any other circumstances
at the discretion of the
Remuneration Committee
Treatment for “good leavers”
Executive directors may receive a
bonus to be paid on the normal
payment date and in accordance
with the agreed performance
measures but reduced pro-rata
to refect the time employed.
Deferred shares may be released
if the executive director ceases
employment prior to the third
anniversary as a result of one of
the good leaver reasons.
Treatment for other leavers
Bonus opportunity
will lapse.
Deferred share
awards will lapse.
Awards will lapse.
Awards will vest on the relevant
vesting date on a time-
apportioned basis, unless the
Remuneration Committee
determines otherwise, and subject
to the achievement of
performance measures at the
relevant vesting date.
The vesting date for such awards
will normally be the original vesting
date, unless otherwise determined
by the Remuneration Committee.
As directors may leave employment for a wide range of reasons, the committee retains discretion to approve
payments where the reason for leaving does not fall precisely within the prescribed “good leaver” category.
The committee will take account of the director’s performance in offce and the circumstances of their exit. The
committee will seek to balance the interests of shareholders, the departing director and the remaining directors.
Any awards subject to performance conditions would be assessed at the end of the relevant period and be subject
to time apportionment.
Corporate Action
If the company is subject to a change in control, the Long Term Incentive Plan provides that awards will vest subject
to the performance targets having been satisfed up to the date of the change of control and, unless the committee
determines otherwise, time pro-rating.
On a variation of share capital, other reorganisation of the company, or a demerger of a substantial part of the
Group’s business, the committee may make such adjustment to awards as it may determine to be appropriate.
Integrated Report and Accounts 2017 G4S plc 113
Governance
Directors’ remuneration report continued
Illustrations of application of remuneration policy
Ashley Almanza, Chief Executive Offcer (£000)
Tim Weller, Chief Financial Offcer (£000)
6000
5000
4000
3000
2000
1000
0
£5,142
47%
£2,410
25%
28%
£1,308
100%
21%
54%
25%
3500
3000
2500
2000
1500
1000
500
0
£3,116
42%
£1,491
32%
22%
23%
55%
£818
100%
26%
m
u
m
n
M
i
i
l
d
o
h
s
e
r
h
T
e
c
n
a
m
r
o
f
r
e
p
m
u
m
x
a
M
i
e
c
n
a
m
r
o
f
r
e
p
Fixed pay
Annual bonus
LTIP
m
u
m
n
M
i
i
l
d
o
h
s
e
r
h
T
e
c
n
a
m
r
o
f
r
e
p
m
u
m
x
a
M
i
e
c
n
a
m
r
o
f
r
e
p
Fixed pay
Annual bonus
LTIP
CEO
£958,550
£110,000
£239,638
£1,308,188
CFO
£656,625
£30,000
£131,325
£817,950
2018
Base pay
Benefts
Pension
Total Fixed Pay
The benefts fgures include taxable business expenses and associated tax and NIC payable by the company.
The bar charts above set out the effect of the executive directors’ remuneration policy as it will apply in 2018 and
based on the assumptions set out below:
Fixed pay
Minimum
Consists of total fxed pay including base salary, benefts and pension benefts
Threshold
Maximum
• Base salary – salary effective as at 1 January 2018
• Benefts – amount received by the Executive Directors respectively in 2017 including
business expenses classifed by HMRC as benefts but which the company does not
consider to be benefts in the ordinary sense
• Retirement benefts – 25% of salary for Ashley Almanza, 20% of salary for Tim Weller
Annual bonus
No payout
Long-term
incentives
No vesting
35% of the maximum payout
(i.e. 52.5% of salary for Ashley
Almanza and Tim Weller)
100% of the maximum payout
(i.e. 150% of salary for Ashley
Almanza and Tim Weller)
25% vesting under the LTIP
(i.e. 62.5% of salary for Ashley
Almanza and 50% of salary for
Tim Weller)
100% of the maximum payout
(i.e. 250% of salary for Ashley
Almanza and 200% of salary
for Tim Weller)
114 G4S plc Integrated Report and Accounts 2017
Statement of consideration of employment conditions elsewhere in the Group
The structure of the executive directors’ pay policy is generally in line with the policy for remuneration of the senior
management within the Group, although the levels of award will be different.
The performance measures that apply in the variable element of the remuneration will refect the relevant areas of
responsibilities. There may be one-off awards for retaining scarce and critical individuals below board level.
Remuneration of employees globally will depend on local regulation and practice, taking any collective bargaining
agreements into account, where they exist.
Elements of
remuneration
Fixed
Variable
Benefts
Pay
Pensions
Annual bonus
Long term incentive plan
Car or car allowance
Life/Income protection insurance
Private Healthcare
Availability
Available to all employees worldwide
Available to most employees in developed markets
Available to all senior managers worldwide
Available to some senior managers worldwide
Available to all senior managers worldwide
Available to most employees in developed markets
Available to all senior managers in markets where it is
commonly provided
Across the Group the company seeks to pay competitively, taking into account external benchmarking and internal
moderation at each level to ensure that remuneration is in line with market practice. When determining base salary
increases for executive directors, the Remuneration Committee pays particular attention to the data at senior
manager level.
At G4S, the committee does not normally consult directly with employees as part of the process of determining
the remuneration policy and pay decisions for executive directors and has not therefore done so in setting this
remuneration policy. However, employee surveys are carried out biennially which help determine employees’ views
of their own pay and benefts, as well as those of colleagues in general.
Statement of consideration of shareholder views
We are committed to on-going engagement on key remuneration issues and seek our major shareholders’ views
prior to proposing any major change in policy. This provides us with valuable feedback and we take into
consideration these views and seek to refect them in our policy.
The chairman of the Remuneration Committee will be available to answer any questions and listen to the views
of our shareholders at the forthcoming annual general meeting.
John Daly
Remuneration Committee Chairman
8 March 2018
Integrated Report and Accounts 2017 G4S plc 115
Governance
Directors’ report
This is the report of the directors of the board of G4S
plc for the year ended 31 December 2017.
1. The company
G4S plc is a parent company incorporated in England
and Wales with company number 4992207. It trades
primarily through its subsidiaries and joint ventures in
numerous jurisdictions. A list of those subsidiaries and
joint ventures is set out on pages 187 to 201.
G4S plc has its primary listing on the London Stock
Exchange and has a secondary listing on the NASDAQ
OMX exchange in Copenhagen.
2. Reporting obligations
In compliance with relevant listing rules and also with
DTR4.1.5.R and DTR4.1.8R, the Integrated Report and
Accounts 2017 contain the consolidated results for the
year, shown in the Consolidated income statement on
page 132, a management statement contained in the
strategic report and in the Directors’ report and
responsibility statements on pages 116 to 119.
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, prospects of the Group and other
information which fulfls the requirements of a
management report, are all contained on pages 4 to 65
of the strategic report and are incorporated by
reference in this Directors’ report. The Corporate
governance report, the Audit Committee report and
the Directors’ remuneration report set out on pages 85
to 115 and the Chief Financial Offcer’s review on pages
37 to 50 are also incorporated in this report by
reference. The Group’s fnancial risk management
objectives and policies in relation to its use of fnancial
instruments and its exposure to price, credit, liquidity
and cash fow risk, to the extent material, are set out
in note 31 to the consolidated fnancial statements
on pages 168 to 172 which is also incorporated by
reference in this Directors’ report.
None of the matters required to be disclosed by LR
9.8.4C R apply to the company other than shareholder
waiver of dividends which is referred to in section 4 of
this Directors’ report.
3. Dividends
The directors propose the following dividend for
the year:
• Interim dividend of 3.59p (DKK 0.2948) per share
paid on 13 October 2017
• Final dividend of 6.11p (DKK 0.5097) per share
payable on 15 June 2018
Shareholders on the Danish VP register will receive their
dividends in Danish kroner. Shareholders who hold their
shares through CREST or in certifcated form will
receive their dividends in sterling unless they prefer to
receive Danish kroner by way of a cheque payable in
the UK, in which case they should apply in writing to the
Registrars by no later than 3 May 2018.
4. Capital
The issued share capital of G4S plc at 31 December
2017 is as set out on page 182 (note 35 to the
consolidated fnancial statements) and consisted of
1,551,594,436 ordinary shares of 25 pence each. The
number of shares in issue as at 8 March 2018
remains unchanged.
In general there are no restrictions on the holder’s
ability to transfer their shares or exercise their voting
rights, other than in situations where the company is
legally entitled to impose such restrictions (usually
where amounts remain unpaid on the shares after
request, or the holder is otherwise in default of an
obligation to the company).
The company is not aware of any agreements between
its shareholders that may restrict the transfer of their
shares or the exercise of the voting rights attaching to
them except in relation to the G4S Employee Beneft
Trust (“the Trust”) which has been established to
facilitate certain employee share plans.
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. At 31 December
2017 the directors had authority in accordance with a
resolution passed at the company’s annual general
meeting held on 25 May 2017 to make market
purchases of up to 155,159,000 of the company’s shares.
The company does not hold any treasury shares as such.
However, the 4,362,068 shares held within the Trust
and referred to on page 182 (note 36 to the
consolidated fnancial 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.
5. Signifcant agreements – change of control
The company is party to a £1,000,000,000 multi-
currency revolving credit facility agreement which
requires prompt notifcation of a change of control
event following which funds committed but unutilised
could be cancelled and repayment of outstanding funds
utilised would need to be made within 45 days.
The company entered into two US Private Placement
Note Purchase Agreements (the “USPP Agreements”),
on 1 March 2007 and 15 July 2008 respectively. The frst
USPP Agreement is for $550,000,000 and series C-D
senior notes representing $250,000,000 remain
outstanding and mature between 1 March 2019 and
1 March 2022. The second USPP Agreement is for
$513,500,000 and £69,000,000 and series D-F senior
notes representing $298,500,000 and £44,000,000
remain outstanding and mature between 15 July 2018
and 15 July 2020. Under the terms of both USPP
Agreements, the company is required to offer the note
holders the right to purchase the notes at par value
together with interest thereon upon a change of control.
116 G4S plc Integrated Report and Accounts 2017
Under the terms of the £2,500,000,000 Euro Medium
Term Note Programme the company issued four
tranches of Medium Term Notes (MTNs), issued to
various institutions on 13 May 2009 (£350,000,000),
6 December 2012 (€500,000,000), 9 November 2016
(€500,000,000) and 2 June 2017 (€500,000,000). In the
event of a change of control, a put option comes into
force, according to which holders of any MTN may
require the company to redeem the MTNs at par if the
MTNs carry a sub-investment grade credit rating in the
period immediately prior to the change of control, or in
certain circumstances where the MTNs are downgraded
to sub-investment as a result of the change of control.
We do not employ forced, bonded or child labour.
We appoint people based on their skills and capabilities
and not any personal characteristics which are
discriminatory or illegal in the countries in which we
work. Our aim is to develop and grow so removing
barriers to employment helps us ensure we tap into the
widest talent pool and are able to harness all the skills
and abilities people have. If, during the course of their
employment individuals become disabled and unable to
meet the job requirements we seek to retrain or retain
their talents by making reasonable adjustments wherever
possible. Further information on our approach to
diversity and inclusion can be found on page 16.
The Group’s UK pension scheme trust deed contains
provisions which apply if a takeover event occurs.
Following such an event, the appointment and removal
of trustees becomes subject to unanimous trustee
agreement and the trustees acquire the unilateral power
to set the employer contribution rates in certain
sections of the scheme.
6. Post balance sheet events
There have been no signifcant events from
31 December 2017 to the date of this report.
7. 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
proft and loss during the year amounted to £4m
(2016:£4m).
8. Employees
Asking for, listening to and acting on the feedback from
our people enables us to address their concerns and
capture their ideas for improvements. They are closest
to our operations and to the needs of our customers
in a constantly changing marketplace. We value the
feedback from our biennial global and management
surveys and take time in between to address the issues
raised. The high response rate helps identify underlying
problems and provides a strong mandate for action. In
addition to the surveys we encourage dialogue with our
employees directly and also seek feedback from our
networks with union representatives at a global,
European and local level. These networks provide early
warning signs of any issues and are an additional avenue
for communication and for sharing updates on business
performance. More information on employee
communication and consultation can be found on
pages 16 and 17.
Our managers are invited to participate in webinars
which coincide with announcements of our fnancial
results and are encouraged to cascade the information
shared with their teams. In 2017, we also introduced
new on-line newsletters for our senior managers
containing information on contract wins, projects and
market developments. The newsletters showcase
examples of security innovations and help businesses
struggling with similar challenges to become early
adopters building on new ideas rather than
recreating them.
9. Political donations
Each year the company’s shareholders have passed
a resolution on a precautionary basis to allow the
company and its subsidiaries to make political donations
or incur political expenditure not exceeding £50,000.
However, the board confrms that the Group’s policy is
not to make any fnancial contribution to political parties
and that 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, or anywhere else in the world.
10. Greenhouse gas emissions
Alongside the risks faced by people and infrastructure
from climate change are the challenges presented by
global economic conditions.
Managing fuel costs and the impact of “carbon taxes”
through programmes to improve the Group’s energy
effciency and reduce its environmental impacts are
important to the continued effectiveness and
sustainability of the Group’s business.
We follow WBCSD* and WRI** Greenhouse Gas
Protocol to measure our Scope 1 and 2 emissions –
vehicle feet, fuel, refrigerants and electricity usage for
G4S businesses over which the Group has fnancial and
operational control. In addition the Group has measured
Scope 3 emissions from employee business air travel.
The businesses that reported data in the 2017 GHG
measurement represent 90% of the Group’s operations,
across a 12 month period. This level of measurement,
including each of the Group’s main service types, allows
reliable calculation of the total GHG emissions for 100%
of the Group.
The G4S total carbon footprint during 2017,
extrapolated to 100% of the business equates to some
501,467 t/CO2e. These CO2e emissions, including
emissions generated by services which our customers
have outsourced to G4S, have decreased by 2.5% since
2016 – against a 3.2% revenue growth in our core
businesses during the same period, refecting the efforts
made to increase the energy effciency of our business.
In 2018, we will continue to implement energy effciency
strategies with the aim of reducing carbon intensity by at
least 3.5% per annum.
* World Business Council for Sustainable Development
** World Resources Institute
For further details, please visit g4s.com/env
Integrated Report and Accounts 2017 G4S plc 117
Governance
Directors’ report continued
GHG emissions (t/CO2e)
(Based on 90% measurement)
Vehicles (inc. refrigerants)
Total buildings (inc. refrigerants)
Including electricity emissions of
Air travel
Carbon intensity
Tonnes CO2e per £m turnover
2016
256,081
139,831
114,243
15,261
2017
261,398
139,728
103,915
20,368
2016
68.1
2017
62.9
11. Substantial holdings
The company had been notifed under DTR 5 of the following interests in the ordinary capital of G4S plc:
As at 31.12.2017
Invesco
BlackRock, Inc.
Mondrian Investment Partners Limited
Harris Associates LP
Between 1.1.2018 and 8.3.2018
Invesco
Blackrock, Inc.
202,498,965 (13.05%)
93,462,222 (6.02%)
78,613,679 (5.07%)
79,355,377 (5.11%)
201,499,651 (12.98%)
98,401,235 (6.34%)
12. Auditor
A resolution to re-appoint PricewaterhouseCoopers
LLP, chartered accountants, as auditor to the company
for 2018, and for their remuneration to be fxed by the
Audit Committee, will be submitted to the annual
general meeting.
13. Directors
The directors, biographical details of whom are
contained on pages 68 and 69, held offce throughout
the year, apart from Ian Springett who retired from the
board on 20 June 2017 and John Ramsay, who was
appointed to the board on 1 January 2018.
In accordance with the code provisions on re-election
of directors in the UK Corporate Governance Code,
each of the directors continuing in offce will offer
themselves for re-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 (or elected) at the annual general meeting.
The contracts of service of the executive directors have
no unexpired term since they are not for a fxed 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
beneft 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 defned by section 234 of the
Companies Act 2006 and have been in effect since
14 June 2010 for Ms Spottiswoode, 1 October 2010 for
Ms Fok, 8 June 2012 for Mr Connolly, 1 January 2013
for Mr Spence,1 April 2013 for Mr Weller,1 May 2013
for Mr Almanza, 5 June 2015 for Mr Daly, 27 May 2016
for Mr Mogford, 1 July 2016 for Ms Thoralfsson,
1 January 2017 for Mr Springett and 1 January 2018
for Mr Ramsay. 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 some of the
Group’s subsidiaries in the USA, Greece, India, the UAE
and the Philippines. The company has maintained a
directors’ and offcers’ liability insurance policy
throughout the year under review.
Details of directors’ interests (including the interests of
their connected persons) in the share capital of G4S plc
are set out on page 101, and the directors’ remuneration
is set out on page 96.
The directors who held offce at the date of approval
of this Directors’ report confrm 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 himself 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 signifcant to the business of the Group during
the fnancial year.
By order of the board
Celine Barroche
Company Secretary
8 March 2018
118 G4S plc Integrated Report and Accounts 2017
Directors’ responsibilities
Statement of directors’ responsibilities in
respect of the annual report and the
fnancial statements
The directors are responsible for preparing the
annual report and the Group and parent company
fnancial statements in accordance with applicable law
and regulations.
Company law requires the directors to prepare group
and parent company fnancial statements for each
fnancial year. Under that law they are required to
prepare the group fnancial statements in accordance
with IFRSs as adopted by the EU and applicable law and
have elected to prepare the parent company fnancial
statements in accordance with UK Accounting Standards.
Under company law the directors must not approve the
fnancial statements unless they are satisfed that they
give a true and fair view of the state of affairs of the
Group and parent company and of their proft or loss
for that period. In preparing each of the group and
parent company fnancial statements, the directors are
required to:
• select suitable accounting policies and then apply
them consistently;
• make judgments and estimates that are reasonable
and prudent;
• for the group fnancial statements, state whether
they have been prepared in accordance with IFRSs
as adopted by the EU;
• for the parent company fnancial statements, state
whether applicable UK Accounting Standards have
been followed, subject to any material departures
disclosed and explained in the parent company
fnancial statements; and
• prepare the fnancial 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 suffcient to show and
explain the parent company’s transactions and disclose
with reasonable accuracy at any time the fnancial
position of the parent company and enable them to
ensure that its fnancial 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 strategic report,
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 fnancial information
included on the company’s website. Legislation in the
UK governing the preparation and dissemination of
fnancial statements may differ from legislation in
other jurisdictions.
Directors’ responsibility statement
Each of the directors, the names of whom are set out on
pages 68 and 69 of this Integrated Report and Accounts,
confrm that, to the best of his or her knowledge:
• the fnancial statements in this Integrated Report and
Accounts have been prepared in accordance with
the applicable accounting standards and give a true
and fair view of the assets, liabilities, fnancial position
and results of the company and the Group; and
• the management report required by DTR4.1.8R
(contained in the strategic report and the Directors’
report) 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 strategic report from the inside front cover to page
65 includes information on the Group structure, the
performance of the business and the principal risks and
uncertainties it faces. The fnancial statements on pages
132 to 210 include information on the Group and the
company’s fnancial results, fnancial outlook, cash fow
and net debt and balance sheet positions. Notes 22, 26,
27, 30 and 31 to the consolidated fnancial statements
include information on the Group’s investments, cash
and cash equivalents, borrowings, derivatives, fnancial
risk management objectives, hedging policies and
exposure to interest, foreign exchange, credit, liquidity
and market risks.
Pages 132 to 201 contain information on the
performance of the Group, its fnancial position, cash
fows, net debt position and borrowing facilities. Further
information, including fnancial risk management policies,
exposures to market and credit risk and hedging
activities, is given in note 31 to the fnancial statements.
After making enquiries, the directors have a reasonable
expectation that the Group has adequate resources to
continue in operational existence for the foreseeable
future. For this reason the directors consider it
appropriate to adopt the going concern basis in
preparing the fnancial statements.
Directors are also required to provide a broader
assessment of viability over a longer period, which can be
found on page 92 of the Integrated Report and Accounts.
The directors consider that the Integrated Report and
Accounts, taken as a whole, is fair, balanced and
understandable and provides the information necessary
for shareholders to assess the company’s performance
and position, business model and strategy.
The statement of directors’ responsibilities and the strategic
report are approved by a duly authorised committee of the
board of directors on 8 March 2018 and signed on its
behalf by Tim Weller, Chief Financial Offcer.
Tim Weller
Chief Financial Offcer
8 March 2018
Integrated Report and Accounts 2017 G4S plc 119
Governance
Independent auditors’ report to the members of G4S plc
REPORT ON THE AUDIT OF THE
FINANCIAL STATEMENTS
Opinion
In our opinion:
• G4S plc’s Group fnancial statements and parent
company fnancial statements (the “fnancial
statements”) give a true and fair view of the state
of the Group’s and of the parent company’s affairs
at 31 December 2017 and of the Group’s proft and
cash fows for the year then ended;
• the Group fnancial statements have been properly
prepared in accordance with International Financial
Reporting Standard (“IFRSs”) as adopted by the
European Union;
• the parent company fnancial statements have been
properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards, comprising
FRS 101 “Reduced Disclosure Framework”, and
applicable law); and
• the fnancial statements have been prepared in
accordance with the requirements of the Companies
Act 2006 and, as regards the Group fnancial
statements, Article 4 of the IAS Regulation.
We have audited the fnancial statements, included
within the Integrated Report and Accounts (the “Annual
Report”), which comprise:
• the consolidated statement of fnancial position at
31 December 2017;
• the parent company statement of fnancial position
at 31 December 2017;
• the consolidated income statement for the year
then ended;
• the consolidated statement of comprehensive
income for the year then ended;
• the consolidated statement of cash fows for the year
then ended;
• the consolidated statement of changes in equity for
the year then ended;
• the parent company statement of changes in equity
for the year then ended; and
• the notes to the fnancial statements, which include
a description of the signifcant accounting policies.
Our opinion is consistent with our reporting to the
Audit Committee.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (“ISAs (UK)”)
and applicable law. Our responsibilities under ISAs (UK)
are further described in the auditors’ responsibilities for
the audit of the fnancial statements section of our
report. We believe that the audit evidence we have
obtained is suffcient and appropriate to provide a basis
for our opinion.
Independence
We remained independent of the Group in accordance
with the ethical requirements that are relevant to our
audit of the fnancial statements in the UK, which
includes the FRC’s Ethical Standard, as applicable to
listed public interest entities and we have fulflled our
other ethical responsibilities in accordance with these
requirements.
To the best of our knowledge and belief, we declare
that non-audit services prohibited by the FRC’s Ethical
Standard were not provided to the Group or to the
parent company.
Other than those disclosed in note 10 to the fnancial
statements, we have provided no non-audit services to
the Group or to the parent company in the period from
1 January 2017 to 31 December 2017.
Our audit approach
Context
G4S is an integrated security company specialising in the
provision of security and related services to customers
in around 90 countries, which in 2017 was organised
into seven geographical regions.
Overview
Materiality
• Overall Group materiality: £20m (2016: £15m),
which represents approximately 5% of adjusted
proft before tax, being proft before tax after adding
back certain items that are separately reported on
the face of the consolidated income statement
including specifc items, restructuring costs and proft
on disposal.
• Overall parent company materiality: £15m (2016:
£13.5m), which represents approximately 1% of net
assets.
Audit scope
• Our audit included full scope audits of the Group’s
seven geographical regions. The regional audits were
supported by full scope audits at 73 country
components with specifed audit procedures
performed at a further 16 country components.
• Taken together, the components at which either
full scope audit work or specifed audit procedures
were performed accounted for 76% of consolidated
revenue, 78% of consolidated proft before tax and
73% of consolidated adjusted proft before tax.
120 G4S plc Integrated Report and Accounts 2017
As in all of our audits, we also addressed the risk of
management override of internal controls, including
evaluating whether there was evidence of bias by
management that represented a risk of material
misstatement due to fraud and the risk of fraud in
revenue recognition. Procedures designed to address
these risks included testing of material journal entries
and post-close adjustments, testing and evaluating
management’s key accounting estimates for
reasonableness and consistency, undertaking cut-off
procedures to check proper cut-off of revenue and
testing the occurrence and accuracy of revenue
transactions. In addition, we incorporate an element of
unpredictability into our audit work each year.
Key audit matters
Key audit matters are those matters that, in the auditors’
professional judgment, were of most signifcance in the
audit of the fnancial statements of the current period
and include the most signifcant assessed risks of
material misstatement (whether or not due to fraud)
identifed by the auditors, including those which had the
greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the
efforts of the engagement team. We have also set out
how we tailored our audit to address these specifc
areas in order to provide an opinion on the fnancial
statements as a whole. These matters, and any
comments we make on the results of our procedures
thereon, were addressed in the context of our audit of
the fnancial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate
opinion on these matters. This is not a complete list
of all risks identifed by our audit.
Areas of focus
• Onerous contract provisioning
• Goodwill impairment
• Uncertain tax positions and deferred tax assets
• Compliance with payroll laws and regulations
• Income statement presentation
• Control environment
The scope of our audit
As part of designing our audit, we determined
materiality and assessed the risks of material
misstatement in the fnancial statements. In particular,
we looked at where the directors made subjective
judgments, for example in respect of signifcant
accounting estimates that involved making assumptions
and considering future events that are inherently
uncertain. We gained an understanding of the legal and
regulatory framework applicable to the Group and to
the industry in which it operates and considered the risk
of acts by the Group which were contrary to applicable
laws and regulations, including fraud. We designed audit
procedures at the Group and component levels to
respond to this risk, recognising that the risk of not
detecting a material misstatement due to fraud is higher
than the risk of not detecting one resulting from error,
as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations or
through collusion.
We designed audit procedures that focused on the risk
of non-compliance related to, but not limited to,
compliance with payroll, foreign ownership and tax laws
and regulations. Our tests included, but were not limited
to, the review of the fnancial statement disclosures to
underlying supporting documentation, review of
correspondence with legal advisors, enquiries of
management, review of signifcant component auditors’
work and review of Internal Audit reports in so far as
they related to the fnancial statements. There are
inherent limitations in the audit procedures described
above and the further removed non-compliance with
laws and regulations is from the events and transactions
refected in the fnancial statements, the less likely we
would become aware of it. We found payroll
compliance and tax to be key audit matters and these
are discussed further below.
Integrated Report and Accounts 2017 G4S plc 121
Financial report
Independent auditors’ report to the members of G4S plc continued
Key audit matter
Onerous contract provisioning
Refer to Audit Committee report on page 85
and to note 33 of the Group fnancial statements.
Certain of the Group’s contracts are onerous
and long-term in nature. These contracts can be
complex and incorporate penalty and key
performance indicator (“KPI”) clauses in the
event of non-compliance. The Group is
therefore required to make operational and
fnancial assumptions to estimate future losses
over periods that can extend beyond 20 years.
Variability of contract penalties, underlying
delivery costs and customer and subcontractor
claims or disputes can put additional pressure
on margins and on future contract proftability,
giving rise to onerous contract provisions.
The prediction of future events over extended
periods contains inherent risk and the outcome
of customer and sub-contractor claims is
uncertain and involves a high degree of
management judgment.
The Group’s onerous contract provisions at
31 December 2017 are £62m (2016: £69m)
and the income statement charge for onerous
contracts in 2017 amounts to £19m (2016: £6m).
How our audit addressed the key audit matter
Our global approach to testing complex contracts starts with an evaluation
of management’s process to identify and quantify onerous and at-risk contracts.
Management focuses on the top 25 contracts by region and on contracts with
margins of less than 3%. We performed scanning analytics on contract margins
and investigated unusual or unexpected trends to check inclusion of all relevant
contracts in management’s assessment. Our sampling of contracts focused
our testing on higher risk and larger contracts and enabled us to form an
independent view as to whether management’s process had identifed all
onerous and at-risk contracts.
For each contract in our sample, we obtained and read the key contractual
terms and tested that the revenue recognised in the period was in accordance
with the contractual terms and was supported by evidence of service delivery.
We read and understood the contract penalty clauses and evaluated the
completeness of penalties through discussions with contract managers and
reading minutes of meetings between G4S and the customer, and
customer correspondence.
We assessed each of the key assumptions used in management’s forecasts to
identify and quantify onerous contract provisions. Where possible, we obtained
third party evidence to corroborate management’s assumptions and assessed
the appropriateness of the Group’s forecasts based on past performance. The
Group’s policy is to include the benefts of performance improvement plans
only where there is evidence of plans being achievable. We critically challenged
these benefts based on observable benefts achieved to date and the extent
to which these plans are within the Group’s direct control.
We assessed the appropriateness of the discount rate used to present value the
obligation and checked that the rate appropriately refected the risk in the
underlying cash fows. We also assessed the recoverability of dedicated contract
assets where the contract was identifed as onerous.
Having examined management’s analysis, including accounting papers prepared
to support key contract judgments and onerous contract provisions, our
procedures focused on the Facilities Management and Care & Justice businesses
in the UK and specifcally on the Compass contract and on a legacy PFI contract
which is long-term in nature. Both contracts are sensitive to changes in
assumptions and have given rise to changes in provisioning levels at year-end.
For these contracts, we performed our own independent sensitivity analysis and
we have undertaken additional analysis on key assumptions to which
management’s provisioning judgments are more sensitive.
We also held discussions with in-house and external legal counsel and read
appropriate documentation to evaluate contractual claims and disputes with
customers and subcontractors. We obtained and evaluated evidence to support
decisions and rationale for provisions held or the decision not to record
provisions, including correspondence with external legal counsel. We also
considered external information sources to assess and evaluate the alternate
possible scenarios.
We considered the level of provisioning to be acceptable in the context of the
Group fnancial statements taken as a whole. However, we noted that the
assumptions and judgments that are required to formulate the provisions mean
that the range of possible outcomes is broad. We are satisfed with the Group’s
related disclosures of these onerous contracts in light of the underlying
assumptions and accounting judgments made.
122 G4S plc Integrated Report and Accounts 2017
Key audit matter
Goodwill impairment
Refer to Audit Committee report on page 85
and to note 18 of the Group fnancial statements.
The Group has £1.9bn of goodwill at
31 December 2017 (2016: £2.0bn).
No impairment charge has been recorded
in 2017 (2016: £9m).
Management determines the recoverable
amount of a cash generating unit (“CGU”) as
the higher of value in use (“VIU”) or fair value
less cost of disposal (“FVLCD”).
The carrying value of goodwill is contingent on
future cash fows and there is risk if these cash
fows do not meet the Group’s expectations
that the assets will be impaired. The impairment
reviews performed by the Group contain a
number of signifcant judgments and estimates
including revenue growth, proft margins, cash
conversion and long-term growth and discount
rates. Changes in these assumptions can have a
signifcant impact on the headroom available in
the impairment calculations.
How our audit addressed the key audit matter
We assessed the mathematical accuracy of management’s cash fow model and
agreed the underlying forecasts to board approved budgets and assessed how
these budgets were compiled.
With the support of our valuations experts, we assessed the terminal growth
rates and discount rates applied by management to third party information and
confrmed whether they fell within a reasonable range of external market data.
Where they did not, we applied our independent view of a more appropriate
rate to management’s forecast.
We considered the reliability of management’s forecasting for revenue, proft
and cash conversion by comparing budgeted results to actual performance over
a period of three years, which we considered appropriate. Where we identifed
signifcant shortfalls against budget in prior years, this informed our
determination of sensitivities to apply as we formed our independent view
about reasonable downside scenarios.
Where the recoverable amount has been assessed with reference to a valuation
multiple, we assessed the appropriateness of the multiple by comparison to
recent business disposals and to other third party information, with the support
of our valuations experts.
We challenged management as to the appropriateness of the level of aggregation
of each CGU and the independence of cash fows from other assets.
We performed our own risk assessment by considering historical performance,
forecasting accuracy and modelled headroom to highlight the CGUs with either
a lower headroom or which are more sensitive to changes in key assumptions.
We also considered the valuation multiple implied by management’s estimate.
For those CGUs with low headroom, we performed our own sensitivity analysis
to understand the impact of changes in the assumptions on the available
headroom. We critically assessed management’s forecast by comparing growth
forecast to actual growth to date and to IMF projections.
The recoverable amounts of a number of CGUs including Brazil Secure
Solutions, Risk Management and UK Cash Solutions were found to be sensitive
to reasonably possible changes in assumptions and we satisfed ourselves that
this risk was appropriately highlighted in the disclosures in note 18.
As a result of our work, we determined that it was appropriate that no
impairment charge was recognised in the context of the Group fnancial
statements taken as a whole and that adequate disclosure has been made.
Integrated Report and Accounts 2017 G4S plc 123
Financial report
Independent auditors’ report to the members of G4S plc continued
How our audit addressed the key audit matter
With the assistance of our local and international tax specialists, we evaluated
and challenged management’s judgments in respect of estimates of tax
exposures and contingencies in order to assess the adequacy of the Group’s
tax provisions.
In understanding and evaluating management’s judgments, we considered the
status of recent and current tax authority audits and enquiries, judgmental
positions taken in tax returns and current year estimates and developments
in the tax environment. Where appropriate, we also read appropriate
documentation to understand the legal positions reached. From the evidence
obtained, we considered the level of provisioning to be acceptable in the
context of the Group fnancial statements taken as a whole. However, we
noted that the assumptions and judgments that are required to formulate
the provisions mean that there is a broad range of possible outcomes.
In respect of the recoverability of deferred tax assets, we evaluated
management’s assessment of how these assets will be realised and whether
there will be suffcient taxable profts in future periods to support their
recognition. We evaluated the directors’ future cash fow forecasts and the
process by which they were prepared, ensuring consistency of cash fows
with those used for the purpose of goodwill impairment testing. Based on
our procedures, future cash fow forecasts supported the recoverability of
the deferred tax assets recognised.
We have reviewed the Group’s impact assessment as a result of US tax reform,
deploying our US tax specialists. We have discussed with management the key
judgments made in evaluating how the legislation applies to the Group and
compared these judgments with our independent expectations based on our
knowledge of the Group’s tax affairs. We have also verifed the mathematical
accuracy of the deferred tax re-measurement calculations. We are satisfed that
the Group has appropriately accounted for the impact of US tax reform in the
context of the Group fnancial statements taken as a whole.
Key audit matter
Uncertain tax positions and
deferred tax assets
Refer to Audit Committee report on page 85
and to notes 13 and 34 of the Group fnancial
statements.
The Group operates in a complex multinational
tax environment and is subject to a range of tax
risks during the normal course of business
including transaction related tax matters and
transfer pricing arrangements.
Where the amount of tax payable is uncertain,
the Group establishes provisions based on
management’s judgment of the probable
amount of the future liability. At 31 December
2017, the Group has recognised provisions
of £42m related to uncertain tax positions
(2016: £37m).
In addition, the Group has recognised £240m
of deferred tax assets at 31 December 2017
(2016: £285m). The recognition of deferred
tax assets involves judgment by management
regarding the likelihood of the realisation of
these assets. The expectation that these assets
will be realised is dependent on a number of
factors, including whether there will be suffcient
taxable profts in future periods to support
utilisation of these assets.
There have been a number of changes in tax
law in 2017, especially in the US that have
resulted in a signifcant impact on the Group’s
deferred tax balances. The most signifcant
change has been the US Tax Cuts and Jobs
Act which was substantively enacted before
31 December 2017. The Group has needed to
consider the impact of this new tax law on both
its current and deferred taxes. Certain of the
changes introduced by the Act are complex
and there are number of areas of uncertainty
relating to both the manner in which the law
will apply and to the accounting in certain areas.
124 G4S plc Integrated Report and Accounts 2017
How our audit addressed the key audit matter
We met with the directors, management and in-house legal counsel and held
discussions with the Group’s external legal advisors to assess the probable
outcomes in relation to ongoing claims and exposures in countries and areas
where legal requirements are open to interpretation.
We evaluated and challenged management’s judgments in order to assess the
adequacy of the Group’s provisions and disclosures. In understanding and
evaluating management’s judgments, we considered the status and basis of
employee and regulatory claims, settlement history and the views of internal
and external legal counsel regarding the interpretation and application of local
payroll laws and regulations. Where appropriate, we also read relevant
documentation and correspondence to understand the legal positions reached.
From the evidence obtained, we are satisfed with the Group’s provisioning
decisions at 31 December 2017 in the context of the Group fnancial
statements taken as a whole and with the adequacy of the contingent liability
disclosures given the status, materiality and likely outcome of employee and
regulatory claims and exposures in countries and areas where legal
requirements are open to interpretation.
We substantiated the nature and quantum of individual items to appropriate
corroborating evidence.
We considered whether the designation of individual items as specifc was
consistent with the Group’s accounting policy and treatment in prior years.
Furthermore, we considered whether amounts included as specifc items related
to current year trading and might be more appropriately refected in the
underlying results.
We considered whether the Group has taken a balanced approach to this area,
checking that exceptional one-off items of income are treated consistently with
one-off items of cost.
We tested management’s process for identifying and tracking the current year
reversal of any prior year specifc items, or utilisation of or adjustment to related
provisions, to identify whether these have been appropriately presented in the
current year income statement.
Based on our procedures, we were satisfed that the treatment and classifcation
of these items were consistent year-on-year and with the Group’s policies.
Key audit matter
Compliance with payroll laws and regulations
Refer to Audit Committee report on page 85
and to note 33 of the Group fnancial statements.
The Group employs over 570,000 employees
across six continents. There are a number of
ongoing employee and regulatory claims in
relation to the interpretation and potential risks
relative to the application of local payroll laws
and regulations in a number of countries.
Interpreting and complying with payroll laws
and regulations is complex. There is inherent
judgment associated both with assessing and
quantifying probable outcomes in relation to
ongoing claims and with determining any
exposure (and the need for provision) in areas
where legal requirements are open to
interpretation. In addition, possible outcomes
need to be considered for disclosure as
contingent liabilities. Unexpected adverse
outcomes could materially impact the Group’s
fnancial performance and position.
Income statement presentation
Refer to Audit Committee report on page 85 and
to note 3(b) of the Group fnancial statements.
The Group has historically reported specifc and
other items (including restructuring costs) which
are disclosed separately on the face of the
income statement and which are excluded from
management’s reporting of the underlying
results of the business. Consistent with the
Group’s defnition of proft before interest, tax
and amortisation (“Adjusted PBITA”), the
following items have continued to be disclosed
separately on the face of the income statement
in 2017: net specifc items £34m (2016: £13m);
restructuring costs £20m (2016: £12m); and
net proft on disposal and closure of subsidiaries
£74m (2016: £7m).
The treatment of specifc and other separately
disclosed items is explained in the Group
accounting policy in note 3(b). We focused on
this area because the classifcation of items as
specifc or separate disclosure of items of
income or expenditure on the face of the
income statement requires judgment and
because certain of these items are excluded
from the calculation of elements of executive
remuneration in line with the Group’s
remuneration policy. Consistency in the
identifcation and presentation of these items is
important to ensure comparability of year-on-
year reporting in the Annual Report.
Integrated Report and Accounts 2017 G4S plc 125
Financial report
Independent auditors’ report to the members of G4S plc continued
Key audit matter
Control environment
The geographical span and decentralised
structure of the Group, coupled with the
current disparate systems landscape and
evolving control environment, means that there
is an increased risk of errors remaining
undetected and aggregating to cause a material
misstatement to the Group fnancial statements.
Progress has been made by the Group in 2017
to strengthen the controls framework through
the embedding of the Minimum Financial
Controls (“MFC”) framework. However, as the
framework is still in its early stages, the operation
and formalisation of these controls is at different
levels of maturity across the organisation.
How our audit addressed the key audit matter
In recognition of the Group’s scale and decentralised structure and aligning to
the Group’s regional management structure, we continued to deploy teams in
each of the Group’s regions to lead our interactions with regional management,
to coordinate the audit work performed at a country component level and to
audit and report on the aggregated fnancial information of that region.
Given that the operation and formalisation of MFC controls are at different
levels of maturity across the organisation, we did not seek to test or rely on
these controls for our 2017 audit. We therefore instructed our component
teams not to rely on fnancial controls at the local business level but to perform
a substantive audit focused on transaction testing and on the integrity of the
year-end balance sheet.
With the support of our regional teams, we determined the entities to be
included in our Group audit scope based on those locations with signifcant risk
and those which contribute a signifcant amount to material line items in the
Group fnancial statements.
We applied a reduction to our overall materiality to set a performance
materiality benchmark that we used to determine the nature, timing and extent
of our detailed audit procedures. Our performance materiality benchmark for
the Group audit of £12.5m refects the Group’s evolving control environment,
the risk of multiple misstatements resulting in a material misstatement and the
history of past audit adjustments.
Wherever we identifed audit adjustments or control matters which could be
pervasive across the Group, we instructed our regional and country component
teams to assess whether similar errors had arisen elsewhere. While we did
identify audit differences across the Group, management corrected the more
signifcant items meaning that the uncorrected items reported to the Audit
Committee were considered to be immaterial for adjustment, both individually
and in aggregate.
126 G4S plc Integrated Report and Accounts 2017
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the fnancial statements
as a whole, taking into account the structure of the Group and the parent company, the accounting processes and controls and the
industry in which they operate.
In 2017, the Group was structured into seven geographical regions being Africa, Asia Pacifc, Europe, Latin America, Middle East & India,
North America and the UK & Ireland (“UK&I”). Corporate head offce entities are managed at a Group level. Each geographical region
(“regional component”) is an aggregation of a number of country-based components along with the Group’s interests in joint ventures
(together the “country components”). Each geographical region has a separate management team which coordinates the businesses
within that region.
The Group’s accounting processes are structured around a local fnance function in each of the country components. In addition, fnance
shared service centres in the UK, North America and India support certain of the Group’s businesses. The country components report
to the regions and to the Group through an integrated consolidation system.
In performing our audit, we determined that we needed to conduct audit work over the complete fnancial information of each of the
regional components. We therefore deployed regional component audit teams in each of the seven regions to lead our interactions
with regional management, to coordinate the audit work performed on country components and to audit and report on the aggregated
fnancial information of that region. In addition to the seven regional components, specifc audit procedures over central functions, the
Group consolidation, head offce entities and areas of judgment (including taxation, goodwill and intangible assets impairment, treasury
and post-retirement benefts) were directly led by the Group audit team.
Recognising that not every country component in each regional component is included in our Group audit scope, we considered as part
of our Group audit oversight responsibility what audit coverage had been obtained in aggregate by our regional component teams by
reference to country components at which audit work had been undertaken. Beneath the regional component layer, the Group fnancial
statements are an aggregation of approximately 700 reporting units, each of which is considered to be a country component. We
identifed 73 country component units that, in our view, required a full scope audit due to their size or risk characteristics. Specifc audit
procedures over signifcant balances and transactions were performed at a further 16 country component units to give appropriate
coverage of all material balances.
