G4S Annual Report and Accounts 2011

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Overview Strategic review Performance Report of the directors For the year ended 31 December 2011 The directors have pleasure in presenting their Annual Report together with the audited financial statements of G4S plc and the consolidated financial statements of that company and its subsidiaries, associated undertakings and joint ventures (“the group”) for the year ended 31 December 2011. G4S plc has its primary listing on the London Stock Exchange and a secondary listing on the NASDAQ OMX exchange in Copenhagen. 1 Principal activities of the group G4S plc is a parent company with subsidiaries, associated undertakings and joint ventures. The principal activities of the group comprise the provision of secure solutions (including manned security services, care and justice services and security systems) and cash solutions (including the management and transportation of cash and valuables) as well as the undertaking of other outsourced business processes in sectors where security and safety risks are considered a strategic threat. 2 Group results The consolidated result for the year is shown in the consolidated income statement on page 73. Details of the development and performance of the group’s business during the year, its position at the year end, future developments, principal risks and uncertainties and prospects of the group and other information which fulfils the requirements of the Business Review are contained on pages 8 to 43 and are incorporated in this report by reference. The Corporate Governance Statement set out on pages 57 to 61 is also incorporated in this report by reference. The group’s financial risk management objectives and policies in relation to its use of financial instruments, and its exposure to price, credit, liquidity and cash-flow risk, to the extent material, are set out in note 33 to the consolidated financial statements on pages 107 to 109. 3 Dividends The directors propose the following net dividend for the year: uu Interim dividend of 3.42p (DKK 0.2928) per share paid on 14 October 2011. uu Final dividend of 5.11p (DKK 0.4544) per share payable on 15 June 2012. Shareholders on the Danish VP register will receive their dividends in Danish kroner. Shareholders who hold their shares through CREST or in certificated form will receive their dividends in sterling unless they prefer to receive Danish kroner, in which case they should apply in writing to the Registrars by no later than 9 May 2012. 4 Significant business acquisitions, disposals and developments In January 2011, Munt Centrale Holland B.V. was acquired in the Netherlands. In March 2011, House Arrest Solutions (US), was acquired in the US. In March 2011, G4S Secure Solutions (UK) Limited was appointed as the official security service provider for the London 2012 Olympic & Paralympic Games. In April 2011, the Cotswold Group Limited, was acquired in the UK. In April 2011, Broomco (4233) Limited, the owner of Guidance Limited, was acquired in the UK. In May 2011, 80% of Detcon SA, was acquired in Argentina. In June 2011, EBC Ingenieria S.A. was acquired in Colombia. In July 2011, AMS (Ireland) Ltd was acquired in Ireland. In August 2011, 75% of Seguridad EBV S.A. was acquired in Chile. In September 2011, GDJS Security Limited was acquired in Ireland. In October 2011, G4S plc published a prospectus and circular relating to the proposed acquisition of ISS A/S. In November 2011, G4S plc terminated its agreement to acquire ISS A/S. In December 2011, G4S’s 50% share of STC (Milton Keynes) Holdings Limited was disposed of in the UK. In December 2011, the group’s home alarms business was disposed of in Norway. In December 2011, a facilities services company was acquired in Brazil. In December 2011, the business and assets of Chubb Emergency Response were acquired in the UK. In January 2012, Controll-Zona Kft and Secret Or Kft were acquired in Hungary. In February 2012, G4S Cash Solutions (Sverige) AB was disposed of in Sweden. 5 Capital The issued share capital of G4S plc at 31 December 2011 is set out on page 118 (note 37 to the consolidated financial statements). There were 1,410,668,639 shares in issue as at 12 March 2012. Resolutions granting the directors power, subject to certain conditions, to allot and make market purchases of the company’s shares will be proposed at the company’s annual general meeting. The resolutions are set out in the Notice of Meeting on pages 133 to 135 and further explanation is provided on pages 136 and 137. At 31 December 2011 the directors had authority in accordance with a resolution passed at the company’s Annual General Meeting held on 19 May 2011 to make market purchases of up to 141,060,000 of the company’s shares. The company does not hold any treasury shares as such. However the 6,265,571 shares held within the G4S Employee Benefit Trust (“the Trust”) and referred to on page 118 (note 38 to the consolidated financial statement) are accounted for as treasury shares. The Trust has waived its right to receive dividends in respect of the company’s shares which it held during the period under review. 54 G4S plc Annual Report and Accounts 2011
