TIDMGFS
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:
-- 2017 Integrated Report and Accounts
-- Notice of the Company's Annual General Meeting ("AGM") dated 3 April 2018
-- associated form of proxy
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.
APPIX
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
360deg 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 GBP56m
(2016: GBP49m) and purchases recorded of GBP6m (2016: GBPnil). Amounts
due from related parties include GBP5m (2016: GBP8m) from joint
ventures. Amounts due to related parties include GBP2m (2016: GBPnil) to
joint ventures.
No expense (2016: GBPnil) 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 2016
Services/ Services/
sales to sales to
GBPm GBPm
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 GBP11m due from these entities as
at 31 December 2017 (2016: GBP12m).
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 GBP0.3m at 31 December 2017 (31 December 2016: GBP0.5m).
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
GBP GBP
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
http://www.g4s.com/
(END) Dow Jones Newswires
April 10, 2018 02:00 ET (06:00 GMT)
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