10 April 2018
G4S
plc
(the "Company")
Integrated Report
and Accounts and Notice of Annual General Meeting
Further to the preliminary announcement of its
results for the year ended 31 December 2017 made on 8 March 2018,
G4S plc, the global, integrated security solutions provider,
announces that it has published its 2017 Integrated Report and
Accounts for the same period.
The Company confirms that the following documents
have been posted or otherwise made available to shareholders:
The AGM will be held on Tuesday, 15 May 2018 at
2.00 pm in The Orchard Suite at the Holiday Inn, Gibson Road,
Sutton, Surrey, SM1 2RF, UK.
The 2017 Integrated Report and Accounts and the
Notice of Meeting with the explanatory notes accompanying it have
been submitted to, and will be available from, the National Storage
Mechanism. These documents are also available on the Company's
website: www.g4s.com/en/Investors.
A condensed set of the Company's financial
statements and extracts of the management report were included in
the Company's preliminary final results announcement.
That information, together with the Appendix to
this announcement, which contains additional information extracted
from the 2017 Integrated Report and Accounts for the year ended 31
December 2017, constitutes the material required for the purposes
of compliance with the Transparency Rules and should be read
together with the preliminary final results announcement, which is
available at www.g4s.com/en/Investors.
This announcement should be read in conjunction
with, and is not a substitute for, reading the full 2017 Integrated
Report and Accounts. Together these constitute the
information required by DTR 6.3.5, which must be communicated in
unedited full text, through a Regulatory Information Service.
References in this announcement to the Company's
website are intended to refer only to the specific documents
mentioned herein and not to other information available on that
website.
Page and note references in the text below refer
to page numbers and notes in the 2017 Integrated Report and
Accounts.
APPENDIX
The group's principal risks and
uncertainties:
A description of the principal risks and
uncertainties that the Company faces is extracted from pages 62 to
65 of the 2017 Integrated Report and Accounts.
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
significant 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 financial 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-traffic 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 firearm
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.
We reviewed the appropriateness of our 'Golden
Rules' which reflect 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 insufficient 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 refine 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.
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 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 reflect 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 reflect the great work that our employees
do.
PEOPLE
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 financial 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.
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 fifth
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.
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
significant contracts in the UK, we perform 360° reviews of all
aspects of contract management and performance. We also perform a
quarterly financial review of the top 25 and low-margin contracts
in each region.
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 significant, 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.
LAWS AND REGULATIONS
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; difficulties 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 confidence.
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 influence 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 efficiency 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 finance, 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-efficient 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 efficiency
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 efficiency and improve
margins. Oversight, challenge and approval of detailed business
cases for all such initiatives will be enforced by Group and
regional teams.
GEOPOLITICAL
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 conflict and post-conflict 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 profits.
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 significant impact on our ability to
trade we will continue to engage with national and international
governments to promote the benefits 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 confidential 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 fines by national
governments; loss of confidence in the G4S brand and specific loss
of trust by customers, especially those in government and financial
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, fit-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 profit, increased cost of insurance and health and
safety considerations for our staff and the public.
Risk mitigation
During 2017 we refined 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 office and compliance is supported and
monitored by regional teams and through internal audit. We also
have clearly-defined 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.
Related party transactions (note 40 to the consolidated financial
statements, page 185)
Transactions and balances with joint
ventures
Transactions between the Company and its subsidiaries have been
eliminated on consolidation and are not disclosed in this note.
Details of transactions between the Group and other related parties
are disclosed below. All transactions with related parties are
entered into in the normal course of business.
Transactions with joint ventures included revenue
recorded of £56m (2016: £49m) and purchases 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) has been recognised in the
year for impairment in respect of amounts owed by related
parties.
The Group has a legal interest in a number of
joint ventures and joint arrangements, where the economic interest
was divested by the Global Solutions Group prior to its acquisition
by G4S plc in 2008. Transactions with these entities during the
year comprised
|
2017
Services/
sales to
£m |
2016
Services/
sales to
£m |
White
Horse Education Partnership Limited |
3 |
3 |
Integrated Accommodation Services plc |
46 |
54 |
Fazakerley Prison Services Limited |
39 |
34 |
Onley
Prison Services Limited |
17 |
16 |
UK
Court Services (Manchester) Limited |
2 |
2 |
East London Lift Company Limited |
1 |
1 |
Total |
108 |
110 |
The Group had outstanding balances of £11m due
from these entities as at 31 December 2017 (2016: £12m).
