11 April 2011
G4S PLC
ANNUAL FINANCIAL REPORT
Further to the preliminary announcement of its results for the year ended 31
December 2010 which it made on 15 March 2011, G4S plc, the international
security solutions provider, announces that it has published its Annual Report
and Accounts for the same period.
The full Annual Report and Accounts has been posted to shareholders. The
document includes the notice of the company's Annual General Meeting which will
be held on Thursday 19 May 2011 at Ironmongers' Hall, Barbican, London EC2Y 8AA
at 2.00 pm. A proxy form for the company's Annual General Meeting accompanies
annual reports posted to shareholders.
The notice of meeting and explanatory notes accompanying it have been submitted
to, and will be available from, the National Storage Mechanism.
The Annual Report and Accounts and the Notice of Annual General Meeting are now
available to view or download in a pdf format from the company's website:
www.g4s.com
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 which has been extracted
from the Annual Report and Accounts for the year ended 31 December 2010,
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 can be downloaded from the company's website. This
announcement should be read in conjunction with and is not a substitute for
reading the full Annual Report and Accounts. Together these constitute the
information required by DTR 6.3.5, which is required to be communicated in
unedited full text through a Regulatory Information Service. Page and note
references in the text below refer to page numbers and notes in the Annual
Report and Accounts.
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.
APPENDIX
The group's principal risks and uncertainties:
A description of the principal risks and uncertainties that company faces is
extracted from pages 50 and 51 of the 2010 Annual Report and Accounts.
"The group operates around 160 businesses spread over more than 125 countries
and across a range of product areas. Most of the risks identified below are
market specific and so the diversity of the group's operations means any
particular issue should have a limited impact.
The group operates a management structure that is appropriate to the scale and
breadth of its activities, and the internal audit department operates under a
wide remit to ensure strict adherence to group authorisation procedures and
control standards as outlined here.
+------------------------+-------------------------+---------------------------+
| RISK | Potential Impact | Mitigation |
+------------------------+-------------------------+---------------------------+
|Price competition |The security industry |Group management |
| |comprises a number of |continually monitors |
| |very competitive markets.|competitor activity to |
| | In particular, manned |ensure that the group can |
| |security markets can be |react quickly to any |
| |fragmented with |competitor actions which |
| |relatively low economic |would directly affect the |
| |barriers to entry and the|group's results. |
| |group competes with a | |
| |wide variety of operators|All business plans and |
| |of varying sizes. |strategic planning includes|
| | Actions taken by the |competitor and SWOT |
| |group's competitors may |analysis and the pricing |
| |place pressure upon its |strategy for contracts is |
| |pricing, margins and |managed through business |
| |profitability. |unit and regional price |
| | |approval levels. |
| | | Significant price |
| | |reductions require group |
| | |capex committee approval. |
| | | |
| | |The group implemented a new|
| | |customer measurement |
| | |process during 2010 which |
| | |should further enhance |
| | |competitor analysis. |
| | | |
| | |In addition in 2011 the |
| | |group will be rolling out a|
| | |new customer relationship |
| | |management system. |
| | | |
+------------------------+-------------------------+---------------------------+
|Major changes in market|Such changes in dynamics |The group performs |
|dynamics |could include new |strategic and business |
| |technologies, government |planning at group, |
| |legislation or customer |division, region and |
| |consolidation and could, |business unit level to |
| |particularly if rapid or |ensure that specific local |
| |unpredictable, impact the|regulation requirements are|
| |group's revenues and |met. Monthly business unit |
| |profitability. |trading reviews ensure that|
| |Security can be a high- |market changes are |
| |profile industry. There |identified quickly and |
| |is a wide and ever- |actions taken to maintain |
| |changing variety of |performance and ensure that|
| |regulations applicable to|business objectives |
| |the group's businesses |continue to be achieved. |
| |across the world, with a | |
| |recent development being |The group also monitors |
| |an increase of |local markets and engages |