Governance Financial statements Shareholder information 6 Research and development expenditure Research in connection with the development of new services and products and the improvement of those currently provided by the group is carried out continuously. Research and development written-off to the income statement during the year amounted to £6m (2010: £5m). 7 Payment of suppliers It is the company’s and the group’s policy to pay suppliers in accordance with the payment terms negotiated with them. Thus, prompt payment is normally made to those suppliers meeting their obligations. The company and the group do not follow any formal code or standard on payment practice. As part of a reorganisation of the group’s UK holding company structure, transactions with trade creditors are now processed through the company’s wholly-owned subsidiary, G4S Corporate Services Limited. Therefore, at 31 December 2011 the trade creditors of the company represented nil days (2010: 28 days) of annual purchases. At 31 December 2011 the consolidated trade creditors of the group represented 39 days (2010: 33 days) of annual purchases. 8 Employees With over 657,000 employees worldwide, involvement and engagement are key drivers of business success. Levels of engagement for each business are monitored through monthly performance indicators such as employee turnover and stability. In addition, in 2011 the second global employee engagement survey was completed to gather feedback about how employees around the world view G4S as an employer. The results were excellent both in terms of improvements in the ratings from the 2009 survey, and also in response rates. Whereas in 2009, the survey was sent to 596,000 employees and 169,000 responses were received, in 2011 the survey was sent to 625,000 employees and 245,000 responses were received. Considering many of our employees are based remotely at customer sites and have limited access to technology, the number of responses received demonstrates the extent to which employees feel their views count and want to share feedback on their experiences of working for G4S. Effective employee communication with such a diverse workforce will always be a challenge and businesses throughout the group seek to use a wide variety of methods and media to achieve this. Such methods include intranets, newsletters, and workplace briefings. With about a third of employees covered by collective agreements, businesses also work with employee representatives to share information and gather feedback on decisions likely to affect their interests. This information exchange takes place in both transnational settings such as the European Works Council as well as local ones like employee consultation forums. During 2011 the focus on talent management continued with the completion of a comprehensive talent review. The review helped to clarify requirements and assess the strength of the internal pipeline for succession purposes. Where possible, internal development programmes across the group are aligned to ensure any gaps identified from the talent reviews are being met. In support of achieving talent management objectives, the group launched a diversity and inclusion strategy two years ago. Reaching out to the widest talent pools to identify the best people and creating an environment where everyone can achieve their full potential regardless of any disability, are central themes in this strategy. It takes account of all aspects of diversity including age, gender and disability. Using an assessment tool that looks at key business processes such as recruitment, promotion and training, businesses are required to produce a plan to show how they are progressing against the strategy. To help them, case studies showcasing internal excellence in recruiting and retaining diverse employees are shared across the businesses. Protecting and ensuring the health and safety of our employees is of paramount importance, so monthly reporting and scrutiny by the board and management teams at all levels occurs to drive constant improvements in this area. Although the number of workplace fatalities due to attacks reduced in 2011, the number of workplace fatalities caused by road traffic incidents increased, so this is an area of focus for businesses in the next year. At the end of 2011 the implementation of the Ethical Employment Partnership (EEP) across G4S was completed. This partnership, which was entered into in 2008 with the GMB and UNI, a Global Union Federation, provides a framework for constructive labour relations. Where issues arise, the strong foundations laid during the implementation phase are helping to ensure that solutions are found that will both deliver benefits for employees and help the long-term success of the business. The continued focus on good employee relations and on embedding talent management, diversity and inclusion and health and safety strategies, undoubtedly contributed to the positive results in the global engagement survey and have helped to maintain employee stability levels at a time of change and uncertainty in many markets. Further information about the group’s approach in these areas can be found in the group’s 2011 CSR report. 9 Political and charitable contributions The group remains committed to the support of charities, the community, job creation and training. Charitable contributions by the group during the year amounted to £344,000 (2010: £375,000). Charitable contributions made by the group in the UK, amounted to £52,000. The purposes for which such contributions were made and the amount donated to each purpose were: child welfare: £16,000; health and medical: £17,000; local communities: £14,000; environment: £1,000; and sports: £4,000. In addition, G4S encourages businesses around the group to play their part in engaging with and helping to improve their local communities. In 2011, G4S completed its first comprehensive review of regional and country managed community investment activity around the world. The review has helped highlight the true level of G4S community investment, identifying more than 550 community programmes across the globe supporting health, education, welfare and development of children and young people. Further details regarding community programmes can be found in the group’s 2011 CSR report. The company and its subsidiaries have made no contributions during the year to political parties carrying on activities, or to candidates seeking election, within the EU. One of the company’s subsidiaries in the US has however made contributions totalling $6,400 in aggregate to a number of candidates seeking election and organisations carrying on political activities in the US. The practice of making any political donations in the US has now ceased. G4S plc Annual Report and Accounts 2011 55
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G4S plc The Manor Manor Royal Crawl
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G4S Annual Report and Accounts 2011

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