Strategy and investment proposition
We are well placed to continue driving value for our stakeholders by maximising the potential of our business…
Our goal is to be recognised as the global leader in providing security solutions, to help customers to achieve their own strategic goals and to deliver sustainable growth for our business and long‑term shareholder value for our investors through the following:
- Drive outsourcing in key markets
- Focus on key sectors where security is a key consideration
- Develop long-term partnerships and deliver “solutions” to our customers’ needs which enhance their strategy
- Transfer skills developed in more mature markets into key New Markets
- Acquire additional expertise to enhance capability
Our investment proposition
Integrated security solutions
We are able to design and manage security solutions that bring together our capabilities in project management, risk consultancy, secure facilities management, physical security, intelligent systems and high quality security-trained personnel to solve the security challenges of a broad range of customers across the world.
Unrivalled cash solutions expertise
Understanding and managing the cash cycle of a country is a core skill of the group. Central banks, commercial banks and retailers outsource their entire cash management to G4S because we have the capability and experience to drive substantial efficiencies in the system whilst achieving the maximum return for our customers over the long term.
Government outsourcing is a strong, long-term source of growth as public sector spending remains under pressure and governments look to the private sector to fill the gap. Government contracts, which currently represent around 28% of group turnover, tend to be long-term, strategic partnerships with recurring revenues.
Strong New Markets positions
Our global presence, market shares and experience of working in less developed markets is unrivalled in almost any industry. It means that we know what it takes to be successful in these markets and are well positioned to maximise the structural growth opportunities as they develop over time. In many cases we are able to drive that development forward to the benefit of our customers and our business.
The solutions approach
Each individual area of the business is a driver of value for the group. But it is when they come together that they truly make a difference. Exporting our government expertise to new countries, leveraging our cash solutions model across New Markets and using our global risk management and security capabilities to protect some of the world’s best known brands across international markets, drive even greater value for our investors.
Investment proposition case studies The strength of G4S is the diversity of its geographic and customer base. In these case studies we have chosen some examples of the type of work we do for customers to demonstrate our investment proposition.
Customer sectors and relationships
We are global experts in the assessment and management of security and safety risks for buildings, infrastructure, materials, valuables and people.
We develop long-term, strategic partnerships with customers in key sectors where we can help them to deliver their own business objectives – either increasing their revenues, reducing costs, managing risks and protecting critical assets or improving their service delivery to the customers that they serve.
We do that by understanding the environments in which our customers operate, the pressures they face and the things that matter to them. By applying our expertise and the knowledge derived from delivering security solutions in diverse regulatory environments in more than 125 countries, we turn our customers’ security challenges into opportunities.
Our focus on key markets and customer sectors
G4S has a broad range of customers around the world, but our strategic focus is on sectors where security and safety are key. This sector expertise enables us to build long-term partnerships with customers and helps drive growth across the businesses.
Our broad geographic reach
G4S has a broad geographic reach, giving it a unique global footprint.
Our segments – an integrated approach
Secure solutions – non-government
Integrated security solutions for commercial customers such as risk consulting, manned security and security systems.
Secure solutions – government
Protection of critical national infrastructure, care and justice services, secure facilities and border protection.
Outsourcing of cash cycle management for central banks, financial institutions and retailers.
Our key growth drivers
With strong market positions in developed and developing markets complementing global outsourcing trends, we believe G4S has a sustainable growth strategy. The key drivers of growth for the group can be summarised as follows:
Economic environment and GDP growth
A favourable economic environment stimulates demand for our customers’ services and hence their security requirements. Wages and salaries are a high proportion of the G4S cost base. As a result, higher wages due to inflation usually result in increased prices for our services.
Customer satisfaction and retention
Customer satisfaction and account management are vital for the group. We have a range of customers from small businesses through to major multinational companies and our customer retention rates are strong.
The security industry can be very fragmented, particularly in New Markets. Our goal is to have strong market-leading positions in our key markets where we can maximise economies of scale and provide a consistent quality of service to national and multinational customers. Click here to read more about Competitive environment.
We welcome regulation of security markets as it improves standards and can help drive growth. Customers turn to high quality providers who can live up to the requirements of local legislation and compliance standards.
Level of customer relationship
We measure our customer relationships based on a number of criteria such as duration of contract, number of services and pricing determination. Over time, we aim to increase the number of strategic partnerships we have with major customers which bring us longer term contracts, measured on impact not inputs and where we are helping them reduce their costs, manage their risks, increase their revenues or improve their own customer service. Our goal is to have a significant proportion of our customers as strategic partners over the medium term.
We continuously review the way we do business to ensure that we maximise our efficiency, keep our costs low and improve performance.
Company reputation and track record
As a global company operating in 125 countries and employing 625,000 staff, we touch the lives of millions of people. We have a strong track record of integrity and a long history of serving our customers well, which has enabled us to be successful over the longer term.