Transactions with post-employment benefit
schemes
Details of transactions with the Group's post-employment benefit
schemes are provided in note 32. Unpaid contributions owed to
schemes amounted to £0.3m at 31 December 2017 (31 December 2016:
£0.5m).
Transactions with other related parties
In the normal course of the Group's business the Group provides
services to and receives services from certain non-controlling
interests on an arm's length basis.
Remuneration of key management personnel
The Group's key management personnel are deemed to be the
non-executive directors and those individuals, including the
executive directors, whose remuneration is determined by the
Remuneration Committee. Their remuneration is set out below.
Further information about the remuneration of individual directors
included within key management personnel is provided in the audited
part of the Directors' Remuneration Report on pages 93 to 115.
|
2017
£ |
2016
£ |
Short-term employee benefits |
11,112,484 |
11,463,651 |
Post-employment benefits |
121,781 |
74,390 |
Other
long-term benefits |
27,833 |
28,728 |
Termination benefits |
- |
305,159 |
Share-based payment |
7,349,358 |
6,417,657 |
Total |
18,611,456 |
18,289,585 |
Statement of directors'
responsibilities:
The following responsibility statement is repeated
here solely for the purpose of complying with Disclosure and
Transparency Rule 6.3.5. This statement relates to and is
extracted from page 119 of the Company's 2017 Integrated Report and
Accounts. Responsibility is for the full 2017 Integrated
Report and Accounts, not the extracted information presented in
this announcement and in the preliminary final results
announcement.
"Statement of directors' responsibilities in
respect of the annual report and the financial statements
The directors are responsible for preparing the
annual report and the Group and parent company financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare
group and parent company financial statements for each financial
year. Under that law they are required to prepare the group
financial statements in accordance with IFRSs as adopted by the EU
and applicable law and have elected to prepare the parent company
financial statements in accordance with UK Accounting
Standards.
Under company law the directors must not approve
the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and parent
company and of their profit or loss for that period. In preparing
each of the group and parent company financial statements, the
directors are required to:
-
select suitable accounting policies and then
apply them consistently;
-
make judgments and estimates that are reasonable
and prudent;
-
for the group financial statements, state
whether they have been prepared in accordance with IFRSs as adopted
by the EU;
-
for the parent company financial statements,
state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the parent company financial statements; and
-
prepare the financial statements on the going
concern basis unless it is inappropriate to presume that the Group
and the parent company will continue in business.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and explain the
parent company's transactions and disclose with reasonable accuracy
at any time the financial position of the parent company and enable
them to ensure that its financial statements comply with the
Companies Act 2006. They have general responsibility for taking
such steps as are reasonably open to them to safeguard the assets
of the Group and to prevent and detect fraud and other
irregularities.
Under applicable law and regulations, the
directors are also responsible for preparing a 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 financial information included
on the company's website. Legislation in the UK governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Directors' responsibility statement
Each of the directors, the names of whom are set
out on pages 68 and 69 of this Integrated Report and Accounts,
confirm that, to the best of his or her knowledge:
-
the financial 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, financial 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 financial statements on pages 132 to
210 include information on the Group and the company's financial
results, financial outlook, cash flow and net debt and balance
sheet positions. Notes 22, 26, 27, 30 and 31 to the consolidated
financial statements include information on the Group's
investments, cash and cash equivalents, borrowings, derivatives,
financial 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 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
financial 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 financial 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 Officer."
Celine Barroche
Company Secretary
G4S plc
LEI 549300L3KWKK8X35QR12
Notes to Editors:
G4S is the leading global,
integrated security company, specialising in the provision of
security services and solutions to customers. Our mission is
to create material, sustainable value for our customers and
shareholders by being the supply partner of choice in all of our
markets.
G4S is quoted on the London Stock
Exchange and has a secondary stock exchange listing in
Copenhagen. G4S is active in around 90 countries and has
around 570,000 employees. For more information on G4S,
visit www.g4s.com.
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: G4S plc UK DK via Globenewswire
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