Where the work was performed by regional and country component audit teams, we determined the level of involvement we needed
to have in the audit work at those components. As a result, six of the seven regions were visited by senior members of the Group audit
team as a supplement to the regular dialogue between our Group and regional teams and the issuance of instructions to direct their
work. Regional teams visited a further 10 country components performing oversight procedures under our instruction. For those
components in Group audit scope where a site visit was not undertaken, our Group and our regional component audit teams’
involvement included regular dialogue with our country component teams, review of component auditor work papers and participation
in certain component audit clearance meetings for the more signifcant country components.
Taken together, the components and functions where we performed either full scope audit work or specifed audit procedures
accounted for 76% of consolidated revenue, 78% of consolidated proft before tax and 73% of consolidated adjusted proft before tax.
This was before considering the contribution to our audit evidence from performing audit work at the regional and Group levels,
including disaggregated analytical review procedures and our evaluation of entity level controls, which covered a signifcant portion of
the Group’s smaller and lower risk components that were not directly included in our Group audit scope.
Materiality
The scope of our audit was infuenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit
procedures on the individual fnancial statement line items and disclosures and in evaluating the effect of misstatements, both individually
and in aggregate on the fnancial statements as a whole.
Based on our professional judgment, we determined materiality for the fnancial statements as a whole as follows:
Integrated Report and Accounts 2017 G4S plc 127
Financial report
Independent auditors’ report to the members of G4S plc continued
Overall materiality
How we determined it
Rationale for
benchmark applied
Group fnancial statements
£20m (2016: £15m).
5% of adjusted proft before tax, being proft
before tax after adding back certain items that
are separately reported on the face of the
consolidated income statement including specifc
items, restructuring costs and proft on disposal.
The Group’s principal measure of earnings is proft
before interest, tax and amortisation adjusted for a
number of items of income and expenditure
(“Adjusted PBITA”). Management uses this
measure as it believes that it refects the underlying
performance of the Group. We took this measure
into account in determining our materiality, except
that we did not adjust proft before tax to add
back amortisation of acquisition-related intangible
assets and fnance income and expense as in our
view these are recurring items which do not
introduce volatility to the Group’s earnings.
Parent company fnancial statements
£15m (2016: £13.5m).
1% of net assets.
The parent company holds the
Group’s investments and performs
treasury functions on behalf of the
Group. Therefore, the entity is not in
itself proft-oriented. The strength of
the balance sheet is the key measure
of fnancial health that is important
to shareholders since the primary
concern for the parent company
is the payment of dividends and
servicing of debt.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group
audit materiality. The range of overall materiality allocated to each regional component was between £5m and
£15m and by each region to each country component was between £0.01m and £14m. Certain components were
audited to a local statutory audit materiality level that was also less than our overall Group audit materiality.
We agreed with the Audit Committee that we would report to them misstatements identifed during our audit
above £1m (Group audit) (2016: £1m) and £750,000 (parent company audit) (2016: £675,000) as well as
misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
Going concern
In accordance with ISAs (UK) we report as follows:
Reporting obligation
We are required to report if we have anything material to add or draw
attention to in respect of the directors’ statement in the fnancial
statements about whether the directors considered it appropriate to
adopt the going concern basis of accounting in preparing the fnancial
statements and the directors’ identifcation of any material uncertainties to
the Group’s and the parent company’s ability to continue as a going
concern over a period of at least twelve months from the date of
approval of the fnancial statements.
We are required to report if the directors’ statement relating to Going
Concern in accordance with Listing Rule 9.8.6R(3) is materially
inconsistent with our knowledge obtained in the audit.
Outcome
We have nothing material to add
or to draw attention to. However,
because not all future events or
conditions can be predicted, this
statement is not a guarantee as to
the Group’s and parent company’s
ability to continue as a going concern.
We have nothing to report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the fnancial statements and
our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the fnancial
statements does not cover the other information and, accordingly, we do not express an audit opinion or, except
to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the fnancial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the fnancial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material
inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a
material misstatement of the fnancial statements or a material misstatement of the other information. If, based on
the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic Report, Directors’ Report and Corporate Governance Statement, we also considered
whether the disclosures required by the UK Companies Act 2006 have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, the Companies
Act 2006, (CA06), ISAs (UK) and the Listing Rules of the Financial Conduct Authority (FCA) require us also to
report certain opinions and matters as described below (required by ISAs (UK) unless otherwise stated).
128 G4S plc Integrated Report and Accounts 2017
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic
Report and Directors’ Report for the year ended 31 December 2017 is consistent with the fnancial statements and
has been prepared in accordance with applicable legal requirements. (CA06)
In light of the knowledge and understanding of the Group and parent company and their environment obtained in
the course of the audit, we did not identify any material misstatements in the Strategic Report and Directors’
Report. (CA06)
Corporate Governance Statement
In our opinion, based on the work undertaken in the course of the audit, the information given in the Corporate
Governance Statement (in the corporate governance report) about internal controls and risk management systems
in relation to fnancial reporting processes and about share capital structures in compliance with rules 7.2.5 and 7.2.6
of the Disclosure Guidance and Transparency Rules sourcebook of the FCA (“DTR”) is consistent with the fnancial
statements and has been prepared in accordance with applicable legal requirements. (CA06)
In light of the knowledge and understanding of the Group and parent company and their environment obtained in
the course of the audit, we did not identify any material misstatements in this information. (CA06)
In our opinion, based on the work undertaken in the course of the audit, the information given in the Corporate
Governance Statement (in the corporate governance report) with respect to the parent company’s corporate
governance code and practices and about its administrative, management and supervisory bodies and their
committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the DTR. (CA06)
We have nothing to report arising from our responsibility to report if a corporate governance statement has not
been prepared by the parent company. (CA06)
The directors’ assessment of the prospects of the Group and of the principal risks that would threaten the
solvency or liquidity of the Group
We have nothing material to add or draw attention to regarding:
• The directors’ confrmation on page 91 of the Annual Report that they have carried out a robust assessment of
the principal risks facing the Group, including those that would threaten its business model, future performance,
solvency or liquidity;
• The disclosures in the Annual Report that describe those risks and explain how they are being managed or
mitigated; and
• The directors’ explanation on page 92 of the Annual Report as to how they have assessed the prospects of the
Group, over what period they have done so and why they consider that period to be appropriate and their
statement as to whether they have a reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifcations or assumptions.
We have nothing to report having performed a review of the directors’ statement that they have carried out a
robust assessment of the principal risks facing the Group and statement in relation to the longer-term viability of the
Group. Our review was substantially less in scope than an audit and only consisted of: making inquiries and
considering the directors’ process supporting their statements; checking that the statements are in alignment with
the relevant provisions of the UK Corporate Governance Code (the “Code”); and considering whether the
statements are consistent with the knowledge and understanding of the Group and parent company and their
environment obtained in the course of the audit. (Listing Rules)
Other Code Provisions
We have nothing to report in respect of our responsibility to report when:
• The statement given by the directors, on page 119, that they consider the Annual Report taken as a whole to be
fair, balanced and understandable and provides the information necessary for the members to assess the Group’s
and parent company’s position and performance, business model and strategy is materially inconsistent with our
knowledge of the Group and parent company obtained in the course of performing our audit;
• The section of the Annual Report on page 85 describing the work of the Audit Committee does not
appropriately address matters communicated by us to the Audit Committee; and
• The directors’ statement relating to the parent company’s compliance with the Code does not properly disclose
a departure from a relevant provision of the Code specifed, under the Listing Rules, for review by the auditors.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in
accordance with the Companies Act 2006. (CA06)
Integrated Report and Accounts 2017 G4S plc 129
Financial report
Independent auditors’ report to the members of G4S plc continued
Responsibilities for the fnancial statements and the audit
Responsibilities of the directors for the fnancial statements
As explained more fully in the directors’ responsibilities set out on page 119, the directors are responsible for the
preparation of the fnancial statements in accordance with the applicable framework and for being satisfed that they
give a true and fair view. The directors are also responsible for such internal control as they determine is necessary
to enable the preparation of fnancial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the fnancial statements, the directors are responsible for assessing the Group’s and the parent company’s
ability to continue as a going concern, disclosing as applicable matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or the parent company or to
cease operations or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the fnancial statements
Our objectives are to obtain reasonable assurance about whether the fnancial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to infuence the
economic decisions of users taken on the basis of these fnancial statements.
A further description of our responsibilities for the audit of the fnancial statements is located on the FRC’s website
at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the parent company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving
these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
130 G4S plc Integrated Report and Accounts 2017
OTHER REQUIRED REPORTING
Companies Act 2006 exception reporting
Under the Companies Act 2006, we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• 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
• certain disclosures of directors’ remuneration specifed by law are not made; or
• the parent company fnancial statements and the part of the Directors’ Remuneration Report to be audited are
not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the members on 4 June 2015 to
audit the fnancial statements for the year ended 31 December 2015 and subsequent fnancial periods. The period of
total uninterrupted engagement is three years, covering the years ended 31 December 2015 to 31 December 2017.
Richard Hughes (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
8 March 2018
Integrated Report and Accounts 2017 G4S plc 131
Financial report
Consolidated income statement
For the year ended 31 December 2017
Continuin operations
Revenue
Operating profit before joint ventures, specific items and other separately disclosed items
Share of post-tax profit from joint ventures
djusted profit before interest, tax and amortisation ( djusted PBIT )
–
–
charges
credits
Specific items
Specific items
Restructuring costs
rofit on disposal/closure of subsidiaries/businesses
Goodwill impairment
Amortisation of acquisition-related intangible assets
Operatin profit
Finance income
Finance expense
Profit before tax
Tax
Profit from continuin operations after tax
Loss from discontinued operations
Profit for the year
ttributable to:
Equity holders of the parent
Non-controlling interests
Profit for the year
Notes
2017
£m
2016
£m
5, 6
7,828
7,590
20
6
8
8
8
8
8, 18
8
6, 8
12
12
13
7
482
9
491
(34)
–
(20)
74
–
(10)
501
16
(131)
386
(128)
258
(6)
252
236
16
252
452
9
461
(21)
8
(12)
7
(9)
(32)
402
33
(139)
296
(76)
220
(3)
217
198
19
217
Earnin s per share attributable to equity shareholders of the parent
15
Basic and diluted – from continuing operations
Basic and diluted – from continuing and discontinued operations
15.6p
15.2p
13.0p
12.8p
132 G4S plc Integrated Report and Accounts 2017
Consolidated statement of comprehensive income
For the year ended 31 December 2017
Profit for the year
Other comprehensive income
Items that will not be re-classified to profit or loss:
Re-measurements relating to defined retirement benefit schemes
Tax on items that will not be re-classified to profit or loss
Items that are or may be re-classified subsequently to profit or loss:
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
Tax on items that are or may be re-classified subsequently to profit or loss
Other comprehensive (loss)/income, net of tax
Total comprehensive income for the year
ttributable to:
Equity holders of the parent
Non-controlling interests
Total comprehensive income for the year
Consolidated statement of changes in equity
For the year ended 31 December 2017
Notes
2 17
£m
252
2016
£m
217
32
13
13
26
(4)
22
(125)
56
–
–
(69)
(47)
(169)
28
(141)
429
(197)
(4)
22
250
109
2 5
326
191
14
2 5
305
21
326
t 1 January 2017
Total comprehensive income
Dividends paid
Transactions with non-controlling interests
(“NCI”)
Recycling of net investment hedge
Recycling of cumulative translation adjustments
Own shares awarded
Own shares purchased
Share-based payments
t 31 December 2017
t 1 January 2016
Total comprehensive income
Dividends paid
Transactions with non-controlling interests
(“NCI”)
Own shares awarded
Share-based payments
t 31 December 2016
* See note 36 for an analysis of other reserves.
Share
capital
£m
388
–
–
–
–
–
–
–
–
388
388
–
–
–
–
–
388
Attributable to equity holders of the parent
Other
reserves*
£m
456
(69)
–
Retained
earnings
£m
(26 )
26
(145)
Share
premium
£m
258
–
–
–
–
–
–
–
–
258
258
–
–
–
–
–
258
(19)
–
–
(11)
–
9
(166)
(174)
55
(145)
(1)
(5)
10
(260)
–
24
(42)
11
(1 )
–
37
201
250
–
–
5
–
456
Total
£m
842
191
(145)
(19)
24
(42)
–
(1 )
9
85
673
305
(145)
(1)
–
10
842
NCI
reserve
£m
21
14
(34)
3
–
–
–
–
–
4
18
21
(17)
(1)
–
–
21
Total
equity
£m
863
2 5
(179)
(16)
24
(42)
–
(1 )
9
854
691
326
(162)
(2)
–
10
863
Integrated Report and Accounts 2017 G4S plc 133
Financial report
Consolidated statement of financial position
At 31 December 2017
Consolidated statement of financial position
At 31 December 2017
ASSETS
Non-current assets
ASSETS
Goodwill
Non-current assets
Other acquisition-related intangible assets
Goodwill
Non-acquisition-related intangible assets
Other acquisition-related intangible assets
Property, plant and equipment
Non-acquisition-related intangible assets
Trade and other receivables
Property, plant and equipment
Investment in joint ventures
Trade and other receivables
Investments
Investment in joint ventures
Retirement benefit surplus
Investments
Deferred tax assets
Retirement benefit surplus
Deferred tax assets
Current assets
Inventories
Current assets
Investments
Inventories
Trade and other receivables
Investments
Current tax assets
Trade and other receivables
Cash and cash equivalents
Current tax assets
Assets of disposal groups classified as held for sale
Cash and cash equivalents
Assets of disposal groups classified as held for sale
Total assets
LIABILITIES
Total assets
Current liabilities
LIABILITIES
Bank overdrafts
Current liabilities
Bank loans
Bank overdrafts
Loan notes
Bank loans
Obligations under finance leases
Loan notes
Trade and other payables
Obligations under finance leases
Current tax liabilities
Trade and other payables
Provisions
Current tax liabilities
Liabilities of disposal groups classified as held for sale
Provisions
Liabilities of disposal groups classified as held for sale
Non-current liabilities
Bank loans
Non-current liabilities
Loan notes
Bank loans
Obligations under finance leases
Loan notes
Trade and other payables
Obligations under finance leases
Retirement benefit obligations
Trade and other payables
Provisions
Retirement benefit obligations
Deferred tax liabilities
Provisions
Deferred tax liabilities
Total liabilities
Total liabilities
Net assets
Notes
Notes
18
18
18
18
18
19
18
23
19
20
23
22
20
32
22
34
32
6
34
6
21
22
21
23
22
23
26
25
26
25
26, 27
27
26, 27
27
27
28
27
29
28
29
33
25
33
25
27
27
27
28
27
29
28
32
29
33
32
34
33
34
2017
£m
2017
£m
1,914
9
1,914
88
9
395
88
83
395
20
83
20
20
80
20
240
80
2,849
240
2,849
104
42
104
1,416
42
55
1,416
902
55
53
902
2,572
53
5,421
2,572
5,421
(284)
(8)
(284)
(655)
(8)
(15)
(655)
(1,262)
(15)
(79)
(1,262)
(104)
(79)
(19)
(104)
(2,426)
(19)
(2,426)
(5)
(1,486)
(5)
(20)
(1,486)
(23)
(20)
(461)
(23)
(138)
(461)
(8)
(138)
(2,141)
(8)
(4,567)
(2,141)
(4,567)
854
2016
£m
2016
£m
1,990
18
1,990
86
18
437
86
101
437
19
101
12
19
75
12
285
75
3,023
285
3,023
112
52
112
1,381
52
61
1,381
831
61
151
831
2,588
151
5,611
2,588
5,611
(93)
(16)
(93)
(677)
(16)
(20)
(677)
(1,260)
(20)
(64)
(1,260)
(116)
(64)
(58)
(116)
(2,304)
(58)
(2,304)
(4)
(1,715)
(4)
(37)
(1,715)
(30)
(37)
(512)
(30)
(132)
(512)
(14)
(132)
(2,444)
(14)
(4,748)
(2,444)
(4,748)
863
35
EQUITY
Net assets
863
Share capital
388
EQUITY
Share premium
258
Share capital
388
Reserves
196
Share premium
258
Equity attributable to equity holders of the parent
842
Reserves
196
Non-controlling interests
21
Equity attributable to equity holders of the parent
842
Total equity
863
Non-controlling interests
21
The Consolidated statement of financial position at 31 December 2016 has been re-presented – see note 3(a).
Total equity
863
The consolidated financial statements were approved by the board of directors and authorised for issue on 8 March 2018. They were
The Consolidated statement of financial position at 31 December 2016 has been re-presented – see note 3(a).
signed on its behalf by:
The consolidated financial statements were approved by the board of directors and authorised for issue on 8 March 2018. They were
Ashley Alman a
Tim Weller
signed on its behalf by:
Director
Director
Tim Weller
Ashley Alman a
Director
Director
854
388
258
388
204
258
850
204
4
850
854
4
854
35
36
36
130 G4S plc Integrated Report and Accounts 2017
134 G4S plc Integrated Report and Accounts 2017
130 G4S plc Integrated Report and Accounts 2017
Consolidated statement of cash flows
For the year ended 31 December 2017
Operating profit
djustments for non-cash and other items:
Goodwill impairment
mortisation of acquisition-related intangible assets
Net profit on disposal/closure of subsidiaries/businesses
Depreciation of property, plant and equipment
mortisation of non-acquisition-related intangible assets
Share of profit from joint ventures
Equity-settled share-based payments
Increase/(decrease) in provisions
dditional pension contributions
Operating cash flow before movements in working capital
Decrease/(increase) in inventory
Increase in accounts receivable
Increase in accounts payable
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
Purchases of non-current assets
Proceeds on disposal of property, plant and equipment
Disposal of subsidiaries/businesses
Cash, cash equivalents and bank overdrafts in disposed entities
cquisition of subsidiaries
Interest received
Sale of investments
Cash flow from equity-accounted investments
Net cash flow from investing activities
Financing activities
Dividends paid to equity shareholders of the parent
Dividends paid to non-controlling interests
Purchase of own shares
Proceeds from new borrowings
Repayment of borrowings
Net interest received relating to derivative financial instruments
Interest paid
Repayment of obligations under finance leases
Transactions with non-controlling interests
Net cash flow from financing activities
Net (decrease)/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 net cash held
Cash, cash equivalents and bank overdrafts at the end of the year
Notes
20
32
17
37
26
201
£m
501
–
10
( 4)
104
22
(9)
9
18
(40)
541
1
(95)
41
488
–
488
(86)
402
(109)
5
156
(8)
(1)
29
3
6
81
(145)
(34)
(10)
43
(6 2)
29
(136)
(23)
(16)
(5 0)
(8 )
6 2
(14)
5 1
2016
£m
402
9
32
(7)
106
25
(9)
10
(1)
(39)
528
(5)
(9)
101
615
(9)
606
(84)
522
(116)
9
82
(20)
(1)
14
6
8
(18)
(145)
(17)
–
440
(451)
22
(132)
(22)
(2)
(307)
197
388
87
672
Integrated Report and Accounts 2017 G4S plc 135
Financial report
Notes to the consolidated financial statements
1. General information
G4S plc s a company ncorporated n the Un ted K ngdom. The consol dated f nanc al statements ncorporate the f nanc al statements
of the Company and ent t es ( ts subs d ar es) controlled by the Company (collect vely compr s ng “the Group”) and the Group’s
nterest n jo nt ventures made up to 31 December each year. The Group operates throughout the world and n a w de range of
funct onal currenc es, the most s gn f cant be ng the Euro, the US dollar and Sterl ng. The Group’s f nanc al statements are presented
n Sterl ng, as the Group’s pr mary l st ng s n the UK. The address of the reg stered off ce s g ven on page 212.
2. Statement of compliance
The consol dated f nanc al statements of the Group have been prepared n accordance w th the Compan es Act 2006, w th Internat onal
F nanc al Report ng Standards adopted by the European Un on (IFRSs) and nterpretat ons ssued by the IFRS Interpretat ons Comm ttee
(IFRS IC), and the account ng pol c es have been cons stently appl ed. The parent company f nanc al statements have been prepared n
–
accordance w th FRS 101 Reduced D sclosure Framework, n accordance w th UK Generally Accepted Account ng Pract ce (UK
GAAP). These are presented on pages 202 to 210.
3. Si nificant accountin policies
(a) Basis of preparation
The consol dated f nanc al statements of the Group have been prepared on a go ng concern bas s and us ng the h stor cal cost bas s,
except for the revaluat on of certa n non-current assets and f nanc al nstruments. The pr nc pal account ng pol c es adopted are set out
below. Judgments made by the d rectors n the appl cat on of those account ng pol c es wh ch have a s gn f cant effect on the f nanc al
statements, and est mates w th a s gn f cant r sk of mater al adjustment, are d scussed n note 4.
Presentation of the Consolidated statement of financial position
The Consol dated statement of f nanc al pos t on as at 31 December 2016 has been re-presented to show the re-class f cat on of
certa n tems w th n cash and cash equ valents of £20m as nvestments and to show the re-class f cat on of certa n nvestments totall ng
£12m prev ously presented as current, as non-current. As a consequence of th s change n presentat on, cash and cash equ valents as
at 31 December 2016 have decreased from £851m to £831m, current nvestments have ncreased from £44m to £52m and new
non-current nvestments of £12m have been presented.
(b) Presentation of the Consolidated income statement
In order to prov de further clar ty n the Group’s Consol dated ncome statement and segmental analys s, the Group separately
d scloses spec f c tems, restructur ng costs, prof ts or losses on d sposal/closure of subs d ar es, amort sat on of acqu s t on-related
ntang ble assets and any related expenses and goodw ll mpa rment. Th s s cons stent w th the way that f nanc al performance s
measured by management and reported to the Board and ass sts n prov d ng a more mean ngful analys s of the Group’s results. The
d rectors bel eve that presentat on of the Group’s results n th s way a ds the understand ng of the Group’s f nanc al performance.
Further explanat on about the Group’s rat onale for separately present ng these tems s set out n the Alternat ve Performance
Measures sect on of the Strateg c Report on pages 35 and 36.
Specific items
The Group’s Consol dated ncome statement and segmental analys s note separately dent fy results before spec f c tems. Spec f c tems
are those that n management’s judgment need to be d sclosed separately n arr v ng at operat ng prof t by v rtue of the r s ze, nature
or nc dence. In determ n ng whether an event or transact on s spec f c, management cons ders quant tat ve as well as qual tat ve factors
such as the frequency or pred ctab l ty of occurrence.
All tems that are reported as spec f c tems are evaluated and approved by the Group’s Aud t Comm ttee pr or to be ng separately
d sclosed. The Group seeks to be balanced when report ng spec f c tems for both deb ts and cred ts, and any reversals of excess
prov s ons prev ously created as spec f c tems are class f ed cons stently as spec f c tems.
In general, prov s ons recogn sed for future losses on onerous contracts are charged to the Consol dated ncome statement w th n
Adjusted PBITA. However, where onerous contract charges are s gn f cant by v rtue of the r s ze, they are separately charged w th n
spec f c tems. Such losses are d st nct from “ n-year” losses, wh ch are ut l sed aga nst prov s ons for onerous contract losses. Releases
of onerous contract prov s ons or g nally charged as spec f c tems are separately cred ted w th n spec f c tems.
Spec f c tems may not be comparable to s m larly-t tled measures used by other compan es. Spec f c tems for the current and pr or
years are descr bed n note 8.
Other separately disclosed items
In order to prov de further clar ty n the Consol dated ncome statement, the Group also d scloses separately certa n strateg c
restructur ng costs, prof ts or losses on d sposal or closure of subs d ar es, acqu s t on-related amort sat on and expenses and
goodw ll mpa rment.
Restructur ng costs that are separately d sclosed reflect the mult -year product v ty programme wh ch s be ng mplemented by the
Group. Th s programme s of a strateg c nature and, as such, s mon tored and approved by the Group’s Execut ve Comm ttee. Dur ng
2016 and 2017 act v t es under the programme have focused pr mar ly on transform ng the operat ng model n the UK & Ireland and
Europe reg ons. Restructur ng costs that are ncurred n the normal course of bus ness are recorded w th n Adjusted PBITA. Go ng
forwards the Group has announced a three-year plan to 2020 to mplement eff c ent organ sat onal des gn and leaner processes,
wh ch s l kely to requ re further restructur ng nvestment.
Further explanat on about the Group’s rat onale for separately present ng prof ts or losses on d sposal or closure of subs d ar es,
amort sat on of acqu s t on-related ntang ble assets and goodw ll mpa rment s set out on page 36.
136 G4S plc Integrated Report and Accounts 2017
(c) Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled b the Group. Control is achieved where the Group has existing rights that give it the current abilit
to direct the activities that affect the Group’s returns and exposure or rights to variable returns from the entit . This can be determined
either b the Group’s ownership percentage, or b the terms of an shareholder agreement. In the case of certain investments detailed
anal sis of the different contracts in place is required, together with a level of judgment, to ascertain whether there is control under the
definition of IFRS 10 – Consolidated financial statements (see note 4).
On acquisition, the assets, 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 value of the assets transferred as consideration to the vendor
and does not include transaction costs. An excess of the cost of acquisition over the fair values of the identifiable net assets acquired is
recognised as goodwill. An deficienc in the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount
on acquisition) is credited to the Consolidated income statement in the ear of acquisition.
The cost of acquisition includes the present value of deferred and contingent consideration pa able, including that in respect of
put options held b non-controlling shareholders, as estimated at the date of acquisition. Subsequent changes to the present value
of the estimate of contingent consideration and an difference upon final settlement of such a liabilit are recognised in the
Consolidated 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 ear are included in the Consolidated income statement from the
effective date of control and up to the effective date of disposal, respectivel .
Joint ventures
A joint venture is a joint arrangement whereb the parties that have joint control have the rights to the net assets of the arrangement.
The results and assets and liabilities of joint ventures are incorporated in the Group’s consolidated financial statements using the equit
method of accounting. Under the equit method, investments in joint ventures are carried in the Consolidated statement of financial
position at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the joint venture, less an impairment
in the value of the investment. The Group’s share of post-tax profits or losses is recognised in the Consolidated income statement.
Transactions eliminated on consolidation
All intra-group transactions, balances, income and expenses are eliminated on consolidation. Where a Group compan transacts with
a joint venture of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant joint venture.
(d) Foreign c rrencies
The financial statements of each of the Group’s businesses are prepared in the functional currenc applicable to that business.
Transactions in currencies other than the functional currenc are translated at the rates of exchange prevailing on the dates of the
transactions. At each balance sheet date, monetar assets and liabilities which are denominated in other currencies are retranslated
at the rates prevailing on that date. Non-monetar 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-monetar items measured at historical cost
denominated in other currencies are not retranslated. Gains and losses arising on retranslation are included in the Consolidated 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 rates on the dates of the transactions).
Exchange differences arising are recognised in other comprehensive income, together with exchange differences arising on monetar
items that are in substance a part of the Group’s net investment in foreign operations, and on borrowings and other currenc 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 Consolidated income statement in the period in which the operation is disposed of.
Integrated Report and Accounts 2017 G4S plc 137
Financial report
Notes to the consolidated financial statements continued
3. Significant accounting policies continued
e) Derivative financial instruments and hedge accounting
In accordance with its treasury po icy, the Group on y ho ds or issues derivative financia instruments to manage the Group’s exposure
to financia risk, not for trading purposes. Such financia risk inc udes the interest-rate risk on the Group’s variab e-rate borrowings, the
fair-va ue risk on the Group’s fixed-rate borrowings, commodity risk in re ation to its diese consumption and foreign-exchange risk on
transactions, on the trans ation of the Group’s resu ts and on the trans ation of the Group’s net assets measured in foreign currencies.
The Group manages these risks through a range of derivative financia instruments, inc uding interest-rate swaps, fixed-rate agreements,
commodity swaps, commodity options, forward-currency contracts and currency swaps.
Derivative financia instruments are recognised in the Conso idated statement of financia position at fair va ue as financia assets or
financia iabi ities.
The gain or oss on re-measurement to fair va ue is recognised immediate y in the Conso idated income statement, un ess the
derivatives qua ify for hedge accounting where the treatment of any resu tant gain or oss depends on the nature of the item
being hedged as described be ow:
Fair-value hedges
The change in the fair va ue of both the hedging instrument and the re ated portion of the hedged item that is attributab e to
the hedged risk is recognised immediate y in the Conso idated income statement.
Cash-flow and net-investment hedges
The change in the fair va ue of the portion of the hedging instrument that is determined to be an effective hedge is recognised in equity
and subsequent y recyc ed to the Conso idated income statement when the hedged cash f ow or hedged net investment impacts the
Conso idated income statement. The ineffective portion of the fair va ue of the hedging instrument is recognised immediate y in the
Conso idated income statement.
f) Intangible assets
Goodwill
Business combinations are accounted for by the app ication of the acquisition method. Goodwi arising on conso idation represents
the excess of the cost of acquisition over the Group’s interest in the fair va ue of the identifiab e assets, iabi ities and contingent
iabi ities at the date of acquisition of a subsidiary or joint venture. No goodwi arises on the acquisition of an additiona interest from a
non-contro ing interest in a subsidiary as this is accounted for as an equity transaction. Goodwi is stated at cost, ess any accumu ated
impairment osses, and is tested annua y for impairment or more frequent y if there are indications that amounts may be impaired.
On disposa of a subsidiary or joint venture, the attributab e amount of goodwi is inc uded in the determination of the profit or
oss on disposa .
Ac uisition-related intangible assets
Intangib e assets on acquisitions that are either separab e or arising from contractua rights are recognised at fair va ue at the date
of acquisition. Such acquisition-re ated intangib e assets inc ude trademarks, techno ogy, customer contracts and customer re ationships.
The fair va ue of acquisition-re ated intangib e assets is determined by reference to market prices of simi ar assets, where such
information is avai ab e, or by the use of appropriate va uation techniques, inc uding the roya ty re ief method and the excess
earnings method.
Acquisition-re ated intangib e assets are amortised by equa annua insta ments over their expected economic ife. The directors
review acquisition-re ated intangib e assets on an on-going basis and, where appropriate, provide for any impairment in va ue.
The estimated usefu ives are as fo ows:
Trademarks and techno ogy
Customer contracts and customer re ationships
up to a maximum of five years
up to a maximum of ten years
Non-ac uisition-related intangible assets
Deve opment expenditure represents expenditure incurred in estab ishing new services and products of the Group. Such expenditure
is recognised as an intangib e asset on y if the fo owing can be demonstrated: the expenditure creates an identifiab e asset, its cost can
be measured re iab y, it is probab e that it wi generate future economic benefits, it is technica y and commercia y feasib e, and the
Group has sufficient resources to comp ete deve opment. In a other instances, the cost of such expenditure is taken direct y to the
Conso idated income statement.
Capita ised deve opment 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 capita ised deve opment expenditure on an on-going basis and, where
appropriate, provide for any impairment in va ue.
Research expenditure is charged to the Conso idated income statement in the year in which it is incurred.
Capita ised 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 residua va ues by equa annua insta ments over their expected
usefu economic ives, up to a maximum of eight years.
138 G4S plc Integrated Report and Accounts 2017
(g) Property, plant and eq ipment
Property, plant and e uipment is stated at cost, net of accumulated depreciation and any provision for impairment. Depreciation
is provided on all property, plant and e uipment other than freehold land. Depreciation is calculated so as to write off the cost
of the assets to their estimated residual values by e ual annual instalments over their expected useful economic lives as follows:
Freehold and long leasehold buildings
Short leasehold buildings (under 50 years)
E uipment and motor vehicles
up to 50 years
over the life of the lease
2 to 10 years
Assets held under finance leases are depreciated over the shorter of their expected useful economic lives and the terms of the
relevant lease.
Where significant, the residual values and the useful economic lives of property, plant and e uipment are re-assessed annually.
(h) Financial instr ments
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instruments.
Trade receivables
Trade receivables are initially recognised at fair value and are subse uently carried at amortised cost less provision for impairment.
Provisions are made where the Group identifies a risk of non-payment, taking into account ageing, previous losses experienced and
other local economic and market conditions and are calculated by discounting expected cash flows using the effective interest rate
at origination of the receivable.
Investments
Investments comprise investments in securities which are classified as held-for-trading. Such investments are initially recognised at cost,
including transaction costs, and subse uently measured at fair value. Gains and losses arising from changes in fair value are recognised
in the Consolidated income statement.
Cash and cash equivalents
Cash and cash e uivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and that form
an integral part of the Group’s cash management are included as a component of cash and cash e uivalents for the purpose of the
Consolidated statement of cash flow.
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 Consolidated income
statement on an accrual basis using the effective-interest method.
Trade ayables
Trade payables are not interest-bearing and are stated initially at fair value.
Equity instruments
E uity instruments issued by the Group are recorded at the value of proceeds received, net of direct issue costs.
(i) 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.
(j) Impairment
The carrying values of the Group’s assets, with the exception of inventories, financial receivables and deferred tax assets, are reviewed
on an on-going 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 Consolidated 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.
Integrated Report and Accounts 2017 G4S plc 139
Financial report
Notes to the consolidated financial statements continued
3. Significant acco nting policies continued
(k) Employee benefits
Retirement benefit costs
Payments to def ned contr but on schemes are charged as an expense as they fall due. Payments made to state-managed ret rement
benef t schemes are dealt w th as payments to def ned contr but on schemes where the Group’s obl gat ons under the schemes are
equ valent to those ar s ng n a def ned contr but on ret rement benef ts scheme.
The ret rement benef t obl gat on recogn sed n the Consol dated statement of f nanc al pos t on represents the present value of the
Group’s total def ned benef t obl gat on reduced by the fa r value of the related scheme assets. The total of all of the Group’s nd v dual
schemes that are n a net asset pos t on s presented separately n the Consol dated statement of f nanc al pos t on. The value of any net
asset recogn sed for a def ned benef t scheme s l m ted to the present value of ava lable refunds and reduct ons n future contr but ons
to the scheme.
For def ned benef t plans, the cost charged to the Consol dated ncome statement cons sts of current serv ce cost, net nterest cost,
and past serv ce cost. The f nance element of the pens on charge s shown n f nance expense and the rema n ng serv ce cost element
s charged as a component of employee costs n the Consol dated ncome statement. Actuar al and other re-measurement ga ns and
losses are recogn sed mmed ately n full w th n other comprehens ve ncome.
Share-based payments
The Group ssues equ ty-settled and cash-settled share-based payments to certa n employees. The fa r value of equ ty-settled share-
based payments s determ ned at the date of grant and expensed, w th a correspond ng ncrease n equ ty, on a stra ght-l ne bas s
over the vest ng per od, based on the Group’s est mate of the shares that w ll eventually vest. The amount expensed s adjusted over
the vest ng per od for changes n the est mate of the number of shares that w ll eventually vest, exclud ng changes result ng from any
market-related performance cond t ons. Cash-settled share-based payments are recogn sed as a l ab l ty at fa r value at the date of
grant. The value of the l ab l ty s re-measured at each report ng date and at the date the l ab l ty s settled. Changes n the l ab l ty
are recogn sed d rectly n the Consol dated ncome statement.
(l) Provisions and contingent liabilities
Prov s ons are recogn sed when a present legal or construct ve obl gat on ex sts for a future l ab l ty n respect of a past event and where
the amount of the obl gat on can be est mated rel ably. The amount recogn sed as a prov s on s the Group’s best est mate of the l kely
outflows at the end of the report ng per od.
In respect of cla ms, onerous customer contracts and l t gat on, the Group prov des for ant c pated costs where an outflow of resources
s cons dered probable and a reasonable est mate can be made of the l kely outcome. For all r sks, the ult mate l ab l ty may vary from
the amounts prov ded and w ll be dependent upon the eventual outcome of any settlement. Management exerc ses judgment n
measur ng the Group’s exposures to cont ngent l ab l t es (see note 33) through assess ng the l kel hood that a potent al cla m or
l ab l ty w ll ar se and n quant fy ng the poss ble range of f nanc al outcomes.
Where the t me value of money s mater al, prov s ons are stated at the present value of the expected expend ture us ng an appropr ate
d scount rate.
(m) Restr ct ring costs
A restructur ng prov s on s recogn sed when the Group has developed a deta led formal plan for the restructur ng and has ra sed a
val d expectat on n those affected that t w ll carry out the restructur ng by start ng to mplement the plan or by announc ng ts ma n
features to those affected by t. The measurement of a restructur ng prov s on ncludes only the d rect expend tures ar s ng from the
restructur ng, wh ch are those amounts that are both necessar ly enta led by the restructur ng and not assoc ated w th the on-go ng
act v t es of the ent ty.
The Group d st ngu shes n the Consol dated ncome statement between restructur ng costs that are recurr ng and those that relate
to one-off or transformat onal Group programmes that mpact a number of operat ons.
Recurr ng restructur ng costs that are ncurred n the normal course of bus ness are recorded as part of the Group’s results w th n
adjusted prof t before nterest, tax and amort sat on (Adjusted PBITA).
Restructur ng costs that are one-off and nd v dually mater al or relate to programmes l nked to the Group’s w der transformat on,
and requ re approval at execut ve level, are d sclosed separately n the Consol dated ncome statement.
(n) Reven e recognition
The Group’s revenue ar ses from two pr mary sources Secure Solut ons products, ma nly compr s ng manned secur ty and fac l t es
management serv ces, and Cash Solut ons, ma nly the prov s on of phys cal cash management serv ces.
–
W th n Secure Solut ons there are add t onal revenue streams ar s ng from:
• Technology serv ces, compr s ng the supply, nstallat on and mon tor ng of alarm systems, and secur ty and bu ld ng systems
technology;
• Fac l t es management; and
• Care & Just ce serv ces.
140 G4S plc Integrated Report and Accounts 2017
Within Cash olutions there is an additional revenue stream arising from Technology services to retailers, comprising the provision
of hardware and software for customer cash management and related services.
In all of these business areas revenue is measured at the fair value of consideration received or receivable, net of discounts, VAT
and other sales-related taxes.
Certain low-volume, high-value government contracts, mainly for Care & Justice services and facilities management services, can cover a
range of bundled services over a long period of time, that are provided on a time and materials basis. Revenue for this type of contracts
is recognised on an accrual basis based on the individual services provided and in accordance with the terms of the contract.
Where services provided to customers include more than one particular revenue source, particularly in cash technology services and in
the alarms business, such as the supply and installation of equipment together with on-going services and maintenance contracts, the fair
value of each revenue source is separately identified and allocated to each element of the arrangement and recognised as the product is
sold or the services are delivered.
Manned security, cash management, facilities management, other care and justice services and security systems services
Revenue is recognised to reflect the period in which the service is provided.
Security alarm systems installations
Revenue for B2B customers is recognised on completion of the installation, and the attributable costs of the installation are recognised
as a cost of sale, given that economic ownership of the asset is transferred to the customer.
Revenue for B2C customers is deferred and recognised along with the revenue from the related monitoring service over the term
of the contract, given that legal and economic ownership of the assets remains with the Group.
ervice and monitoring fees for all alarm system contracts are recognised in the period when the service is provided.
Long term contracts
These contracts are mainly related to certain long-term construction or alarm or other technology installation projects which span
one or more reporting periods and where long-term contract accounting is applied.
Where the outcome of a long-term 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 bear to the estimated total contract costs, or by the proportion that the 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 and hence recoverable.
Where the outcome of a long-term contract cannot be estimated reliably, contract revenue is recognised only 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.
(o) Pre-contract and mobili ation co t
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) and before contract mobilisation, 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 preferred bidder status is not followed by the award of the contract, or
where these may no longer be expected to be recovered through future profits.
Mobilisation costs are those costs incurred after the signing of a contract with a customer, and prior to commencement of delivery of
the contract. Costs incurred during this stage are generally only capitalised if the criteria to be capitalised as inventories or as property,
plant and equipment are met. In all other cases mobilisation costs are expensed as incurred.
(p) Onerou contract
Onerous contract provisions are recognised where the unavoidable costs of meeting the obligations under the contract exceed the
economic benefits expected to be received under it. Management’s profit-improvement plans to recover the position on loss-making
contracts require a level of judgment and are generally taken into account in the calculation of the onerous contract provision only
when implementation has commenced and tangible evidence exists of benefits being delivered. The provision is calculated based on
discounted cash flows to the end of the contract.
In general, provisions recognised for future losses are charged to the Consolidated income statement within Adjusted PBITA.
Where onerous contract provisions are material by virtue of their size, they are separately charged within specific items.
In-year operating losses from onerous contracts are accounted for as a utilisation of the related provision for future losses. Any
excess or shortfall to the initial estimate for onerous contract provisions is credited or charged in the Consolidated income statement
consistent with where the charge for the initial provision was recognised.
Vacant property provisions are recognised when the Group has committed to a course of action that will result in the property
becoming vacant. The provision is calculated based on discounted cash flows to the end of the lease taking into account expected
future sub-lease income.
Integrated Report and Accounts 2017 G4S plc 141
Financial report
Notes to the consolidated financial statements continued
3. Significant acco nting policies continued
(q) Interest
Interest income is accrued on a time basis by re erence to the principal outstanding and at the e ective interest rate applicable.
This is the rate that exactly discounts estimated uture cash receipts through the expected li e o the inancial asset’s net carrying
amount. Borrowing costs, also calculated using the e ective-interest method, are recognised as an expense in the Consolidated
income statement.
(r) Income taxes
Tax is recognised in the Consolidated income statement except to the extent that it relates to items recognised in equity, in which
case it is recognised through other comprehensive income. The tax expense represents the sum o current tax and de erred tax,
and excludes charges or interest on tax and certain penalties on tax settlements, which are reported within inance expenses and
administration expenses respectively.
Current tax is based on taxable pro it or the year. Taxable pro it di ers rom net pro it as reported in the Consolidated income
statement because it excludes items o income or expense that are taxable or deductible in other years and it urther excludes
items that are never taxable or deductible. The Group’s liability or current tax is calculated using tax rates that have been enacted
or substantively enacted by the balance sheet date.
De erred tax is the tax expected to be payable or recoverable on di erences between the carrying amounts o assets and liabilities in
the consolidated inancial statements and the corresponding tax bases used in the computation o taxable pro it, and is accounted or
using the balance sheet liability method. De erred tax liabilities are generally recognised or all taxable temporary di erences. De erred
tax assets are recognised to the extent that it is probable that uture taxable pro its will be available against which deductible temporary
di erences can be utilised.
De erred tax liabilities are recognised or taxable temporary di erences arising on investments in subsidiaries and interests in joint
ventures, except where the Group is able to control the reversal o the temporary di erence and it is probable that the temporary
di erence will not reverse in the oreseeable uture.
The carrying amount o potential de erred tax assets is re-assessed at each balance sheet date and recognised to the extent that
it is probable that su icient taxable pro its will be available to allow those assets to be recovered.
De erred tax is measured based on the tax rates that have been enacted or substantively enacted by the end o the reporting period.