| |restriction of foreign |with local governments |
| |ownership in some |around the world involving |
| |countries. Failure, or |the group legal department |
| |an inability, to comply |where appropriate to ensure|
| |with such regulations may|adherence to regulatory |
| |adversely affect the |requirements, to identify |
| |group's revenues and |any restrictions that could|
| |profitability. |adversely impact the |
| | |group's activities and take|
| | |appropriate actions. |
| | | |
| | |The group has formed an |
| | |anti-corruption steering |
| | |group which is working on |
| | |addressing the implications|
| | |of the UK Bribery Act and |
| | |similar legislation. |
+------------------------+-------------------------+---------------------------+
| Cash losses |The group is responsible |The group has formal |
| |for the cash held on |systems and policies in |
| |behalf of its customers. |place documenting physical |
| | Increases in the value |security procedures and |
| |of cash lost through |directives and adheres to a|
| |criminal attack may |security framework to help |
| |increase the costs of the|reduce the risk of cash |
| |group's insurance. Were |losses. |
| |there to be failures in | |
| |the control and |The group also operates a |
| |reconciliation processes |captive insurance business |
| |surrounding customer cash|unit to mitigate against |
| |these could also |the financial risk of |
| |adversely affect the |losses and attacks. |
| |group's profitability. | |
| | |All transactions are |
| | |subject to strict |
| | |authorisation limits and |
| | |regular reconciliations of |
| | |cash balances are performed|
| | |for both cash in ATMs and |
| | |cash held on customers' |
| | |behalf. |
| | | |
| | |In addition there is |
| | |regular reporting of any |
| | |cash losses/attacks and |
| | |audits of security are |
| | |performed in branches. |
| | | |
| | |The group has in place |
| | |regional reconciliation |
| | |managers to increase the |
| | |focus on cash |
| | |reconciliations throughout |
| | |the group. |
| | | |
+------------------------+-------------------------+---------------------------+
|Onerous contractual |Should the group commit |Any new contracts entered |
|obligations |to sales contracts |into are subject to defined|
| |specifying |approval process criteria. |
| |disadvantageous pricing | Standard contracts are |
| |mechanisms, unachievable |used where practicable. |
| |service levels or | Non-standard contracts |
| |excessive liability it |which expose the group to |
| |could impact its margins |material risk (eg unlimited|
| |and profitability. |liability) are subject to |
| | |risk assessment and |
| | |depending on the level of |
| | |risk exposure are referred |
| | |for regional and group |
| | |legal department review. |
| | | |
| | |The group maintains a |
| | |contract risk database and |
| | |management system to |
| | |monitor the ongoing risks |
| | |involved. The contract |
| | |management system was |
| | |subject to a major upgrade |
| | |during 2009. |
| | | |
+------------------------+-------------------------+---------------------------+
|Defined Benefit Pension |A prolonged period of |The performance of the |
|Schemes |poor asset returns and/or|group's pension schemes and|
| |unexpected increases in |deficit funding plans are |
| |longevity could require |reviewed regularly by both |
| |increases in the current |the group and the trustees |
| |levels of additional cash|of the schemes taking |
| |contributions to defined |actuarial and investment |
| |benefit pension schemes, |advice as necessary. |
| |which may constrain the | |
| |group's ability to invest|The results of these |
| |in acquisitions or |reviews are discussed with |
| |capital expenditure, |the board and appropriate |
| |adversely impacting its |action is taken. Please |
| |growth and profitability.|refer to note 34 to the |
| | |group accounts for further |
| | |details of the group's |
| | |retirement benefit plans |
| | |and upcoming valuations. |
| | | |
| | |The group has begun a |
| | |consultation process to |
| | |close the defined benefit |
| | |scheme to future accrual |
| | |which should limit the |
| | |growth in future |
| | |liabilities. |
| | | |
+------------------------+-------------------------+---------------------------+
|Inappropriate sourcing |The group's greatest |The group has standard |
|of staff |asset is its large and |recruitment policies and |
| |committed work force. |procedures in place to |
| | However, were the group |ensure that only |
| |to source inappropriate |appropriate staff are |
| |staff, whether as |recruited. These include |
| |permanent employees, |formal vetting procedures |
| |temporary workers or sub-|carried out during |
| |contractors, the result |application with formal |
| |could be detrimental to |sign-off that the group |
| |the group's reputation |standards have been met |