Role and strategy of central banks
In more developed cash markets, central banks are more likely to outsource the management of the cash cycle to commercial banks and to cash management companies. We use our experience from some of the most advanced cash markets in the world, to advise central banks on developing outsourcing strategies.
Development phases of the cash cycle
The cash cycle of a country develops through different phases over time, from basic cash transportation services to total outsourcing of all cash related activities at the most developed end of the spectrum. There are more significant opportunities for our business in cash outsourcing and we are able to use our experience and expertise to influence the rate at which a market moves through the different phases of development.
Increased willingness to outsource
Customer attitudes to outsourcing non-core activities to third parties have changed dramatically in recent years and we expect this trend to continue as we demonstrate the value that G4S can bring to managing the cash cycle for the benefit of our customers.
Product innovation – e.g. end-to-end ATM management and CASH360
Innovation in a cash market helps to drive growth. Using technology and manpower, we have developed ways in which internal customer cash management processes can be automated and non-core customer facing services can be outsourced to G4S. Service developments such as these help banks and retailers to cut their costs, while increasing efficiency and returns on their cash.
Interest rates can influence the efficiency of the cash cycle. In high interest rate environments, banks and retailers gain maximum returns on their cash if the cycle is operating at maximum efficiency. In low interest rate environments, customers are less concerned about cash sitting idly in ATMs or in branches, which results in lower cash transportation and processing volumes.
Crime levels have an impact on customer attitudes to handling cash themselves or using a secure method of cash management. Small business customers who “walk to bank” can benefit from reduced bank charges or increased speed of credit by avoiding high street bank branches and paying directly into a larger, more efficient processing centre.
Secure solutions – government
Focus on security
Attitudes to security within governments can help drive growth for the security industry. Worldwide, the private sector is playing an increasing role in protecting government staff working at missions overseas, supporting the work of the armed forces and securing sensitive buildings and assets.
Propensity to outsource
A government’s attitude towards outsourcing to the private sector can be another key driver of growth. G4S has valuable skills in many areas such as prisons, prisoner escorting, electronic monitoring of offenders, police custody and the facilities management or security of key government facilities, both at home and abroad.
When government budgets are under pressure, governments are more willing to explore ways of achieving efficiencies and managing costs and that often creates additional private sector participation in government services. On average, the private sector is said to be at least 20% cheaper than government delivery of key services such as prisons.
Secure solutions – non-government
Attitude to risk management
Attitudes to risk within major organisations are changing – discussions on the protection of a company’s assets and people are now conducted at a senior level and have extended beyond physical protection into protecting company reputations. Security is now less of a commodity and more of an imperative for businesses to survive. We expect this trend to continue.
Focus on high growth segments
By ensuring that we are at the cutting edge of securing complex environments in high growth segments such as oil and gas and ports and airports, we can continue to deliver strong growth across the business.
Growth of internationally let contracts from multinationals
There is an increasing trend for large multinational companies to look to a single provider to secure their assets and protect their people across their international operations. Growth in international accounts is expected to continue. See Integrated security solutions and Strong New Markets positions for more information.
Investment in infrastructure growth in New Markets
Increasing investment in transport, energy, communications and other forms of infrastructure is increasing the need for quality security services across New Markets. G4S has a unique presence in these markets and is well placed to benefit from this continued investment.
Impact of technology
Our ability to supply and integrate manpower services with technology – not just traditional security systems, but customer-facing IT systems which provide enhanced management information and risk management capability – gives us a strong competitive advantage.
Multi-service or service bundling
In New Markets, customers are often looking for “bundled” services incorporating security with, for example, catering, cleaning, health & safety and other services. With a long heritage and a strong brand in New Markets, we are able to expand the services we provide for existing contracts as well as attract new customers.
We are focused on driving outsourcing across our key sectors and our customer base…
One of the main elements of our strategy is to drive outsourcing across our key sectors and customer base. In order to achieve this, it is important to have the right level of customer relationship – customers see G4S as a strategic partner, a solutions provider and an essential part of their own strategy delivery plans.
We categorise our customers into different groups depending on the complexity of the service provided and the nature of the relationship. This model shows the four different customer groups and outlines the characteristics of each of them.
We measure our progress on strategic customer relationship development by analysing various aspects of the service provided, the contractual terms, the strength and duration of the customer relationship and the style of purchasing adopted by our customers. Our goal is for a significant proportion of our customer relationships to be at the strategic level (total process outsourcer or transformational partner).
In order to assess our progress during 2010, we analysed our relationships with 700 of our larger customers across 40 countries, representing around 50% of group revenues. The analysis showed that 55% of the sample were at the strategic level and we estimate this to equate to about 30% of revenues at a total group level. The results are shown in the pie charts. We will update this analysis regularly and use it as an ongoing indicator of our performance.