Tax liabilities or re unds may di er rom those anticipated due to changes in tax legislation, di ering interpretations o tax legislation and
uncertainties surrounding the application o tax legislation. In situations where uncertainties exist, provision is made or tax liabilities and
assets on the basis o management judgment ollowing consideration o the available relevant in ormation. Further detail on
management’s judgments in respect o taxation is provided in note 4.
(s) Leasing
Leases are classi ied as inance leases when the terms o the lease trans er substantially all o the risks and rewards o ownership
to the lessee. On occasion this classi ication requires a level o judgment. All other leases are classi ied as operating leases.
Assets held under inance leases are recognised at the inception o the lease at their air value or, i lower, at the present value o the
minimum lease payments. The corresponding liability to the lessor is included in the Consolidated statement o inancial position as a
inance lease obligation. Lease payments made or received are apportioned between inance charges or income and the reduction o
the lease liability or asset so as to produce a constant rate o interest on the outstanding balance o 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.
(t) Non-c rrent assets held for sale and discontin ed operations
Non-current assets (and disposal groups) classi ied as held or sale are measured at the lower o carrying amount and air value less
costs to sell.
Non-current assets and disposal groups are classi ied as held or sale i 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 or immediate sale in its present condition. The Group must be committed to the sale, which should
be expected to quali y or recognition as a completed sale within one year rom the date o classi ication.
A discontinued operation is a component o the Group’s business that represents a separate major line o business or geographical area
o operations or is a subsidiary acquired exclusively with a view to resale that has been disposed o , has been abandoned or meets the
criteria to be classi ied as held or sale.
( ) Dividend distrib tion
Dividends are recognised as distributions to equity holders in the period in which they are paid or approved by the shareholders in
general meeting.
142 G4S plc Integrated Report and Accounts 2017
(v) Adoption of new and revi ed accounting tandard and interpretation
The Group has not earl -adopted an standard, amendment or interpretation. A number of new standards, amendments to standards
and interpretations are not et effective for the ear ended 31 December 2017. The directors are currentl evaluating the impact of
these new standards on the group financial statements:
• Annual Improvements to IFRS Standards 2014-2016 C cle
•
•
•
–
IFRS 2 amendments Classification and Measurement of share-based pa ment transactions
IFRIC 22 – Foreign currenc transactions and advance consideration
IFRIC 23 – Uncertaint over income tax treatments
IFRS 15 – Revenue from Contracts with Customers
The Group has adopted IFRS 15 – Revenue from Contracts with Customers with effect from 1 Januar 2018, and will prepare its 2018
Interim Results and Integrated Report and Accounts in accordance with the requirements of this new standard, with full retrospective
application restating comparatives where appropriate.
The majorit of the services which the Group provides are related to Secure Solutions (including securit s stems) and Cash Solutions
(including hardware and software s stems). Following a thorough review of the contractual terms of the contracts under which the
Group provides these services, and from an assessment of the basis on which customers are invoiced in relation to work performed
on a number of material contracts in each of these business categories, it has been concluded that the Group’s right to consideration
from the customer corresponds directl with the value to the customer of the Group’s performance completed to date. The Group
is therefore allowed to recognise revenue in the amount to which it has the right to invoice, and there will be no significant change
in revenue recognition in respect of these services. The Group will appl the practical expedient approach allowed b IFRS 15 in such
cases, whereb revenue is recognised in line with amounts invoiced to customers, based on the value of services performed over the
duration of the contract.
Onl a residual amount of care and justice services have been identified where the practical expedient approach is not applicable, but
based on a detailed assessment of the most material of such contracts in relation to IFRS 15 revenue recognition criteria, no material
change to current revenue recognition has been identified.
In addition to review and assessment of revenue recognition, the Group has assessed the impact of IFRS 15 criteria for capitalisation
of contract-acquisition and contract-fulfilment costs b comparison with its existing accounting policies. Certain changes (such as
the cessation of capitalisation of pre-contract costs after attainment of preferred supplier status) are required to those existing
policies under IFRS 15, but these changes will likewise have no material impact on the Group’s results or Consolidated statement
of financial position.
As a result of these reviews, management has concluded that, whilst refinements are required to certain of the Group’s existing
revenue recognition and contract cost capitalisation policies for compliance with IFRS 15, together with the inclusion of a number of
additional disclosures in the Integrated Report and Accounts for 2018 and for subsequent ears, there will be no material change to
the Group’s revenue, Adjusted PBITA, profit before tax or profit for the ear, or to its Consolidated statement of financial position,
as a consequence of adoption of this new standard.
–
IFRS Financial Instruments
The Group has adopted IFRS 9
Integrated Report and Accounts in accordance with the requirements of this new standard, with restated comparatives where appropriate.
Financial Instruments with effect from 1 Januar 2018, and will prepare its 2018 Interim Results and
–
The new standard is applicable to financial assets and financial liabilities, and covers the classification, measurement, impairment and
de-recognition of financial assets and liabilities together with a new hedge accounting model.
Management has completed its assessment of the impact of this new accounting standard on its consolidated financial statements, with
particular reference to the impact of the expected credit loss model for impairment of financial assets and to the changes in respect
of hedge accounting, from which it has been concluded that there will be no material change to the Group’s revenue, Adjusted PBITA,
profit before tax or profit for the ear, or to its Consolidated statement of financial position, as a consequence of adoption of IFRS 9,
and there will be no change to the Group’s existing hedging strateg .
IFRS 16 – Leases
The Group continues to assess the impact of adopting IFRS 16 – Leases, which will be effective for the Group’s financial ear ending
31 December 2019.
Additional debt will be recognised in the Consolidated statement of financial position, together with additional propert , plant and
equipment assets.
The impact on the Consolidated income statement is currentl expected to be a small increase in Adjusted PBITA, due to the
re-classification of the interest element of operating lease rentals as finance costs.
The impact on Profit before tax will be variable over the term of a lease, as interest is charged at the effective rate on the reducing
balance of the liabilit over the lease term. Over the course of each lease the cumulative impact on pre-tax profit will be neutral.
The impact on the Consolidated statement of cash flows will be an increase in net cash flow from operating activities, equivalent to the
increase in Adjusted PBITA, matched b an increase in cash outflow from financing activities due to the re-classification of finance lease
interest, with no impact on net cash flow.
Integrated Report and Accounts 2017 G4S plc 143
Financial report
Notes to the consolidated financial statements continued
4. Accountin estimates, jud ments and assumptions
The preparation of financia statements in conformity with adopted IFRSs requires management to make judgments, estimates and
assumptions that affect the app ication of the Group’s accounting po icies, which are described in note 3, with respect to the carrying
amounts of assets and iabi ities at the date of the financia statements, the disc osure of contingent assets and iabi ities at the date of
the financia statements and the reported amounts of income and expenses during the reporting period.
Si nificant jud ments
Significant judgments are those made by management when app ying its accounting po icies that are considered to have the most
significant impact on amounts recognised in the conso idated financia statements.
During the year, management reassessed the most significant judgments and determined that those re ating to revenue recognition
were no onger considered to be significant.
Those judgments that are considered to have the most significant impact on amounts recognised in the conso idated financia
statements, apart from those invo ving estimations (which are disc osed separate y be ow), are the fo owing:
Compliance with forei n ownership rules and consolidation of subsidiaries
The Group has a diverse set of comp ex ownership structures, which are sometimes driven by oca aws and regu ations re ating to
foreign ownership. In some instances the Group operates through oca structures with imited direct share ownership of the business
but exercises contro through shareho der agreements.
Judgment is required in determining whether certain Group entities qua ify for conso idation under IFRS10 – Conso idated Financia
Statements, and in some instances professiona and ega advice is sought to support these judgments. Conso idation of any of these
entities wou d be at risk if the Group’s abi ity to enforce its rights of contro was successfu y cha enged.
These judgments have been app ied in determining how the Group conso idates businesses with an aggregated revenue of c.£800m,
Adjusted PBITA of c.£60m and equity shareho ders’ funds of c.£200m. The impact on the Group’s earnings (after tax) of equity
accounting rather than fu conso idation wou d not be materia .
Classification of leases
The c assification of eases as operating or finance eases is based on the criteria set out in IAS 17 – Leases, which defines a series
of attributes which, when contained within a ease, may resu t in its c assification as a finance ease. Judgment is required in assessing
eases at inception as to whether individua attributes, in aggregate or in iso ation, are such that the substance of the ease is that of
a finance ease. Detai s of the Group’s finance eases are disc osed in note 28 and the Group’s operating ease commitments are set
out in note 38.
Alternative Performance Measures
The Group uses Adjusted PBITA as a consistent interna and externa reporting measure of its performance, as management views it as
being more representative of the norma course of business and more comparab e period to period. Adjusted PBITA exc udes strategic
restructuring costs, amortisation of acquisition-re ated intangib e assets and specific and other separate y disc osed items which the
Group be ieves shou d be disc osed separate y by virtue of their size, nature or incidence. Judgment is required when defining those
items to be disc osed separate y and when app ying the c assification criteria to each period’s resu ts. Further detai s on separate y
disc osed items are set out in note 8.
Si nificant estimates and assumptions
Significant estimates and associated assumptions are those that have a significant risk of resu ting in a materia adjustment to the carrying
amounts of assets and iabi ities within the next financia year. Significant estimates are made taking into account historica experience
and various other factors that are be ieved to be reasonab e under the circumstances, inc uding current and expected economic
conditions, and, in some cases, actuaria techniques. Estimates and under ying assumptions are reviewed on an on-going basis. Revisions
to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.
The most significant estimates, assumptions and sources of uncertainty in preparing the Group’s 2017 conso idated financia statements
are set out be ow:
Onerous contracts
The Group de ivers certain ong-term services that are comp ex in nature. Some of these contracts may evo ve to become oss-making,
such that net unavoidab e osses are expected to be incurred over their ife.
Where a contract is expected to be oss-making over its remaining term, the net present va ue of estimated future osses is determined
in order to ca cu ate an onerous contract provision. The identification and measurement of such provisions is subject to inherent risk,
given the extended time periods often invo ved and the number of variab es which are not a within the Group’s contro .
In particu ar, estimation is required in assessing future expected revenue and costs on such contracts, inc uding:
• determining the expected impact of any profit improvement p ans where sufficient evidence exists of benefits being de ivered
by those p ans; and
• determining an appropriate discount rate to app y to materia future cash f ows.
The eve of uncertainty in the estimates and assumptions supporting expected future revenues and costs can vary with the comp exity
of each contract and with the form of service de ivery.
For further detai s of how the Group has app ied judgments and estimates to significant onerous contract provisions refer to note 33
on pages 179 to 181.
144 G4S plc Integrated Report and Accounts 2017
Carrying value of goodwill
The Group tests tangi le and intangi le assets, including goodwill, for impairment on an annual asis or more frequently if there are
indications that amounts may e impaired. The impairment analysis for such assets is ased principally upon discounted estimated future
cash flows from the use and eventual disposal of the assets, requiring assumptions on growth rates and the impact of local economic
factors. The full methodology and results of the Group’s impairment testing, including an analysis of the sensitivity of goodwill to the key
assumptions, are presented in note 18.
Taxa ion
The Group operates in many tax jurisdictions including countries where the tax legislation is not consistently applied and under some
complex contractual circumstances where the responsi ility for tax arising is not always clear. Judgments and estimates are required to
determine the appropriate amount of tax to provide for and any required disclosure around contingent tax lia ilities at each period end.
Provisions for tax lia ilities are estimated for existing matters under dispute with local tax authorities, as well as for matters which it is
considered may e disputed y them, where it is pro a le that a future lia ility will arise. The tax lia ility provided is management’s est
estimate, taking into account external advice, the anticipated position of the relevant tax authorities, and other local factors. In certain
cases, and where appropriate, a pro a ility weighting is applied in determining the amount provided. In all cases it is assumed that
the local tax authorities have, or will e provided with, full information. Therefore the tax lia ility is not reduced for “detection risk”.
Further details a out the range of the potential tax exposure to which the Group is su ject are set out in note 13.
The Group has tax losses and other deducti le temporary differences, mainly in the UK and USA, that have the potential to reduce tax
payments in future years. Deferred tax assets are only recognised to the extent that their recovery is pro a le, having regard to the
projected future taxa le income of these entities and after taking into account specific risk factors that affect the recovery of these
assets. The same profit projections are used for these purposes as are used y the usiness, for example in assessing the carrying
value of goodwill. Judgment is applied on a case- y-case asis due to the jurisdictional nature of taxation. This analysis is considered
afresh at each alance sheet date.
Valua ion of re iremen benefi obliga ions
The valuation of defined retirement enefit schemes is arrived at using the advice of qualified independent actuaries who use
the projected unit credit method for determining the Group’s o ligations. This methodology requires the use of a variety of
assumptions and estimates, including the determination of an 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 enefit
o ligations, including an analysis of the sensitivity of the calculations to the key assumptions, are presented in note 32.
Labour laws and commercial agreemen s
The Group is involved in disputes in a num er of countries, mainly related to activities incidental to its operations. Currently there
are a num er of such disputes open in relation to the application of local la our law, commercial agreements with customers and
su contractors and claims and compliance matters, in some cases in the course of litigation. In addition the interpretation of la our laws
and regulations in a num er of countries where the Group operates is complex and there is an inherent judgment made when applying
those laws and regulations that are open to interpretation. As such, there is a risk that further disputes and claims from employees could
arise in the future. Where there is a dispute (or where there is a risk of a dispute on claims in the future) and where, ased on legal
counsel advice, the Group estimates that it is pro a le that the dispute will result in an outflow of economic resources, provision is
made ased on the Group’s est estimate of the likely financial outcome. For further details of how the Group has applied judgments
and estimates to these provisions and, where relevant, an analysis of the sensitivity of the provisions to the key underlying estimates
and assumptions, refer to note 33 on pages 179 to 181.
In certain instances it is not possi le to determine a relia le estimate or a reasona le range of potential outcomes. For these cases,
disclosure of the relevant items as contingent lia ilities is provided in note 33.
Integrated Report and Accounts 2017 G4S plc 145
Financial report
Notes to the consolidated financial statements continued
5. Re enue
An analysis of t e Group’s revenue, as defined by IAS 18 – Revenue, is as follows:
Continuing operations
Sale of goods
Rendering of services
Revenue from construction contracts
Revenue from continuing operations as presented in t e Consolidated income statement
Notes
6
2017
£m
281
7,344
203
7,828
2016
£m
311
7,072
207
7,590
6. Operating segments
T e Group operates on a worldwide basis and derives a substantial proportion of its revenue and operating profit from eac of t e
following seven geograp ic regions: Africa, Asia Pacific, Latin America, Middle East & India, Europe, Nort America and UK & Ireland.
For eac of t ese reportable segments, t e Group Executive Committee (t e c ief operating decision maker) reviews internal
management reports on a regular basis.
Segment information is presented below:
Re enue by reportable segment
Africa
Asia Pacific
Latin America
Middle East & India
Emerging markets
Europe
Nort America
UK & Ireland*
De eloped markets
Total re enue
Total gross
segment re enue
2017
£m
554
763
732
864
2,913
1,491
2,034
1,419
4,944
7,857
Inter-segment
re enue
2017
£m
(6)
(2)
–
(12)
(20)
(1)
(5)
(3)
(9)
(29)
External re enue
2017
£m
548
761
732
852
2,893
1,490
2,029
1,416
4,935
7,828
Total gross
segment revenue
2016
£m
502
717
660
862
2,741
1,442
1,908
1,513
4,863
7,604
Inter-segment
revenue
2016
£m
(1)
(3)
–
(3)
(7)
(1)
(4)
(2)
(7)
(14)
External revenue
2016
£m
501
714
660
859
2,734
1,441
1,904
1,511
4,856
7,590
*Revenue in t e UK, being t e Group’s country of domicile, was £1,298m (2016: £1,406m).
Re enue by product/ser ice
Secure Solutions
Cas Solutions
Total re enue
External
re enue
2017
£m
6,532
1,296
7,828
External
revenue
2016
£m
6,349
1,241
7,590
Inter-segment sales are c arged at prevailing market prices.
T e Group as no transactions (2016: none) wit a single external customer t at amount to 10% or more of total Group revenue.
146 G4S plc Integrated Report and Accounts 2017
6. Operating segments continued
Operating profit before corporate costs
by reportable segment
Africa
Asia Pacific
Latin A erica
Middle East & India
Europe
North A erica
UK & Ireland
Adjusted PBITA before corporate costs
Corporate costs
Adjusted PBITA
Net specific ite s
Restructuring costs
Net profit on disposal/closure of subsidiaries
Goodwill i pair ent
A ortisation of acquisition-related intangible
assets
Operating profit/(loss)
Continuing
operations
2017
£m
39
65
28
56
109
124
119
540
(49)
491
(34)
(20)
74
–
Discontinued
operations
2017
£m
–
–
–
–
–
(6)
–
(6)
–
(6)
–
–
–
–
(10)
501
–
(6)
Total
2017
£m
39
65
28
56
109
118
119
534
(49)
485
(34)
(20)
74
–
(10)
495
Continuing
operations
2016
£
35
56
15
76
95
115
119
511
(50)
461
(13)
(12)
7
(9)
Discontinued
operations
2016
£
(1)
–
–
–
–
(2)
–
(3)
–
(3)
–
–
–
–
(32)
402
–
(3)
Total
2016
£
34
56
15
76
95
113
119
508
(50)
458
(13)
(12)
7
(9)
(32)
399
Refer to note 7 for details on discontinued operations.
Non-current assets
The following infor ation is analysed by reportable seg ent and by the geographical area in which the assets are located:
Non-current assets1
By reportable segment
Africa
Asia Pacific
Latin A erica
Middle East & India
Europe
North A erica
UK & Ireland*
Total segment non-current assets1
Corporate
Total non-current assets1
Other non-current assets2
Less: Non-current assets held for sale
Total non-current assets
2017
£m
2016
£
105
256
158
117
410
496
862
2 404
47
2 451
424
(26)
2 849
118
277
180
126
466
577
877
2,621
19
2,640
460
(77)
3,023
* Non-current assets in the UK, being the Group’s country of do icile, a ounted to £817 (2016: £825 ).
1. Non-current assets co prise goodwill, other acquisition-related intangible assets, non-acquisition-related intangible assets, property, plant and equip ent
and invest ents in joint ventures.
2. Other non-current assets co prise trade and other receivables, invest ents, retire ent benefit surpluses and deferred tax assets.
Integrated Report and Accounts 2017 G4S plc 147
Financial report
Notes to the consolidated financial statements continued
Other information
By reporta le segment
Africa
Asia Pacific
Latin America
Middle East & India
Europe
North America
UK & Ireland
Corporate
Total
Impairment
losses
recognised
in income
2017
£m
–
–
–
–
–
–
–
–
–
Depreciation
and
amortisation
2017
£m
14
12
11
12
41
10
30
6
136
Impairment
losses
recognised
in income
2016
m
–
–
14
–
–
–
9
–
23
Depreciation
and
amortisation
2016
m
13
13
15
11
45
10
53
3
163
Capital
additions
2017
£m
13
10
7
6
28
12
22
10
108
Capital
additions
2016
m
12
6
9
9
33
13
32
15
129
7. Discontinued operations
The loss from discontinued operations of 6m in the current year relates to impairments of trade receivables and costs and charges
incurred or expected to be incurred relating to historical disposals of businesses classified as discontinued operations at the time of
sale (2016: 3m costs and charges relating to historical disposals). Discontinued operations incurred no tax charge during the year
(2016: nil). None of the Group’s businesses currently held for sale or closure meet the criteria to be classified as discontinued
operations in the current year (2016: none).
The effect of discontinued operations on segment results is disclosed in note 6.
Discontinued operations generated no cash flows for the year ended 31 December 2017 (2016: 9m operating cash outflow).
8. Operating profit
The Consolidated income statement can be analysed as follows:
Continuing operations
Revenue
Cost of sales
Gross profit
Administration expenses
Goodwill impairment
Share of profit after tax from joint ventures
Operating profit
2017
£m
7,828
(6,432)
1,396
(904)
–
9
501
2016
m
7,590
(6,212)
1,378
(976)
(9)
9
402
Operating profit includes items that are separately disclosed for the year ended 31 December 2017 relating to:
• Net specific items charge of 34m (2016: 13m), of which 19m (2016: 4m) primarily relates to the anticipated total losses over
the next 15-20 years in respect of certain UK contracts. The net specific item charge also includes 6m relating to the estimated
cost of settlement of subcontractor claims from commercial disputes in respect of prior years, and 9m relating mainly to the
settlement of labour-related disputes in respect of prior years in North America and Latin America. Specific items in 2016 included
a 10m charge due to the revision of estimates relating to legacy acquisitions and labour claims in Latin America, 7m relating to
commercial restructuring in Middle East & India, and a net 4m supplementary onerous contract provision primarily in respect of
the Compass asylum seekers contract, all offset by an 8m credit mainly relating to the recovery of a legal claim in Europe and of
certain disputed debtor balances in the UK;
• Costs of 20m (2016: 12m) arising from restructuring activities during the year, mainly in the UK & Ireland and Europe regions, as
part of the multi-year strategic prodcutivity programme across the Group which is now drawing to a close. In addition, the Group
incurred non-strategic severance costs of 10m (2016: 9m) which are included within cost of sales and administration expenses
as appropriate. Going forwards the Group has announced a three-year plan to 2020 to implement efficient organisational design
and leaner processes, which is likely to require further restructuring investment;
• Amortisation of acquisition-related intangible assets of 10m (2016: 32m) is lower than the prior year as certain intangible assets
recognised on a number of legacy acquisitions became fully amortised in 2016; and
• As part of the portfolio programme, the Group realised net profit of 74m (2016: 7m) relating to the disposal of a number of the
Group’s operations including the US Youth Services business, the children’s homes business in the UK, the cash businesses in Peru
and Paraguay, and the Group’s businesses in Israel and Bulgaria (see note 17). In 2016, the Group recorded a goodwill impairment
charge of 9m in relation to businesses identified for sale or closure.
148 G4S plc Integrated Report and Accounts 2017
9. Profit from operations
Profit from continuing and discontinued operations as been arrived at after c arging/(crediting):
Continuin
2017
£m
Discontinued
2017
£m
Notes
Total
2017
£m
Continuing
2016
£m
Discontinued
2016
£m
Cost of sales
Cost of inventories recognised as an expense
Administration expenses
Amortisation of acquisition-related intangible
assets
Net specific items
Restructuring costs
Goodwill impairment
Depreciation of property, plant and equipment
Amortisation of non-acquisition-related
intangible assets
Net profit on disposal/closure of
subsidiaries/businesses
Impairment of trade receivables
Researc and development expenditure
Operating lease rentals payable
S are-based payments
8
8
8
18
19
18
17
23
39
98
10
34
20
–
104
22
(74)
17
4
104
10
–
–
–
–
–
–
–
–
4
–
–
–
98
112
10
34
20
–
104
22
(74)
21
4
104
10
32
13
12
9
106
25
(7)
21
4
98
13
–
–
–
–
–
–
–
–
–
–
–
–
Total
2016
£m
112
32
13
12
9
106
25
(7)
21
4
98
13
Integrated Report and Accounts 2017 G4S plc 149
Financial report
Notes to the consolidated financial statements continued
10. A ditor’s rem neration
Fees pa able to the Compan ’s auditor for the audit of the parent compan and
consolidated financial statements
Fees pa able to the Compan ’s auditor and its associates for other services:
The audit of the Compan ’s subsidiaries*
All other services**
* 2017 fees included £1m (2016: £1m) in respect of prior ears.
2017
£m
2016
£m
1
7
1
1
7
2
** Other services of £0.7m (2016: £1.9m) relate mainl to other assurance services for £0.5m (2016: £0.8m) which include the half ear review.
The Audit Committee Report on pages 85 to 91 outlines the Compan ’s established polic for ensuring that audit independence
is not compromised through the provision b the Compan ’s auditor of other services.
11. Staff costs and employees
The average monthl number of emplo ees, in continuing and discontinued operations, including executive directors was:
By reportable segment
Africa
Asia Pacific
Latin America
Middle East & India
Europe
North America
UK & Ireland
Head office
Total average n mber of employees (excl ding joint vent res)
Average number of emplo ees emplo ed b joint ventures
Total average n mber of employees (incl ding joint vent res)
Their aggregate remuneration, in continuing and discontinued operations, comprised:
Wages and salaries
Social securit costs
Emplo ee benefits
Total staff costs (excl ding joint vent res)
Joint venture staff costs
Total staff costs (incl ding joint vent res)
2017
N mber
125,451
58,613
71,502
165,847
50,066
54,578
34,865
248
561,170
12,501
573,671
2017
£m
4,629
501
233
5,363
70
5,433
2016
Number
126,182
59,996
73,907
176,330
53,287
55,522
34,293
171
579,688
13,209
592,897
2016
£m
4,533
479
228
5,240
64
5,304
Information on directors’ remuneration, long-term incentive plans, pension contributions and entitlements is set out in the Directors’
Remuneration report on pages 93 to 115.
150 G4S plc Integrated Report and Accounts 2017
12. Net finance expense
Interest and other ncome on cash, cash equ valents and nvestments
Interest rece vable on loan-note related der vat ves
Ga n ar s ng from fa r value adjustment to the hedged loan note tems
Loss ar s ng from change n fa r value of der vat ve f nanc al nstruments hedg ng loan notes
Finance income
Interest on bank overdrafts and loans
Interest on loan notes
Interest on obl gat ons under f nance leases
Other nterest charges*
Total Group borrow ng costs
F nance costs on def ned ret rement benef t obl gat ons
Finance expense
2017
£m
12
4
14
(14
16
(18
(87
(3
(12
(120
(11
(131
2016
£m
15
18
11
(11)
33
(21)
(97)
(5)
(6)
(129)
(10)
(139)
Net finance expense
(115
(106)
* Other nterest charges nclude £2m (2016: £n l) relat ng to d scounts unwound on prov s ons (see note 33).
13. Tax
Continuing
operations
2017
£m
Discontinued
operations
2017
£m
Current tax expense
Current year
Adjustments n respect of pr or years (note (v ))
Total current tax expense
Deferred tax expense/(credit (see note 34
Current year
Re-assessment of deferred tax recoverab l ty on losses
(note (v ))
Adjustments n respect of pr or years (note (v ))
Total deferred tax expense/(credit
89
8
97
42
(5
(6
31
Total income tax expense for the year
128
–
–
–
–
–
–
–
–
Cont nu ng
operat ons
2016
£m
D scont nued
operat ons
2016
£m
Total
2017
£m
89
8
97
42
(5
(6
31
91
19
110
6
(36)
(4)
(34)
128
76
Total
2016
£m
91
19
110
6
(36)
(4)
(34)
76
–
–
–
–
–
–
–
–
UK corporat on tax s calculated at 19% (2016: 20%) of the est mated assessable prof ts for the year. Overseas tax s calculated at the
corporat on tax rates preva l ng n the relevant jur sd ct ons.
Integrated Report and Accounts 2017 G4S plc 151
Financial report
Notes to the consolidated financial statements continued
13. Ta continued
The tax charge for the ear can be reconciled to the profit per the Consolidated income statement as follows:
Profit before ta
Continuing operations
Discontinued operations
Total profit before ta
Tax at UK corporation tax rate of 19% (2016: 20%)
Items that are not deductible and other additions to taxable profit (note (i))
Goodwill impairments not deductible
Profits on disposal of businesses not taxable or covered b capital losses (note (ii))
Losses on disposal of businesses not relieved (note (ii))
Different tax rates of subsidiaries operating in non-UK jurisdictions (note (iii))
Benefit of tax incentives and credits
Impact of phased reduction in UK rate to 17%
Adjustment for joint ventures
Tax losses not recognised in the current ear (note (iv))
Impact of US tax reforms (note (v))
Re-assessment of deferred tax recoverabilit on losses (note (vi))
–
Adjustment in respect of prior ears current and deferred tax (note (vii))
Total income ta charge
Effective ta rate for continuing and discontinued operations
The effective tax rate for continuing operations was 33% (2016: 26%).
2017
£m
386
(6)
380
74
20
–
–
1
23
(5)
(2)
(1)
2
19
(5)
2
128
34%
2016
£m
296
(3)
293
59
25
2
(8)
7
12
(5)
4
(1)
2
–
(36)
15
76
26%
(i) Items that are not deductible and other additions to taxable profit £ 0m ( 016: £ 5m)
This categor reflects the tax effect of items which, in management’s judgment, are potentiall disallowable for the purposes
of determining local taxable profits. This includes unrelieved withholding taxes of £8m (2016: £9m) relating to withholding tax
deducted on domestic or cross-border pa ments in excess of the profits tax arising in the recipient compan .
–
(ii) Profits on disposal of businesses not taxable or covered by capital losses – £nil ( 016: £(8)m)
This relates to profits arising on the disposal of businesses where an taxable gain arising on the disposal is either exempt from tax
under the relevant tax legislation or there are capital losses available to offset against those taxable gains, for which deferred tax assets
were not previousl recognised. Similarl , losses on disposal of businesses not relieved of £1m (2016: £7m) relates to the disposal of
businesses where no deductible loss arises or where there is a low probabilit that losses will be utilised.
(iii) Different tax rates of subsidiaries operating in non-UK jurisdictions £ 3m ( 016: £1 m)
This relates to the effect of profits of the Group being subject to tax at rates different from the current UK corporation tax rate of 19%.
–
(iv) Tax losses not recognised in the current year £ m ( 016: £ m)
This relates to current- ear losses not recognised as deferred tax assets on the basis that there are insufficient taxable profits available
to utilise those losses in the foreseeable future.
–
–
(v) Impact of US tax reforms £19m ( 016: £nil)
On 22 December 2017, the US tax legislation known as the Tax Cuts and Jobs Act was signed into law and introduced significant
changes in US tax laws taking effect on 1 Januar 2018. For 2017, the changes in legislation result in a one-off charge to the income
statement of £19m which relates to a revaluation of deferred tax asset balances due to the reduction in the US Federal tax rate and
the impairment of foreign tax credits which are no longer expected to be utilisable in future periods against foreign source income.
On the basis of currentl available information and anal sis completed since the legislation was enacted, these are likel to be the most
significant impacts for the Group. However, as more detailed anal sis and future legislative guidance becomes available, it is possible that
the Group ma be further impacted in the current ear and subsequent ears b the legislative changes.
(vi) Re-assessment of deferred tax recoverability on losses – £(5)m ( 016: £(36)m)
Relates to the recognition of additional deferred tax assets on historical tax losses during the period as a result of improvements in
profitabilit in group forecasts and business plans. Forecasted taxable profits for future ears support a marginal increase in the level
of deferred tax assets recognised on tax losses compared to the prior ear. The increased recognition in 2016 reflected improvements
in the taxable profit profile of the relevant Group companies, underpinned b the continuing progress of the Group’s transformation
strateg to generate future, sustainable profitable growth.
(vii) Adjustment in respect of prior years current and deferred tax – £ m ( 016: £15m)
This relates to a re-assessment of the tax deductibilit of expense items and provisions for unresolved tax issues as a result of case
law developments and settlements with tax authorities.
–
152 G4S plc Integrated Report and Accounts 2017
Issues relating to taxation
The calculation o the Group’s total tax charge involves consideration o certain items whose tax treatment cannot be ultimately
determined until inal resolution has been reached through negotiation with the relevant tax authorities, or via a domestic or
international dispute resolution process.
The global nature o the Group’s operations means that the most signi icant tax risk is in relation to challenges rom tax authorities
in relation to the pricing o cross-border transactions and the Group’s interpretation o the OECD’s arm’s-length principle. This risk is
largely driven by the inherently subjective nature o trans er pricing and the divergent views taken by tax authorities. In determining the
appropriate level o provisions in respect o such challenges, the Group applies a risk-based approach which considers actors such as
the quantum o the charge, the countries party to the transaction and the relevant statutes o limitation.
An assessment is also made o the likelihood that compensating adjustments will be obtained under the relevant tax treaties to mitigate
the level o double taxation which could arise. As the Group operates in a signi icant number o countries, determining the appropriate
level o judgment is typically in luenced by the Group’s evolving experience o tax controversy in di erent countries. The Group has
open tax periods in a number o countries involving a number o issues, with the most material disputes typically being in respect o
cross-border transactions. As at 31 December 2017, the Group had total tax exposures o approximately £146m (2016: £102m) o
which £42m (2016: £37m) is provided against. The Group believes that it has made appropriate provision or open tax periods which
have not yet been agreed by tax authorities. The inal agreed liabilities may vary rom the amounts provided, as these are dependent
upon the outcomes o the domestic and international dispute resolution processes in the relevant countries. The Group typically has
limited control over the timing o resolution o uncertain tax positions with tax authorities. Acknowledging this inherent unpredictability,
and on the basis o currently available in ormation, the Group does not expect material changes to occur to the level o provisions
against uncertain tax positions during the next twelve months.
Following the re erendum held on 23 June 2016, the UK voted to leave the European Union. The potential tax impacts which could
arise as a consequence o the UK withdrawing rom the European Union are currently uncertain, but on the basis o current in ormation
the Group does not anticipate that signi icant additional tax liabilities will arise.
The ollowing taxation (charge)/credit has been recognised directly in equity within the Consolidated statement o comprehensive income:
Tax relating to de ined retirement bene it schemes
Recognition o tax losses on exchange movements previously recognised within other comprehensive
income
Current tax charge or exchange movements recognised within other comprehensive income
Change in air value o net-investment and cash- low hedging inancial instruments
Total tax (charged)/credited to other comprehensive income
14. Dividends
Amounts recognised as distributions to equity holders of the parent in the year
Final dividend or the year ended 31 December 2015
Interim dividend or the six months ended 30 June 2016
Final dividend or the year ended 31 December 2016
Interim dividend or the six months ended 30 June 2017
Pence
per share
DKK
per share
5.82
3.59
5.82
3.59
0.5615
0.3143
0.5029
0.2948
Proposed final dividend for the year ended 31 December 2017
6.11
0.5097
2017
m
(4)
–
–
–
(4)
2017
m
–
–
90
55
145
95
2016
£m
28
29
(8)
1
50
2016
£m
90
55
–
–
145
–
The proposed inal dividend is subject to approval by shareholders at the Annual General Meeting. I so approved, it will be paid on
15 June 2018 to shareholders who are on the register on 4 May 2018. The Danish kroner exchange rate shown above or the dividend
is that at 7 March 2018.
Integrated Report and Accounts 2017 G4S plc 153
Financial report
Notes to the consolidated financial statements continued
15. Ea nings pe sha e att ibutable to equity sha eholde s of the pa ent
F om continuing and discontinued ope ations
Pro it or the year attributable to equity shareholders o the parent
Weighted-average number o ordinary shares* (m)
Ea nings pe sha e f om continuing and discontinued ope ations (pence)
Basic and diluted
F om continuing ope ations
Ea nings
Pro it or the year attributable to equity shareholders o the parent
Adjustment to exclude loss or the year rom discontinued operations (net o tax)
Pro it rom continuing operations
Ea nings pe sha e f om continuing ope ations (pence)
Basic and diluted
F om discontinued ope ations
Loss or the year rom discontinued operations (net o tax)
Loss pe sha e f om discontinued ope ations (pence)
Basic and diluted
2017
£m
236
1,548
2016
£m
198
1,546
15.2p
12.8p
236
6
242
198
3
201
15.6p
13.0p
(6)
(3)
(0.4)p
(0.2)p
* Excluding shares held by the Group’s Employee Bene it Trust and accounted or as treasury shares (see note 36).
16. Acquisitions
The Group has not made any material acquisitions in the current or prior year. During the year, the Group has invested £16m in the
acquisition o non-controlling interests in certain operations, primarily in the Group’s Europe region (2016: £2m in the A rica region).
154 G4S plc Integrated Report and Accounts 2017
17. Disposals and closures
As part of the Group’s portfo io programme, in 2017 the Group so d nine businesses, inc uding the US Youth Services business,
the chi dren’s homes business in the UK, the cash businesses in Peru and Paraguay, and the Group’s businesses in Israe and Bu garia,
rea ising net cash consideration of £156m. These businesses generated Adjusted PBITA of £8m to the date of disposa (2016 fu year:
£21m). A further four businesses were c osed during the year.
In the year ended 31 December 2016 the Group so d 12 businesses, inc uding the Cash So utions business in Thai and, the businesses
in Fin and, Brunei and Kazakhstan, and the Uti ities Services and ATM engineering businesses in the UK, rea ising net cash consideration
of £82m. A further four businesses were c osed during that year, and in addition the Group recognised a oss of £16m in re ation to
a systems business in Latin America which was in the process of being c osed down.
The net assets and net profit on disposa /c osure of operations disposed of or c osed were as fo ows:
Goodwi
Other acquisition-re ated intangib e assets
Non-acquisition-re ated intangib e assets
Property, p ant and equipment
Other non-current assets
Current assets
Liabi ities
Net assets of operations disposed of/c osed
Less: recyc ing from currency trans ation reserve
Net impact on the Conso idated statement of financia position due to disposa s
Fair va ue of retained investment in former joint venture
Profit on disposa /c osure of subsidiaries/businesses
Tota consideration
Satisfied by:
Cash received
Net disposal costs paid
Net cash consideration received in the year
Deferred consideration receivab e
Accrued disposa and other costs
Tota consideration
2017
£
52
1
–
13
17
78
(61)
100
(18)
82
(3)
74
153
166
(10)
156
4
(7)
153
2016
£m
9
1
3
18
2
86
(44)
75
–
75
–
7
82
90
(8)
82
–
–
82
Integrated Report and Accounts 2017 G4S plc 155
Financial report
Notes to the consolidated financial statements continued
Acquisition-related intangible assets
Goodwill
£m
Trademarks
£m
Customer-
related
£m
Non-acquisition-
related
intangible assets
£m
Technology
£m
2,157
–
(2)
–
(9)
–
(66)
2,080
(167)
–
–
1
–
(166)
1,990
1,914
1,962
2
–
(1)
(49)
(2)
245
2,157
(134)
–
(9)
–
–
(24)
(167)
1,828
1,990
34
–
–
(32)
–
1
–
3
(32)
(2)
32
–
–
(2)
2
1
33
–
–
–
–
–
1
34
(31)
–
–
–
–
(1)
(32)
2
2
674
–
–
(599)
–
–
(14)
61
(658)
(8)
599
–
14
(53)
16
8
643
–
–
(6)
(23)
2
58
674
(599)
(31)
–
3
22
(53)
(658)
44
16
9
–
–
(9)
–
–
–
–
(9)
–
9
–
–
–
–
–
9
–
–
–
–
–
–
9
(8)
(1)
–
–
–
–
(9)
1
–
Total
£m
3,129
24
(2)
(657)
(16)
2
(80)
2,400
(1,035)
(32)
657
7
14
(389)
255
24
–
(17)
(7)
1
–
256
(169)
(22)
17
6
–
(168)
86
88
2,094
2,011
235
–
30
(28)
(3)
–
21
255
(153)
(25)
–
23
2
(16)
(169)
2,882
2
30
(35)
(75)
–
325
3,129
(925)
(57)
(9)
26
24
(94)
(1,035)
82
86
1,957
2,094
18. ntangible assets
2017
Cost
At 1 January 2017
Additions
Disposa s
Write-off of fu y amortised intangib e assets
Transferred to he d for sa e
Re-c assifications
Exchange differences
At 31 December 2017
Accumulated amortisation and
impairment losses
At 1 January 2017
Amortisation charge
Write-off of fu y amortised intangib e assets
Transferred to he d for sa e
Exchange differences
At 31 December 2017
Carrying amount
At 1 January 2017
At 31 December 2017
2016
Cost
At 1 January 2016
Acquisition of businesses
Additions
Disposa s
Transferred to he d for sa e
Re-c assifications
Exchange differences
At 31 December 2016
Accumu ated amortisation and
impairment osses
At 1 January 2016
Amortisation charge
Impairment
Disposa s
Transferred to he d for sa e
Exchange differences
At 31 December 2016
Carrying amount
At 1 January 2016
At 31 December 2016
156 G4S plc Integrated Report and Accounts 2017
Goodwill allocation
Goodwill ac uired in a business combination is allocated to the cash-generating units (CGUs) which are expected to benefit from that
business combination. A significant portion of the Group’s 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 ac uisition of Securicor by Group 4 Falck.
Goodwill impairment testing
The Group tests tangible and intangible assets, including goodwill, for impairment on an annual basis or more fre uently if there are
indications that any of these assets may be impaired. The Group’s annual impairment test compares the carrying value of goodwill and
other relevant non-current assets held by each CGU with the recoverable amount of each CGU as at 31 December each year. CGUs
for goodwill impairment testing purposes are identified on a country-level basis including significant business units, consistent with 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 the carrying value of goodwill and other relevant non-current assets.
The recoverable amount of a CGU is generally determined by its value in use which is derived from discounted cash flow calculations.
The key inputs to the calculations are described below. In certain circumstances, where market prices can be ascertained (for example
through recent transactions or by reference to normal industry standard multiples), the fair value less costs to sell is used as a basis for
the recoverable amount. In the current year the value of goodwill in the Group’s Greece CGU was supported by this valuation method.
Forecast cash lows
All operating countries in the Group are re uired to submit a budget for the next financial year (for the year ending 31 December
2018) and strategic plan forecasts for the two years following the budget year (i.e. for the years ending 31 December 2019 and
31 December 2020).
Estimated future cash flows are based on these plan forecasts for the first three years, with year 4, year 5 and the terminal
value projected by applying growth rates as set out in the growth rate section below. Estimated cash flows are discounted
using country-specific risk-adjusted discount rates as described in the discount rate section.
Growth rates
The following table demonstrates the application of growth rates to forecast cash flows:
Growth assumptions
Input
Year 1
Budget1
Year 2
Strategic plan
forecast1
Year 3
Strategic plan
forecast1
Year 4
Projected
midpoint between
years 3 and 5
–
to achieve
Example
8%
7%
6%
4%
1. Budgets and strategic plan forecasts are reviewed by the group board.
2. Sourced from IMF website.
Year 5
Projected lower of
year 3 forecast or
country-specific
inflation rate2
2%
Terminal value
Country-specific
long-term
inflation rate2
2%
In this example, budgeted year 1 growth rate is 8%, forecast growth in year 2 is 7% and in year 3 is 6%. The long-term country inflation
rate is 2% so the year 4 growth rate is calculated to be the midpoint between 6% in year 3 and 2% in year 5, i.e. 4%. The terminal value
calculation is then based on the long-term inflation rate of 2%.
Integrated Report and Accounts 2017 G4S plc 157
Financial report
Notes to the consolidated financial statements continued
18. Intan ible assets continued
Discount rates
The follo ing key inputs are used to calculate country-specific discount rates for all CGUs:
Input
Risk-free rate (Group)
Adjusted risk-free rate
(country specific)
Unleveraged beta
Debt margin
Weighted-average cost
of capital (pre-tax)
How determined
The Group’s risk-free rate is based on the UK government's 20 year gilt /
bond rates.