| |and could adversely |before a new staff member, |
| |affect the group's growth|temporary worker or sub- |
| |and profitability. |contractor is able to |
| | |commence work. |
| | | |
| | |There are controls and |
| | |monitoring, such as formal |
| | |compliance reviews by |
| | |regional human resources |
| | |management designed to |
| | |ensure business unit |
| | |compliance with these |
| | |standards. |
| | | |
| | |Particular attention is |
| | |given to acquired |
| | |businesses to ensure that |
| | |they meet the group |
| | |standards. |
+------------------------+-------------------------+---------------------------+
|Poor operational service|Should the group fail to |Group-wide operational |
|delivery |meet the operational |procedures and standards |
| |requirements of its |are in place and enforced |
| |customers it could impact|in all business units. |
| |its reputation, contract | There is also a robust |
| |retention and growth. |supervision structure which|
| | |allows management to |
| | |monitor the progress and |
| | |delivery of the group's |
| | |contracts and customer |
| | |relationships. |
| | | |
+------------------------+-------------------------+---------------------------+
|Financing |If, due to adverse |The group treasury |
| |financial market |department monitors and |
| |conditions, insufficient |follows policies to |
| |or only very costly |mitigate against liquidity,|
| |financial funding were |re-financing and |
| |available, the group |currency/exchange rate |
| |might not be in a |risks. Refer to note 33 to|
| |position to implement its|the group accounts for more|
| |strategy or invest in |details. |
| |acquisitions or capital | |
| |expenditure, adversely |The group's historical main|
| |impacting its growth and |source of funding has been |
| |profitability. This |a revolving bank facility |
| |includes possible bank |of £1.1bn which was renewed|
| |bankruptcy, loss of |in March 2011 until 2016. |
| |headroom particularly | Recently the group has |
| |from movement of exchange|sought to diversify its |
| |rates, unavailability of |sources of finance by |
| |bank, bond or other |issuing a number of private|
| |sources of financing and |placement bonds in the US |
| |downgrading of G4S credit|and more recently public |
| |rating. |bond in the UK. These have|
| | |spread out the refinancing |
| | |requirements over the next |
| | |ten years to ensure the |
| | |group has access to |
| | |sufficient funds to meet |
| | |its business and strategic |
| | |plans. |
| | | |
+------------------------+-------------------------+---------------------------+
|Information technology |Cyber attacks and |The group employs IT |
| |incidents on G4S and |specialists at all levels |
| |client systems and |and has in place mandatory |
| |services, especially |minimum security controls |
| |around critical national |(relating to 35 specific |
| |infrastructure, could |controls). In addition |
| |result in financial loss,|penetration testing of |
| |breach of contract, legal|networks and systems is |
| |action and reputational |performed regularly to |
| |damage. |ensure the key systems are |
| | |robust. |
+------------------------+-------------------------+---------------------------+
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 67 of the 2010 Annual Report and Accounts.
Responsibility is for the full 2010 Annual Report and Accounts not the
extracted information presented in this announcement and the preliminary final
results announcement.
"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 and applicable law (UK
Generally Accepted Accounting Practice).
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 judgements 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 Directors' Report, Directors' Remuneration Report and Corporate
Governance Statement that complies 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.
The statement of directors' responsibilities was approved by a duly authorised
committee of the board of directors on 14 March 2011 and signed on its behalf by
Trevor Dighton, Chief financial officer."
Peter David
Company Secretary
For further enquiries, please contact:
Helen Parris - Director of Investor Relations +44 (0) 1293 554400
Media enquiries:
Alison Flynn - Media Manager +44 (0) 1293 554400
Kevin Smith - Citigate Dewe Rogerson +44 (0) 7973 672649
Notes to Editors:
G4S is the world's leading security solutions group, specialising in outsourcing
of business processes in sectors where security and safety risks are considered
a strategic threat. G4S is the largest employer quoted on the London Stock
Exchange and has a secondary stock exchange listing in Copenhagen. G4S has
operations in more than 125 countries and over 625,000 employees. For more
information on G4S, visitwww.g4s.com.
[HUG#1505078]
Annual Financial Report
| Quelle: G4S plc