G4S Annual Report and Accounts 2011

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Overview Strategic review Performance Strategic review Marketplace Building on our leading position in the security market The global security market The “business to business” and “business to government” global security market is estimated to generate revenues of around £90bn per annum. As an integrated security provider, we are active in all types of security service and the market is split by service type as follows: G4S major markets With operations in more than 125 countries, G4S is a truly global security services provider. Total security market size The charts below show the market size of the top three markets in each region for G4S. Global security % 1 4 5 3 1 Manned security 62% 2 Security systems 20% 3 Cash solutions 10% 4 Justice services 4% 5 Other 4% 2 UK and Africa UK £6,000m South Africa £3,000m Ireland £400m Europe Netherlands £2,000m Belgium £700m Finland £450m Based on published market research (Freedonia Report on World Security Services, March 2011) and our own analysis, we estimate that the global security market will grow at between 8% and 12% per year in developing markets and between 4% and 5% per year in developed markets during the five-year period from 2009 to 2014 as shown on the chart below. In addition, by 2019, 50% of the global security market revenue is expected to come from developing markets. Security industry growth US$bn Americas USA £20,000m Canada £1,500m Colombia £750m Asia Middle East India £650m Saudi Arabia £400m Australia £1,300m 3 North America Latin America 32 5 14 7 6 28 10 11 25 34 40 20 14 25 15 65 17 8 38 49 2004 2009 2014 2019 Western Europe Eastern Europe 39 45 Asia Pacific Africa/Middle East 61 50% of the global security market is expected to be in developing markets by 2019 £2.2bn of revenues were generated by G4S in developing markets in 2011 9% organic growth was achieved in developing markets in 2011 12 G4S plc Annual Report and Accounts 2011
Governance Financial statements Shareholder information How our business grows Drivers of growth With strong market positions in developed and developing markets complementing global outsourcing trends, G4S has a sustainable growth strategy. The key drivers of growth for the group are a combination of external drivers and G4S strengths and can be summarised as follows: 9 See Divisional reviews on pages 30 and 36 for more detail All Services uu Economic environment and GDP growth uu Competitive environment uu Regulation and regulatory environment uu Level of customer relationship uu Innovation or continuous improvement uu G4S reputation and track record uu Customer satisfaction and retention Cash solutions uu uu uu uu uu uu Role and strategy of central banks Development phases of the cash cycle Increased appetite for outsourcing Product innovation Interest rates Crime Secure solutions government uu uu uu Focus on security Propensity to outsource Budgetary pressures Secure solutions non-government uu uu uu uu uu uu Attitude to risk management Focus on high growth segments Growth of international accounts Increasing infrastructure investment in developing markets Ability to integrate manpower and technology Multi-service or service bundling in developing markets Competitive environment The global security industry consists of a number of highly competitive markets, particularly in the manned security sector where markets can be fragmented. At a local level, G4S competes with local companies for the provision of individual service lines. At a global level G4S has no direct peer with which it competes directly in all service lines across all geographies. Our closest peers are listed in the table below. Company Loomis Securitas Brink’s Serco ISS Mitie Service lines Competing geographies Cash solutions UK Secure solutions UK Europe North America Cash solutions Canada Far East Small no. in Europe Government outsourcing UK Australia Secure solutions UK Southern Europe Asia Secure solutions UK Global market shares – 2010 % 1 2 3 4 5 6 7 8 9 1 G4S 8% 2 Securitas 6% 3 Tyco/ADT 6% 4 UTC/GE 6% 5 Prosegur 2% 6 Brink’s 2% 7 Secom 2% 8 Serco Civil 2% 9 Others 66% G4S plc Annual Report and Accounts 2011 13
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