Country-specific risk free rates are derived for each CGU by adjusting the
Group’s risk-free rate for both the relevant inflation rate differential
bet een the UK and that CGU’s country and by applying an appropriate
country-specific risk premium sourced primarily from the IMF and Ne
York University ebsites as ell as other studies by independent
economists.
Beta is a risk adjustment applied to the discount rate to reflect the risk of
the Group’s operating companies relative to the market as a hole. The
Group’s beta is estimated by performing an analysis of comparable multi-
national listed companies and is adjusted for the appropriate leverage of
the Group.
The Group applies a Group- ide debt margin to the country-specific risk-
free rates to obtain a cost of debt for each CGU. The debt margin is
determined by calculating the premium bet een the yield on a BBB-rated
15+ year UK benchmark bond and the UK risk-free rate.
The eighted-average cost of capital is calculated by eighting the cost of
equity and the cost of debt by the applicable debt to equity ratio at the
year end.
31 Dec 2017
1.75% in UK
31 Dec 2016
1.89% in UK
2.3% in UK
2.4% in UK
0.75 for the
Group
0.7 for the
Group
1.3% in UK
1.5% in UK
9.1% in UK
8.1% in UK
The table belo sets out the pre-tax discount rates and gro th rates used for the countries that represent significant good ill balances:
Brazil
United States of America
Hong Kong
Malaysia
Estonia
Netherlands
United Kingdom
Other (all allocated)
Total oodwill
Discount rate
2017
15.6%
10.1%
9.5%
10.9%
9.5%
8.2%
9.1%
Discount rate
2016
19.7%
9.7%
7.0%
11.9%
9.8%
6.9%
8.1%
Lon -term
rowth rate*
2017
4.0%
2.3%
3.0%
3.0%
2.5%
1.6%
2.0%
Long-term
gro th rate*
2016
4.5%
2.2%
3.0%
3.0%
2.7%
1.2%
2.0%
Goodwill
2017
£m
77
447
46
38
38
160
696
412
1,914
Good ill
2016
£m
86
490
51
37
36
154
696
440
1,990
* Lo er of long-term country inflation rate per the IMF and implied year 3 business forecast gro th rate.
Within the UK, the most significant CGUs and their good ill carrying values are UK Central Government Services (£225m), UK Cash
Solutions (£205m) and UK Secure Solutions (£107m). Within the USA, the most significant CGU is US Commercial Security Solutions
ith good ill of £405m.
158 G4S plc Integrated Report and Accounts 2017
Impairment charge in 2016
During the prior year the roup recognised an impairment charge of £9m relating to businesses held for sale or closure as a result
of their estimated recoverable amounts being less than the carrying value of their net assets.
Sensitivit to ke assumptions
The key assumptions used in the discounted cash flow calculations relate to the discount rates and long-term growth rates used. The
table below shows the additional impairment that would arise from an increase in discount rates by 1% and 3% (with all other variables
being equal, for example, increasing the UK base rate from 9.1% to 10.1% and 12.1%) or a decrease in long-term growth rates by 1%
and 3% (to a minimum of 0% with all other variables being equal, for example, decreasing the UK long-term growth rate from 2.0%
to 1.0% and 0.0%) for the roup in total and for each of its countries that represent significant goodwill balances:
Base
discount rate
2017
15.6%
10.1%
9.5%
10.9%
9.5%
8.2%
9.1%
Goodwill
2017
£m
77
447
46
38
38
160
696
412
1,914
Additional impairment
Additional impairment
1%
increase
2017
£m
–
–
–
–
–
–
–
(1)
(1)
3%
increase
2017
£m
(5)
–
–
–
–
–
–
(4)
(9)
Base
growth
rate1
2017
4.0%
2.3%
3.0%
3.0%
2.5%
1.6%
2.0%
1%
decrease
2017
£m
(7)
–
–
–
–
–
–
(3)
(10)
3%
decrease
2017
£m
(18)
–
–
–
–
–
(18)
(7)
(43)
Brazil2
United States of America
Hong Kong
Malaysia
Estonia
Netherlands
United Kingdom2
Other2 (all allocated)
Total
1. Lower of the long-term country growth rate per the IMF and the implied year 3 business forecast growth rate.
2. For the Brazil C U, for certain C Us in the United Kingdom (primarily the UK Cash Solutions C U) and for the Risk Management C U (included within
‘other’ with a goodwill balance of £35m), the impairment model indicated a potential impairment when applying sensitivities as presented in the table above.
For these C Us management is satisfied that the carrying value of goodwill is currently supported by fair value less costs to sell and therefore no impairment
is required as at 31 December 2017.
Integrated Report and Accounts 2017 G4S plc 159
Financial report
Notes to the consolidated financial statements continued
19. roperty, plant and equipment
2017
Cost
At 1 January 2017
Additions
Disposa s
Transferred to he d for sa e
Re-c assifications
Exchange differences
At 31 December 2017
Accumulated depreciation and impairment losses
At 1 January 2017
Depreciation charge
Disposa s
Transferred to he d for sa e
Re-c assifications
Exchange differences
At 31 December 2017
Carrying amount
At 1 January 2017
At 31 December 2017
2016
Cost
At 1 January 2016
Additions
Disposa s
Transferred to he d for sa e
Re-c assifications
Exchange differences
At 31 December 2016
Accumu ated depreciation and impairment osses
At 1 January 2016
Depreciation charge
Disposa s
Transferred to he d for sa e
Re-c assifications
Exchange differences
At 31 December 2016
Carrying amount
At 1 January 2016
At 31 December 2016
Land and
buildings
£m
Equipment
and vehicles
£m
255
11
(15)
(9)
5
(1)
246
(109)
(13)
13
4
(5)
1
(109)
146
137
933
73
(136)
(37)
(1)
(18)
814
(642)
(91)
132
28
1
16
(556)
291
258
Land and
bui dings
£m
Equipment
and vehic es
£m
232
12
(5)
(6)
1
21
255
(89)
(14)
4
2
–
(12)
(109)
143
146
816
87
(73)
(10)
(6)
119
933
(532)
(92)
59
2
5
(84)
(642)
284
291
Total
£m
1,188
84
(151)
(46)
4
(19)
1,060
(751)
(104)
145
32
(4)
17
(665)
437
395
Tota
£m
1,048
99
(78)
(16)
(5)
140
1,188
(621)
(106)
63
4
5
(96)
(751)
427
437
The net book va ue of equipment and vehic es he d under finance eases was £26m (2016: £39m). Accumu ated depreciation on these
assets was £109m (2016: £126m) and the depreciation charge for the year was £16m (2016: £21m).
The rights over assets he d on finance eases are effective y security for ease iabi ities. These rights revert to the essor in the event
of defau t.
160 G4S plc Integrated Report and Accounts 2017
The net book alue of equipment and ehicles includes £25m (2016: £23m) of assets leased by the Group to third parties under
operating leases. Accumulated depreciation on these assets was £28m (2016: £40m) and the depreciation charge for the year was
£9m (2016: £7m).
The net book alue of land and buildings comprises freeholds of £68m (2016: £71m), long leaseholds of £17m (2016: £20m) and
short leaseholds of £52m (2016: £55m).
20. Investment in joint ventu es
The following is summarised aggregate financial information for the Group’s interest in joint entures that are not material to the
Group, based on the amounts reported in the Group’s consolidated financial statements:
Carrying amount of interests in joint entures
Group’s share of:
Profit from continuing operations
Total comprehensi e income
21. Invento ies
Raw materials
Work in progress
Finished goods including consumables
Total invento ies
2017
£m
20
9
9
2017
£m
8
12
84
104
22. Investments
In estments include listed securities of £27m (2016: £31m) held by the Group’s wholly-owned capti e insurance subsidiaries.
These securities are stated at fair alue based on quoted market prices consistent with Le el 1 of the aluation hierarchy. Use
of these in estments is restricted to the settlement of claims against the Group’s capti e insurance subsidiaries. During the year
the 2016 comparati es ha e been re-presented, as explained in Note 3(a).
23. T ade and othe eceivables
Within cu ent assets
Accrued income
Trade debtors
Pro ision for impairment of trade recei ables
Recei ables from customers in respect of cash-processing operations
Other debtors
Prepayments
Amounts due from construction contract customers
Deri ati e financial instruments at fair alue
Total t ade and othe eceivables included within cu ent assets
Within non-cu ent assets
Deri ati e financial instruments at fair alue
Other debtors
Total t ade and othe eceivables included within non-cu ent assets
Notes
26
24
30
30
2017
£m
167
1,071
(61)
7
106
64
17
45
1,416
40
43
83
2016
£m
19
9
9
2016
£m
7
15
90
112
2016
£m
151
1,060
(65)
10
106
79
17
23
1,381
53
48
101
Integrated Report and Accounts 2017 G4S plc 161
Financial report
Notes to the consolidated financial statements continued
23 Trade and other receivables continued
Credit risk on trade receivables
There is li ited concentration of credit risk with respect to trade receivables, as the Group’s custo ers are both large in nu ber
and dispersed geographically in around 90 countries. The Group perfor s various services to a nu ber of UK Govern ent agencies
which, in total, co prised approxi ately 6% of the total trade debtor balance as at 31 Dece ber 2017 (2016: 8%). The Group
considers these individual Govern ent agencies to be separate custo ers due to the li ited econo ic integration between each
agency. Manage ent are satisfied that across the G4S Group’s total trade debtors as at 31 Dece ber 2017 there is no significant
concentration risk. Group co panies are required to follow the Group Finance Manual guidelines with respect to assessing the credit-
worthiness of potential custo ers. These guidelines include processes such as obtaining approval for credit li its over a set a ount,
perfor ing credit checks and assess ents and obtaining additional security where required.
Credit ter s vary across the Group and can range fro 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 ade for debts according to local conditions and past
default experience.
The ove ent in the provision for i pair ent of trade receivables is as follows:
At 1 January
Provision for i pair ent of trade receivables
A ounts written off during the year
Unused a ounts reversed
Exchange differences
At 31 December
The ageing of trade debtors, net of provision for i pair ent of trade receivables, is as follows:
Accrued inco e
Not yet due
1-30 days overdue
31-60 days overdue
61-90 days overdue
91-180 days overdue
181-365 days overdue
Over 365 days
Net trade debtors and accrued income
2017
£m
(65)
(21)
16
6
3
(61)
2017
£m
167
754
143
45
21
26
13
8
1,177
2016
£
(53)
(21)
10
6
(7)
(65)
2016
£
151
769
125
41
22
22
11
5
1,146
No additional provision has been ade on the above a ounts as there has not been a significant change in credit quality and the
Group believes that the a ounts are still recoverable. The Group does not hold any collateral over these balances. The proportion
of trade debtors at 31 Dece ber 2017 that were overdue for pay ent was 22% (2016: 20%). The Group’s DSO easure (days’
sales outstanding) for continuing operations based on revenue fro the last 90 days of the year is 52 days (2016: 46 days).
The directors believe that the fair value of trade and other receivables, being the present value of future cash flows, approxi ates
to their book value.
24 Construction contracts
A ounts due fro contract custo ers included in trade and other receivables
A ounts due to contract custo ers included in trade and other payables
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
Notes
23
29
2017
£m
17
(2)
15
173
(158)
15
2016
£
17
(3)
14
198
(184)
14
At 31 Dece ber 2017, advances received fro custo ers for contract work a ounted to £9 (2016: £14 ), and the value
of retentions held by custo ers for contract work a ounted to £3 (2016: £5 ). All trade and other receivables arising fro
construction contracts are due for settle ent within one year.
162 G4S plc Integrated Report and Accounts 2017
25. Disposal groups classified as held for sale
As at 31 December 2017 disposal groups classified as held for sale include the assets and liabilities associated with minor operations
in the Group’s Africa Asia Pacific Latin America and Europe regions.
As at 31 December 2016 disposal groups classified as held for sale include the assets and liabilities associated with a number of group-
wide operations. The more material of these operations include G4S Israel the US Youth Services business and the children’s homes
business in the UK.
The major classes of assets and liabilities comprising the operations classified as held for sale are as follows:
Assets
Goodwill
Acquisition-related intangible assets
Property plant and equipment and non-acquisition-related intangible assets
Investments (non-current)
Other non-current assets
Inventories
Trade and other receivables (current)
Cash and cash equivalents
Total assets of disposal groups classified as held for sale
Liabilities
Bank overdrafts
Bank loans
Trade and other payables
Retirement benefit obligations
Deferred tax liability
Obligations under finance leases
Provisions
Total liabilities of disposal groups classified as held for sale
Net assets of disposal groups
2 17
£m
9
–
16
–
1
2
17
8
53
–
(2)
(12)
(3)
(1)
(1)
–
(19)
34
2016
£m
50
1
15
7
4
4
62
8
151
(1)
(1)
(48)
(1)
(1)
–
(6)
(58)
93
26. Cash, cash equivalents and bank overdrafts
The Group’s Cash Solutions businesses provide a range of cash handling and processing services on behalf of customers. Certain
of those services comprise collection segregated storage and delivery of customer cash with title to the cash handled remaining
with the customer throughout the process. Such cash is never recorded in the Group’s balance sheet.
A number of other cash-processing services are provided to customers such as the sale and purchase of physical cash balances and
the replenishment of ATMs and similar machines from customer funds held in Group bank accounts. Such funds which are generally
settled within two working days are classified as “funds within cash-processing operations” along with the related balances due to
and from customers in respect of unsettled transactions and are included gross within the relevant balance sheet classifications.
Funds within cash-processing operations
Stocks of money included within cash and cash equivalents
Overdraft facilities related to cash-processing operations included within bank overdrafts
Liabilities to customers in respect of cash-processing operations included within trade
and other payables
Receivables from customers in respect of cash-processing operations included within trade
and other receivables
Funds within cash-processing operations (net)
2 17
£m
74
(19)
(62)
7
–
2016
£m
95
(22)
(83)
10
–
Integrated Report and Accounts 2017 G4S plc 163
Financial report
Notes to the consolidated financial statements continued
26. ash, cash equivalents and bank overdrafts continued
Whilst such cash and ank alances are not formally restricted y legal title, they are restricted y the Group’s own internal policies such
that they cannot e used for the purposes of the Group’s own operations. For the purposes of the Group’s Consolidated statement of
cash flow, funds within cash-processing operations are therefore recorded net of the related alances due to and from customers in
respect of unsettled transactions, within cash, cash equivalents and ank overdrafts, and hence have no impact on the Group’s statutory
cash flow.
A reconciliation of cash, cash equivalents and ank overdrafts at the end of the year per the Consolidated statement of financial position
to the corresponding alances included within the Consolidated statement of cash flow is as follows:
Cash and cash equivalents in the Consolidated statement of financial position
Bank overdrafts in the Consolidated statement of financial position
Cash, cash equivalents and ank overdrafts included within disposal groups classified as held for sale
Total cash, cash equivalents and bank overdrafts
Add:
Lia ilities to customers in respect of cash-processing operations, included within trade
and other paya les
Receiva les from customers in respect of cash-processing operations, included within trade
and other receiva les
2017
£m
902
(284)
8
626
(62)
7
2016
£m
831
(93)
7
745
(83)
10
ash, cash equivalents and bank overdrafts at the end of the year in the onsolidated statement of
cash flow
571
672
Cash and cash equivalents comprise principally short-term money market deposits, current account alances and Group-owned cash
held in ATM machines. At 31 Decem er 2017 cash and cash equivalents earned interest at a weighted-average rate of 0.6% (2016:
0.6%). The credit risk on cash and cash equivalents is limited ecause wherever possi le, and in accordance with Group Treasury policy,
the cash is placed with ank counterparties that hold investment grade credit ratings assigned y international credit-rating agencies.
The Consolidated statement of financial position at 31 Decem er 2016 has een re-presented to show the re-classification of certain
items within cash and cash equivalents of £20m as trading investments. As a consequence of this change in presentation, cash and cash
equivalents at 31 Decem er 2016 have decreased from £851m to £831m.
Cash and cash equivalents of £71m (2016: £75m) are held y the Group’s wholly-owned captive insurance su sidiaries. Their use
is restricted to the settlement of claims against the Group’s captive insurance su sidiaries.
27. Bank overdrafts, bank loans and loan notes
Bank overdrafts
Bank loans
Loan notes*
Total bank overdrafts, bank loans and loan notes
The orrowings are repaya le 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 (shown under non-current liabilities)
* Loan notes include £463m (2016: £675m) of private loan notes and £1,678m (2016: £1,717m) of pu lic loan notes.
2017
£m
284
13
2,141
2,438
947
466
142
883
2,438
(284)
(8)
(655)
(947)
1,491
2016
£m
93
20
2,392
2,505
786
659
536
524
2,505
(93)
(16)
(677)
(786)
1,719
164 G4S plc Integrated Report and Accounts 2017
Analysis of ank overdrafts, ank loans and loan notes y currency is as follows:
Bank overdrafts
Bank loans
Loan notes
At 31 December 2017
Bank overdrafts
Bank loans
Loan notes
At 31 Decem er 2016
Sterling
£m
145
–
394
539
1
–
395
396
Euros
£m
17
–
1,328
1,345
10
–
1,366
1,376
US dollars
£m
86
2
419
507
50
6
631
687
thers
£m
36
11
–
47
32
14
–
46
Total
£m
284
13
2,141
2,438
93
20
2,392
2,505
Of the orrowings in currencies other than Sterling, £1,214m (2016: £1,198m) is designated as a net-investment hedge.
The weighted-average interest rates on ank overdrafts, ank loans and loan notes at 31 Decem er 2017, adjusted for hedging, were
as follows:
Bank overdrafts
Bank loans*
Private loan notes
Pu lic loan notes
2017
%
4.3
–
4.8
3.7
2016
%
3.8
–
4.1
3.5
* There were no material ank loans in place at either 31 Decem er 2017 or 31 Decem er 2016.
At 31 Decem er 2017, the Group’s committed ank orrowings comprised a £1 n multi-currency revolving credit facility with
£964m maturing in January 2022 and the remainder in January 2021. At 31 Decem er 2017, this committed facility was undrawn.
Interest on all committed ank orrowing facilities is at prevailing LIBOR or EURIBOR rates (with a floor of zero), dependent upon
the period of drawdown, plus an agreed margin, and is 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 31.
The Group’s main sources of finance and their applica le rates as of 31 Decem er 2017 are set out elow:
Debt instrument/
Year of issue
US PP 2008
US PP 2007
US PP 2008
Pu lic Bond 2012
Pu lic Bond 2009
Pu lic Bond 2016
Pu lic Bond 2017
Revolving Credit
Facility 2015
Nominal
amounta
£44m
US$250m
US$298.5m
€500m
£350m
€500m
€500m
£1 n
(multi-
currency)
Post-hedging
average
Issued
interest
interest rate
rate
7.56%
7.56%
5.96% 6.06% 2.20%
6.78% 6.88% 6.90%
2.62%
2.63%
7.75%
7.75%
2.24%
1.5%
3.21%
1.5%
–
–
2018
44
154
417
Year of redemption and amounts (£m)
2019
2020
2021
2022
2023
2024
78
55
107
350
448
421
Total
44
185
209
417
350
448
421
Undrawn
Undrawn
615
457
55
–
78
448
–
421 2,074
a. Nominal de t amount. For fair value carrying amount see note 31.
. Applying foreign exchange rates at 31 Decem er 2017 or hedged foreign exchange rates where applica le.
Integrated Report and Accounts 2017 G4S plc 165
Financial report
Notes to the consolidated financial statements continued
27. ank overdrafts, bank loans and loan notes continued
The Group’s a erage cost of gross borrowings in 2017, net of interest hedging, was 4.1% (2016: 4.1%).
In June 2017 the Group issued a €500m Public Bond which matures in June 2024 and pays an annual coupon of 1.5%.
The committed bank facilities and the pri ate loan notes are subject to one financial co enant (based on a net debt to Adjusted
EBITDA ratio where Adjusted EBITDA is calculated as Group Adjusted PBITA plus depreciation and amortisation of non-acquisition-
related intangible assets) and non-compliance with the co enant may lead to an acceleration of maturity. The Group complied with
the financial co enant throughout the year to 31 December 2017 and the year to 31 December 2016. The Group has not defaulted
on, or breached the terms of, any material loans during the year.
Bank o erdrafts, bank loans, the loan notes issued in July 2008 and May 2009, €380m of the loan notes issued in December 2012, the
loan notes issued in No ember 2016 and €400m of the loan notes issued in June 2017 are stated at amortised cost. The loan notes
issued in March 2007, €120m of the loan notes issued in December 2012 and €100m of the loan notes issued in June 2017 are stated
at amortised cost but are designated in a fair- alue hedge relationship which has a fair- alue adjustment in relation to the hedged
interest-rate risk.
Cross-currency swaps with a nominal alue of US$50m (£37m) relating to the loan notes issued in July 2008 ha e a fair- alue mark-to-
market gain of £12m (2016: gain £16m), predominantly resulting from fixing the Sterling alue of this portion of the loan notes at an
exchange rate of 1.975 and partly from fixing the Sterling and US dollar interest rates.
Cross-currency swaps with a nominal alue of €350m (£311m) relating to the loan notes issued in December 2012 ha e a fair- alue
mark-to-market gain of £30m (2016: gain £20m), predominantly resulting from fixing the Sterling alue of this portion of the loan notes
at an exchange rate of 1.233 and partly from fixing the Sterling and Euro interest rates.
Cross-currency swaps with a nominal alue of €270m (£240m) relating to the loan notes issued in No ember 2016 ha e a fair- alue
mark-to-market loss of £9m (2016: loss £17m), predominantly resulting from fixing the Sterling alue of this portion of the loan notes
at an exchange rate of 1.109 and partly from fixing the Sterling and Euro interest rates.
Cross-currency swaps with a nominal alue of €400m (£356m) relating to the loan notes issued in June 2017 ha e a fair- alue mark-to-
market gain of £12m, predominantly resulting from fixing the Sterling alue of this portion of the loan notes at an exchange rate of
1.157 and partly from fixing the Sterling and Euro interest rates.
28. Obligations under finance leases
Amounts payable under finance leases:
Within one year
In the second to fifth years inclusi e
After fi e years
Less: future finance charges on finance leases
Present value of lease obligations
Less: amount due for settlement within 12 months (presented within
current liabilities)
Amount due for settlement after 12 months (presented within
non-current liabilities)
Minimum lease
payments
2017
£m
Minimum lease
payments
2016
£m
Present value of
minimum lease
payments
2017
£m
Present alue of
minimum lease
payments
2016
£m
15
20
1
36
(1)
35
22
36
2
60
(3)
57
15
19
1
35
(15)
20
20
35
2
57
(20)
37
The Group leases certain of its fixtures and equipment under finance leases. The weighted-a erage lease term is six years (2016: six
years). For the year ended 31 December 2017, the weighted-a erage effecti e borrowing rate was 5.7% (2016: 5.7%). Interest rates
are fixed at the related contract dates. All leases are on a fixed repayment basis and no arrangements ha e been entered into for
contingent rental payments.
The Group’s obligations under finance leases are secured by the lessors’ charges o er the leased assets.
166 G4S plc Integrated Report and Accounts 2017
29. Trade and other payable
Within current liabilitie :
rade creditors
Amounts due to construction-contract customers
Other taxation and social security costs
Holiday pay and other wage-related accruals
Liabilities to customers in respect of cash-processing operations
Other creditors
Other accruals
Deferred income
Derivative financial instruments at fair value
Total trade and other payable included within current liabilitie
Within non-current liabilitie :
Derivative financial instruments at fair value
Other creditors
Total trade and other payable included within non-current liabilitie
Notes
24
26
30
30
2017
£m
249
2
206
370
62
62
240
64
7
1,262
6
17
23
2016
£m
252
3
204
373
83
61
203
76
5
1,260
14
16
30
rade and other payables comprise principally amounts outstanding for trade purchases and on-going costs. he average credit period
taken for trade purchases for continuing operations is 42 days (2016: 35 days).
30. Derivative financial in trument
he carrying values of derivative financial instruments at the balance sheet date are presented below:
Cro -currency wap
Cash-flow hedges
Net-investment hedges
Intere t-rate wap
Cash-flow hedges
Fair-value hedges
Not in a hedging relationship
Forward-currency contract
Cash-flow hedges
Not in a hedging relationship
Less: non-current portion
Current portion
A et
2017
£m
Assets
2016
£m
Liabilitie
2017
£m
Liabilities
2016
£m
54
16
–
15
–
–
–
85
(40)
45
48
–
–
27
–
–
1
76
(53)
23
9
2
–
1
1
–
–
13
(6)
7
17
–
1
–
–
1
–
19
(14)
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 and liability, either directly or indirectly). Market
prices are sourced from Bloomberg or third-party relationship counterparty banks. he 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. his
value is compared to the original transaction value giving a fair value of the instrument at the balance sheet date.
Certain financial instruments are not designated or do not qualify for hedge accounting. Changes in fair value of any derivative
instruments in this category are immediately recognised in the Consolidated income statement. In 2017 these included certain
interest-rate swaps and in 2016 included certain forward-currency contracts used for interest and cash management.
he mark-to-market valuation of the derivatives has improved by £15m during the year, mainly due to an increase in the value
of the cross-currency swaps as a result of Sterling’s weakness.
Offsetting and enforceable master netting agreements
Financial assets and liabilities are offset and the net amount reported in the Consolidated statement of financial position when there is a
legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle
the liability simultaneously. here were no material amounts offset in the Consolidated statement of financial position and no material
balances associated with enforceable master netting agreements were identified.
Integrated Report and Accounts 2017 G4S plc 167
Financial report
Notes to the consolidated financial statements continued
30. erivative financial instruments continued
The interest-rate cross-currency and forward-currency contracts treated as cash-flow or net-investment hedges have the following maturities:
Within one year
In the second year
In the fourth year
In the fifth year or greater
Total carrying value
Assets
2017
£m
41
–
–
26
67
Assets
2016
£m
12
36
–
–
48
Liabilities
2017
£m
–
–
–
8
8
Liabilities
2016
£m
1
–
1
17
19
In the table above derivatives are presented as either assets or liabilities at the date of maturity.
The projected settlement of cash flows (including accrued interest) associated with derivatives treated as cash-flow or net investment
hedges is as follows:
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
2017
£m
41
(7)
(7)
(7)
50
70
Assets
2016
£m
16
35
–
–
–
51
Liabilities
2017
£m
10
3
3
3
(5)
14
Liabilities
2016
£m
5
4
4
3
3
19
31. Financial risk
Capital management
£964m of the original £1 billion multi-currency revolving credit facility matures in January 2022 with the remainder maturing in
January 2021. At 31 December 2017 there were no drawings from the facility.
In May 2017 Standard & Poor’s affirmed the Group’s long-term credit rating of BBB- (negative). The Group will continue to manage
its capital structure so that it retains an investment-grade rating.
The Group’s policy objective is a net debt to Adjusted EBITDA ratio of less than 2.5x. At the end of 2017 the ratio was 2.4x
(2016: 2.8x).
The next debt maturities are £44m and US$224m of US Private Placement debt maturing in July 2018 and a €500m Public Bond
maturing in December 2018. Overall the debt portfolio has a medium to long-term debt maturity profile. The Group is currently well
placed to access finance from the debt-capital markets and from the bank market if required. Borrowings are principally in Sterling US
dollars and Euros reflecting the geographies of the Group’s significant operational assets and profits.
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 27.
The percentage of the available committed Revolving Credit Facility that was undrawn during the course of the year was as follows:
31 December 2016
31 March 2017
30 June 2017
30 September 2017
31 December 2017
100%
86%
93%
89%
100%
To reduce re-financing risk Group Treasury obtains finance with a range of maturities to minimise 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 12 months before its termination date.
168 G4S plc Integrated Report and Accounts 2017
Maturity profile of loans and borro ings
The contractual matur t es of f nanc al assets and l ab l t es, est mated based on expectat ons at the report ng date, together w th
the r carry ng amounts nclud ng nterest payments n the Consol dated statement of f nanc al pos t on, are shown below, subtotalled
by category:
31 December 2017
Investments
Der vat ve f nanc al nstruments ( nterest-rate swaps)
Financial assets designated at fair value through profit or loss
Notes
22
Der vat ve f nanc al nstruments (cross-currency swaps)
Financial assets designated as cash-flo hedges
Der vat ve f nanc al nstruments (cross-currency swaps)
Financial assets designated as net-investment hedges
Net trade rece vables and accrued ncome
Cash and cash equ valents**
Loans and receivables
Loan notes ( ssued March 2007, 5.96%-6.06%, matur ng 2019-22)
Der vat ve f nanc al nstruments ( nterest-rate swaps)
Financial liabilities designated as fair-value hedges
Der vat ve f nanc al nstruments (cross-currency swaps)
Financial liabilities designated as cash-flo hedges
Der vat ve f nanc al nstruments (cross-currency swaps)
Financial liabilities designated as net-investment hedges
Der vat ve f nanc al nstruments ( nterest-rate swaps)
Financial liabilities designated at fair value through profit or loss
Loan notes ( ssued July 2008, 6.78%-7.56%, matur ng 2018-20)
Loan notes ( ssued May 2009, 7.75%, matur ng 2019)
Loan notes ( ssued December 2012, 2.625%, matur ng 2018)*
Loan notes ( ssued November 2016, 1.5%, matur ng 2023)
Loan notes ( ssued June 2017, 1.5%, matur ng 2024)*
Bank loans
Bank overdrafts**
F nance lease l ab l t es
Trade cred tors
Financial liabilities measured at amortised cost
30
30
26
27
30
30
30
30
27
27
27
27
27
27
27
28
29
16
16
1,177
828
2,005
Carrying
amount
£m
62
15
77
54
54
16
16
Total
contractual
cash flo s
£m
62
19
81
Fair
value
£m
62
15
77
Within 1
year
£m
42
9
51
2-5
years
£m
20
10
30
Over 5
years
£m
–
–
–
54
54
16
16
54 361+(320) 22+(34) 388+(363)
25
54
(12)
41
–
–
34+(49) 361+(330)
31
(15)
1,177
828
2,005
1,177
828
2,005
1,177
828
2,005
–
–
(198)
(1)
(199)
(193)
(1)
(194)
(221)
(1)
(222)
(11)
–
(11)
(210)
–
(210)
–
–
–
(1)
(1)
(9)
(9)
(2)
(2)
(1)
(1)
(9)
(9)
(2)
(2)
(1)
(1)
(265)
(350)
(445)
(443)
(440)
(13)
(265)
(35)
(249)
(2,505)
(274)
(380)
(456)
(456)
(450)
(13)
(265)
(35)
(249)
(2,578)
(10)
(10)
9+(15) 15+(28) 256+(247)
9
(13)
(6)
(4)
(4)
(2)
(2)
(291)
(404)
(456)
(484)
(491)
(13)
(265)
(35)
(249)
(2,688)
9+(13)
(4)
(1)
(1)
(228)
(27)
(456)
(7)
(7)
(8)
(265)
(15)
(249)
(1,262)
–
–
(1)
(1)
(63)
(377)
–
(27)
(27)
(5)
–
(19)
–
(518)
–
–
–
–
–
–
–
(450)
(457)
–
(1)
–
(908)
* €120m (£107m) of December 2012 loan notes and €100m (£89m) of June 2017 loan notes are held n fa r-value hedge relat onsh ps.
** Exclud ng cash and overdraft balances n respect of cash-process ng operat ons (see note 26).
Note: In the table above, certa n values are presented gross, to show both the asset and the l ab l ty.
Integrated Report and Accounts 2017 G4S plc 169
Financial report
Notes to the consolidated financial statements continued
31. Financial isk continued
31 December 201
Investments
Derivative financial instruments (interest-rate swaps)
Derivative financial instruments (forward-currency contracts)
Financial assets designated at fair value through profit or loss
Notes
22
30
30
Derivative financial instruments (cross-currency swaps)
Financial assets designated as cash-flow hedges
Net trade receivables and accrued income
Cash and cash equivalents**
Loans and receivables
Loan notes (issued May 2009, 7.75%, maturing 2019)
Loan notes (issued March 2007, 5.8 %- .0 %, maturing 2017-22)
Financial liabilities designated as fair-value hedges
Derivative financial instruments (cross-currency swaps)
Derivative financial instruments (interest-rate swaps)
Derivative financial instruments (forward-currency contracts)
Financial liabilities designated as cash-flow hedges
Loan notes (issued July 2008, .78%-7.5 %, maturing 2018-20)*
Loan notes (issued May 2012, 2.875%, maturing 2017)*
Loan notes (issued December 2012, 2. 25%, maturing 2018)*
Loan notes (issued November 201 , 1.5%, maturing 2023)
Bank loans
Bank overdrafts**
Finance lease liabilities
Trade creditors
Financial liabilities measured at amortised cost
30
23
2
27
27
30
30
30
27
27
27
27
27
27
28
29
Carrying
amount
£m
4
27
1
92
48
48
Fair
value
£m
4
27
1
92
48
48
Total
contractual
Within 1
year
cash flows
£m
£m
52
4
49
30
1 175+(174)
83
114
2-5
years
£m
12
18
–
30
51 29 +(280) 355+(320)
35
1
51
1,14
73
1,882
1,14
73
1,882
(351)
(389)
(740)
(398)
(381)
(779)
1,14
73
1,882
(431)
(420)
(851)
1,14
73
1,882
(27)
(184)
(211)
–
–
–
(404)
(148)
(552)
Over 5
years
£m
–
1
–
1
–
–
–
–
–
–
(88)
(88)
(17)
(1)
(1)
(19)
(17)
(1)
(1)
(19)
(17)
(1)
(1)
(19)
1+(5) 14+(27) 254+(254)
–
(1)
–
–
–
(14)
–
34+(35)
(5)
(28 )
(513)
(428)
(425)
(20)
(71)
(57)
(252)
(2,052)
(30 )
(518)
(44 )
(429)
(20)
(71)
(57)
(252)
(2,099)
(334)
(527)
(450)
(459)
(20)
(71)
(57)
(252)
(2,170)
(20)
(527)
(11)
( )
(1 )
(71)
(20)
(252)
(923)
(314)
–
(439)
(2 )
(4)
–
(37)
–
(820)
–
–
–
(427)
–
–
–
–
(427)
* £44m of July 2008 loan notes, €90m (£ m) of May 2012 loan notes and €120m (£89m) of December 2012 loan notes were held in fair-value hedge
relationships.
** Excluding cash and overdraft balances in respect of cash-processing operations (see note 2 ).
Note: In the table above, certain values are presented gross, to show both the asset and the liability.
The gross cash flows disclosed in the tables above represent the contractual undiscounted cash flows relating to derivative financial
assets and liabilities held for risk management purposes and which are usually not closed out before contractual maturity. The disclosure
shows the 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-currency contracts.
170 G4S plc Integrated Report and Accounts 2017
Market risk
Currency risk and forward-currency contracts
The Group conducts bus ness n many currenc es. Transact on r sk s l m ted s nce, wherever poss ble, each bus ness operates and
conducts ts f nanc ng act v t es n local currency. However, the Group presents ts consol dated f nanc al statements n Sterl ng and
t s n consequence subject to fore gn-exchange r sk due to the translat on of the results and net assets of ts fore gn subs d ar es.
Treasury pol cy s to manage s gn f cant translat on r sks n respect of net operat ng assets and ts consol dated net debt/Adjusted
EBITDA rat o by hold ng fore gn currency denom nated loans, cross-currency swaps and to a lesser extent forward-currency contracts.
The Group has hedged a substant al proport on of ts exposure to fluctuat ons n the translat on nto Sterl ng of ts overseas net assets
through these nstruments.
Translat on adjustments ar s ng on the translat on of fore gn currency loans and on changes n the fa r value of cross-currency swaps
meet ng hedge account ng cr ter a are recogn sed n equ ty to match translat on adjustments on fore gn currency equ ty nvestments
as they qual fy as net nvestment hedges w th no res dual mpact to equ ty.
At 31 December 2017, the Group’s US dollar and Euro net assets were approx mately 91% and 90% respect vely hedged by
fore gn currency loans and the cross-currency swaps des gnated as net- nvestment hedges (2016: US dollar 80%, Euro 93%).
Cross-currency swaps w th a nom nal value of $449m (£332m) were arranged and des gnated as net- nvestment hedges.
Cross-currency swaps w th a nom nal value of £25m are n place hedg ng the fore gn currency r sk on US$50m of the second US
Pr vate Placement notes ssued n July 2008, effect vely f x ng the Sterl ng value of th s port on of debt at an exchange rate of 1.9750.
Cross-currency swaps w th a nom nal value of £284m are n place hedg ng the fore gn currency r sk on €350m of the Euro publ c
notes ssued n December 2012, effect vely f x ng the Sterl ng value of th s port on of debt at an exchange rate of 1.2332.
Cross-currency swaps w th a nom nal value of £244m are n place hedg ng the fore gn currency r sk on €270m of the Euro publ c
notes ssued n November 2016, effect vely f x ng the Sterl ng value of th s port on of debt at an exchange rate of 1.1088.
Cross-currency swaps w th a nom nal value of £346m were arranged to hedge the fore gn currency r sk on €400m of the Euro publ c
notes ssued n June 2017, effect vely f x ng the Sterl ng value of th s port on of debt at an exchange rate of 1.1570.
Apply ng the relat ve movements n US dollar and Euro fore gn exchange rates aga nst Sterl ng n 2017 compared w th 2016 to carry ng
values at 31 December 2017, the fa r value net ga n on the cross-currency swaps wh ch hedge part of the currency loan notes would
have ncreased by £33m w th a d rect mpact on the Consol dated ncome statement. Th s would be offset by an equal and oppos te
revaluat on to the underly ng bonds. Any of the underly ng bonds not n a cash-flow hedge are n a net nvestment hedge relat onsh p
so that ult mately the mpact on the Consol dated ncome statement s n l.
Interest-rate risk and interest-rate swaps
Much of the Group’s debt s ssued at f xed rate, but to the extent there s borrow ng at float ng rates as descr bed n note 27, the
Group s exposed to cash-flow nterest-rate r sk, wh ch the Group manages w th n pol cy l m ts approved by the d rectors. Interest-rate
swaps and, to a l m ted extent, forward-rate agreements are ut l sed to f x the nterest rate on a proport on of borrow ngs on a reduc ng
scale over forward per ods up to a max mum of f ve years. At 31 December 2017 there were no such contracts n place (2016: £60m).
The US Pr vate Placement market s predom nantly a f xed-rate market, w th nvestors preferr ng a f xed-rate return over the l fe of the
loan notes. At the t me of the f rst ssue n March 2007, the Group was comfortable w th the proport on of float ng rate exposure not
hedged by nterest-rate swaps and therefore rather than take on a h gher proport on of f xed-rate debt arranged f xed to float ng swaps
effect vely convert ng the f xed coupon on the Pr vate Placement to a float ng rate. Follow ng the swaps the result ng average coupon on
the US Pr vate Placement s LIBOR + 60bps. These swaps have been documented as fa r-value hedges of the US Pr vate Placement
f xed nterest loan notes, w th the movements n the r fa r value recogn sed n the Consol dated ncome statement at the same t me as
the movement n the fa r value of the hedged tem.
The nterest on the US Pr vate Placement notes ssued n July 2008, the Sterl ng publ c notes ssued n May 2009, €510m of the Euro
publ c notes ssued n May 2012, €380m of the Euro publ c notes ssued n December 2012, the Euro publ c notes ssued n November
2016 and €400m of the publ c notes ssued n June 2017 was n t ally kept at f xed rate. In Apr l 2014, the nterest rate on £44m of the
US Pr vate Placement notes ssued n July 2008 and on all the Sterl ng publ c notes ssued n May 2009 was swapped from f xed to
float ng for a per od of three years us ng der vat ves and therefore matured n 2017.
All four publ c notes have a coupon step-up of 1.25% wh ch s tr ggered should the cred t rat ng of G4S plc fall below nvestment grade.
The core Group borrow ngs are held n US dollars, Euros and Sterl ng. Although the mpact of r s ng nterest rates s largely sh elded by
f xed-rate loans and nterest-rate swaps wh ch prov de certa nty on the vast major ty of the exposure, some nterest-rate r sk rema ns.
A 1% ncrease n nterest rates across the y eld curve n each of these currenc es, w th the 31 December 2017 debt pos t on constant
throughout 2018, would result n an expectat on of an add t onal nterest charge of £6m n the 2018 f nanc al year.
Commodity risk and commodity swaps
The Group’s pr nc pal commod ty r sk relates to the fluctuat ng level of d esel pr ces, part cularly affect ng ts Cash Solut ons bus nesses.
Commod ty swaps and commod ty opt ons are on occas ons used to f x synthet cally part of the exposure and reduce the assoc ated
cost volat l ty. The hedg ng programme s under evaluat on, and as a consequence there was no commod ty hedg ng n place at
31 December 2017.
Integrated Report and Accounts 2017 G4S plc 171
Financial report
Notes to the consolidated financial statements continued
31. inancial risk continued
Counterparty credit risk
The Group’s strateg for credit-risk management is to set minimum credit ratings for counterparties and to monitor these on a regular basis.
For treasur -related transactions, the Group’s polic limits the aggregate credit risk assigned to a counterpart . The utilisation of a credit
limit is calculated b appl ing a weighting to the notional value of each transaction outstanding with each counterpart based on the
t pe and duration of the transaction. The total mark-to-market value outstanding with each counterpart is also closel monitored
against polic limits assigned to each counterpart . For short-term transactions (under one ear), at inception of the transaction, the
financial counterpart must be investment-grade rated b either the Standard & Poor’s or Mood ’s rating agencies. For long-term
transactions, at inception of the transaction, unless otherwise approved, the financial counterpart must have a minimum rating of
BBB+/Baa1 from Standard & Poor’s or Mood ’s.
Treasur transactions are dealt with through the Group’s relationship banks, all of which have a strong investment grade rating. At
31 December 2017 the largest two counterpart exposures related to treasur transactions were £48m and £29m and both were held
with institutions with a long-term Standard & Poor’s credit rating of A. These exposures represent 29% and 18% of the carr ing values
of the treasur transactions, 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 2017.
The Group operates a multi-currenc notional pooling cash management s stem with a wholl -owned subsidiar of an A-rated
bank. At ear end, credit balances of £271m were pooled with debit balances of £260m, resulting in a net pool credit balance
of £11m. There exists a legal right of set-off under the pooling agreement and an overdraft facilit of £3m. In accordance with
IFRS Interpretations Committee (IC) requirements, the cash and overdraft pool balances are presented gross in the Consolidated
statement of financial position.
At an operating level the minimum investment-grade rating criteria applies. Exceptionall , where required b local countr
circumstances, counterparties with no rating 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.
32. 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, multi-emplo er and funded and unfunded defined
benefit schemes.
Defined contribution arrangements
The majorit of the retirement benefit arrangements operated b the Group are of a defined contribution structure, where the emplo er
contribution and resulting income statement charge is fixed at a set level or is a set percentage of emplo ees’ pa . Contributions made to
defined contribution schemes in 2017 and charged to the Consolidated income statement totalled £67m (2016: £77m).
In the UK, following the closure of the defined benefit schemes to new entrants in 2004, the main scheme for new emplo ees is
a contracted-in defined contribution scheme.
Multi-employer arrangement
In the Netherlands, most emplo ees are members of the Securit Industr Wide Pension Fund (IWPF). This is a career-average defined
benefit plan. Pensionable salar is subject to a cap, and minus an offset that reflects social securit levels. Withdrawal from the scheme
is onl possible under certain strict conditions determined b Dutch law and b the pension fund board of the IWPF.
The plan is funded b a premium that is set b the IWPF board in line with the financing rules that state that the premium should cover
the cost of the annual accrual of pension benefits. As of 1 Januar 2018 the premium is 35.3% and historicall has been around 30% of
pensionable salaries. The emplo er pa s 60% of this premium and the emplo ees the remaining 40%.
The financing rules specif that an emplo er is not obliged to pa an further premiums in respect of previousl accrued benefits. This
means that in case of insufficient funding, the benefits of participants could, in theor , be reduced. The current solvenc ratio is 104.2%
(December 2017). The required solvenc ratio according to Dutch law is 124.2% (as at 31 December 2017). Should a surplus appear
within the scheme the board will decide if a reduction in premium is possible although this would onl be possible at much higher
solvenc levels.
Premiums paid to the scheme b the Group and charged to the Consolidated income statement in 2017 totalled £11m (2016: £10m).
The estimated premium expected to be paid to the scheme during the financial ear commencing 1 Januar 2018 in respect of the
on-going accrual of benefits is approximatel £12m.
The scheme is not accounted for as a defined benefit scheme under IAS 19 – Emplo ee Benefits as it is not possible to identif the
Group’s share of the scheme’s assets and liabilities. As a result, and in line with general practice for such schemes, the scheme is
accounted for as if it were a defined contribution scheme under IAS 19.
The Netherlands Cash Solutions Pension Plan (“the Cash Solutions scheme”) is a separate scheme operated b the Group but is
required to provide benefits at least equivalent to the IWPF, and in particular pension increases in pa ment and deferment, as well
as revaluation of active members’ rights in the Cash Solutions scheme, have to follow the multi-emplo er scheme (which applies a
conditional approach).
172 G4S plc Integrated Report and Accounts 2017
Defined benefit arrangements
The Group operates severa funded defined retirement benefit schemes where the benefits are based on emp oyees’ ength of service.
Whi st the Group’s primary scheme is in the UK, it a so operates the Cash So utions scheme in the Nether ands and other ess materia
p ans e sewhere. Under funded arrangements, the assets of defined benefit schemes are he d in separate trustee-administered funds or
simi ar structures in the countries concerned.
C ns lidated inc me statement
The amounts recognised in the Conso idated income statement in re ation to the materia funded schemes are inc uded within the
fo owing categories:
Cost of sa es
Administration expenses
Net finance costs
T tal f r material funded defined benefit schemes
2017
£m
4
2
8
14
2016
£m
4
2
7
13
There are a so various ess materia unfunded arrangements, for which the Group does not ho d re ated assets separate from the
Group. In aggregate, other unfunded arrangements incurred £10m (2016: £8m) of costs within cost of sa es and finance costs of
£3m (2016: £3m).
C ns lidated statement f c mprehensive inc me
Re-measurements of the net defined benefit ob igation are recognised in fu in the Conso idated statement of comprehensive income
in the year in which they arise. These comprise the impact on the net defined benefit iabi ity of changes in demographic and financia
assumptions compared with the start of the year, actua experience being different to those assumptions and the return on p an assets
above the amount inc uded in the net pension interest expense. During the year the Group recognised a tota net re-measurement gain
of £26m (2016: oss of £169m) within other comprehensive income (OCI) comprising a re-measurement gain of £29m (2016: oss of
£164m) re ating to materia funded defined benefit schemes offset by a re-measurement oss of £3m (2016: oss of £5m) re ating to
unfunded or other funded defined benefit schemes.
C ns lidated statement f financial p siti n
The Group’s net defined benefit deficit recognised in the Conso idated statement of financia position at 31 December 2017 was
£381m (2016: £437m), or £318m (2016: £368m) net of app icab e tax in the re evant jurisdictions.
The defined benefit ob igations (DBO) and assets for defined benefit schemes are as fo ows:
2017
UK secti ns:
Securicor
Group 4
GSL
T tal UK
Nether ands
T tal f r material funded defined benefit schemes
Tota provision for unfunded and other funded defined benefit schemes
T tal net pr visi n f r all defined benefit schemes
2016
UK sections:
Securicor
Group 4
GSL
Tota UK
Nether ands
Tota for materia funded defined benefit schemes
Tota provision for unfunded and other funded defined benefit schemes
Tota net provision for a defined benefit schemes
DBO
£m
Assets
£m
(Deficit)/surplus
£m
(1,911)
(414)
(270)
(2,595)
(96)
(2,691)
1,658
337
350
2,345
63
2,408
(253)
(77)
80
(250)
(33)
(283)
(98)
(381)
DBO
£m
Assets
£m
(Deficit)/surp us
£m
(1,957)
(430)
(272)
(2,659)
(81)
(2,740)
1,655
337
347
2,339
60
2,399
(302)
(93)
75
(320)
(21)
(341)
(96)
(437)
Integrated Report and Accounts 2017 G4S plc 173
Financial report
Notes to the consolidated financial statements continued
32 Retirement benefit obligations continued
UK defined benefit scheme
The defined enefit scheme in the UK accounts for 88% (2016: 94%) of the net alance sheet lia ility for material funded defined
retirement enefit schemes. It comprises three sections: the Group 4 section which is the pension scheme demerged from the former
Group 4 Falck A/S, the Securicor section, for which the Group assumed responsi ility on 20 July 2004 with the acquisition of Securicor
plc, and the GSL section, for which the Group assumed responsi ility on 12 May 2008 with the acquisition of GSL.
The UK scheme is closed to future accrual apart from some su -sections of the GSL section, and for most mem ers defines the pension
ased on final salary. Certain su -sections of the GSL section have historically remained open to provide a facility to accept former
pu lic-sector employees who join the Group through outsourcings. In the Group 4 and Securicor sections, mem ers retain their link
to final salary where appropriate on their enefits accrued up to closure in 2011.
As at the latest actuarial funding valuation the participants of the UK pension scheme sections can e analysed as follows:
At 5 April 2015
Active participants
• Num er
• Average age
Deferred participants
• Num er
• Average age
Pensioner participants
• Num er
• Average age
Group 4
section
–
N/A
3,653
52.0
3,346
71.0
GSL
section
607
49.0
1,236
51.0
883
65.0
Securicor
section
–
N/A
8,535
53.0
9,551
69.0
Total
607
49 0
13,424
52 5
13,780
69 2
There is a mix of fixed and inflation-dependent pension increases (in payment and deferment) which vary from mem er to mem er
according to their mem ership history and the section of the scheme.
The discounted weighted-average duration of the accrued lia ilities of the sections is as follows:
Group 4
GSL
Securicor
2017
17
19
18
2016
17
20
18
The scheme is set up under UK law and governed y a Trustee company which is responsi le for the scheme’s investments,
administration and management. The Board of the Trustee company comprises an independent chairman and further
independent, Group and scheme mem ership representatives.
The current schedule of deficit recovery contri utions provides for a contri ution of approximately £41m during 2018. In addition,
the Company has pledged a share of any material disposal proceeds to the pension scheme (to e shared in the same proportion as
the pension scheme deficit ears to overall group inde tedness) and has agreed that additional contri utions would e made in the
event that the average annual dividend payment to ordinary shareholders over the three financial years 2016, 2017 and 2018 exceeds
a certain threshold or in the event that the Company makes a significant special dividend payment (or equivalent capital return), to its
ordinary shareholders over the same period.
A funding valuation is carried out for the scheme’s Trustee every three years y an independent firm of actuaries. Depending on
the outcome of that valuation a schedule of future contri utions is negotiated; the Group has guaranteed any contri utions due
from its su sidiaries.
Under the terms of the existing agreement with the pension trustees, deficit payments are due to increase y 3% per annum until
the next funding valuation in 2018 when they will e su ject to review and potential renegotiation.
The Group has concluded that it should allow for a refund of any residual surplus in all three sections of the UK Scheme assuming
wind-up after all enefits have een paid in the normal course of events. Therefore no adjustments for asset ceiling or additional
lia ilities under the IFRIC 14 interpretation are made. At present the GSL section has a surplus and the other two sections have
deficits. The IASB is proposing to amend IFRIC 14 and the Group will assess if there are any implications once the final form of
the revised interpretation is clarified.
174 G4S plc Integrated Report and Accounts 2017
Principal risks
The Group’s pens on schemes create a number of r sk exposures. Annual ncreases n benef ts are, to a vary ng extent from scheme
to scheme, dependent on nflat on so the ma n uncerta nt es affect ng the level of benef ts payable are future nflat on levels ( nclud ng
the mpact of nflat on on future salary ncreases) and the actual longev ty of the membersh p. Benef ts payable w ll also be nfluenced
by a range of other factors nclud ng member dec s ons on matters such as when to ret re and the poss b l ty to draw benef ts n
d fferent forms.
A key r sk s that add t onal contr but ons are requ red f the nvestment returns fall short of those ant c pated when sett ng the
contr but ons to the pens on plans. For the UK fund ng valuat on those assumed nvestment returns (for fund ng valuat ons) are set
based on f xed marg ns over the LIBOR swap curve. The management of the UK pens on fund assets has been delegated to an asset
manager, who manages the assets aga nst a l ab l ty benchmark. The key parameters of th s mandate can be summar sed as follows:
Risk
Asset m x
Description
The plan assets may fall n value.
Interest rate r sk
The plan assets may fall n value as a result
of a fall n nterest rates.
Inflat on r sk
The plan assets may fall n value as a result of
r se n nflat on.
Currency r sk
Regulatory r sk
Actuar al
assumpt ons r sk
Any plan assets held n fore gn currenc es
are exposed to changes n fore gn currency
exchange rates.
All pens on schemes are regulated by the
relevant jur sd ct ons. These nclude extens ve
leg slat on and regulatory mechan sms that
are subject to change and may mpact the
Group’s pens on schemes.
Actuar al assumpt ons made on a range
of demograph c and f nanc al matters that
are used to project the expected benef t
payments nclud ng future nflat on, salary
growth and l fe expectancy. The DBO
and serv ce cost are also very sens t ve
to the IAS 19 d scount rate, wh ch
determ nes the d scounted value of the
projected benef t payments. The d scount
rate depends on market y elds on h gh-
qual ty corporate bonds.
M t gat on
The assets are managed dynam cally over t me rather than a set
strateg c allocat on.
Managed w th the benchmark of hedg ng 100% of these r sks as a
percentage of the asset value through the use of debt nstruments
(government bonds) and der vat ves.
Managed w th the benchmark of hedg ng 100% of these r sks as a
percentage of the asset value through the use of debt nstruments
(government bonds) and der vat ves.
Managed w th the object ve of hedg ng at least 70% of the
overseas currency exposure n the portfol o through the
use of forward fore gn currency contracts.
G4S mon tors changes n regulat ons n the UK and the
Netherlands to assess the potent al mpact these changes
could have on the Group’s mater al pens on schemes.
The UK pens on trustees have adopted nvestment strateg es to
m t gate changes n key assumpt ons appl ed to the valuat on of
pens on l ab l t es for fund ng purposes. These strateg es ma nly
hedge aga nst nterest rate and nflat on expectat ons generally,
as descr bed above, but do not spec f cally seek to hedge aga nst
changes n cred t spreads that also affect the IAS 19 d scount
rate. As a result the d fference between the market value of
the assets and the valuat on of the pens on obl gat ons under
IAS 19 may be volat le.
Financial assumptions an sensitivity analysis
The we ghted averages for each of the pr nc pal assumpt ons used for the purposes of the actuar al valuat ons were as follows:
Key assumptions use at 31 December 2017
D scount rate
Expected rate of salary ncreases
Pens on ncreases n payment (for the UK, at RPI* w th a l m t of 5% p.a.)
Inflat on
Key assumpt ons used at 31 December 2016
D scount rate
Expected rate of salary ncreases
Pens on ncreases n payment (for the UK, at RPI* w th a l m t of 5% p.a.)
Inflat on
UK
Netherlan s
2.55%
3.3%
3.1%
3.2%
2.5%
3.4%
3.1%
3.3%
2.0%
N/A
1.2%
1.8%
2.0%
N/A
0.8%
1.9%
* RPI w th a l m t of 5% p.a. s the most common level of ncrease n the UK arrangements. Assumpt ons for other ncreases are der ved from the above nflat on
assumpt on for RPI, and an annual CPI assumpt on of 2.2% (2016: 2.3%) as appropr ate.
IAS 19 spec f es that pens on l ab l t es should be d scounted at appropr ate h gh qual ty corporate bond rates. The Group cons ders that
t s appropr ate to cons der AA-rated corporate bonds as h gh qual ty and has therefore used d scount rates based on y elds on such
bonds correspond ng to the l ab l ty prof le of the respect ve schemes. In 2017 the Group has ref ned ts approach to exclude certa n
un vers ty and government-backed bonds that the Group does not cons der to be corporate bonds for the purposes of IAS 19.
The effect of a movement n the d scount rate appl cable n the UK alters reported l ab l t es (before assoc ated deferred tax
adjustments) by approx mately the amounts shown n the table overleaf.
Integrated Report and Accounts 2017 G4S plc 175
Financial report
Notes to the consolidated financial statements continued
32. etirement benefit obligations continued
Sensitivity analysis
Discount rate assumption being 0.5% ig er
Discount rate assumption being 0.5% lower
Increase/(decrease) in the
DBO of the UK scheme
2017
£m
(220)
242
Increase/(decrease) in t e
DBO of t e UK sc eme
2016
£m
(221)
243
T e effect of a movement in RPI inflation applicable in t e UK alters reported liabilities (before associated deferred tax adjustments) by
approximately t e amounts s own in t e table below:
Sensitivity analysis
Inflation assumption being 0.5% ig er
Inflation assumption being 0.5% lower
Increase/(decrease) in the
DBO of the UK scheme
2017
£m
90
(95)
Increase/(decrease) in t e
DBO of t e UK sc eme
2016
£m
92
(85)
T e above sensitivities allow for inflation-dependent assumptions suc as salary growt and relevant pension increases to vary
corresponding to t e inflation assumption variation. Due to t e caps and floors on pension increases a certain movement in t e inflation
assumption will not generally result in t e same movement in t e pension increase assumption.
Demographic assumptions and sensitivity analysis
In addition to t e above, t e Group uses appropriate mortality assumptions w en calculating t e sc emes’ obligations. T e mortality
tables used for t e sc eme in t e UK are: Birt year table S2P[M/F]A Base wit future improvements in line wit CMI_2015 Core
projections, based on a long-term improvement rate of 1.25% p.a. and allowing for individual scaling factors based on t e mortality
analysis carried out as part of t e last funding valuation.
T e resulting assumed life expectancy of a male member of t e UK sc emes currently aged 65 is 21 years. T e assumed life expectancy
at 65 of a male currently aged 52 is 22 years. At t ose ages, t e assumed life expectancy for a female member is between two and
t ree years longer t an for a male member.
T e effect of a one-year c ange in t is UK life expectancy assumption is to alter reported liabilities (before associated deferred tax
adjustments) by approximately £123m (2016: £137m).
T e selection of t ese movements to illustrate t e sensitivity of t e DBO to key assumptions s ould not be interpreted as t e Group
expressing any specific view of t e probability of suc movements appening.
176 G4S plc Integrated Report and Accounts 2017
Analysis of amounts recognise in the Group’s Consoli ate statement of financial position
The amounts recognised in the roup’s Consolidated statement of financial position in respect of the material funded defined benefit
schemes, and in the various components of income, OCI and cash flow are as follows:
2017
Amounts recognise in the Consoli ate statement of financial position at the
beginning of the year
DBO
£m
Assets
£m
Provision
£m
(2,740)
2,399
(341)
Amounts recognise in income:
Current service cost
Interest on obligations and assets
Administration costs paid from plan assets
Total amounts recognise in the Consoli ate income statement
Re-measurements:
–
Actuarial gain change in financial assumptions
–
Actuarial loss change in demographic assumptions
–
Actuarial gain experience
Return on assets in excess of interest
Re-measurement effects recognise in the Consoli ate statement of
comprehensive income*
Cash:
Employer contributions
Benefits paid from plan assets
Net cash
Other:
Impact of exchange rates
Amounts recognise in the Consoli ate statement of financial position at the en
of the year
(4)
(67)
(2)
(73)
22
(3)
16
–
35
–
91
91
–
59
–
59
–
–
–
(6)
(6)
43
(91)
(48)
(4)
4
(4)
(8)
(2)
(14)
22
(3)
16
(6)
29
43
–
43
–
(2,691)
2,408
(283)
* Total re-measurements recognised in OCI of £26m are shown net of re-measurement losses relating to other unfunded schemes of £3m.
Integrated Report and Accounts 2017 G4S plc 177
Financial report
Notes to the consolidated financial statements continued
32. etirement benefit obligations continued
2016
Amounts recognised in the Consolidated statement of financial position at the
beginning of the year
DBO
m
Assets
m
Provision
m
(2,281)
2,076
(205)
Amounts recognised in income:
Current service cost
Interest on obligations and assets
Administration costs paid from plan assets
Total amounts recognised in the Consolidated income statement
Re-measurements:
–
Actuarial loss change in financial assumptions
–
Actuarial gain change in demographic assumptions
–
Actuarial gain experience
Return on assets in excess of interest
Re-measurement effects recognised in the Consolidated statement of comprehensive
income*
Cash:
Employer contributions
Benefits paid from plan assets
Net cash
(4)
(85)
(2)
(91)
(545)
81
23
–
(441)
–
83
83
–
78
–
78
–
–
–
277
277
43
(83)
(40)
(4)
(7)
(2)
(13)
(545)
81
23
277
(164)
43
–
43
Other:
Impact of exchange rates
Amounts recognised in the Consolidated statement of financial position at the end of
the year
(10)
8
(2)
(2,740)
2,399
(341)
* Total re-measurements recognised in OCI in 2016 of 169m are shown net of re-measurements relating to other unfunded schemes of 5m.
Employer contributions in 2017 included 40m (2016: 39m) of additional contributions in respect of the deficit in the UK schemes.
Analysis of scheme assets
The composition of the scheme assets at the reporting date is as follows:
2017
Equity
Government bonds
Other
Total
2016
Equity
Government bonds
Other
Total
UK
£m
552
72
1,721
2,345
UK
m
747
237
1,355
2,339
Netherlands
£m
10
39
14
63
Netherlands
m
11
39
10
60
Total
£m
562
111
1,735
2,408
Total
m
758
276
1,365
2,399
178 G4S plc Integrated Report and Accounts 2017
A more granular, approx mate spl t of assets of the UK scheme at 31 December 2017 s as follows:
Equ ty
Pr vate equ ty
Government bonds
Cred t
Property
Macro-or entated
Mult -strategy
Der vat ves
Cash and cash equ valents
Total UK ass ts
2017
£m
409
143
72
83
83
243
202
382
728
2,345
2016
£m
628
119
237
51
71
339
217
412
265
2,339
Mult -strategy assets are held n a pooled fund structure, wh ch s a mult -asset fund nvest ng across all asset classes.
W th n the UK pens on fund, the Equ ty, Cred t, Macro-or entated and Mult -strategy sub-categor es cons st of pooled veh cles nvest ng
predom nantly n assets w th quoted pr ces n act ve markets. All government bonds are ssued by the UK government and have quoted
pr ces n act ve markets. Other UK nvestments are predom nantly unquoted.
Der vat ves nclude a range of nterest-rate and nflat on-l nked swaps, forward-currency contracts, equ ty- ndex total return swaps, equ ty
opt ons, and futures. Invest ng n nterest-rate and nflat on-l nked swaps s des gned to m t gate the mpact of future changes n nterest
rates and nflat on.
None of the pens on scheme assets are held n the Group’s own f nanc al nstruments or n any assets held or used by the Group.
The fa r value of d rectly-held secur t es (equ t es and bonds) s taken as the clos ng pr ce on an act vely-traded market. Fa r value
of hold ngs n pooled funds s prov ded by the nvestment manager, who calculates the pr ce based on the aggregate value of the
underly ng assets held by the fund (based on clos ng pr ces of the secur t es on an act vely-traded market) and the number of
un ts ssued.
33. Provisions and conting nt liabiliti s
At 1 January 2017
Add t onal prov s on n the year
Ut l sat on of prov s on
Re-class f cat ons
Unused amounts reversed
Unw nd ng of d scounts
Exchange d fferences
At 31 D c mb r 2017
Included n current l ab l t es
Included n non-current l ab l t es
Employ
b n fits
£m
19
4
(3)
1
–
–
(1)
20
R structuring
£m
5
20
(20)
–
(1)
–
–
4
Claims
£m
96
58
(43)
(1)
(2)
2
(6)
104
On rous
custom r
contracts
£m
69
19
(22)
(4)
–
–
–
62
Prop rty
and oth r
£m
59
22
(26)
2
(3)
–
(2)
52
Total
£m
248
123
(114)
(2)
(6)
2
(9)
242
104
138
242
Judgment s requ red n quant fy ng the Group’s prov s ons, part cularly n connect on w th cla ms and onerous customer contracts,
wh ch are based on a number of assumpt ons and est mates where the ult mate outcome may be d fferent to the amount prov ded.
Each of these prov s ons reflects the Group’s best est mate of the probable exposure at 31 December 2017 and th s assessment has
been made hav ng cons dered the sens t v ty of each prov s on to reasonably poss ble changes n key assumpt ons. The Group s sat sf ed
that t s unl kely that changes n these key assumpt ons w ll have a mater al mpact on the Group’s overall prov s on ng pos t on n the
next 12 months.
Employ b n fits
The prov s on for employee benef ts s n respect of any employee benef ts wh ch accrue over the work ng l ves of the employees,
typ cally nclud ng tems such as long serv ce awards and term nat on ndemn ty schemes.
The Group’s net obl gat on n respect of long-term serv ce benef ts other than ret rement benef ts represents the present value of the
future benef t that employees have earned at the balance sheet date, less the fa r value of scheme assets out of wh ch the obl gat ons
are to be settled d rectly.
Integrated Report and Accounts 2017 G4S plc 179
Financial report
Notes to the consolidated financial statements continued
33. rovisions and contingent liabilities continued
Restructuring
Restructuring provisions include amounts or redundancy payments, and the costs o closure o activities in acquired businesses
and discontinued operations. Settlement o restructuring provisions is highly probable. The timing is uncertain but is generally likely
to be short-term. During the year the Group incurred restructuring costs o £20m (2016: £12m) within speci ic items relating to the
multi-year strategic productivity programme across the Group. In addition, the Group incurred non-strategic reorganisation costs o
£10m (2016: £9m) which are included within Adjusted PBITA.
Claims
Claims provisions represent any outstanding litigation claims against the Group that are considered likely to lead to the out low o unds
in the uture, including provisions within the captive insurance companies to cover (where appropriate) anticipated claims incurred as at
the balance sheet date, based on actuarial assessments to calculate the liabilities.
These claims reserves are held by the Group’s wholly-owned captive insurance subsidiaries in Guernsey and the US which underwrite
part o the Group’s Cash Solutions, general liability, workers’ compensation and auto liability policies. In the year the Group provided
£36m (2016: £20m) in relation to claims made under these policies which comprise a signi icant number o unrelated claims, most o
which are individually immaterial. Claims provisions are subject to regular actuarial review and are adjusted as appropriate. Settlement
o these provisions is highly probable but both the value o the inal settlements and their timing is uncertain, dependent upon the
outcome o on-going processes to determine both liability and quantum in respect o a wide range o claims or possible claims.
During the year the Group also recognised additional provisions o £9m mainly relating to the settlement o labour-related disputes in
North and Latin America in respect o prior years, and £6m relating to the estimated cost o settlement o subcontractor claims rom
commercial disputes in respect o prior years. Both o these amounts have been presented within speci ic items in the Consolidated
income statement.
Onerous customer contracts
The Group recognised as speci ic items additional onerous contract provisions o £19m (2016: £4m) relating primarily to the anticipated
total losses over the next 15 to 20 years in respect o certain UK contracts. It is expected that around 60% o the Group’s total
provision or onerous contracts will be utilised by the end o 2020, mainly as the Compass contract comes to an end in August 2019.
Given the short period remaining to the inalisation o this contract, any potential uture changes to key assumptions made when
estimating its uture losses are not expected to have a signi icant impact. The additional expected losses o £19m are mainly related to
two other PFI contracts where there has been an expected increase in costs to deliver the required maintenance regime. The expected
additional uture losses are expected to be partially o set by pro it improvement plans, although these are re lected only to the extent
that they have been implemented and are delivering the expected savings. A number o pro it improvement plans that have been
designed but which have not yet been embedded success ully in the contract delivery were not considered when estimating uture
expected losses. This is consistent with the Group’s policy which requires evidence that pro it improvement plans will be success ully
implemented be ore they are re lected in anticipated uture cash low projections or onerous contract provisioning purposes. There
is no single change in key variables that could materially a ect uture expected losses on these contracts. Furthermore, management
believes that the current level o provision is balanced and that any signi icant potential downside rom possible changes to key
assumptions could be o set by urther progress made in those pro it improvement plans that have not been considered ollowing the
Group’s policy described above. The discount rates applied when calculating onerous contract provisions or these contracts were
between 1.4% and 1.7%.
roperty and other
Included within property and other provisions are uture liabilities or long-term idle leased properties, or properties sub-let at a
short all, or the cost o replacing or reinstalling assets where there is a present contractual requirement, and or customer claims
on contracts that are related to the per ormance on a contract but do not orm part o onerous customer contract provisions.
Whilst the likelihood o settlement o these obligations is considered probable, there is uncertainty over their value and duration.
Included in property and other provisions are contract-related provisions o £35m (2016: £43m) and onerous property lease provisions
o £17m (2016: £16m).
Contingent liabilities
The Group is involved in disputes in a number o countries, mainly related to activities incidental to its operations. Currently there are
a number o disputes open in relation to the application o local labour law, commercial agreements with customers and subcontractors
and claims and compliance matters, in some cases in the course o litigation. In addition, the interpretation o labour laws and regulations
in a number o countries where the Group operates is complex and there is inherent judgment made when applying those laws and
regulations that are open to interpretation. As such, there is risk that urther disputes and claims rom employees could arise in the
uture. Where there is a dispute or where there is a risk o a dispute or claims in the uture and where, based on legal counsel advice,
the Group estimates that it is probable that the dispute will result in an out low o economic resources, provision is made based on the
Group’s best estimate o the likely inancial outcome. Where a reliable estimate cannot be made, or where the Group, based on legal
counsel advice, considers that it is not probable that there will be an out low o economic resources, no provision is recognised.
In this regard, the Group is party to a number o on-going litigation processes in relation to interpretation o local labour law and
regulations in a number o countries, and where it is expected that these matters will not be resolved in the near uture. At this stage,
the Group’s view is that these cases will either be resolved in a manner avourable to the interests o the Group or, due to the nature
and complexity o the cases, it is not possible to estimate the potential economic exposure. In addition, in the ordinary course o
business, other contingent liabilities exist where the Group is subject to commercial claims and litigation rom a range o parties in
respect o contracts, agreements, regulatory and compliance matters, none o which are expected to have a material impact on
the Group.
180 G4S plc Integrated Report and Accounts 2017
The investigation opened y the Serious Fraud Office in 2013 in respect of the Group’s Electronic Monitoring contract remains on-
going. The Group continues to co-operate fully with the investigation ut, ased on currently availa le information, is una le to make a
relia le estimate of the outcome of that review.
34. Deferred tax
The following are the major deferred tax lia ilities and assets recognised y the Group and movements thereon during the year:
At 1 January 2017
Charge to the income statement
Disposal of su sidiaries
Charge to equity
Exchange differences
At 31 December 2017
At 1 January 2016
Credit/(charge) to the income statement
Acquisition of su sidiaries
Credit to equity
Exchange differences
Transfers and re-classifications
At 31 December 2016
Retirement
benefit
bligati ns
£m
69
(2)
–
(4)
–
63
45
–
–
23
–
1
69
Tax l sses
£m
110
(18)
–
–
–
92
51
35
–
22
2
–
110
Other
temp rary
differences
£m
93
(11)
(1)
–
(5)
76
82
(1)
(2)
–
14
–
93
T tal
£m
272
(31)
(1)
(4)
(5)
231
178
34
(2)
45
16
1
272
Certain deferred tax assets and lia ilities have een offset where permitted. The following is the analysis of the deferred tax alances
(after offset):
Deferred tax lia ilities
Deferred tax assets
Net deferred tax (lia ility)/asset included in assets of disposal groups classified as held for sale
Net deferred tax assets
2017
£m
(8)
240
(1)
231
2016
£m
(14)
285
1
272
At 31 Decem er 2017, the Group had unutilised tax losses of approximately £780m (2016: £842m) potentially availa le for
offset against future profits. A deferred tax asset of £92m (2016: £110m) has een recognised in respect of approximately
£508m (2016: £529m) of gross losses ased on profita ility from approved udgets and usiness plans.
No deferred tax asset has een recognised in respect of the remaining £272m (2016: £313m) of gross losses due to the
unpredicta ility and availa ility of future profit streams in the relevant jurisdictions, and the fact that a significant proportion of such
losses remains unaudited y the relevant tax authorities. In certain cases, there are continuing structural issues which prevent the
utilisation of losses within the foreseea le future. Losses which will never e utilised, for example due to the operation of statute,
are not included in the a ove figures.
Approximately £54m (2016: £80m) of the gross unrecognised losses relate to the UK group. Utilisation of such losses is dependent
upon the profita ility of particular trading and corporate entities. The financial projections used in assessing the future profita ility are
consistent with those used in assessing the carrying value of goodwill as set out in note 18. The utilisation of these losses will occur at
different rates due to the incidence and timing of profits within these entities, which consequently impacts their recognition as deferred
tax assets.
Included in unrecognised tax losses are gross losses of £27m (2016: £40m) which will expire etween 2018 and 2026. Other losses
may e carried forward indefinitely.
At 31 Decem er 2017, the Group has capital losses availa le to carry forward of approximately £2.6 n (2016: £0.25 n). The in-year
increase is mainly related to liquidation of dormant holding companies crystallising tax losses. These losses have no expiry date and
have not een agreed with the relevant tax authorities. No deferred tax assets have een recognised in respect of these losses on
the asis that the likelihood of their future utilisation is considered to e remote.
At 31 Decem er 2017, the aggregate amount of undistri uted earnings of non-UK su sidiaries and joint ventures on which temporary
differences may exist was £1,416m (2016: £1,646m). A deferred tax lia ility of £2m (2016: £3m) has een recognised on undistri uted
earnings, ased on expected distri utions from such su sidiaries and joint ventures.
Other temporary differences vary y country and include items relating to the local tax treatment of fixed assets, employee enefits,
and provisions.
Integrated Report and Accounts 2017 G4S plc 181
Financial report
Notes to the consolidated financial statements continued
35 Share capital
G4S plc
Issued and fully paid ordinary shares of 25p each
Ordinary shares in issue
At 1 January
At 31 December
36 Other reserves
At 1 January 2017
Total comprehensive loss attributable to equity
shareholders of the parent
Recycling of net investment hedge
Recycling of cumulative translation adjustments
Own shares awarded
Own shares purchased
At 31 December 2017
At 1 January 2016
Total comprehensive (loss)/income attributable to
equity shareholders of the parent
Own shares awarded
At 31 December 2016
Other reserves include:
2017
£
387,898,609
2016
£
387 898 609
2017
Number
1,551,594,436
1,551,594,436
2016
Number
1 551 594 436
1 551 594 436
Hedging
reserve
£m
–
Translation
reserve
£m
43
Merger
reserve
£m
426
Reserve for
own shares
£m
(13)
Total other
reserves
£m
456
–
–
–
–
–
–
3
(3)
–
–
(69)
24
(42)
–
–
(44)
(210)
253
–
43
–
–
–
–
–
426
426
–
–
426
–
–
–
11
(10)
(12)
(18)
–
5
(13)
(69)
24
(42)
11
(10)
370
201
250
5
456
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash-flow hedging instruments
related to the hedged transactions that have not yet occurred (net of tax). During the year a fair value gain of £21m (2016: £69m)
was recognised in the hedging reserve relating to the increase in fair value of the cash-flow hedging instruments. Out of this gain £21m
(2016: £73m) relating to the re-translation of those hedging instruments was transferred from the hedging reserve to the Consolidated
income statement. This was offset by an equal and opposite revaluation to the hedged loan note items so that the net impact on the
Consolidated income statement was nil.
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 Group’s net investment in foreign operations (net of tax). During
the year £42m (2016: £nil) of cumulative translation adjustments and £24m (2016: £nil) of cumulative net investment hedging amounts
relating to business disposals were recycled to the Consolidated income statement (see note 17).
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. In accordance with Section 612 of the Companies Act
2006 the £308m premium on ordinary shares issued in the Group’s 9.99% share placement in August 2013 was initially recorded in the
merger reserve and has subsequently been transferred to retained earnings.
Reserve for own shares
An Employee Benefit Trust established by the Group held 4 362 068 shares at 31 December 2017 (2016: 4 844 243 shares) to satisfy
the vesting of awards under the performance share plan and performance-related schemes (see note 39). During the year 3 489 049
shares (2016: no shares) were purchased by the trust and 3 971 224 shares (2016: 1 475 901 shares) were used to satisfy the vesting
of awards under the schemes. At 31 December 2017 the cost of shares held by the trust was £12 330 829 (2016: £12 896 107) whilst
the market value of these shares was £11 646 722 (2016: £11 383 971). 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.
Distributable reserves
As at 31 December 2017 the parent company of the Group had distributable reserves of £885m (2016: £918m).
182 G4S plc Integrated Report and Accounts 2017
37. Analysis of net debt
A reconciliation of net debt to a ounts in the Consolidated state ent of financial position is presented below:
Cash and cash equivalentsa
Receivables fro custo ers in respect of cash-processing operationsb
Net cash and overdrafts included within assets of disposal groups held for sale
Bank overdrafts
Liabilities to custo ers in respect of cash-processing operationsc
Total group cash, cash equivalents and bank overdrafts
Invest entsa
Net debt (excluding cash and overdrafts) included within assets of disposal groups held for sale
Bank loans
Loan notes
Obligations under finance leases
Fair value of loan note derivative financial instru ents
Net debt
a. The 2016 co paratives for cash and cash equivalents and invest ents have been re-presented
–
see note 3(a).
b. Included within trade and other receivables.
c.
Included within trade and other payables.
An analysis of ove ents in net debt in the year is presented below:
(Decrease)/increase in cash, cash equivalents and bank overdrafts per Consolidated statement of
cash flow
Sale of invest ents
Net decrease in borrowings
Repay ent of finance leases
Decrease in net debt resulting from cash flows
New finance leases
Net debt (excluding cash, cash equivalents and bank overdrafts) in disposed entities
Net decrease in net debt before foreign exchange movements
Exchange differences
Net debt at the beginning of the year
Net debt at the end of the year
017
£m
90
7
8
( 84)
(6 )
571
6
(3)
(13)
( ,141)
(35)
7
(1,487)
017
£m
(87)
(3)
35
3
168
(3)
(3)
16
1
(1,670)
(1,487)
2016
£
831
10
7
(93)
(83)
672
64
6
(20)
(2,392)
(57)
57
(1,670)
2016
£
197
(6)
11
22
224
(7)
5
222
(110)
(1,782)
(1,670)
38. Operating lease arrangements
The Group as lessee
As at 31 Dece ber 2017, the Group had outstanding co it ents 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
017
£m
99
46
1 5
470
2016
Restateda
£
113
288
124
525
The Group leases a nu ber of its office properties, vehicles and other operating equip ent under operating leases. Property leases are
negotiated over an average ter of around ten years, at rates reflective of arket rentals. Periodic rent reviews take place to bring lease
rentals into line with prevailing arket conditions. So e, but not all, lease agree ents have an option to renew the lease at the end of
the lease ter . Leased vehicles and other operating equip ent are negotiated over an average lease ter of four years.
a. As a consequence of the detailed work carried out to date to assess the i pact of IFRS16
Leases, effective 1 January 2019, it has been deter ined that the
operating lease co it ents reported at 31 Dece ber 2016 were understated. The ageing analysis previously reported was £104 payable within one year,
£272 payable within two to five years and £110 payable after ore than five years.
–
Integrated Report and Accounts 2017 G4S plc 183
Financial report
Notes to the consolidated financial statements continued
39 Share-based payments
Long Term Incentive Plan (LTIP)
Shares allocated under the Group s LTIP are subject to performance conditions and forfeitures, as detailed in the Directors
Remuneration report on page 93.
Under the Group s LTIP, Relative Total Shareholder Return (a market performance condition) constitutes 30% (2016: 30%) of
the performance criteria and is measured over three financial years. The Relative Total Shareholder Return is measured against a
comparator group of selected relevant companies. 25% of this element of the award vests upon the Group s Total Shareholder Return
being ranked median against the comparator group. The fair value of the shares awarded which is subject to this market performance
condition has therefore been reduced by 75%.
Deferred Bonus Share Plan (DBSP) and Restricted Share Plan (RSP)
Shares allocated under the Group s DBSP and RSP are not subject to further financial performance conditions, but in both cases, are
subject to forfeitures, either in part or in full, subject to continued employment, unless a participant is deemed a good leaver by the
Remuneration Committee. Share awards under the RSP were granted in 2016 for the first time.
Share-based payment plans information
All three share plans have a three-year vesting period from their dates of grant.
The following table shows the movements in the number of shares held under the share-based payment plans outstanding but
not exercisable:
Outstanding at 1 January
Granted during the year
Exercised during the year
Forfeited during the year
Expired during the year
Outstanding at 31 December
DBSP and RSP
2017
Number
1,518,118
1,620,857
(183,563)
(43,086)
–
2,912,326
LTIP
2017
Number
20,587,152
6,085,959
(4,745,747)
(5,188,807)
(1,439,326)
15,299,231
Total
2017
Number
22,105,270
7,706,816
(4,929,310)
(5,231,893)
(1,439,326)
18,211,557
DBSP and RSP
2016
Number
858,866
1,017,512
(358,260)
–
–
1,518,118
LTIP
2016
Number
17,210,721
10,431,311
(1,424,577)
(2,104,420)
(3,525,883)
20,587,152
Total
2016
Number
18,069,587
11,448,823
(1,782,837)
(2,104,420)
(3,525,883)
22,105,270
The weighted-average remaining contractual life of conditional share allocations outstanding at 31 December 2017 was 15 months
(2016: 17 months). The weighted-average share price at the date of allocation of shares allocated conditionally during the year was
283.1p (2016: 185.2p) and the contractual life of all conditional allocations was three years. The weighted-average share price at the
date of exercise for the shares exercised during the year was 279.0p (2016: 196.3p).
The Consolidated income statement is charged with an estimate for the vesting of shares awarded conditionally and subject to
non-market performance conditions. The charge for 2017 was £10m (2016: £13m), out of which £9m (2016: £10m) arose from
equity-settled share-based payments. The total carrying amount for the liabilities arising from share-based payment transactions
as at 31 December 2017 was £6m (31 December 2016: £6m).
184 G4S plc Integrated Report and Accounts 2017
40. Related party transactions
Transactions and balances ith joint ventures
Transactions between t e Company and its subsidiaries ave been eliminated on consolidation and are not disclosed in t is note.
Details of transactions between t e Group and ot er related parties are disclosed below. All transactions wit related parties are
entered into in t e normal course of business.
Transactions wit joint ventures included revenue recorded of £56m (2016: £49m) and purc ases recorded of £6m (2016: £nil).
Amounts due from related parties include £5m (2016: £8m) from joint ventures. Amounts due to related parties include £2m
(2016: £nil) to joint ventures.
No expense (2016: £nil) as been recognised in t e year for impairment in respect of amounts owed by related parties.
T e Group as a legal interest in a number of joint ventures and joint arrangements, w ere t e economic interest was divested by
t e Global Solutions Group prior to its acquisition by G4S plc in 2008. Transactions wit t ese entities during t e year comprised:
W ite Horse Education Partners ip Limited
Integrated Accommodation Services plc
Fazakerley Prison Services Limited
Onley Prison Services Limited
UK Court Services (Manc ester) Limited
East London Lift Company Limited
Total
2017
Services/sales to
£m
3
46
39
17
2
1
108
2016
Services/sales to
£m
3
54
34
16
2
1
110
T e Group ad outstanding balances of £11m due from t ese entities at 31 December 2017 (2016: £12m).
Transactions ith post-employment benefit schemes
Details of transactions wit t e Group’s post-employment benefit sc emes are provided in note 32. Unpaid contributions owed
to sc emes amounted to £0.3m at 31 December 2017 (31 December 2016: £0.5m).
Transactions ith other related parties
In t e normal course of t e Group’s business t e Group provides services to and receives services from certain non-controlling
interests on an arm’s-lengt basis.
Remuneration of key management personnel
T e Group’s key management personnel are deemed to be t e non-executive directors and t ose individuals, including t e executive
directors, w ose remuneration is determined by t e Remuneration Committee. T eir remuneration is set out below. Furt er
information about t e remuneration of individual directors included wit in key management personnel is provided in t e audited
part of t e Directors’ Remuneration report on pages 93 to 115.
S ort-term employee benefits
Post-employment benefits
Ot er long-term benefits
Termination benefits
S are-based payment
Total
41. Events after the balance sheet date
No significant post-balance s eet events ave affected t e Group since 31 December 2017.
2017
£
11,112,484
121,781
27,833
–
7,349,358
18,611,456
2016
£
11,463,651
74,390
28,728
305,159
6,417,657
18,289,585
Integrated Report and Accounts 2017 G4S plc 185
Financial report
Notes to the consolidated financial statements continued
42. Significant in estments
The companies isted be ow are those which were part of the Group at 31 December 2017 and which, in the opinion of the directors,
significant y affected the Group’s resu ts and net assets during the year. A comprehensive ist of a Group undertakings is disc osed on
pages 187 to 200.
The principa activities of the companies isted be ow are indicated according to the fo owing key:
Secure So utions
Cash So utions
These businesses operate principa y in the country in which they are incorporated.
S
C
Product
segment
Country of incorporation
Ultimate
ownership
Subsidiary undertakings
G4S So uciones de Seguridad S.A.
G4S Custodia Services Pty Limited
G4S Secure So utions AG (Austria)
G4S Secure So utions SA/NV
G4S Cash So utions (Be gium) NV
G4S Interativa Service Ltda
Vanguarda Segurança e Vigi ância Ltda
G4S Secure So utions (Canada) Limited
G4S Secure So utions Co ombia S.A.
G4S Security Services A/S
G4S Care and Justice Services (UK) Limited
G4S Cash Centres (UK) Limited
G4S Cash So utions (UK) Limited
G4S Faci ities Management (UK) Limited
G4S Risk Management Limited
G4S Secure So utions (UK) Limited
AS G4S Ba tics
G4S Keszpenz ogisztikai Kft
G4S Secure So utions (India) Pvt. Limited1,3
G4S Kenya Limited
G4S Security So utions S.A.R.L.
Safeguards G4S Sdn Bhd2,3
G4S Cash So utions BV
G4S Security Services BV
G4S Peru S.A.C.
A Maja Service Master LLC3
Mohammed Bin Abdoud A Amoudi Co for Civi ian Security Services Partnership
(A maja )3
G4S Cash So utions (SA) (Pty) Limited
G4S Secure So utions (SA) (Pty) Limited3
G4S Security Services (Thai and) Limited
G4S Secure So utions LLC3
G4S Retai So utions (USA) Inc.
G4S Secure So utions (USA) Inc.
G4S Techno ogy LLC
1. G4S Secure So utions (India) Pvt. Limited has a year end of 31 March.
2. Safeguards G4S Sdn Bhd has a year end of 30 June.
S
S
S
S
C
S
S
S
S+C
S
S
C
C
S
S
S
S+C
C
S
S+C
S+C
S+C
C
S
S
S
S+C
C
S
S
S+C
C
S
S
Argentina
Austra ia
Austria
Be gium
Be gium
Brazi
Brazi
Canada
Co ombia
Denmark
Eng and
Eng and
Eng and
Eng and
Eng and
Eng and
Estonia
Hungary
India
Kenya
Luxembourg
Ma aysia
Nether ands
Nether ands
Peru
Saudi Arabia
Saudi Arabia
South Africa
South Africa
Thai and
United Arab Emirates
USA
USA
USA
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
49%
100%
100%
49%
100%
100%
100%
49%
0%
75%
72%
98%
49%
100%
100%
100%
3. By virtue of shareho der agreements, options, pre-emption rights and other contractua arrangements, the Group has the power to govern the financia
and operating po icies, so as to obtain the benefits from the activities of these companies. These are therefore conso idated as fu subsidiaries.
186 G4S plc Integrated Report and Accounts 2017
43. Details of related undertakin s of G4S plc
Subsidiaries
Entities listed belo are subsidiaries at 31 December 2017, by reason of the holding of a majority of the voting rights or, if a majority
is not held, by virtue of section 1162 (2) (c) of the Companies Act 2006. Not all of the companies listed belo are trading entities.
Company Name
G4S ALGERIE EURL
SECURICOR GRAY SECURITY SERVICES
(ANGOLA) (PTY) LTD
G4S SERVICOS DE SEGURANCA
(ANGOLA) LIMITADA
G4S SOLUCIONES DE SEGURIDAD S.A.
G4S SERVICIOS DE SEGURIDAD S.A.
INDOMEGA S.A.
MANAR S.A.
PROTECCION E INVERSIONES S.A.
G4S SOLUCIONES GLOBALES S.A.
G4S APPLIED SECURITY S.A.
G4S CONTROL SYSTEMS S.A.
G4S DETCON S.A.
ORCANI PTY LTD
G4S INTERNATIONAL LOGISTICS
(AUSTRALIA) PTY LTD
G4S COMPLIANCE & INVESTIGATIONS
PTY LTD
G4S AUSTRALIA PTY LTD
G4S HEALTH SERVICES AUSTRALIA
PTY LTD
G4S CUSTODIAL SERVICES PTY LTD
G4S AUSTRALIA HOLDINGS PTY LTD
G4S INTEGRATED SERVICES PTY LTD
G4S CORRECTIONAL SERVICES
(AUSTRALIA) PTY LTD
G4S SECURE SOLUTIONS AG (AUSTRIA)
G4S SECURITY SYSTEMS GMBH
G4S DIENSTLEISTUNGS GMBH
G4S SECURE SOLUTIONS
BAHRAIN W.L.L
G4S REGIONAL CONSULTANCY SERVICES
(NAMESA) WLL
G4S SECURE SOLUTIONS BANGLADESH
(P) LTD
FIRST SELECT BANGLADESH LIMITED
Country of
Incorporation
Algeria
Angola
% owned
by Group
100.0%
100.0%
% owned
by plc
Angola
Argentina
Argentina
Argentina
Argentina
Argentina
Argentina
Argentina
Argentina
Argentina
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Austria
Austria
Austria
Bahrain
Bahrain
65.0%
100%
75.1%
99.9%
100%
80.0%
75.0%
75.0%
85.8%
75.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
34.3%
100.0%
Re istered address
Lotissement Benhedadi Said N°3 Dar Diaf Cherraka, 16050, Algeria
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Rua di reita da Samba, No 58, Corimba, Samba
Luanda, Angola
Timoteo Gordillo 5697/5611, C1439 GKA Buenos Aires, Argentina
Timoteo Gordillo 5697/5611, C1439 GKA Buenos Aires, Argentina
Peru 338 San Fernando del Valle de Catamarca, K4700AKJ Catamarca,
Argentina
Peru 338 San Fernando del Valle de Catamarca, K4700AKJ Catamarca,
Argentina
Timoteo Gordillo 5697/5611, C1439 GKA Buenos Aires, Argentina
Jose Demaria 4470 (C1425AEB), Buenos Aires, Argentina
Timoteo Gordillo 5697/5611, C1439 GKA Buenos Aires, Argentina
Timoteo Gordillo 5697/5611, C1439 GKA Buenos Aires, Argentina
Lavalle 1528, 3º “E” (C1048AAL), Ciudad Autónoma de Buenos Aires,
Argentina
Level 4 616 St Kilda Road, Melbourne, 3004 Victoria, Australia
c/o HLB Mann Judd, Level 19, 207b Kent Street, 2000 Sydney, Australia
P.O. Box 7332 (Level 3, 182-184 Bourke Road), NSW 2015 Alexandria,
Australia
Level 4 616 St Kilda Road, Melbourne, 3004 Victoria, Australia
Level 4 616 St Kilda Road, Melbourne, 3004 Victoria, Australia
Level 4 616 St Kilda Road, Melbourne, 3004 Victoria, Australia
Level 4 616 St Kilda Road, Melbourne, 3004 Victoria, Australia
Level 4 616 St Kilda Road, Melbourne, 3004 Victoria, Australia
Level 4 616 St Kilda Road, Melbourne, 3004 Victoria, Australia
Dresdner Strasse 91/1, A-1200 Vienna, Austria
Peilsteinerstr. 5-7, A-5020 Salzburg, Austria
Dresdner Strasse 91/1, A-1200 Vienna, Austria
Villa 925, Road 3830, Manama, Qudaybiyah 338, P. O. Box 15193 Adliya,
Bahrain
2235 West To er BFH Manama, Bahrain
Bangladesh
100.0%
House # KA 79, Joar Sahara, Dhaka, 1212 Dhaka, Bangladesh
Bangladesh
Barbados
G4S SECURE SOLUTIONS (BARBADOS)
LTD
G4S CASH SOLUTIONS (BELGIUM) SA/NV Belgium
Belgium
G4S SUPPORT SERVICES SA/NV
Belgium
G4S SECURE SOLUTIONS SA/NV
Belgium
G4S CARGO SOLUTIONS SA/NV
Belgium
G4S TRAINING & CONSULTANCY
SERVICES SA/NV
G4S AVIATION SECURITY SA/NV
G4S SECURE MONITORING SA/NV
G4S SECURITY SYSTEMS SA/NV
G4S CARE SA/NV
G4S EVENT SERVICES SA/NV
G4S EVENT SECURITY SA/NV
G4S FIRE AND SAFETY BV/BA
G4S BELGIUM NOMINEE NV
G4S SAFETY SYSTEMS N.V.
ASC SAFETY SERVICES B.V/B.A.
G4S BOLIVA S.A.
Belgium
Belgium
Belgium
Belgium
Belgium
Belgium
Belgium
Belgium
Belgium
Belgium
Bolivia
40.0%
51.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
50.4%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
99.9%
100%
Apartment 10/A, Rupsha To er, 7 Kamal Ataturk Avenue, Banani, Dhaka,
Bangladesh
Brighton, Spring Garden, St. Michael, Barbados
Buro & Design Center PB 77 Heizel Esplanade 1020 Brussels, Belgium
Buro & Design Center PB 77 Heizel Esplanade 1020 Brussels, Belgium
Buro & Design Center PB 77 Heizel Esplanade 1020 Brussels, Belgium
Buro & Design Center PB 77 Heizel Esplanade 1020 Brussels, Belgium
Buro & Design Center PB 77 Heizel Esplanade 1020 Brussels, Belgium
Buro & Design Center PB 77 Heizel Esplanade 1020 Brussels, Belgium
Buro & Design Center PB 77 Heizel Esplanade 1020 Brussels, Belgium
Buro & Design Center PB 77 Heizel Esplanade 1020 Brussels, Belgium
Buro & Design Center PB 77 Heizel Esplanade 1020 Brussels, Belgium
Buro & Design Center PB 77 Heizel Esplanade 1020 Brussels, Belgium
Buro & Design Center PB 77 Heizel Esplanade 1020 Brussels, Belgium
Buro & Design Center PB 77 Heizel Esplanade 1020 Brussels, Belgium
Buro & Design Center PB 77 Heizel Esplanade 1020 Brussels, Belgium
Abtsdreef 10, 2940 Stabroek, Belgium
Abtsdreef 10, 2940 Stabroek, Belgium
Marcelo terceros Banzer S/N, 3er Anillo Ext. Equipetrol (Frente Hotel Casa
Blanca), Santa Cruz, Bolivia
Integrated Report and Accounts 2017 G4S plc 187
Financial report
Notes to the consolidated financial statements continued
Registe ed add ess
C/o Grant Thornton usiness Services (Pty) Ltd, Acumen Park, Plot 50370,
Fairgrounds Gaborone otswana
C/o Grant Thornton usiness Services (Pty) Ltd, Acumen Park, Plot 50370,
Fairgrounds Gaborone otswana
Plot 50370, Fairgrounds Office Park, Gaborone, otswana
Rua Rui arbosa 70, 2º andar, 01326-010 São Paulo, razil
Rua Rui arbosa 70, 3º andar, ela Vista, São Paulo, razil
Rua Maria José 69, ela Vista, 01324-010 São Paulo, razil
Rua Rui arbosa 191,1º andar, 01326-010 São Paulo, razil
Rua Santa Rosa, 911, airro Santa Paula, Sao Caetano do Sul, Sao Paulo,
razil
Rua Rui arbosa 70-A, 01326-010 São Paulo, razil
Rua Maria José 133, ela Vista, 01324-010 São Paulo, razil
Rua Rui arbosa 70, 1º andar, ela Vista 01326-010 São Paulo, razil
CITCO uilding, Wickhams City, P.O. ox 662, Road Town,
Tortola, ritish Virgin Islands
Flat/ RM 101 & 104/F, Tower 2, The Harbourfront, 22 Tak Fung Street,
Kowloon, Hong Kong
1395 University lvd, 33458 Jupiter, FL, United States
Craigmuir Chambers, P.O. ox 71, Road Town, Tortola, ritish Virgin
Islands
Kingston Chambers, P.O. ox 173, Road Town Tortola, ritish Virgin Islands
1395 University lvd, 33458 Jupiter, FL, United States
P.O. ox 957, Offshore Incorporations Centre, Road Town, Tortola, ritish
Virgin Islands
1395 University lvd, 33458 Jupiter, FL, United States
Old Airport Road, onapriso Doula, Cameroon
150 Ferrand Drive, Suite 600, M3C 3E5 Toronto, Ontario, Canada
5255 Orbitor Drive, L4W 5M6 Mississauga Ontario, Canada
160 Elgin Street, K1P 1C3, Ottawa, Canada
Sterling Trust (Cayman) Limited, Whitehall House, 238 North Church
Street, k1-1102 Grand Cayman, Cayman Islands
No 48/85, Avenue Kolwezi, Gombe, Kinshasa, DRC
–
–
–
–
–
Avda. Zañartu 1680, Ñuñoa Santiago, Chile
Santiago, Chile
Avda. Zañartu 1680, Ñuñoa
Avda. Zañartu 1680, Ñuñoa
Santiago, Chile
Avda. Zañartu 1680, Ñuñoa Santiago, Chile
Avda. Zañartu 1680, Ñuñoa Santiago, Chile
13F, Hui Shang uilding, 1286 Min Sheng Road, Pudong New District,
200122, Shanghai, China
West Floor 9, us Tower 1001, Lianhau branch, Futian District, 518036
Shenzhen, China
Room 01-4 Tower A 8F, Yi Cheng International Centre No.10 Rong Hua
Middle Road eijing Development Area, 100176 eijing, China
Room 710A, 7/F, Nan Fang Securities uilding, 140 -148 Ti Yu Dong Lu,
Tian He District, Guangzhou, China
6A, Huamin Empire Plaza, No. 728 Yan An Road (W), 200050 Shanghai,
China
17-1 ai Ma Miao Xiang, Shangcheng District, Hangzhou, China
Room 204-7, 2/Floor, China Diamond Exchange Center uilding, Tower ,
No. 1701 Century oulevard, Pudong New Area, Shanghai, China
13F, Hui Shang uilding, 1286 Min Sheng Road, Pudong New District,
200122, Shanghai, China
43. Details of elated unde takings of G4S plc continued
Subsidia ies continued
Company Name
G4S ( OTSWANA) LTD
Count y of
Inco po ation
otswana
% owned
by G oup
70.0%
% owned
by plc
FIDELITY CASH MANAGEMENT SERVICES
( OTSWANA) PTY LTD
G4S FACILITIES MANAGEMENT
OTSWANA (PTY) LTD
G4S RAZIL HOLDING LTDA
G4S MONITORAMENTO
E SISTEMAS LTDA
G4S SERVIÇOS LTDA
G4S ENGENHARIA E SISTEMAS LTDA
G4S INTERATIVA SERVICE LTDA
G4S VANGUARDA SEGURANÇA E
VIGILÂNCIA LTDA
EMPRESA NACIONAL DE SEGURANCA
LTDA
G4S PARTICIPAÇÕES LTDA
G4S GROUP HOLDING (ASIA) LTD
otswana
100.0%
otswana
48.9%
razil
razil
razil
razil
razil
razil
razil
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
razil
ritish Virgin Islands
100.0%
100.0%
G4S SECURE SOLUTIONS (ASIA) LTD
ritish Virgin Islands
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
48.4%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
75.0%
100.0%
100.0%
90.0%
100.0%
100.0%
ritish Virgin Islands
ritish Virgin Islands
ritish Virgin Islands
ritish Virgin Islands
ritish Virgin Islands
G4S HOLDINGS LTD
ARMORGROUP (SPECIAL CLEARANCE
SERVICES) LTD
HILL & ASSOCIATES CONSULTANTS LTD
G4S ( VI) HOLDCO (COLOM IA II) LTD
HILL & ASSOCIATES CONSULTANTS
(MIDDLE EAST) LTD
ASHINO HOLDINGS LTD
G4S SECURITY SERVICES CAMEROON PLC Cameroon
G4S SECURE SOLUTIONS (CANADA) LTD.
(G4S SOLUTIONS DE SECURITE (CANADA)
LTEE)
INDO RITISH GARMENTS (CANADA) LTD Canada
Canada
I-VISION SYSTEMS INC
Cayman Islands
SERVICE MASTERS LTD
Canada
ritish Virgin Islands
G4S CENTRAFRIQUE SECURITE SOLUTION
SURL
G4S HOLDINGS CHILE S.A.
G4S SECURITY SERVICES REGIONES, S.A.
G4S SECURITY SERVICES LIMITADA
ARRIENDOS FAST CAR, LTDA
CAPACITACIÓN Y DESARROLLO, LTDA
G4S FACILITIES MANAGEMENT LTD
Central African
Republic
Chile
Chile
Chile
Chile
Chile
China
SHENZHEN G4S DONAR TECHNOLOGY
CO, LTD
G4S SECURITY SYSTEMS ( EIJING) CO., LTD China
China
G4S TECHNOLOGY (CHINA) LTD
HILL & ASSOCIATES (PRC) LTD
G4S ZHEJIANG SECURE SOLUTIONS
CO LTD
G4S INTERNATIONAL LOGISTICS
(SHANGHAI) CO. LTD
G4S MANAGEMENT SERVICES
(SHANGHAI) CO. LTD
China
China
China
China
China
188 G4S plc Integrated Report and Accounts 2017
Subsidiaries continued
Coun ry of
Incorpora ion
Company Name
G4S SE URE SOLUTIONS OLOMBIA S.A. olombia
G4S RISK MANAGEMENT OLOMBIA S.A. olombia
olombia
G4S HOLDING OLOMBIA SA
G4S TE HNOLOGY OLOMBIA S.A.
olombia
G4S ASH SOLUTIONS OLOMBIA LTDA. olombia
olombia
EB INGENIERIA S.A.S
osta Rica
GFOURS S.A.
% owned
by group
100.0%
94.5%
100.0%
100.0%
100.0%
100.0%
100.0%
G UATRO S VALOURS S.A.
osta Rica
100.0%
% owned
by plc
osta Rica
WA KENHUT SERVI IOS DE SEGURIDAD,
S.A.
WA KENHUT SERVI IO DE ES OLTAS,
S.A.
G FOUR S GRUPO DE SERVI IOS
ESPE IALES DE SEGURIDAD, S.A.
G FOUR S ONSULTOR EN SEGURIDAD,
S.A.
G UATRO S LOGISTI A DE VALORES SA osta Rica
osta Rica
osta Rica
osta Rica
100.0%
100.0%
100.0%
100.0%
100.0%
G UATRO S ASH SOLUTIONS S.A.
osta Rica
100.0%
G4S GULF HOLDINGS NV
G4S SE URE SOLUTIONS ( YPRUS) LTD
G4S HOLDING YPRUS LTD
G4S AVIATION ( YPRUS) LTD
G4S SE URE SOLUTIONS ( Z), A.S.
G4S ASH SOLUTIONS ( Z) A.S.
G4S SERVI ES S.R.O.
G4S (DR ) S.A.R.L.
G4S HOLDINGS (DK) A/S
G4S INTERNATIONAL (DK) A/S
G4S SE URITY SERVI ES A/S
G4S KYHLENSO A/S
G4S VIKINGA SURAMERI ANA APS
G4S SURAMERI ANA HOLDING APS
G4S SE URE SOLUTIONS
100.0%
74.0%
100.0%
80%
100.0%
100.0%
100.0%
95.0%
uracao
yprus
yprus
yprus
zech Republic
zech Republic
zech Republic
Democratic Republic
of ongo
100.0%
Denmark
100.0%
Denmark
100.0%
Denmark
100.0%
Denmark
100.0%
Denmark
Denmark
100.0%
Dominican Republic 95.0%
G4S ASH SOLUTIONS
Dominican Republic 95.0%
Ecuador
Ecuador
Ecuador
Ecuador
Ecuador
Egypt
Egypt
Egypt
Egypt
Egypt
Egypt
99.9%
99.9%
99.9%
99.9%
100.0%
85.0%
99.0%
99.0%
60.0%
51.0%
G4S SE URE SOLUTIONS (E UADOR)
IA LTDA.
G4S HOLDING (E UADOR) S.A.
DEFEN E SYSTEMS E UADOR
DSE IA LTDA
G4S FA ILITY MANAGEMENT IA LTDA
EFOSEG IA. LTDA.
G4S SE URE SOLUTIONS (EGYPT) LL
INDO BRITISH GARMENTS EGYPT S.A.E.
FS INVESTMENTS LL
FIRST SELE T EGYPT LL
G4S LOTUS FA ILITIES MANAGEMENT
OMPANY
G4S FA ILITIES MANAGEMENT (EGYPT)
LL
G4S SE URE SOLUTIONS EL SALVADOR
S.A. DE .V.
AS G4S BALTI S
AS G4S GRUPP
AS G4S EESTI
ALARMTE AS
AS ÜHISTEENUSED
–
Regis ered address
Avenida 26 No 69A-51 Torre A, Int 1 Piso 3, Bogota, olombia
Avenida 26 No. 69A 51 Torre A, Int 1, Piso 2, Bogota, olombia
Avenida 26 No 69A-51 Torre A, Int 1 Piso 3, Bogota, olombia
Avenida 26 No 69A-51 Torre A, Int 1 Piso 3, Bogota, olombia
Avenida de las Americas No. 41 – 08, Bogota, olombia
Avenida 26 No 69A-51 Torre A, Int 1 Piso 3, Bogota, olombia
Sabana Sur Yamuni 200 Sur de Frente a onsejo Nacional de Produccion,
San Jose, osta Rica
inco Esquinas de Tibas de la linica, lorito Picado 150 mts. Oeste,
San Jose, osta Rica
Sabana Sur Yamuni 200 Sur de Frente a onsejo
Nacional de Produccion, San Jose, osta Rica
Sabana Sur Yamuni 200 Sur de Frente a onsejo
Nacional de Produccion, San Jose, osta Rica
Sabana Sur Yamuni 200 Sur de Frente a onsejo
Nacional de Produccion, San Jose, osta Rica
Sabana Sur Yamuni 200 Sur de Frente a onsejo
Nacional de Produccion, San Jose, osta Rica
inco Esquinas de Tibas de la linica, lorito Picado 150 mts. Oeste,
San Jose, osta Rica
inco Esquinas de Tibas de la linica, lorito Picado 150 mts. Oeste,
San Jose, osta Rica
Kaya Flamboyan 6, uraçao, Dutch West Indies, uracao
Diianiras 17, 2045 Strovolos Nicosia, P.O. Box 23989 1687, Nicosia, yprus
P.O. Box 23989, 1687 Nicosia, yprus
Diianiras 17, 2045 Strovolos Nicosia, P.O. Box 23989 1687, Nicosia, yprus
Na Kosince 2257/9, 180 00 Prague 8, zech Republic
Na Kosince 2257/9, 180 00 Prague 8, zech Republic
Na Kosince 2257/9, 180 00 Prague 8, zech Republic
108, Boulevard du 30 Juin, Gombe, Kinshasa, Democratic
100.0%
28.50%
Roskildevej 157, DK-2620 Albertslund, Denmark
Roskildevej 157, DK-2620 Albertslund, Denmark
Roskildevej 157, DK-2620 Albertslund, Denmark
Roskildevej 157, DK-2620 Albertslund, Denmark
Roskildevej 157, DK-2620 Albertslund, Denmark
Roskildevej 157, DK-2620 Albertslund, Denmark
Paseo de los Locutores #36, Ensanche Piantini, Santo Domingo, Dominican
Republic
Paseo de los Locutores #36, Ensanche Piantini, Santo Domingo, Dominican
Republic
Gral. Giacomo Roca N33-92 y Bosmediano, Quito, Ecuador
Luis ordero E12-114 y Toledo, Quito, Ecuador
alle Moscú E09-8 y Av. República del Salvador, Quito, Ecuador
alle Moscú E09-8 y Av. República del Salvador
Quito, Ecuador
Av. Principal la Perla S52-136 y Quinta Transversal
Quito Ecuador
2nd District, 90th Street, Area 6, 5th Settlement, New airo, airo, Egypt
Head Office: Ismalia Public Free Zone Area, Egypt
7 El Sherka El Porsaidia St., Auba Boula Sq. Ard El Golf, Heliopolis, airo,
Egypt
Flat no. 7, Bur Saeediya ompany Street, Alan Babula Square, Heliopolis,
Golf Land, airo, Egypt
3A Nabatat Street, Garden ity, airo, Egypt
12 Suhag St. Extension of Harun El-Rasheed St., Heliopolis, airo, Egypt
El Salvador
100.0%
Av. Olimpica 3765, San Salvador, El Salvador
Estonia
Estonia
Estonia
Estonia
Estonia
100.0%
100.0%
100.0%
100.0%
100.0%
Paldiski mnt 80, 10617 Tallinn, Estonia
Paldiski mnt 80, 10617 Tallinn, Estonia
Paldiski mnt 80, 10617 Tallinn, Estonia
Töökoja 1, 11313 Tallinn, Estonia
Tarta mnt 80j, 10112 Tallinn, Estonia
Integrated Report and Accounts 2017 G4S plc 189
Financial report
% owned
by Group
100.0%
% owned
by plc
Registered address
18 R Pasquier, 75008 Paris, France
Notes to the consolidated financial statements continued
43. etails of related undertakings of G4S plc continued
Subsidiaries continued
Country of
Incorporation
France
Company Name
G4S IN ERNA IONAL HOLDINGS
(FRANCE) SAS
France
G4S AVIA ION SECURI Y (FRANCE) SAS
France
G4S SECURE SOLU IONS FRANCE SAS
G4S GABON SECURE SOLU IONS S.A.
Gabon
G4S SECURE SOLU IONS (GAMBIA) L D Gambia
G4S SECURI Y HOLDINGS DE GMBH
Germany
G4S IN ERNA IONAL LOGIS ICS
(GERMANY) GMBH
G4S IMMOBILIEN-VERWAL UNGS GMBH Germany
Germany
Ghana
Ghana
Ghana
Ghana
Greece
Greece
Greece
Greece
Greece
Greece
G4S SECURI Y SERVICES (GHANA) L D
G4S (GHANA) L D
G4S SECURE SOLU IONS (GHANA) L D
G4S RISK MANAGEMEN (AFRICA) L D
G4S SECURE SOLU IONS SA
G4S HELLAS HOLDING SA
G4S CASH SOLU IONS SA
G4S ELEMA IX SA
WSW SKYKAP SERVICES SA
G4S AVIA ION AND POR S
SECURE SOLU IONS SA
HELLAS GUARD S.A.
UNDER LIQUIDA ION
G4S RMS L D
CSI DEFENSE L D
G4S SECURI Y SYS EMS AND
MONI ORING SERVICES (GREECE) SA
G4S SECURE SOLU IONS (GRENADA) L D. Grenada
Guam
G4S SECURE SOLU IONS (GUAM), INC.
Guam
G4S SECURI Y SYS EMS (GUAM) INC.
Guatemala
WACKENHU DE GUA EMALA S.A.
Guatemala
WACKENHU ELEC RONICA S.A.
Guatemala
G4S DOCUMEN A, S.A.
Guatemala
FACILI Y SERVICES, S.A.
Guatemala
G4S SECURE SOLU IONS, S.A.
G4S SECURE SOLU IONS (GUERNSEY) L D Guernsey
Guernsey
G4S INSURANCE (GUERNSEY) L D
Greece
Greece
Greece
Greece
G4S SECURI Y SERVICES (GUINEA) SARL
Guinea
100.0%
100.0%
99.9%
100.0%
100.0%
100.0%
100.0%
5.20%
100.0%
100.0%
100.0%
49.0%
100.0%
100.0%
100.0%
39.4%
42.5%
100.0%
18.0%
100%
50.0%
100.0%
51.0%
100.0%
100.0%
50.0%
47.5%
50.0%
28.0%
50.0%
100.0%
100.0%
75.0%
100.0%
G4S (HONG KONG HOLDING) L D
–
Hong Kong
100.0%
VERDI L D
Hong Kong
100.0%
G4S SECURE SOLU IONS
(HONG KONG) L D
G4S GURKHA SERVICES L D
Hong Kong
100.0%
Hong Kong
100.0%
HONG KONG SECURI Y L D
Hong Kong
100.0%
G4S DOCUMEN MANAGEMEN SERVICES
(HONG KONG) L D
G4S FACILI Y SERVICES
(HONG KONG) L D
G4S CASH SOLU IONS
(HONG KONG) L D
SECURICOR MACAU
INVES MEN L D
G4S GROUP HOLDING (CHINA) L D
Hong Kong
100.0%
Hong Kong
100.0%
Hong Kong
100.0%
Hong Kong
100.0%
Hong Kong
100.0%
S ARPOIN INVES MEN S L D
Hong Kong
100.0%
G4S IN ERNA IONAL LOGIS ICS
(HONG KONG) L D
G4S SECURI Y SYS EMS
(HONG KONG) L D
Hong Kong
100.0%
Hong Kong
100.0%
190 G4S plc Integrated Report and Accounts 2017
9 Place De La Madeleine 75008 Paris, France
9 Place De La Madeleine 75008 Paris, France
Quartier Ambowe, BP 4000 Libreville, Gabon
9 Booster Street, Fajara, SK Serrekunda, Gambia
C/o Baker illy Roelfs AG Wirtschaftspruefungsgesellschaft
Valentinskamp 88 20355 Hamburg, Germany
Rathenaustrasse 53, D-63263 Neu-Isenburg, Germany
C/o Baker illy Roelfs AG Wirtschaftspruefungsgesellschaft
Valentinskamp 88 20355 Hamburg, Germany
31 Second Labone Street, Labone, Accra, Ghana
31 Second Labone Street, Labone, Accra, Ghana
31 Second Labone Street, Labone, Accra, Ghana
31 Second Labone Street, Labone, Accra, Ghana
7, Sorou Str., 144 52 Metamorphosis, Athens, Greece
7, Sorou Str., 144 52 Metamorphosis, Athens, Greece
7, Sorou Str., 144 52 Metamorphosis, Athens, Greece
7, Sorou Str., 144 52 Metamorphosis, Athens, Greece
5 klm, Spaton-Loutsas aven., 190 19 Spata, Greece
7, Sorou Str., 144 52 Metamorphosis, Athens, Greece
National Road Palaiokastritsas, 491 00 Kerkiras, Greece
7, Sorou Str., 144 52 Metamorphosis, Athens, Greece
35 Kountouriotou, 555-35 hessaloniki, Greece
7, Sorou Str., 144 52 Metamorphosis, Athens, Greece
Maurice Bishop Highway, Grand Anse St., George’s, Grenada
1851A Army Drive, Harmon, Guam, 96913, Guam
1851A Army Drive, Harmon, Guam, 96913, Guam
Avenida Petapa 42-51, Zona 12 Guatemala City, Guatemala
Avenida Petapa 42-51, Zona 12 Guatemala City, Guatemala
Avenida Petapa 42-51, Zona 12 Guatemala City, Guatemala
Avenida Petapa 42-51, Zona 12 Guatemala City, Guatemala
Avenida Petapa 42-51, Zona 12 Guatemala City, Guatemala
Homefield, Rue de L’Epinel Forest, GY8 0HL, Guernsey
P.O. Box 384, 4th Floor, he Albany, South Esplanade, GY1 4NF
St. Peter Port, Guernsey
Commune de Ratoma, Kipe Centre Emetteur, Pres de la Seg, Conakry,
Guinea
1/F, Securicor Ctre, 481 Castle Peak Rd, Cheung Sha Wan, Kowloon,
Hong Kong
1/F, Securicor Ctre, 481 Castle Peak Rd, Cheung Sha Wan, Kowloon,
Hong Kong
1/F, Securicor Ctre, 481 Castle Peak Rd, Cheung Sha Wan, Kowloon,
Hong Kong
1/F, Securicor Ctre, 481 Castle Peak Rd, Cheung Sha Wan, Kowloon,
Hong Kong
1/F, Securicor Ctre, 481 Castle Peak Rd, Cheung Sha Wan, Kowloon,
Hong Kong
1/F, Securicor Ctre, 481 Castle Peak Rd, Cheung Sha Wan, Kowloon,
Hong Kong
1/F, Securicor Ctre, 481 Castle Peak Rd, Cheung Sha Wan, Kowloon,
Hong Kong
1/F, Securicor Ctre, 481 Castle Peak Rd, Cheung Sha Wan, Kowloon,
Hong Kong
1/F, Securicor Ctre, 481 Castle Peak Rd, Cheung Sha Wan, Kowloon,
Hong Kong
1/F, Securicor Centre, 481 Castle Peak Road, Cheung Sha Wan, Kowloon,
Hong Kong
1/F, Securicor Ctre, 481 Castle Peak Rd, Cheung Sha Wan, Kowloon,
Hong Kong
Unit 02, 7/F, Beautiful Group ower, 77 Connaught Rd Central, Hong Kong
1/F, Securicor Centre, 481 Castle Peak Road, Cheung Sha Wan, Kowloon,
Hong Kong
Subsidiaries continued
Company Name
GREAT STE INVESTMENT LTD
Coun ry of
Incorpora ion
Hong Kong
% owned
by Group
100.0%
% owned
by plc
VICTORY STE GROU LTD
Hong Kong
75.0%
G4S TECHNOLOGY
(HONG KONG) LTD
HILL & ASSOCIATES LTD
Hong Kong
100.0%
Hong Kong
100.0%
G4S BIZTONSÁGTECHIKAI ZRT
G4S KÉSZ ÉNZLOGISZTIKAI KFT
G4S BIZTONSÁGI
SZOLGÁLTATÁSOK ZRT
G4S HOLDING KFT
G4S CENTRAL MONITORING SERVICES
(INDIA) VT. LTD
G4S SECURE SOLUTIONS (INDIA) VT. LTD India
Hungary
Hungary
Hungary
Hungary
India
INDO-BRITISH GARMENTS ( ) LTD
India
100.0%
100.0%
100.0%
100.0%
100.0%
49.0%
100.0%
G4S CASH SOLUTIONS (INDIA) VT LTD
India
100.0%
18.50%
G4S FLEET MANAGEMENT SERVICES
(INDIA) VT. LTD
G4S RODUCTS (INDIA) VT. LTD
India
India
G4S SECURITY SYSTEMS (INDIA) VT. LTD
India
MONITRON SECURITY ( ) LTD
G4S COR ORATE SERVICES (INDIA)
VT. LTD
FIRST SELECT ( ) LTD
India
India
India
G4S FACILITY SERVICES (INDIA) VT. LTD
India
G4S IT SERVICES (INDIA) VT. LTD
ROTEX SECURITY SERVICES
(A ) VT. LTD
INVESTIGATION AND SECURITY SERVICES
(INDIA) VT. LTD
MONITRON SU ORT
SERVICES VT. LTD
HILL & ASSOCIATES (INDIA) VT. LTD
SO EDU SECURITY RIVATE LIMITED
T G4S SECURITY SERVICES
T G4S CASH SERVICES
India
India
India
India
India
India
Indonesia
Indonesia
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
84.5%
48.9%
46.7%
49.5%
100.0%
100%
97.0%
83.9%
T CASINTRANS ERDANA
Indonesia
100.0%
T G4S EURONET (INDONESIA)
Indonesia
T HILL KONSULTAN INDONESIA
Indonesia
T G4S SECURITY SOLUTION SERVICES
Indonesia
T ARGENTA ADHILOKA RATAMA
Indonesia
GROU 4 SECURICOR
GLOBAL RISKS LTD
G4S SECURE SOLUTIONS (IRE) LTD
G4S SU ORT SERVICES
(IRELAND) LTD
G4S HOLDINGS (IRELAND) LTD
G4S CASH SOLUTIONS IRELAND LTD
G4S MONITORING (IRE) LTD
A1 SECURITY TECHNOLOGIES LTD
G4S FACILITIES MANAGEMENT (IRE) LTD
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
53.0%
99.0%
51.0%
51.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Regis ered address
1/F, Securicor Centre, 481 Castle eak Road, Cheung Sha Wan, Kowloon,
Hong Kong
1/F, Securicor Centre, 481 Castle eak Road, Cheung Sha Wan, Kowloon,
Hong Kong
1/F, Securicor Centre, 481 Castle eak Road, Cheung Sha Wan, Kowloon,
Hong Kong
Suite 1701-08, Tower 2, Times Square, 1 Matheson Street, Causeway Bay,
Hong Kong
Harrer ál u. 3., 1033 Budapest, Hungary
Rozsnyai u. 21-25, 1139 Budapest, Hungary
olgár u. 8-10, 1033 Budapest, Hungary
olgár u. 8-10, 1033 Budapest, Hungary
C-16, Community Centre, Janakpuri, Behind Janak Cinema, 110058 New
Delhi, India
C-16, Community Centre, Janakpuri, Behind Janak Cinema, 110058 New
Delhi, India
C-16, Community Centre, Janakpuri, Behind Janak Cinema, 110058 New
Delhi, India
C-16, Community Centre, Janakpuri, Behind Janak Cinema, 110058 New
Delhi, India
C-16, Community Centre, Janakpuri, Behind Janak Cinema, 110058 New
Delhi, India
C-16, Community Centre, Janakpuri, Behind Janak Cinema, 110058 New
Delhi, India
C-16, Community Centre, Janakpuri, Behind Janak Cinema, 110058 New
Delhi, India
Office Unit No.301, Third Floor, A-Wing,Eureka Tower, Building No. 7,
Mind Space, Link Road, Malad (west), 400064 Mumbai, India
C-16, Community Centre, Janakpuri, Behind Janak Cinema, 110058 New
Delhi, India
C-16, Community Centre, Janakpuri, Behind Janak Cinema, 110058 New
Delhi, India
C-16, Community Centre, Janakpuri, Behind Janak Cinema, 110058 New
Delhi, India
Block B3, 3rd Floor, DLF World Tech ark, DLF IT SEZ, Silokhera
122001 Gurgaon, Haryana, India
lot No. 43, Road No. 14, Banjara Hills, 500034 Hyderabad, India
lot No. 43, Road No. 14, Banjara Hills, 500034 Hyderabad, India
C-16, Community Centre, Janakpuri, Behind Janak Cinema, 110058 New
Delhi, India
Upper Ground Floor, Tower B, Building No. 10, DLF Cyber City, 122002
DLF hase II, Gurgaon, Haryana, India
C-30, Chirag Enclave, , 110048 New Delhi, India
The Security Center- Unit 407, Cilandak Commercial Estate KKO, 12560
Jakarta, Indonesia
Jl. Ciputat Raya No. 18, ondok inang, Kebayoran Lama, 12310 Jakarta,
Indonesia
Menara Jamsostek Fl.22, Jl. Jend. Gatot Subroto No. 38, Kuningan Barat,
Jakarta Selatan, Indonesia
The Security Center- Unit 407, Cilandak Commercial Estate KKO, 12560
Jakarta, Indonesia
Gedung Setiabudi 2 Lt.3A Suite 3A-01 Jl. H.R. Rasuna, Said Kav.62, 12920
Jakarta, Indonesia
The Security Center- Unit 407, Cilandak Commercial Estate KKO, 12560
Jakarta, Indonesia
Jl. Administrasi Negara 1A No. 30, Bendungan Hilir, Tanah Abang, 10210
Jakarta, Indonesia
2013 Orchard lace, City West, Dublin 24, Ireland
2013 Orchard lace, City West, Dublin 24, Ireland
2013 Orchard lace, City West, Dublin 24, Ireland
2013 Orchard lace, City West, Dublin 24, Ireland
Bluebell Industrial Estate, Bluebell Ave, Dublin 12, Ireland
2013 Orchard lace, City West, Dublin 24, Ireland
2013 Orchard lace, City West, Dublin 24, Ireland
Unit 5 Calmount Business ark, Ballymount, Dublin 12, Ireland
Integrated Report and Accounts 2017 G4S plc 191
Financial report
% owned
by plc
% owned
by G oup
100.0%
100.0%
Registe ed add ess
2013 Orchard Place, City West, Dublin 24, Ireland
2013 Orchard Place, City West, Dublin 24, Ireland
100.0%
2013 Orchard Place, City West, Dublin 24, Ireland
2013 Orchard Place, City West, Dublin 24, Ireland
IOM Business Park, Ballacottier, Braddon, Isle of Man, IM2 2SE
14 Scacham St., Petch ikva, Israel
1a Ha’Yarden St. Air Port City, Lod, Israel
111, Arlozorov Street, el Aviv-Yafo, Israel, 6209809
20 B.P., 845 Abidjan 20, Ivory Coast
3 Boulevard Valerie Giscard d’Estaing, 01 BP 6065 ABJ 01
Abidjan, Ivory Coast
Rue B31, Lot 29, Cocody danga Nord Abidjan, 20 BP 845 Abidjan
20 Abidjan, Ivory Coast
6-8 East Avenue, 5 Kingston W.I., Jamaica
202, Musashino Hills, 2299-4 Fussa, Fussa-shi, 1970011 Fussa-shi, Japan
2-2-15, #403, Minami-Aoyama, Minato-ku, 107-0062 okyo, Japan
hird Floor, 37 Esplanade, JE2 3QA St Helier, Jersey
he Security Centre, Rue des Pres rading Estate, JE2 7QP St Saviour, Jersey
he Old Chapel, Sacre Coeur, Rouge Bouillon St Helier, Jersey, JE2 3ZA
# 12, Mithqual El Fayez St., hird Circle, Jebel, P.O. Box 831358, 11183
Amman, Jordan
Roxy Al Ozaizi Street Dana Center 2, 11183 Amman, Jordan
–
Witu Rd, off Lusaka Rd, P O Box 30242, GPO 00100 Nairobi, Kenya
Witu Rd, off Lusaka Rd, P O Box 30242, GPO 00100 Nairobi, Kenya
Plot No. LR 209/368/10, Armor House, Lenana Road, P.O. Box 2714
Nairobi, Kenya
Witu Rd, off Lusaka Rd, P O Box 30242, GPO 00100
Nairobi, Kenya
Stigu Str 10, LV-1021, Riga, Latvia
Stigu Str 10, LV-1021, Riga, Latvia
Saliba Building Awkar Dbayeh, 70-461, Antelias Beirut, Lebanon
Saliba Building Awkar Dbayeh, 70-461, Antelias Beirut, Lebanon
397 Hilton Hill Road Maseru, Lesotho
397 Hilton Hill Road, Maseru, Lesotho
–
–
–
J.Jasinskio 16C, L -01112 Vilnius, Lithuania
14 Rue du Père Raphaël P.O. Box 1513, L-1015 Luxembourg
14 Rue du Père Raphaël P.O. Box 1513, L-1015 Luxembourg
14 Rue du Père Raphaël P.O. Box 1513, L-1015 Luxembourg
Avenida Venceslau de Morais, 157, BL 2,2, Edificio Centro Ind. Keck Seng,
Fase II, 2 Andar H, Macau
Avenida Venceslau de Morais, 185-191, 1 Andar A, Macau
Avenida Venceslau de Morais, 157, BL 2,2, Edificio Centro Ind. Keck Seng,
Fase II, 2 Andar H, Macau
Avenida Venceslau de Morais, 157, BL 2,2, Edificio Centro Ind. Keck Seng,
Fase II, 2 Andar H, Macau
Avenida Venceslau de Morais, 157, BL 2,2, Edificio Centro Ind. Keck Seng,
Fase II, 2 Andar H, Macau
Avenida Venceslau de Morais, 157, BL 2,2, Edificio Centro Ind. Keck Seng,
Fase II, 2 Andar H, Macau
Lot II, 161 HC Ambohijatovo Ivandry Immeuble Millenium, 10101 101
Antananarivo Renivohitra C.U., Madagascar
Notes to the consolidated financial statements continued
43. Details of elated unde takings of G4S plc continued
Subsidia ies continued
Company Name
ALARM MONI ORING SERVICES L D
G4S COMPLIANCE AND INVES IGA IONS
(IRELAND) LIMI ED
G4S FINANCE (IRELAND) L D
GDJS SECURI Y L D
G4S SECURE SOLU IONS
(ISLE OF MAN) L D
G4S ISRAEL PPP L D
POLICI Y L D
G4S IN ERNA IONAL LOGIS ICS (ISRAEL)
L D
WACKENHU SA
G4S SECURE SOLU IONS (CI) SA
Count y of
Inco po ation
Ireland
Ireland
Ireland
Ireland
Isle of Man
Israel
Israel
Israel
Ivory Coast
Ivory Coast
100.0%
100.0%
100.0%
100.0%
25.0%
100.0%
97.5%
97.5%
ARMORGROUP CO E D’IVOIRE SA
Ivory Coast
100.0%
G4S JAMAICA L D
G4S SECURE SOLU IONS JAPAN K.K
HILL & ASSOCIA ES (JAPAN) KK
G4S HOLDINGS INDIA L D
G4S SECURE SOLU IONS (JERSEY) L D
G4S IN ERNA IONAL
EMPLOYMEN SERVICES L D
G4S SECURE SOLU IONS IN ERNA IONAL
INC (JORDAN) L D.
G4S SECURE SOLU IONS IN . (JORDAN)
FOR IN EGRA ED SOLU IONS
G4S KENYA L D
G4S FIRE SERVICES (KENYA) L D
ARMORGROUP KENYA L D
G4S SECURE DA A SOLU IONS (KENYA)
L D
AS G4S LA VIA
AS G4S CASH SERVICES LA VIA
GROUP 4 SECURI Y SERVICES LEBANON
SAL
G4S SECURI Y SYS EMS LEBANON SAL
G4S SECURE SOLU IONS LESO HO (P Y)
L D
G4S CASH SOLU IONS LESO HO (P Y)
L D
UAB G4S LIE UVA
G4S SECURI Y SOLU IONS S.A.R.L.
G4S GENERAL SERVICES SA
G4S FINANCE (LUXEMBOURG) SARL
HILL & ASSOCIA ES (MACAU) l D
Jamaica
Japan
Japan
Jersey
Jersey
Jersey
Jordan
Jordan
Kenya
Kenya
Kenya
Kenya
Latvia
Latvia
Lebanon
Lebanon
Lesotho
Lesotho
Lithuania
Luxembourg
Luxembourg
Luxembourg
Macau
Macau
G4S (MACAU HOLDING) L D
G4S SECURE SOLU IONS (MACAU) L D Macau
–
GREA WALL SECURI Y SERVICES L DA Macau
GREA WALL PROPER Y MANAGEMEN
SERVICES L D
GREA WALL HOLDINGS L D
Macau
Macau
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
50.0%
60.0%
100.0%
100.0%
100.0%
60.0%
100.0%
100.0%
50.6%
50.7%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100%
100.0%
100.0%
100.0%
100.0%
100.0%
G4S MADAGASCAR SOLU IONS DE
SECURI E SARL
Madagascar
100.0%
50.60%
100.0%
192 G4S plc Integrated Report and Accounts 2017
Subsidiaries continued
Coun ry of
Incorpora ion
Company Name
G4S SE URE SOLUTIONS (MALAWI) LTD Malawi
Malawi
G4S PREMIER GUARDING SERVI ES
(MALAWI) LTD
G4S PREMIER ALARM MONITORING AND
RESPONSE SERVI ES (MALAWI) LTD
G4S MALAYSIA SDN. BHD
ALMO SYSTEMS SDN BHD
GROUP 4 FAL K MS SDN BHD
Malaysia
Malaysia
Malaysia
Malawi
SAFEGUARDS G4S SDN BHD
Malaysia
SE URI OR (MALAYSIA) SDN BHD
Malaysia
SAFEGUARDS G4S (SABAH) SDN BHD
Malaysia
SAFEGUARDS G4S (SARAWAK) SDN BHD Malaysia
SAFEGUARDS G4S SE URITY SYSTEMS
SDN BHD
GWENKENS SE URITY SERVI ES SDN BHD Malaysia
Malaysia
G4S MANAGEMENT SERVI ES (ASIA
PA IFI ) SDN BHD
HILL ORPORATE SERVI ES SDN BHD
RISK ONSULTING (L) LTD
HILL RISK ONSULTING (MALAYSIA)
SDN BHD
VIVA POWERTE H SDN. BHD
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
SAFEGUARDS G4S A ADEMY SDN BHD
Malaysia
GWENKENS ENTRAL MONITORING
SDN BHD
INDO BRITISH GARMENTS
MALAYSIA SDN BHD
G4S (MALI) SARL
G4S SE URITY SERVI ES (MALTA) LTD
G4S SE URITY SERVI ES LTD
G4S HOLDINGS (MALTA) LTD
Malaysia
Malaysia
Mali
Malta
Malta
Malta
G4S OMMUNITY SERVI ES LIMITED
Malta
G4S SE URITY SERVI ES (MAURITANIA) SA Mauritania
G4S HOLDINGS HINA LTD
Mauritius
ROSSKEYS (MAURITIUS) HOLDINGS LTD Mauritius
Mauritius
HILL RISK MANAGEMENT LTD
HILL & ASSO IATES (MAURITIUS) LTD
Mauritius
HILL RISK ONSULTING (MAURITIUS) LTD Mauritius
S GRAY MANAGEMENT SERVI ES LTD
Mauritius
Mexico
Mexico
Mexico
G4S HOLDINGS MÉXI O, SA DE V
G4S SE URITY SYSTEMS S.A. DE .V
G4S PRIVATE SE URITY SERVI ES, SA DE
V
G4S SE URITY SERVI ES RNA GORA
DOO PODGORI A
MARO PROTE TION SURVEILLAN E SA Morocco
Morocco
G4S (MARO ) SA
Morocco
FIRST SELE T MORO O SA
Morocco
G4S INTEGRATED SERVI ES
MORO O SA
Montenegro
% owned
by plc
% owned
by Group
99.7%
100.0%
Regis ered address
hirimba Industrial Area, P O Box 720, Blantyre, Malawi
hirimba Industrial Area, P O Box 720, Blantyre, Malawi
100.0%
hirimba Industrial Area, P O Box 720, Blantyre, Malawi
60.0%
49.0%
49.0%
49.0%
49.0%
49.0%
49.0%
49.0%
44.1%
100.0%
100.0%
100.0%
100.0%
100.0%
44.1%
44.1%
100.0%
100.0%
50.1%
50.1%
100.0%
50.1%
70.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
85.0%
100.0%
100.0%
99.9%
100.0%
25-2, Jalan PjU 1/42A, Dataran Prima, 47301 Petaling Jaya, Malaysia
25-2, Jalan PjU 1/42A, Dataran Prima, 47301 Petaling Jaya, Malaysia
Suite 226, 1st floor, FAS Business Avenue, No.1, Jalan Perbandaran, 47301
Petaling Jaya, Malaysia
No 1 & 1A, 2nd Floor (Room 2), Jalan Ipoh Kecil, 50350 Kuala Lumpur,
Malaysia
No 1 & 1A, 2nd Floor (Room 2), Jalan Ipoh Kecil, 50350 Kuala Lumpur,
Malaysia
No 1 & 1A, 2nd Floor (Room 2), Jalan Ipoh Kecil, 50350 Kuala Lumpur,
Malaysia
No 1 & 1A, 2nd Floor (Room 2), Jalan Ipoh Kecil, 50350 Kuala Lumpur,
Malaysia
No 1 & 1A, 2nd Floor (Room 2), Jalan Ipoh Kecil, 50350 Kuala Lumpur,
Malaysia
910 (Suite 1), Block B, Phileo Damansara 2, No 15, Jalan 16/11, Off Jalan
Damansara, Petaling Jaya,46350 Selangor Darul Ehsan, Malaysia
1st Floor, Lot 6, Jalan 225, Sec 51A, Petaling Jaya, 46100 Selangor, Malaysia
2nd floor, No 2-4 Jalan Manau, 50460 Kuala Lumpur, Malaysia
Level 15B, Main Office Tower, Financial Park, Jalan Merdeka, 87000 Labuan,
Malaysia
Unit No 9-7, The Boulevard, Mid Valley ity, Lingkaran Syed Putra, 59200
Kuala Lumpur, Malaysia
Level 21, Suite 21.10, The Gardens South Tower, Mid Valley ity, Lingkaran
Syed Putra, 59200 Kuala Lumpur, Malaysia
910 (Suite 1), Block B, Phileo Damansara 2, No 15, Jalan 16/11, Off Jalan
Damansara, Petaling Jaya, 46350 Selangor Darul Ehsan, Malaysia
910 (Suite 1), Block B, Phileo Damansara 2, No 15, Jalan 16/11, Off Jalan
Damansara, Petaling Jaya, 46350 Selangor Darul Ehsan, Malaysia
Suite 1005, 10th Floor, Wisma Hamzah-Kwong Hing No 1 Leboh Ampang,
50100 Kuala Lumpur, Malaysia
–
Hamdallaye A I 2000, street 405 gate 558, Bamako, Mali
Ent A, Level 1, apital Business entre, Triq ta-Zwejt, SGN 3000 San
Gwann, Malta
Ent A, Level 1, apital Business entre, Triq ta-Zwejt, SGN 3000 San
Gwann, Malta
Ent A, Level 1, apital Business entre, Triq ta-Zwejt, SGN 3000 San
Gwann, Malta
Ent A, Level 1, apital Business entre, Triq ta-Zwejt, SGN 3000 San
Gwann, Malta
BP 4201, Nouakchott, Tevragh Zeina Ilot , No. 261, Nouakchott,
Mauritania
c/o Multiconsult Ltd, Les ascades Building, Edith avell Street, Port Louis,
Mauritius
210 St James ourt, Rue St Denis, Port Louis, Mauritius
c/o Multiconsult Ltd, Les ascades Building, Edith avell Street, Port Louis,
Mauritius
c/o Multiconsult Ltd, Les ascades Building, Edith avell Street, Port Louis,
Mauritius
c/o Multiconsult Ltd, Les ascades Building, Edith avell Street, Port Louis,
Mauritius
c/o Intercontinental Trust LTD, Level 3, Alexander House, 35 ybercity,
Ebene, Mauritius
Barranca del Muerto #380, P 01020 Mexico, D.F., Mexico
Barranca del Muerto #380, P 01020 Mexico, D.F., Mexico
Barranca del Muerto #380, P 01020 Mexico, D.F., Mexico
vijetna Street no.25, Podgorica, Montenegro
24 Lotissement la olline, Sidi Maarouf, 20150 asablanca, Morocco
24 Lotissement la olline, Sidi Maarouf, 20150 asablanca, Morocco
24, Lotissement la olline, Sidi Maârouf, 20150 asablanca, Morocco
24 Lotissement la olline, Sidi Maarouf, 20150 asablanca, Morocco
Integrated Report and Accounts 2017 G4S plc 193
Financial report
Notes to the consolidated financial statements continued
43. etails of related undertakings of G4S plc continued
Subsidiaries continued
% owned
by plc
% owned
by Group
90%
87.5%
Registered address
Rua Mariano Machado nr. 99/186, Maputo, Mozambique
Av da Organizacao da Unidade Africana, 121, Maputo, Mozambique
90.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
99.9%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
51.0%
99.9%
99.0%
100.0%
60.0%
100.0%
100.0%
100.0%
o 2085, Avenida Ahmed Sekoe Toure, Maputo, Mozambique
33 General Murtala Ramat Muhammed Street, Eros, Windhoek, amibia
33 General Murtala Ramat, Muhammed Street, Eros, Windhoek, amibia
33 General Murtala Ramat Muhammed Street, Eros, Windhoek, amibia
33 General Murtala Ramat Muhammed Street, Eros, Windhoek, amibia
33 General Murtala Ramat Muhammed Street, Eros, Windhoek, amibia
33 General Murtala Ramat Muhammed Street, Eros, Windhoek, amibia
33 General Murtala Ramat Muhammed Street, Eros, Windhoek, amibia
Ichhunadi Marg, Baluwatar, Ward o. 4, Kathmandu Metropolitan City,
Kathmandu, epal
P.O. Box 20423, House # 75/45, Lazimpat, Kailash Chaur, Kathmandu,
epal
Ichhunadi Marg, Baluwatar, Ward o. 4 , Kathmandu Metropolitan City,
Kathmandu, epal
Ichhunadi Marg, Baluwatar, Ward o. 4 , Kathmandu Metropolitan City,
Kathmandu, epal
Hogehilweg 12, 1101CD Amsterdam Zuidoost, etherlands
Hogehilweg 12, 1101CD Amsterdam Zuidoost, etherlands
Hogehilweg 12, 1101CD Amsterdam Zuidoost, etherlands
Evert van de Beekstraat 1 rumimtenummer 66, Luchthaven Schiphol, 1118
CL etherlands
Hogehilweg 12, 1101CD Amsterdam Zuidoost, etherlands
Hogehilweg 12, 1101CD Amsterdam Zuidoost, etherlands
Hogehilweg 12, 1101 CD Amsterdam Zuidoost, etherlands
Hogehilweg 12, 1101 CD Amsterdam Zuidoost, etherlands
Hogehilweg 12, 1101 CD Amsterdam Zuidoost, etherlands
Hogehilweg 12, 1101 CD Amsterdam Zuidoost, etherlands
Hogehilweg 12, 1101 CD Amsterdam Zuidoost, etherlands
Hogehilweg 12, 1101 CD Amsterdam Zuidoost, etherlands
Hogehilweg 12, 1101 CD Amsterdam Zuidoost, etherlands
Ptolemaeuslaan 61, 3528 BR Utrecht, etherlands
Ptolemaeuslaan 61, 3528 BR Utrecht, etherlands
Galvanistraat 89, 6716 AE Ede, etherlands
Galvanistraat 89, 6716 AE Ede, etherlands
Galvanistraat 89, 6716 AE Ede, etherlands
Hogehilweg 12, 1101 CD Amsterdam, etherlands
Amperestraat 25, 6716 B Ede, etherlands
Tolnasingel 1, 2411 PV Bodegraven, etherlands
Hogehilweg 12, 1101CD Amsterdam Zuidoost, etherlands
Donk 1D, 2991 LE Barendrecht, etherlands
Tolnasingel 1, 2411PV Bodegraven, etherlands.
Level3, 2 Kalmia Street, Ellerslie, 1051, ew Zealand
Reparta Belmonte, Dr. Hospital Velez Paiz, 1 Cuadra Holis
Arriba, icaragua
27, Oba Akinjobi Street, GIRA, Ikeja, Lagos, igeria
13A, A.J. Marinho Drive, Victoria Island, Lagos, igeria
27, Oba Akinjobi Street, GIRA, Ikeja Lagos. igeria
AIB Plaza, Off Akin Adesola Street, Victoria Island, Lagos, igeria
1 Murtala Mohammed Drive (Formerly Bank Road), Ikoyi, Lagos, igeria
27, Oba Akinjobi Street, GIRA, Ikeja, Lagos, igeria
Plot 7a Acme Road, Block C, Ogba Inustrial Scheme, Ikeja, Lagos, igeria
Country of
Incorporation
amibia
Mozambique
Company Name
WACKE HUT MOZAMBIQUE LIMITADA Mozambique
Mozambique
G4S SECURE SOLUTIO S MOCAMBIQUE
LIMITADA
G4S ORD A CE MA AGEME T
(MOCAMBIQUE), LIMITADA
G FOUR S MA ED SECURITY ( AMIBIA)
(PTY) LTD
G FOUR S AVIATIO SECURITY ( AMIBIA)
(PTY) LTD
G FOUR S SECURE SOLUTIO S ( AMIBIA)
(PTY) LTD
ARMED RESPO SE COMPA Y
(PROPRIETARY) LTD
RESCUE 911 (PROPRIETARY) LTD
PRO-FORCE CORPORATE SECURITY
(PROPRIETARY) LTD
G FOUR S CASH SOLUTIO S ( AMIBIA)
(PTY) LTD
G4S SECURITY SERVICES EPAL (P) LTD
amibia
amibia
amibia
amibia
amibia
amibia
epal
FIRST SELECT EPAL (P) LTD
epal
SECURITAS PRODUCT EPAL (P). LTD
epal
G4S FACILITY & EMPLOYME T SERVICES
EPAL PVT. LTD
G4S I TER ATIO AL ( L) BV
G4S HOLDI G (B) BV
G4S I DIA HOLDI GS ( L) BV
G4S AVIATIO SECURITY BV
G4S SECURE MO ITORI G BV
G4S I TER ATIO AL HOLDI GS 101 ( L)
BV
G4S SECURITY SERVICES BV
G4S HOLDI GS 102 ( L) B.V
G4S HOLDI GS 103 ( L) BV
G4S GROUP HOLDI G (ASIA) BV
G4S BEHEER BV
G4S SERVICES BV
G4S PUBLIC SECURITY BV
G4S CASH SOLUTIO S B.V
G4S CASH MA AGEME T B.V
G4S TRAI I G & SAFETY BV
G4S DIRECT BV
ROTUS BV
IBG EUROPE BV
G4S PERSO EL BV
G4S ZORG & WELZIJ B.V
G4S OVERSEAS HOLDI GS BV
G4S FIRE & SAFETY B.V.
I ZETBAAR B.V.
G4S EW ZEALA D LTD
G4S SECURE SOLUTIO S ICARAGUA,
SOCIEDAD A Ó IMA
OUTSOURCI G SERVICES LTD
SCHC LTD
G4S SECURE SOLUTIO S IGERIA LTD
G4S TRACKI G SOLUTIO S LTD
ASSETGUARD SERVICES LTD
ARMORGROUP ( IGERIA) LTD
G4S/GLOBAL RISKS IGERIA LTD
epal
etherlands
etherlands
etherlands
etherlands
etherlands
etherlands
etherlands
etherlands
etherlands
etherlands
etherlands
etherlands
etherlands
etherlands
etherlands
etherlands
etherlands
etherlands
etherlands
etherlands
etherlands
etherlands
etherlands
etherlands
ew Zealand
icaragua
igeria
igeria
igeria
igeria
igeria
igeria
igeria
194 G4S plc Integrated Report and Accounts 2017
Country o
Incorporation
Northern Mariana
Islands
Oman
Oman
Subsidiaries continued
Company Name
G4S SE URE SOLUTIONS ( NMI) IN .
G4S SE URITY SOLUTIONS LL
G4S SERVI ES LL
HILL & ASSO IATES PAKISTAN (PVT.) LTD Pakistan
Panama
INVERSIONES SETES A
Panama
SEGURIDAD TE NI A SA
Panama
TELEMETRIA Y ALARMA SA
Panama
DETE TA SA
Panama
LIMPIE SA
Panama
G4S SA
49.0%
49.0%
100.0%
100.0%
44.0%
17.6%
44.0%
44.0%
100.0%
METERS ORP.
G4S SE URE SOLUTIONS (PNG) LTD
Panama
Papua New Guinea
100.0%
100.0%
MONT BLAN LIMITED
Papua New Guinea
100.0%
G4S PNG LIMITED
WA KENHUT PARAGUAY SA
G4S PERU SA
G4S HOLDING, IN .
G4S SE URITY SYSTEMS, IN .
PERSONAL SE URITY SYSTEMS IN .
ATENA SE URITY IN .
VALLUM SE URITY SERVI ES ORP.
G4S SE URITY TRAINING IN .
Papua New Guinea
Paraguay
Peru
Philippines
Philippines
Philippines
Philippines
Philippines
Philippines
ATTINA SE URITY SERVI ES, IN .
HILL & ASSO IATE RISK ONSULTING
PHILS., IN .
A URIA EXE UTIVE PROTE TION &
DETE TIVE SERVI ES IN .
G4S ASH SOLUTIONS PHILIPPINES IN .
YNEWARD SE URITY ORP.
G4S SE URE SOLUTIONS
(PUERTO RI O) IN .
G4S SE URE SOLUTIONS SRL
G4S ASH SOLUTIONS SRL
G4S FIRE & SAFETY S.R.L.
LL PSE G4S SE URITY
–
SERVI ES SAKHALIN
LL G4S TE NI AL SOLUTIONS
SAKHALIN
G4S EURASIA LL
LL GROUP 4 SE URI OR
G4S RWANDA LTD
G4S SE URE SOLUTIONS (ST.LU IA) LTD
AL MAJAL GROUP 4S FOR SE URITY AND
SAFETY LL
AL MAJAL SERVI E MASTER LL
MOHAMMED BIN ABDOUD AL AMOUDI
O FOR IVILIAN SE URITY SERVI ES
PARTNERSHIP (ALMAJAL)
G4S SE URE SOLUTIONS D.O.O.
–
G4S SE URE SOLUTIONS (SL) LTD
GROUP 4 SE URI OR (S) PTE. LTD.
G4S SE URITY SYSTEMS (S) PTE. LTD.
G4S SE URE SOLUTIONS (SINGAPORE)
PTE. LTD.
Philippines
Philippines
Philippines
Philippines
Philippines
Puerto Rico
Romania
Romania
Romania
Russia
Russia
Russia
Russia
Rwanda
Saint Lucia
Saudi Arabia
Saudi Arabia
Saudi Arabia
Serbia
Sierra Leone
Singapore
Singapore
Singapore
100.0%
80.0%
99.9%
79.9%
79.8%
100%
100%
100%
31.9%
100.0%
100.0%
100.0%
59.0%
100.0%
100.0%
100.0%
100.0%
100.0%
75.0%
75.0%
100.0%
99%
99.0%
51.0%
49.0%
49.0%
0.0%
85.0%
100.0%
100.0%
100.0%
100.0%
% owned
by Group
100.0%
% owned
by plc
Registered address
PMB 384 PPP Box 1000, 96950 Saipan, Northern Mariana Islands
P.O. Box 1625, 112, Ruwi Muscat, Oman
P.O. Box 1625, 112, Muscat, Oman
B-61, KDA Scheme 01, 7550 Karachi, Pakistan
alle 41, 2-40 Bella Vista, Panama
alle 41, 2-40 Bella Vista, Panama
alle 41, 2-40 Bella Vista, Panama
alle 41, 2-40 Bella Vista, Panama
alle 41, 2-40 Bella Vista, Panama
Marbella, Ave. Aquilino de la Guardia Ocean Business Plaza, Piso 17-1704,
Panama ity, Panama
alle 41, 2-40 Bella Vista, Panama
Section 61, Allotment 13, Morata Street, Gordons, National apital District,
Papua New Guinea
/ Sinton Spence hartered Accountants 2nd Floor Brian Bell Plaza Turmu
St. Boroko, Boroko, Papua New Guinea
PO Box 5392 Boroko N D, Papua New Guinea
Nery Quevedo 315 Esq. Hipolito Garron, Asuncion, Paraguay
Av. El Sol 916, Urbanización La ampiña., horrillos, Lima, Peru
G4S House, 142 Pasig Blvd., Bagong Ilog, 1600 Pasig ity, Philippines
G4S House, 142 Pasig Blvd., Bagong Ilog, 1600 Pasig ity, Philippines
G4S House, 142 Pasig Blvd., Bagong Ilog, 1600 Pasig ity, Philippines
G4S House, 142 Pasig Blvd., Bagong Ilog, 1600 Pasig ity, Philippines
G4S House, 142 Pasig Blvd., Bagong Ilog, 1600 Pasig ity, Philippines
Metro Manila, Philippines /O Unit 201 onservatory Bldg, 605 Shaw Blvd.,
Mandaluyong ity, Philippines
G4S House, 142 Pasig Blvd., Bagong Ilog, 1600 Pasig ity, Philippines
Unit 505, Pse Tower One & Exchange Plaza, 6767 Ayala Avenue, 1226
Makati ity, Philippines
G4S House, 142 Pasig Blvd., Bagong Ilog, 1600 Pasig ity, Philippines
100 E. Rodriquez Avenue, Ugong Norte, 1552 Quezon ity, Philippines
G4S House, 142 Pasig Blvd., Bagong Ilog, 1600 Pasig ity, Philippines
arretera #1 Plaza Bairoa, Suite 211, aguas, Puerto Rico
15 harles de Gaulle Square, 12th floor, District 1, Bucharest, Romania
15 harles de Gaulle Square, 12th floor, District 1, Bucharest, Romania
15 harles de Gaulle Square, 12th floor, District 1, Bucharest, Romania
36 Dzerzhinskogo, 693000 Yuzhno Sakhalinsk, Russia
62A Amurskaya Str, Office 103, 693000 Yuzhno-Sakhalinsk, Russia
Building 1, 4 Ukhtomsky Pereulok, 111020 Moscow, Russia
107023, M. Semenovskaya str., 9, bld, Moscow, Russia
5698 Nyarutarama, P.O. Box 7230, Kigali, Rwanda
P.O. Box P 6098 onway Post Office, astries, Saint Lucia
P.O. Box 31049, 21497 Jeddah, Saudi Arabia
Post ode 6930, 21452 Jeddah, Saudi Arabia
P.O. Box 2779, 21461 Jeddah, Saudi Arabia
Bulevar Peka Dapcevica 32
Belgrade, Serbia
6 Spur Road, P.O Box, Freetown, Sierra Leone
8 ommonwealth Lane, #04-04 (Annex), 149555 Singapore
8 ommonwealth Lane, #04-04 (Annex), 149555 Singapore
8 ommonwealth Lane, #04-04 (Annex), 149555 Singapore
25.30%
Integrated Report and Accounts 2017 G4S plc 195
Financial report
Notes to the consolidated financial statements continued
43. etails of related undertakings of G4S plc continued
Subsidiaries continued
Company Name
G4S IN ERNA IONAL LOGIS ICS
(SINGAPORE) P E LIMI ED
HILL & ASSOCIA ES RISK CONSUL ING
(SINGAPORE) P E L D
G4S SECURI Y SYS EMS (SK) S.R.O.
G4S SECURE SOLU IONS (SK), A.S.
G4S FIRE SERVICES (SK), S.R.O
G4S ECHNOLOGY SOLU IONS
(SK), S.R.O
G4S DRUZBA ZA VAROVANJE D.O.O.
(G4S D.O.O.)
GROUP 4 FALCK (P Y) L D
Country of
Incorporation
Singapore
Singapore
Slovak Republic
Slovak Republic
Slovak Republic
Slovak Republic
Slovenia
% owned
by Group
100.0%
% owned
by plc
Registered address
158 Cecil Street, 069 545 #11-01 Singapore,
100.0%
100.0%
100.0%
100.0%
100.0%
96.2%
51 Cuppage Road, #10-18, 229469, Singapore
Visnova 16, 831 01 Bratislava, Slovak Republic
Visnova 16, 831 01 Bratislava, Slovak Republic
Visnova 16, 831 01 Bratislava, Slovak Republic
Visnova 16, 831 01 Bratislava, Slovak Republic
Stegne 21, 1000 Ljubljana, Slovenia
South Africa
100.0%
G4S SECURI Y SERVICES (AFRICA) (P Y) L D South Africa
100.0%
G4S SECURE SOLU IONS (SA) (P Y) L D
South Africa
100.0%
G4S AVIA ION SECURI Y (SA) (P Y) L D
South Africa
G4S IN EGRI Y ASSESSMEN (P Y) L D
South Africa
G4S IN ERNA IONAL LOGIS ICS (SOU H
AFRICA) P Y.
GRAY SECURI Y SERVICES (SA) (P Y) L D South Africa
South Africa
G4S CASH SOLU IONS (SA) (P Y) L D
South Africa
G4S INSURANCE (SA) L D
South Africa
ELWIERDA (GAU ENG) (P Y) L D
South Africa
CMS MICRO FINANCE (P Y) L D
South Africa
49.0%
49.0%
100.0%
49.0%
74.9%
74.9%
74.9%
74.9%
G4S EMPOWERMEN VEN URES
(SA) (P Y) L D
G4S CARE AND JUS ICE SERVICES (SOU H
AFRICA) (P Y) L D
G4S CORREC ION SERVICES
(BLOEMFON EIN) (P Y) L D
GSL REBOUND (P Y) L D
South Africa
48.4%
South Africa
100.0%
South Africa
81.0%
South Africa
100.0%
SKYCOM (P Y) L D
South Africa
ACCESS AND BEYOND (P Y) L D
South Africa
49.0%
49.0%
IN EGRA ED SKY FORCE SOLU IONS
(P Y) L D
INDO BRI ISH GARMEN S PV . LIMI ED,
EX ERNAL PROFI
INVES MEN SURVEYS (P Y) L D
South Africa
72.2%
South Africa
100.0%
South Africa
100.0%
G4S DEPOSI A (RF) (P Y) L D
South Africa
G4S A M ENGINEERING (SA) (P Y) L D
South Africa
74.9%
74.9%
IN EGRA (P Y) L D
South Africa
100.0%
HE HA ECHNOLOGIES (P Y) L D
South Africa
74.9%
G4S AFRICA (PROPRIE ARY) L D
South Africa
100.0%
G4S SECURI Y SERVICES (PRIVA E) L D.
ARMORGROUP SUDANESE CO L D
GROUP 4 SYRIA LIMI ED LIABILI Y
COMPANY
G4S SECURE SOLU IONS ( AIWAN) L D aiwan
Sri Lanka
Sudan
Syria
G4S A M SOLU IONS ( AIWAN) L D
aiwan
G4S PROPER Y MANAGEMEN L D
aiwan
60.0%
100.0%
29.4%
100.0%
100.0%
100.0%
196 G4S plc Integrated Report and Accounts 2017
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Unit 31, First Floor Waterford Office Park, Corner Witkoppen & Waterford
Road, Fourways 1610, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa, 0157 Centurion
Sorento Suite, 5 De Haviland Cresent, Ill Villaggio Persequor Pretoria,
Gauteng, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
Byls Bridge Office Park, Building 11, 13 Candela Street, Highveld Ext 73,
0157 Centurion, South Africa
21 Vauxhall Street, 2 Colombo, Sri Lanka
8 Mek Nimer Street, P.O. Box 47, Khartoum, Sudan
Al-Aasar Building, near the Central Post office, Sinjikdar, Damascus, Syria
20F-1, No. 266, Sec 1, Wenhua 2nd Road, Linkou Dist, 24448 New aipei
City, aiwan
20F-2, No. 266, sec 1, wun hua 2nd road, Linko Distt, 24448 aipei City,
aiwan,
20F-1, No. 266, Sec 1, Wenhua 2nd Road, Linkou Dist, 24448 New aipei
City, aiwan
Coun ry of
Incorpora ion
Taiwan
% owned
by Group
100.0%
% owned
by plc
Subsidiaries continued
Company Name
G4S SE UREWELL SE URE SOLUTIONS
(TAIWAN) LTD
G4S WEI FUNG SE URE SOLUTIONS
(TAIWAN) LTD
G4S SYSTEM ENGINEERING
ORPORATION
HILL & ASSO IATES (TAIWAN) LTD
Taiwan
Taiwan
Taiwan
G4S SE URITY SYSTEMS O. LTD
Taiwan
G4S SE URE SOLUTIONS (TZ) LTD
Tanzania
ARMORGROUP TANZANIA LTD
G4S (THAILAND) LTD
G4S SE URITY SERVI ES (THAILAND)
LTD
G4S HOLDINGS (THAILAND) LTD
INTER-ASIAN ENTERPRISES (IAE)
OMPANY LTD
G4S INTERNATIONAL LOGISTI S
HOLDING (THAILAND) LTD
G4S INTERNATIONAL LOGISTI S
(THAILAND) LTD
ASIAN HOLDING INTERNATIONAL
OMPANY LTD
GUARDIAN ALARMS OMPANY LTD.
Tanzania
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
Thailand
HILL RISK ONSULTING
(THAILAND) O., LTD
G4S HOLDINGS 4 (THAILAND) LIMITED Thailand
Thailand
G4S HOLDINGS 3 (THAILAND) LIMITED Thailand
G4S HOLDINGS 2 (THAILAND) LIMITED Thailand
G4S HOLDINGS 1 (THAILAND) LIMITED Thailand
Turkey
Turkey
G4S HOLDINGS (TRINIDAD) LTD
G4S SE URE SOLUTIONS (TRINIDAD)
LTD
G4S GÜVENLİK HİZMETLERİ
ANONİM ŞİRKETİ
G4S ELEKTRONİK SİSTEMLERİ ANONİM
ŞİRKETİ
G4S SE URE SOLUTIONS (UGANDA)
LTD
Uganda
ALARM PROTE TION SERVI ES LTD
Uganda
US DEFENSE SYSTEMS LL (UGANDA)
GROUP 4 SE URITAS LL
Ukraine
G4S SE URE SOLUTIONS (UKRAINE) LTD Ukraine
Ukraine
G4S SE URITY SOLUTIONS (UKRAINE)
LTD
G4S SE URE SOLUTIONS LL
Uganda
GROUP 4 FAL K SERVI ES LL
G4S ASH SERVI ES LL
GROUP 4 SE URI OR INFORMATION
TE HNOLOGY UAE LL (G4S)
GROUP 4 SE URI OR FA ILITY SERVI ES
LL (G4S)
SHAMS AGRI ULTURAL SERVI ES L.L.
(G4S)
FIRST SELE T UAE LL
G4S ALARM MONITORING SERVI ES LL United Arab
G4S INTERNATIONAL LOGISTI S
(MIDDLE EAST) FZE
G4S EVENTS SERVI ES UAE LL
G4S INTERNATIONAL LOGISTI S
(MIDDLE EAST) DM
United Arab
Emirates
United Arab
Emirates
United Arab
Emirates
United Arab
Emirates
United Arab
Emirates
United Arab
Emirates
United Arab
Emirates
Emirates
United Arab
Emirates
United Arab
Emirates
United Arab
Emirates
Trinidad & Tobago
Trinidad & Tobago
100.0%
85.0%
100.0%
85.0%
100.0%
100.0%
73.5%
73.7%
73.4%
73.5%
100%
100%
72.0%
73.5%
49.0%
48.9%
48.9%
48.9%
48.9%
51.0%
51.0%
100.0%
100.0%
99.9%
100.0%
100.0%
99.4%
100.0%
100.0%
49.0%
49.0%
49.0%
48.5%
48.5%
48.5%
48.5%
24.5%
100.0%
48.5%
100.0%
Regis ered address
20F-1, No. 266, Sec 1, Wenhua 2nd Road, Linkou Dist, 24448 New
Taipei ity, Taiwan
20F-2, No. 266, sec 1, wun hua 2nd road, Linko Distt, 24448 Taipei ity,
Taiwan
6F., No.320, Sec. 1, Neihu Rd., Neihu Dist., Taipei ity 11493, Taiwan
(R.O. ), 22101 Taipei, Taiwan
20F-1, No. 266, Sec 1, Wenhua 2nd Road, Linkou Dist, 24448 New
Taipei ity, Taiwan
16th Floor, Suite 1, No. 266, Sec. 1, Wen-Hwa 2nd Road, Linko Hsiang,
Taipei, Taiwan, 22101 Taipei, Taiwan
Plot No. 37, Ali Hassan Mwinyi Road, Kinondoni Municipality, P O Box
5555, Dar Es Salaam, Tanzania
TDFL, 3rd Floor (Opposite Sheraton Hotel), Dar-es-Salaam, Tanzania
2922/205-206 harn Issara Tower II, 11th Floor, New Petchburi Road,
Bangkapi, Huaykwang, 10310 Bangkok, Thailand
2922/205-206 harn Issara Tower II, 11th Floor, New Petchburi Road,
Bangkapi, Huaykwang, 10310 Bangkok, Thailand
2922/205-206 harn Issara Tower II, 11th Floor,New Petchburi Road,
Bangkapi, Huaykwang, 10310 Bangkok, Thailand
2922/205-206 harn Issara Tower II, 11th Floor, New Petchburi Road,
Bangkapi, Huaykwang, 0310 Bangkok, Thailand
45/1 Silom 19 Building, 2nd Floor, Soi Silom 19, Silom Road, Silom,
10500 Bangrak, Bangkok, Thailand
45/1 Silom 19 Building, 2nd Floor, Soi Silom 19, Silom Road, Silom,
10500 Bangrak, Bangkok, Thailand
2922/205-206 harn Issara Tower II, 11th Floor,New Petchburi Road,
Bangkapi, Huaykwang, 10310 Bangkok, Thailand
43/55 Moo 5, Wiset Rd., Rawai Sub District, Muang District, Phuket
Province, Thailand
2922/205-206 harn Issara Tower II, 11th Floor, New Petchburi Road,
Bangkapi, Huaykwang, 10310 Bangkok, Thailand
2922/205-206 harn Issara Tower II, 11th Floor, New Petchburi Road,
Bangkapi, Huaykwang, 10310 Bangkok, Thailand
2922/205-206 harn Issara Tower II, 11th Floor, New Petchburi Road,
Bangkapi, Huaykwang, 10310 Bangkok, Thailand
2922/205-206 harn Issara Tower II, 11th Floor, New Petchburi Road,
Bangkapi, Huaykwang, 10310 Bangkok, Thailand
2922/205-206 harn Issara Tower II, 11th Floor, New Petchburi Road,
Bangkapi, Huaykwang, 10310 Bangkok, Thailand
61-63 Edward Street, Port of Spain, Trinidad & Tobago
61-63 Edward Street, Port of Spain, Trinidad & Tobago,
Ayazaga Mah. Ataturk ad Mezarlik Sok No 1 Ayazaga, Sariyer, Istanbul,
Turkey
Ayazaga Mah. Ataturk ad Mezarlik Sok No 1 Ayazaga, Sariyer, Istanbul,
Turkey
Plot 6, Nakasero Road, Kampala, Uganda
Plot 53 Lumumba Avenue, Nakasero, Kampala, Uganda
Plot 53 Lumumba Avenue, Nakasero, Kampala, Uganda
21A Moskovskij ave, 02073 Kiev, Ukraine
21A Moskovskij ave, 02073 Kiev, Ukraine
21A Moskovskij ave, 02073 Kiev, Ukraine
hain Tower (Oriental Travel Building), First Floor, Muroor Street, P.O.
Box 31859 Abu Dhabi, United Arab Emirates
P.O. Box 32634, Dubai, United Arab Emirates
P.O. Box 113400, Rsahidiya Dubai, United Arab Emirates
P.O. Box 32634, Dubai, United Arab Emirates
P.O. Box 32634, Dubai, United Arab Emirates
P.O. Box 32634, Dubai, United Arab Emirates
P.O. Box 32634, Dubai, United Arab Emirates
P.O. Box 31859, Abu Dhabi, United Arab Emirates
Unit 1-05, Street W B 4, Airport Free Zone, 54907, UAE, United Arab
Emirates
Dubai, 215634, United Arab Emirates
Unit No. Al Mas 2 – D14, Al Mas Tower, Plot No. LT2, Jumeirah Lake
Tower Dubai, United Arab Emirates
Integrated Report and Accounts 2017 G4S plc 197
Financial report
Notes to the consolidated financial statements continued
43. Details of elated unde takings of G4S plc continued
Subsidia ies continued
Company Name
G4S REGI NAL MANAGEMENT
C NSULTANCY ME DMCC
G4S UK H LDINGS LTD
G4S H LDINGS 3 (UK) LTD
Count y of
Inco po ation
United Arab
Emirates
United Kingdom
United Kingdom
% owned
by G oup
100.0%
100.0%
100.0%
% owned
by plc
G4S TECHN L GY LTD
United Kingdom
100.0%
AMAG TECHN L GY LTD
United Kingdom
100.0%
G4S SECURITY SERVICES (UK) LTD
United Kingdom
100.0%
GR UP 4 LTD
United Kingdom
100.0%
G4S 084 (UK) LTD
G4S GL BAL H LDINGS LTD
United Kingdom
United Kingdom
100.0%
100.0%
99.80%
G4S H LDINGS 102 (UK) LTD
United Kingdom
100.0%
SECURIC R LTD
United Kingdom
100.0%
G4S INTERNATI NAL 105 (UK) LTD
United Kingdom
100.0%
G4S AMERICAS (UK) LTD
United Kingdom
100.0%
G4S AVIATI N SERVICES (UK) LTD
United Kingdom
100.0%
G4S AVIATI N (FRANCE) LTD
United Kingdom
100.0%
G4S INTERNATI NAL L GISTICS (UK)
LTD
G4S SECURE S LUTI NS (UK) LTD
United Kingdom
100.0%
United Kingdom
100.0%
G4S CASH S LUTI NS (UK) LTD
United Kingdom
100.0%
G4S CASH CENTRES (UK) LTD
United Kingdom
100.0%
G4S CARE AND JUSTICE SERVICES (UK)
LTD
G4S SPV H LDINGS LTD
G4S MP (UK) LTD
United Kingdom
100.0%
United Kingdom
United Kingdom
100.0%
100.0%
G4S N MINEES LTD
United Kingdom
100.0%
G4S INTERNATI NAL H LDINGS LTD
United Kingdom
100.0%
G4S G VERNMENT SERVICES LTD
G4S TRUSTEES LTD*
United Kingdom
United Kingdom
100.0%
100.0%
100.0%
G4S FINANCE LTD
United Kingdom
100.0%
100.0%
FIRST SELECT H LDINGS LTD
United Kingdom
100.0%
G4S P LICING S LUTI NS LTD
G4S GURKHA SERVICES (UK) LTD
United Kingdom
United Kingdom
100.0%
100.0%
G4S US H LDINGS LTD
United Kingdom
100.0%
G4S W RLDWIDE H LDINGS LTD
United Kingdom
100.0%
G4S DEFENCE SYSTEMS EURASIA LTD
United Kingdom
100.0%
G4S DSL H LDINGS LTD
United Kingdom
100.0%
G4S H LDINGS INTERNATI NAL (AG)
LTD
United Kingdom
100.0%
* Pension trust not part of the consolidation.
Registe ed add ess
Unit no. 2403, JBC 5, Plot no. JLT-PH 2- W1A, Jumeirah Lake Towers,
Dubai, United Arab Emirates
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
Challenge House, International Drive, Tewkesbury, Gloucestershire,
GL20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, Gloucestershire,
GL20 8UQ, United Kingdom
Sutton Park House, 15 Carshalton Road, Sutton, Surrey, SM1 4LD,
United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
Sutton Park House, 15 Carshalton Road, Sutton, Surrey, SM1 4LD,
United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
Sutton Park House, 15 Carshalton Road, Sutton, Surrey, SM1 4LD,
United Kingdom
Sutton Park House, 15 Carshalton Road, Sutton, Surrey, SM1 4LD,
United Kingdom
Sutton Park House, 15 Carshalton Road, Sutton, Surrey, SM1 4LD,
United Kingdom
Sutton Park House, 15 Carshalton Road, Sutton, Surrey, SM1 4LD,
United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
Sutton Park House, 15 Carshalton Road, Sutton, Surrey, SM1 4LD,
United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
Sutton Park House, 15 Carshalton Road, Sutton, Surrey, SM1 4LD,
United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
198 G4S plc Integrated Report and Accounts 2017
United Kingdom
100.0%
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
United Kingdom
United Kingdom
100.0%
100.0%
100.0%
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
Subsidiaries continued
Company Name
G4S H LDINGS UK (AG) LTD
G4S FINANCE MANAGEMENT
(AG) LTD
G4S RISK MANAGEMENT LTD
G4S SECURE S LUTI NS (IRAQ) LTD
G4S RISK C NSULTING LTD
G4S US INVESTMENTS LTD
Coun ry of
Incorpora ion
United Kingdom
% owned
by Group
100.0%
% owned
by plc
United Kingdom
100.0%
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
G4S 308 (UK) LTD
United Kingdom
G4S 309 (UK) LTD
G4S 182 (UK) LTD
United Kingdom
G4S REGI NAL MANAGEMENT (UK&I) LTD United Kingdom
G4S H LDINGS 305 (UK) LTD
United Kingdom
G4S FACILITIES MANAGEMENT (UK) LTD United Kingdom
United Kingdom
G4S VERSEAS H LDINGS LTD
United Kingdom
G4S G VERNMENT AND UTS URCING
SERVICES (UK) LTD
STRATUS INTEGRATED SERVICES LTD
G4S HEALTH SERVICES (UK) LTD
’
G4S CASH S LUTI NS EMPL YEES
CRIMINAL ATTACK FUND LTD
G4S RDNANCE MANAGEMENT LTD
IBG H LDINGS (UK) LTD
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Limited by
guarantee
100.0%
100.0%
G4S INTERNATI NAL FINANCE PLC
United Kingdom
100.0%
100.0%
G4S C RP RATE SERVICES LTD
United Kingdom
100.0%
100.0%
United Kingdom
100.0%
G4S INVESTIGATI N S LUTI NS (UK)
LTD
G4S M NIT RING
TECHN L GIES N .1 LTD
G4S FINANCE (S UTH AFRICA) LIMITED
G4S M NIT RING
TECHN L GIES LTD
G4S FINANCE (BRAZIL) LTD
United Kingdom
100.0%
100.0%
G4S INVESTMENT L ND N LTD
United Kingdom
100.0%
100.0%
G4S INTEGRATED SERVICES H LDINGS
LTD
G4S BULLI N S LUTI NS (UK) LTD
United Kingdom
100.0%
United Kingdom
100.0%
G4S FIRE AND SECURITY SYSTEMS LTD
United Kingdom
100.0%
G4S H LDING NE INC
G4S SECURE S LUTI NS (USA) INC
G4S SECURE S LUTI NS INTERNATI NAL
INC
AMAG TECHN L GY INC
TITANIA INSURANCE C F AMERICA
TWC/FL/01 INC
United States
United States
United States
United States
United States
United States
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
TUHNECKCAW INC
United States
100.0%
Regis ered address
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT, United
Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
Sutton Park House, 15 Carshalton Road, Sutton, Surrey, SM1 4LD,
United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
5th Floor, Southside, 105 Victoria Street, London, SW1E 6QT,
United Kingdom
Southside, 105 Victoria Street, London, SW1E 6QT, United Kingdom
Sutton Park House, 15 Carshalton Park Road, Sutton, SM1 4LD,
United Kingdom
Site 16 Sydenham Business Park Airport Road West, BELFAST, BT3 9LN,
United Kingdom
2711 Centerville rd, 19808 Wilmington, DE, United States
1395 University Blvd, 33458 Jupiter, FL, United States
1395 University Blvd, 33458 Jupiter, FL, United States
20701 Manhattan Place, -1829 Torrance, CA 90501, United States
156 College Street, 3rd Floor, 05401 VT, IS, United States
4200 Wackenhut Drive, Suite 100, Palm Beach Gardens, Florida, FL 33410,
United States
900 Market Street, Suite 200, Wilmington, Delaware, DA 19801,
United States
Integrated Report and Accounts 2017 G4S plc 199
Financial report
Notes to the consolidated financial statements continued
43. etails of related undertakings of G4S plc continued
Subsidiaries continued
Company Name
AMERICAN UARD & ALERT INC
Country of
Incorporation
United States
% owned
by Group
100.0%
% owned
by plc
WACKENHUT U.S. PROPERTIES INC
United States
WACKENHUT FOREI N PROPERTIES INC United States
United States
4S INTERNATIONAL LO ISTICS (USA),
INC.
VEBA TRUST
United States
WACKENHUT HOMELAND SECURITY, INC. United States
United States
United States
SERVICE AND SUPPLY INTERNATIONAL,
INC.
4S COMPLIANCE & INVESTI ATIONS,
INC.
4S TECHNOLO Y HOLDIN S (USA) INC. United States
United States
4S TECHNOLO Y SOFTWARE
SOLUTIONS LLC
US DEFENSE SYSTEMS LLC
RONCO CONSULTIN CORPORATION
4S US INC.
United States
United States
United States
United States
4S SECURE INTE RATION LLC
United States
4S UATEMALA HOLDIN , LLC
4S ELECTRONICA HOLDIN , LLC
United States
4S UATEMALA FACILITY SERVICES, LLC United States
United States
4S RETAIL SOLUTIONS (USA) INC
United States
RENAISSANCE CENTER MANA EMENT
COMPANY
ADESTA LLC
4S SECURE SOLUTIONS (URU UAY) S.A. Uruguay
SETECSA DE VENEZUELA CA
ROUP 4S SECURITY SERVICES YEMEN
LTD
4S SECURE SOLUTIONS ZAMBIA LTD
SAFETECH (COPPERBELT) LTD
SAFETECH ZAMBIA LTD
Zambia
Zambia
Zambia
Venezuela
Yemen
United States
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
90.9%
100%
80.0%
30.0%
25.0%
100.0%
100.0%
100.0%
Registered address
4200 Wackenhut Drive, Suite 100, Palm Beach ardens, Florida, FL 33410,
United States
2711 Centerville rd, 19808 Wilmington, DE, United States
2711 Centerville rd, 19808 Wilmington, DE, United States
Prologis Cargo Center 75, JFK International Airport, North Hangar Road,
Suite 210 Jamaica
11430 New York, United States
1395 University Blvd., 33458 Jupiter, United States
4200 Wackenhut Drive, Suite 100, FL 33410 Palm Beach ardens, Florida,
United States
701 Brazos, Suite 1050, 78701 Austin, Texas, United States
910 Paverstone Drive, 27615 Raleigh, NC, United States
21 North Avenue, Burlington, MA 01803, United States
21 North Avenue, Burlington, MA 01803, United States
2711 Centerville Road, Suite 400, Wilmington DE, United States
1209 Orange Street, DE 19801 Wilmington, Delaware, United States
4200 Wackenhut Drive, Suite 100, FL 33410 Palm Beach ardens, Florida,
United States
1200 Landmark Center, Ste 1300, 68102 Omaha, NE, United States
1395 University Blvd., 33458 Jupiter, Florida, United States
1395 University Blvd., 33458 Jupiter, Florida, United States
1395 University Blvd., 33458 Jupiter, Florida, United States
2711 Centerville rd, 19808 Wilmington, DE, United States
601 Abbot Rd., 48823 Lansing, United States
1200 Landmark Center, Suite 1300, Omaha, NE 68102, United States
Cufre 2320, Montevideo, Uruguay
Los Ruices Sur, Calle Milan 1013, Caracas, Venezuela, Venezuela
Off 50 Meter Road, Hadda, 11805 Sana’a, Yemen
P.O. Box 32914, 10 H Kabulonga Road, Lusaka, Zambia
Plot 3144, Mukwa Road, Lusaka, Zambia
Plot 7305, Kambala Road, Lusaka, Zambia
Holdings in other undertakings
Entities listed below are joint ventures, where the economic interest has been divested and are therefore not included in the consolidation.
Company Name
4S INVESTMENTS LTD
4S JOINT VENTURES LTD
ACCOMMODATION SERVICES (HOLDIN S) LTD
INTE RATED ACCOMODATION SERVICES PLC
EAST LONDON LIFT ACCOMODATION SERVICES LTD
EAST LONDON LIFT COMPANY LTD
EAST LONDON LIFT INVESTMENT LTD
EAST LONDON LIFT HOLDCO NO2 LTD
EAST LONDON LIFT ACCOMMODATION SERVICES NO2 LTD
EAST LONDON LIFT HOLDCO NO4 LTD
EAST LONDON LIFT HOLDCO NO3 LTD
ELLAS NO3 LTD
ELLAS NO4 LTD
4S JOINT VENTURES (FAZAKERLEY) LTD
FAZAKERLEY PRISON SERVICES LTD
4S JOINT VENTURES (ONLEY) LTD
ONLEY PRISON SERVICES LTD
Registered Address
3rd Floor, Broad Quay House, Prince Street, Bristol BS1 4DJ, United Kingdom
3rd Floor, Broad Quay House, Prince Street, Bristol BS1 4DJ, United Kingdom
Challenge House, International Drive, Tewkesbury, L20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, L20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, L20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, L20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, L20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, L20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, L20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, L20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, L20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, L20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, L20 8UQ, United Kingdom
3rd Floor, Broad Quay House, Prince Street, Bristol, BS1 4DJ, United Kingdom
3rd Floor, Broad Quay House, Prince Street, Bristol, BS1 4DJ, United Kingdom
3rd Floor, Broad Quay House, Prince Street, Bristol, BS1 4DJ, United Kingdom
3rd Floor, Broad Quay House, Prince Street, Bristol, BS1 4DJ, United Kingdom
% ordinary
shares owned
by Group
16.78
16.78
8.39
8.39
5.03
5.03
8.39
5.03
5.03
5.03
5.03
5.03
5.03
16.78
16.78
16.78
16.78
200 G4S plc Integrated Report and Accounts 2017
Holdings in other undertakings continued
ompany Name
OCHRE OLUTION (HOLDING ) LTD
OCHRE OLUTION LTD
NORTH WILT HIRE CHOOL LTD
UK COURT ERVICE (MANCHE TER) HOLDING LTD
UK COURT ERVICE (MANCHE TER) LTD
WHITE HOR E EDUCATION PARTNER HIP LTD
HULL MATERNITY DEVELOPMENT LTD
HEALTHCARE PROVIDER LTD
ALBION HEALTHCARE (OXFORD) HOLDING LTD
ALBION HEALTHCARE (OXFORD) LTD
LIFT HEALTHCARE INVE TMENT LTD
BEXLEY BROMLEY & GREENWICH LIFT COMPANY LTD
BBG HOLDCO LTD
BBG LIFT ACCOMMODATION ERVICE LTD
BBG LIFT HOLDCO (NO 2) LTD
BBG LIFT ACCOMMODATION ERVICE (NO 2) LTD
BHH LIFT COMPANY LTD
BHH HOLDCO LTD
BHH LIFT ACCOMMODATION ERVICE LTD
HEALTHCARE IMPROVEMENT PARTNER HIP
(WOLVERHAMPTON CITY AND WAL ALL) LTD
WOLVERHAMPTON CITY AND WAL ALL HOLDCO LTD
WOLVERHAMPTON CITY AND WAL ALL LIFT
ACCOMMODATION ERVICE LTD
WAL ALL HOLDCO LTD
WAL ALL LIFT ACCOMMODATION ERVICE LTD
LONDON LIFTCO P LTD
Registered Address
3rd Floor, Broad Quay House, Prince treet, Bristol, B 1 4DJ, United Kingdom
3rd Floor, Broad Quay House, Prince treet, Bristol, B 1 4DJ, United Kingdom
3rd Floor, Broad Quay House, Prince treet, Bristol, B 1 4DJ, United Kingdom
3rd Floor, Broad Quay House, Prince treet, Bristol, B 1 4DJ, United Kingdom
3rd Floor, Broad Quay House, Prince treet, Bristol, B 1 4DJ, United Kingdom
3rd Floor, Broad Quay House, Prince treet, Bristol, B 1 4DJ, United Kingdom
3rd Floor, Broad Quay House, Prince treet, Bristol, B 1 4DJ, United Kingdom
3rd Floor, Broad Quay House, Prince treet, Bristol, B 1 4DJ, United Kingdom
3rd Floor, Broad Quay House, Prince treet, Bristol, B 1 4DJ, United Kingdom
3rd Floor, Broad Quay House, Prince treet, Bristol, B 1 4DJ, United Kingdom
Challenge House, International Drive, Tewkesbury, GL20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, GL20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, GL20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, GL20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, GL20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, GL20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, GL20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, GL20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, GL20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, GL20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, GL20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, GL20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, GL20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, GL20 8UQ, United Kingdom
Challenge House, International Drive, Tewkesbury, GL20 8UQ, United Kingdom
% ordinary
shares owned
by Group
3.36
3.36
16.78
16.78
16.78
16.78
16.78
16.78
4.19
4.19
2.85
1.71
1.71
1.71
1.71
1.71
1.71
1.71
1.71
1.71
1.71
1.71
1.71
1.71
2.82
Associated companies
ompany Name
G4 - JC LLC
G4 PAR ON PACIFIC LLC
Joint ventures
ompany Name
PARK EC LIMITED
% owned by Group
20
20
Profit or loss
not material
not material
Registered address
1395 University Blvd., 33458 Jupiter, Florida, United tates
7121 Fairway Drive, uite 301, 33418 Palm Beach Gardens, Florida, United tates
PACIFIC BUILDING ERVICE MANAGEMENT
LIMITED (JV)
BRIDGEND CU TODIAL ERVICE LIMITED Challenge House, International Drive, Tewkesbury, GL20
Registered address
Ent A, Level 1, Capital Business Centre, Triq ta-Zwejt, GN
3000 an Gwann, Malta
Level 6, Era Rumana Building Champions Parade, Port
Moresby, Papua New Guinea
GROUP 4 ECURITY OLUTION CO. WLL P.O. Box 22063, 13081 afat, Kuwait
AL MULLA ECURITY ERVICE CO WLL
G4 QATAR .P.C
BLOEMFONTEIN CORRECTIONAL
CONTRACT (PTY) LIMITED
POLICITY OPERATOR LIMITED
FORBE G4 OLUTION PVT LTD
–
BU INE CA H CENTER .A.
T.I. . TOTAL INTEGRATED ERVICE LTD
FORBE G4 OLUTION Pvt LTD
8UQ, United Kingdom
Byls Bridge Office Park, Building 11, 13 Candela treet,
Highveld Ext 73, 0157 Centurion, outh Africa
Virginia 1, Beit hemesh, Israel
C-16, Community Centre, Janakpuri, Behind Janak Cinema,
110058 New Delhi, India
P.O. Box 117, 13002 afat, Kuwait
Villa no. 321, Corner of Abduallah Bin Rawaha treet, C Ring
Road, P.O. Box 18592 Doha, Qatar
Parc Industriel de la CFCIM, lot No63, Bouskoura, Casablanca,
Morocco
Diianiras 17, 2045 trovolos Nicosia, P.O. Box 23989 1687,
Nicosia, Cyprus
C16 Community Centre, Janakpuri, Behind Janak Cinema
110058 New Delhi, India
% owned
by Group
undertakings
50.1
Factors on which joint
management is based
Joint venture agreement
Date of last
financial year
if not 31/12
50
58.45
1 director appointed to
the board
Joint venture agreement
30th eptember
20
50
50
48.5
49
0
45.7
50
50
Joint venture agreement
30th eptember
Joint venture agreement
Joint venture agreement
Joint venture agreement
Joint venture agreement
Joint venture agreement
Joint venture agreement
Joint Venture Agreement
Joint Venture Agreement
Integrated Report and Accounts 2017 G4S plc 201
Financial report
Share
capital
£m
388
Share
premium
£m
258
Retained
earnings
£m
945
Hedging
reserve
£m
–
Reserve for
own shares
£m
(13)
Total
equity
£m
1,5 8
8
–
–
–
–
–
–
–
–
–
–
–
–
388
–
–
–
–
–
–
–
–
–
–
–
258
–
–
40
( )
120
(145)
(11)
–
9
(14 )
918
388
258
1,102
–
–
–
–
–
–
–
–
–
–
388
–
–
–
–
–
–
–
–
–
–
258
122
–
–
(162)
21
(19)
(145)
(3)
10
(138)
945
–
–
–
–
–
–
8
(4)
4
40
( )
120
–
11
(10)
–
1
(12)
(145)
–
(10)
9
(146)
1,552
(16)
1,732
–
–
–
–
–
–
122
7
(7)
(162)
21
(19)
–
3
–
3
(13)
(145)
–
10
(135)
1,578
(4)
4
–
–
–
–
–
–
–
–
–
–
7
(7)
–
–
–
–
–
–
–
–
Parent company statement of changes in equity
For the year ended 31 December 2017
t 1 January 2017
Comprehensive income:
Profit for the year
Other comprehensive (expense)/income:
Change in fair value of cash-flow hedging financial instruments
Cash-flow hedging fair value transferred to income statement
Re-measurements relating to defined retirement benefit scheme
Tax on items taken directly to equity
Total comprehensive income
Transactions with owners:
Dividends paid
Own shares awarded
Own shares purchased
Share-based payments
At 31 December 201
t 1 January 2016
Comprehensive income:
Profit for the year
Other comprehensive (expense)/income:
Change in fair value of cash-flow hedging financial instruments
Cash-flow hedging fair value transferred to income statement
Re-measurements relating to defined retirement benefit scheme
Tax on items taken directly to equity
Total comprehensive loss
Transactions with owners:
Dividends paid
Own shares awarded
Share-based payments
t 31 December 2016
202 G4S plc Integrated Report and Accounts 2017
Parent company statement of financial position
At 31 December 2017
ASSETS
Non-current assets
Intangible assets
Investments in subsidiaries
Trade and other receivables
Retirement benefit surplus
Deferred tax assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
LIABILITIES
Current liabilities
Loan notes (unsecured)
Current tax liability
Trade and other payables
Non-current liabilities
Loan notes (unsecured)
Retirement benefit obligations
Total liabilities
Net assets
EQUITY
Share capital
Share premium
Retained earnings1
Reserve for own shares
Total equity
otes
2017
m
2016
£m
(d)
(e)
(f)
(j)
(k)
(f)
(g)
(h)
(g)
(j)
(l)
(m)
(n)
4
3,098
11
80
99
3,292
1,358
14
1,372
4,664
(210)
(5)
(1,964)
(2,179)
(603)
(330)
(933)
(3,112)
7
3,045
32
75
118
3,277
1,660
1
1,661
4,938
(165)
(5)
(1,934)
(2,104)
(861)
(395)
(1,256)
(3,360)
1,552
1,578
388
258
918
(12)
1,552
388
258
945
(13)
1,578
1. The profit for the financial year was £87m (2016: £122m).
The parent company financial statements were approved by the board of directors and authorised for issue on 8 March 2018.
They were signed on its behalf by:
Ashley Almanza
Director
Tim Weller
Director
Integrated Report and Accounts 2017 G4S plc 203
Financial report
Notes to the parent company financial statements
(a General information
G4S plc the ‘company’) is incorporated in the United Kingdom, registered in England and Wales, and domiciled in the UK. It is a
public company, limited by shares. The company’s registered office is given on page 212. The company’s principal activities during
the year have been as a holding company.
The financial statements are presented in sterling, which is the company’s functional currency, and in millions of pounds.
(b Statement of compliance
These financial statements were prepared in accordance with Financial Reporting Standard ‘FRS’) 101- Reduced Disclosure Framework.
(c Significant accounting policies
Basis of preparation
The financial statements have been prepared under the going concern basis and using the historical cost convention, except for the
revaluation of certain financial instruments, in accordance with Companies Act 2006 and applicable United Kingdom Accounting
Standards United Kingdom Generally Accepted Accounting Practice ‘UK GAAP’)). The principal accounting policies and measurement
bases adopted are the same as those disclosed in note 3 to the consolidated financial statements, except as noted below, and have
been applied consistently to all the years presented, unless stated otherwise. Judgments 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, have been disclosed in note 4 to the consolidated financial statements.
Going concern
Pages 132 to 200 of the consolidated financial statements contain information on the performance of the Group, its financial position,
cash flows, net debt position and borrowing facilities. Further information, including financial risk management policies, exposures to
market and credit risk and hedging activities, is given in note 31 to the consolidated financial statements, ‘Financial risk’. After making
enquiries, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence
for the foreseeable future. For this reason the directors consider it appropriate to adopt the going concern basis in preparing the
financial statements.
Exemptions
In accordance with section 408 3) of the Companies Act 2006, the company is exempt from the requirement to present its own
income statement.
The company has taken advantage of certain disclosure exemptions in FRS 101, in part because its financial statements are included
in the publicly-available consolidated financial statements of G4S plc.
These disclosure exemptions relate to:
•
•
–
the requirements of IAS 7 Statement of Cash Flows;
the statement of compliance with International Financial Reporting Standards adopted by the European Union;
• new IFRSs that have been issued but are not yet effective and which have not been applied by the company;
• comparative information for the movements from the beginning to the end of the year in respect of intangible assets and certain
other additional comparative information;
information on the assumptions used in the determination of fair value and recoverable amounts of cash-generating units containing
goodwill and management’s approach to determining these amounts;
financial instruments disclosures required by IFRS 7 Financial Instruments: Disclosures;
–
•
•
• disclosures required by IFRS 13 – Fair Value Measurement;
• certain related-party disclosures on key management compensation and transactions entered into between two or more wholly-
owned members of a Group; and
• capital management disclosures.
Investments in subsidiaries
Investments in subsidiary undertakings are stated at cost less provisions for impairment. The accounting policy for impairments
is disclosed in note 3 j) to the consolidated financial statements.
Amounts owed by/to Group undertakings
Amounts owed by/to Group undertakings are recognised initially at fair value and are subsequently stated at amortised cost. Finance
income and expense are recognised in the income statement on an accruals basis using the effective interest method.
Impairment of financial assets
The company provides for impairments in financial assets when there is objective evidence of impairment as a result of one or more
events that impact the estimated future cash flows of the financial assets.
204 G4S plc Integrated Report and Accounts 2017
Share-based payments
The company ssues equ ty-settled share-based payments to certa n employees. The fa r value of equ ty settled share-based payments
s determ ned at the date of grant and s e ther expensed or cap tal sed as an nvestment n the relevant subs d ary, w th a correspond ng
ncrease n equ ty, on a stra ght-l ne bas s over the vest ng per od, based on the company’s est mate of the shares that w ll eventually
vest. The amount expensed or cap tal sed s adjusted over the vest ng per od for changes n the est mate of the number of shares that
w ll eventually vest, save for changes result ng from any market-related performance cond t ons.
The company also ssues cash-settled share-based payments to certa n employees, wh ch are recogn sed as a l ab l ty at fa r value at
the date of grant. The value of the l ab l ty s re-measured at each report ng date and at the date on wh ch the l ab l ty s settled. The
fa r value of cash settled share-based payments s expensed n the ncome statement f t relates to employees of the company and
cap tal sed as an nvestment n the relevant subs d ary f t relates to employees of a subs d ary company.
Financial uarantees
The company enters nto f nanc al guarantee contracts to guarantee the ndebtedness of other compan es w th n the Group. The
company cons ders these to be nsurance arrangements and accounts for them as such. The company therefore treats such contracts
as a cont ngent l ab l ty unless and unt l such t me as t becomes probable that the company w ll be requ red to make a payment under
the guarantee.
(d) Intan ible assets
Cost
At 1 January 2017
Wr te-off of fully amort sed ntang ble assets
At 31 December 2017
Accumulated amortisation
At 1 January 2017
Amort sat on charge
Wr te-off of fully amort sed ntang ble assets
At 31 December 2017
Carry ng amount
At 1 January 2017
At 31 December 2017
(e) Investments in subsidiaries
Subs d ary undertak ngs
Shares at net book value:
At 1 January
Add t ons
Contr but on through share-based payments
At 31 December
Software
£m
15
(3)
12
(8)
(3)
3
(8)
7
4
2017
£m
3,045
46
7
3,098
2016
£m
3,039
–
6
3,045
Full deta ls of all nvestments held by the parent company are d sclosed n note 43 to the consol dated f nanc al statements. Dur ng the
year ended 31 December 2017 there were no mpa rment charges recorded n respect of the company’s nvestments n subs d ar es
(2016: n l).
Integrated Report and Accounts 2017 G4S plc 205
Financial report
Notes to the parent company financial statements continued
(f) rade and other receivables
Within current assets
Amounts owed y Group undertakings
Other receiva les
Derivative financial instruments at fair value (note (i))
Total trade and other receiva les included within current assets
Within non-current assets
Derivative financial instruments at fair value (note (i))
Total trade and other receiva les included within non-current assets
2017
£m
1,341
3
14
1,358
11
11
2016
£m
1,652
–
8
1,660
32
32
Amounts owed y Group undertakings are unsecured, interest-free or interest- earing ased on market rates, and repaya le on demand.
(g) Loan notes (unsecured)
The loan notes are repaya le as follows:
On demand or within one year
In the second year
In the third to fifth years inclusive
After five years
Total loan notes
2017
£m
210
461
142
–
813
2016
£m
165
226
536
99
1,026
The company issued fixed-rate loan notes in the US Private Placement market totalling US$550m on 1 March 2007. US$100m
of these notes matured and were repaid on 1 March 2014, US$ 200m of these notes matured and were repaid on 1 March 2017,
and the remaining notes mature in March 2019 (US$145m) and March 2022 (US$105m).
The company issued further fixed-rate loan notes in the US Private Placement market totalling US$514m and £69m on 15 July 2008.
US$65m of these notes matured and were repaid on 15 July 2013, US$150m matured and were repaid on 15 July 2015, £25m
matured and were repaid on 15 July 2016. The remaining notes mature in July 2018 (US$224m and £44m), and July 2020 (US$75m).
The company issued its inaugural pu lic note of £350m using its European Medium Term Note Programme on 13 May 2009. The
note matures in May 2019.
The 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 ut are designated in a fair-value hedge relationship which has a fair value adjustment in relation to the hedged interest-
rate risk. Information on the significant assumptions underlying the valuation model used and the interest rates on the orrowings are
disclosed in note (i). Derivatives relating to the loan notes, descri ed in note (i), have a fair value gain of £12m (2016: £16m). The
management of currency risk and interest-rate risk is also descri ed in note (i).
(h) rade and other payables
Within current liabilities:
Amounts owed to Group undertakings
Other taxation and social security costs
Accruals
Other paya les
Total trade and other paya les
2017
£m
1,927
2
30
5
1,964
2016
£m
1,913
2
15
4
1,934
Amounts owed to Group undertakings are unsecured, interest-free or interest- earing ased on market rates, and repaya le
on demand.
206 G4S plc Integrated Report and Accounts 2017
(i) Derivative financial instruments
The carrying alues of deri ati e financial instruments at the reporting date are presented below:
Cross-currency swaps designated as cash-flow hedges
Interest-rate swaps designated as fair- alue hedges
Total
Less: amount due for settlement within 12 months (shown under
current assets and current liabilities):
Cross-currency swaps designated as cash-flow hedges
Interest-rate swaps designated as fair- alue hedges
Amount due for settlement after 12 months
2 17
Assets
£m
12
13
25
(12)
(2)
(14)
11
2016
Assets
£m
16
24
40
(1)
(7)
(8)
32
2 17
Liabilities
£m
–
–
–
2016
Liabilities
£m
–
–
–
–
–
–
–
–
–
–
–
The mark-to-market aluation of the deri ati es has decreased by £15m (2016: decreased by £5m), dealt with as follows:
Cross-currency swaps designated as cash-flow hedges
Interest-rate swaps designated as fair- alue hedges
2 17
Income
statement
£m
–
(11)
(11)
2016
Income
statement
£m
–
(12)
(12)
2 17
Comprehensive
income
£m
(4)
–
(4)
2016
Comprehensi e
income
£m
7
–
7
Deri ati e financial instruments are stated at fair alue, measured using techniques consistent with Le el 2 of the aluation hierarchy
(inputs other than quoted prices in acti e markets that are obser able for the asset and liability, either directly or indirectly). The source
of the market prices is Bloomberg and in addition the third-party relationship counterparty banks. The rele ant currency yield cur e is
used to forecast the floating-rate cash flows anticipated under the instrument, which are discounted back to the reporting date. This
alue is compared to the original transaction alue, gi ing a fair- alue of the instrument at the reporting date.
The fair alue of deri ati e financial instruments is calculated using a discounted cash flow approach and using inputs based on
obser able market data. Judgment is used to determine the rele ant inputs, currency yield cur es and discount rates. Although these
judgments, estimates and associated assumptions are based on management’s best knowledge of current e ents and circumstances,
the actual results may differ.
Currency risk and cross-currency swaps
The Group conducts business in many currencies. The Group presents its consolidated financial statements in Sterling and as a consequence
is subject to foreign exchange risk due to the translation of the results and net assets of its foreign subsidiaries. The company, together with
its subsidiary G4S International Finance plc, hedges a substantial portion of the Group’s exposure to fluctuations in the translation into Sterling
of the Group’s o erseas net assets by holding loans in foreign currencies and cross-currency swaps. On consolidation, translation adjustments
arising on the translation of foreign currency loans and changes in the fair alue of the cross-currency swaps meeting hedge accounting criteria
are recognised in equity to match translation adjustments on foreign currency equity in estments as they qualify as net-in estment hedges.
Howe er, in the company’s own financial statements, translation adjustments arising on the translation of foreign currency loans are recognised
in the income statement and are in part hedged by cross-currency swaps.
Cross-currency swaps with a nominal alue of £25m are outstanding. These swaps were arranged to hedge the foreign currency risk
on US$50m of the second US Pri ate Placement notes issued in July 2008, effecti ely fixing the Sterling alue on this portion of debt
at an exchange rate of 1.9750. These swaps will mature in July 2018.
Integrated Report and Accounts 2017 G4S plc 207
Financial report
Notes to the parent company financial statements continued
(i Derivative financial instruments continued
Interest-rate risk and interest-rate swaps
Borrowings issued at fi ed rates e pose the company to fair value interest-rate risk, which the company manages within policy
limits approved by the directors. When fi ed/floating interest-rate debt in the preferred mi is unavailable directly from investors,
interest-rate swaps are utilised to create the desired blend in accordance with Treasury policy, with the proportion of fi ed interest rate
held reducing on a sliding scale over forward periods up to a ma imum of five years. The quantity of interest-rate swaps outstanding in
the Company is e pected to continue to decline as treasury activity is increasingly conducted by G4S International Finance plc.
The US Private Placement market is predominantly a fi ed-rate market, with investors preferring a fi ed-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 e posure
not hedged by interest-rate swaps and therefore rather than take on a higher proportion of fi ed-rate debt it arranged fi ed-to-floating
swaps, effectively converting the fi ed 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 fi ed-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 swaps with a nominal value of US$200m matured in 2017 with the remainder of US$145m
maturing in 2019 and US$105m maturing in 2022.
The interest on the US Private Placement notes issued in July 2008, and on the £350m public notes issued in May 2009, was initially
kept at fi ed rate. In April 2014, the interest rate on £44m of the US Private Placement notes issued in July 2008, and on all of the
£350m public notes issued in May 2009, was swapped from fi ed to floating for a period of three years using derivatives. These swaps
matured in 2017.
The £350m public notes have a coupon step-up of 1.25%, which is triggered should the credit rating of the company fall below
investment grade.
(j Retirement benefit obligations
The company is the sponsoring company for the Group’s UK defined benefit pension scheme, to which it provides a guarantee over
all payments to be made to the scheme by the operating companies. The following disclosures relate to the UK scheme only and are
given because the disclosures in note 32 of the group financial statements refer to the consolidated Group position and include certain
non-UK schemes.
The amounts recognised in the statement of financial position and the various components of income, other comprehensive income
and cash flow are as follows:
Obligation
£m
(2,659
Assets
£m
2,339
Deficit
£m
(320
(4
(65
(2
(71
32
(2
15
–
45
–
90
90
–
58
–
58
–
–
–
(5
(5
43
(90
(47
(4
(7
(2
(13
32
(2
15
(5
40
43
–
43
(2,595
2,345
(250
2017
At 1 January 2017
Amounts recognised in income
Current service cost (in cost of sales)
Interest on obligations and assets (in finance costs)
Administration costs paid from plan assets (in administration e penses)
Total amounts recognised in income
Re-measurements
Actuarial loss change in financial assumptions
–
Actuarial gain change in demographic assumptions
–
Actuarial gain e perience
–
Return on assets in e cess of interest
Re-measurement effects recognised in other comprehensive income
Cash
Employer contributions
Benefits paid from plan assets
Net cash
At 31 December 20171
1. Retirement benefit surplus £80m and retirement benefit obligation £330m.
208 G4S plc Integrated Report and Accounts 2017
(j) Retirement benefit obligation continued
2016
At 1 January 2016
Amounts recogn sed n ncome
Current serv ce cost ( n cost of sales)
Interest on obl gat ons and assets ( n f nance costs)
Adm n strat on costs pa d from plan assets ( n adm n strat on expenses)
Total amounts recogn sed n ncome
Re-measurements
Actuar al loss change n f nanc al assumpt ons
–
Actuar al ga n change n demograph c assumpt ons
–
Actuar al ga n exper ence
–
Return on assets n excess of nterest
Re-measurement effects recogn sed n other comprehens ve ncome
Cash
Employer contr but ons
Benef ts pa d from plan assets
Net cash
At 31 December 20161
Obl gat on
£m
(2,218)
Assets
£m
2,029
(4)
(82)
(2)
(88)
(539)
82
22
–
(435)
–
82
82
–
76
–
76
–
–
–
273
273
43
(82)
(39)
Def c t
£m
(189)
(4)
(6)
(2)
(12)
(539)
82
22
273
(162)
43
–
43
(2,659)
2,339
(320)
1. Ret rement benef t surplus £75m and ret rement benef t obl gat on £395m.
Employer contr but ons n 2017 ncluded £40m (2016: £39m) of add t onal contr but ons n respect of the def c t n the UK scheme.
(k) Deferred tax a et
The reconc l at on of deferred tax assets s as follows:
At 1 January 2017
Cred t/(charge) to the ncome statement
Cred t to equ ty
Charge to equ ty
At 31 December 2017
change n tax rate
–
At 1 January 2016
Cred t/(charge) to the ncome statement
Cred t to equ ty
Charge to equ ty
At 31 December 2016
change n tax rate
–
Intangible
a et
£m
1
–
–
–
1
Retirement
benefit
obligation
£m
57
(6)
(8)
1
44
Share-ba ed
payment
£m
2
–
–
–
2
Tax lo e
£m
58
(9)
–
–
49
Other
temporary
difference
£m
–
2
1
–
3
–
1
–
–
1
36
–
24
(3)
57
1
1
–
–
2
–
58
–
–
58
6
(6)
–
–
–
Total
£m
118
(13)
(7)
1
99
43
54
24
(3)
118
At 31 December 2017, the company had unut l sed tax losses of approx mately £271m (2016: £298m) potent ally ava lable for offset
aga nst future prof ts. A deferred tax asset of £49m (2016: £58m) has been recogn sed n respect of approx mately £271m (2016:
£298m) of gross losses based on expected/forecast prof tab l ty from approved budgets and bus ness plans. The recogn t on of deferred
tax assets on tax losses s pred cated on the projected generat on of ncome n the company wh ch should result n the ut l sat on of
the ava lable tax losses w th n a foreseeable per od. Th s ncome stream s dr ven by the current and future global results of the Group
n l ne w th bus ness plans. The t m ng of recogn t on of the tax losses as a deferred tax asset n 2017 was supported by the mproved
prof t prof le of the company, wh ch tself s underp nned by the cont nu ng progress of the Group’s transformat on strategy to generate
future susta nable, prof table growth.
As at 31 December 2017, the company has cap tal losses ava lable to carry forward of approx mately £2.5bn (2016: £0.14bn). These
losses have no exp ry date and have not been agreed w th the relevant tax author t es. No deferred tax assets have been recogn sed
n respect of these losses on the bas s that the l kel hood of the r future ut l sat on s cons dered to be remote.
Integrated Report and Accounts 2017 G4S plc 209
Financial report
Notes to the parent company financial statements continued
(l Share capital
Disclosures on the share capital o the company have been disclosed in note 35 to the consolidated inancial statements.
(m Retained earnings
Included in the Company’s retained earnings is £885m (2016: £918m) o distributable pro its.
(n Reserve for own shares
Disclosures on the reserve or own shares o the company have been disclosed in note 36 to the consolidated inancial statements.
(o Auditor’s remuneration
Fees payable to PricewaterhouseCoopers LLP or the audit o the company’s annual inancial statements have been disclosed in
note 10 to the consolidated inancial statements.
(p Staff costs and employees
The average monthly number o employees, including executive directors, was:
Average number o employees (corporate)
The aggregate remuneration o employees, including executive directors, employed by the company comprised:
Wages and salaries
Social security costs
Employee bene its
Total sta costs
2017
Number
19
2016
Number
21
2017
£m
7
1
6
14
2016
£m
10
2
7
19
In ormation on directors’ remuneration, long-term incentive plans, pension contributions and entitlements is set out in the Directors’
Remuneration Report on pages 93 to 115.
(q Share-based payments
The Company has both equity-settled and cash-settled share-based payment schemes in place, being the conditional allocations o
G4S plc shares. An Employee Bene it Trust established by the Group holds shares to satis y the vesting o conditional allocation awards.
Share-based payments disclosures relevant to the company are presented within note 39 to the consolidated inancial statements.
(r Related-party transactions
Certain disclosures relevant to the company are presented within note 40 to the consolidated inancial statements. Company
transactions with Group undertakings primarily consist o royalty charges, central service charges and loan transactions.
There were no material transactions with non-wholly-owned Group undertakings or with other external related parties in 2017
(2016: none).
(s Contingent liabilities
To help secure cost-e ective inance acilities or its subsidiaries, the company issues guarantees to some o its inance providers.
At 31 December 2017 guarantees totalling £466m (2016: £470m) were in place in support o such acilities.
The company also guarantees the debt obligations o certain subsidiaries. At 31 December 2017 contingent liabilities on guarantees
o £1,333m (2016: £1,367m) were outstanding in support o such debt obligations.
(t Dividends
Amounts recognised as distributions to equity holders o the company in the year have been disclosed in note 14 to the consolidated
inancial statements.
210 G4S plc Integrated Report and Accounts 2017
Group fnancial record
GROUP
FINANCIAL
RECORD
Revenue* (£bn)
Adjusted PBITA* (£m)
496
476
435
415
379
8
6
6.4
6.6
6.8
7.2
7.4
4
2
0
500
400
300
200
100
0
13
14
15
16
17
13
14
15
16
17
Revenue* at constant
exchange rates
£7.4bn
G4S revenue has grown 17%
since June 2013.
Adjusted PBITA* at constant
exchange rates
£496m
Adjusted PBITA defned as
proft before interest, tax and
amortisation and excluding
specifc and other separately
disclosed items, has increased
31% since 2013.
Dividend (pence per share)
Operating cash ˜ow (£m)
Employees (’000)
as at 31 December 2017
9.24
9.41
9.41
9.70
8.96
10
8
6
4
2
0
618
623
610
585
570
633
527
391
700
600
500
400
441
480
300
200
100
0
700
600
500
400
300
200
100
0
13
14
15
16
17
13
14
15
16
17
13
14
15
16
17
Dividend
Operating cash fow*
9.70p
The total dividend was increased
3.1% in 2017.
£527m
Operating cash fow has grown
20% since 2013.
Employees as
at 31 December 2017
570,000
(including joint ventures and
businesses held for sale or closure)
* Revenue, Adjusted PBITA and operating cash fow relate to the Group’s core businesses excluding results from businesses held for sale
or closure, onerous contracts and specifc and other separately disclosed items. A reconciliation between results from core businesses
and statutory results is provided on page 44.
Integrated Report and Accounts 2017 G4S plc 211
General information
General information
Financial calendar
Results announcements
Q1 Trading update – May
Half-year results – August
Q3 Trading update – November
Final Results – March
Dividend payment
Interim paid – 13 October 2017
Final payable – 15 June 2018
Annual General Meeting
15 May 2018
Corporate addresses
Registered offce
5th Floor
Southside
105 Victoria Street
London
SW1E 6QT
Telephone +44 (0)207 963 3100
Registered number
4992207
Auditor (since 2015 AGM)
PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RH
Stockbrokers
J.P. Morgan Cazenove
25 Bank Street
Canary Wharf
London E14 5JP
Citigroup Global Markets Limited
Citigroup Centre
Canada Square, Canary Wharf
London E14 5LB
Financial advisors
J.P. Morgan Cazenove
25 Bank Street
Canary Wharf
London E14 5JP
Barclays Capital
5 The North Colonnade
Canary Wharf
London E14 4BB
Legal Entity Identifer code
549300L3KWKK8X35QR12
G4S website
g4s.com
212 G4S plc Integrated Report and Accounts 2017
General shareholder information
Registrars and transfer offce
All enquiries relating to the administration
of shareholdings should be directed to:
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Telephone: within the UK 0871 664 0300
(calls cost 12p per minute plus your phone
company’s access charge. If you are outside
the UK call +44 (0)371 644 0300. Calls
from outside the UK will be charged at the
applicable international rate)
Fax: +44 (0) 1484 600 911
Email: enquiries@linkgroup.co.uk
Secure shareholder portal:
www.signalshares.com
Please note that benefcial 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.
Link shareholder portal
Signal shares is an online facility provided
by the company’s registrars, Link Asset
Services, 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.
Dedicated helpline
Link Asset Services also has a helpline to
help users with all aspects of the service.
The numbers are noted above. Lines are
open 8.30am to 5.30pm Monday to Friday.
Printed by Park Communications on FSC® certifed paper.
Park is an EMAS certifed company and its Environmental
Management System is certifed to ISO 14001.
100% of the inks used are vegetable oil based, 95% of press
chemicals are recycled for further use and, on average 99%
of any waste associated with this production will be recycled.
This document is printed on FSC® certifed paper.
Designed and produced by Black Sun Plc.
www.g4s.com
G4S plc
5th Floor
Southside
105 Victoria Street
London
SW1E 6QT
United Kingdom
Telephone: +44 (0) 207 963 3100
Email: investor@g4s.com
Registered in England No. 4992207