G4S plc UK DK : Integrated Report and Accounts and

13 April 2017

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 2016 which it made on 8 March 2017, G4S plc, the global, integrated security solutions provider, announces that it has published its 2016 Integrated Report and Accounts for the same period.

The full Integrated Report and Accounts has been posted to shareholders who have elected to receive printed copies, together with the Notice of the Company's Annual General Meeting which will be held on Thursday, 25 May 2017 at 2.00 pm in The Orchard Suite at the Holiday Inn, Gibson Road, Sutton, Surrey, SM1 2RF, UK.  A proxy form for the Company's Annual General Meeting will be sent to shareholders other than those who have elected to receive shareholder information via electronic communication.

The 2016 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.

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 2016 Integrated Report and Accounts for the year ended 31 December 2016, 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 2016 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 2016 Integrated Report and Accounts.

APPENDIX

The group's principal risks and uncertainties:

A description of the principal risks and uncertainties that the Company faces is extracted from pages 52 to 55 of the 2016 Integrated Report and Accounts.

HEALTH AND SAFETY (H&S)
Risk description
The provision of security services to protect valuable assets, often in hostile or dangerous circumstances, presents health and safety challenges. The business operates a large vehicle fleet in a number of countries with poor road infrastructures, increasing the risk of road traffic incidents. In 2016, 47 (2015: 46) employees lost their lives in work-related incidents.

Risk mitigation
The protection of our staff, people in our care or custody, and third parties including the public, is of utmost importance. We believe that accidents are preventable and that 'zero fatalities' is an appropriate goal. The Group has mandatory H&S controls which all companies are required to comply with. These controls cover the core requirements for businesses' management systems and are supplemented by on-line training for managers and business leaders. Formal processes, which are continuously reinforced, are in place to report, investigate, close out and share the lessons learned from serious incidents. A road safety policy applies to all businesses, a number of which also run local programmes on topics such as speed management, GPS tracking and motorcycle safety. A series of 'Golden Rules' which reflect some of the most common H&S risks are widely publicised, included in mandatory training, and failure to adhere to them is linked to our disciplinary procedures. As part of embedding best practice H&S standards and behaviour we have completed assessments of H&S practices in high-risk countries and provided further guidance to mitigate H&S risks. Good practice and progress in delivering H&S improvements are recognised and rewarded, while poor practice and insufficient progress lead to close executive scrutiny, formal performance management processes and reductions in performance related pay for business leaders as appropriate.

Mitigation priorities for 2017
We will continue to monitor compliance with the H&S controls through the annual self-assessment process and through on site reviews from local, regional and Group teams to check compliance with these controls. We will enhance the process for reporting H&S performance and introduce the tracking of high potential incidents with the aim of proactive prevention of incidents leading to injuries and fatalities.

Having recently developed a number of training programmes aimed at managers and business leaders, we will focus our attention on the content of H&S training given to front line employees and make changes as appropriate to ensure the messages about the importance of health and safety and responsibilities are consistent at all levels. We will refresh the 'Golden Rules' to ensure they remain aligned to the key H&S risks and awareness of them is reinforced. We will continue to provide guidance and intervene to support selected businesses in delivering improved health and safety performance.

CULTURE AND VALUES
Risk description
G4S provides security for people, premises and valuable assets.
The Care and Justice services businesses provide services to detainees, victims of crime, people needing state assistance, and other members of the public. We operate in many different countries around the world with a diversity of local and national cultures. Having a strong set of corporate values that unite the organisation deeply embedded in our culture, is very important.

If we fail to behave in accordance with the high standards that we set ourselves there is a risk that we will not deliver on our commitment to our colleagues, customers and other stakeholders and may fail to comply with legislation and international standards.

Risk mitigation
The Group has a strong set of corporate values which are embedded in a range of employment practices including recruitment, induction training, Group policies and performance contracts. They are communicated to employees through posters, intranet, values events, training programmes and other methods across our different markets. Our corporate values are detailed on page 3. In everything we do, no matter how challenging the circumstances, we require our people to live these values and to be prepared to Speak Out if others disregard them. Ethics steering committees at a Group level and in each region oversee the whistleblowing investigation process and provide guidance to countries on ethical matters. In the UK & Ireland we focused on building awareness of the importance of our corporate values and whistleblowing, particularly in prisons and other secure care environments. Members of our Group Executive Committee have undertaken a programme of visits to these locations to help ensure this is embedded successfully.

Mitigation priorities for 2017
To ensure widespread understanding and awareness of our revised corporate values, we have recently launched a new communications toolkit and identified a global network of values ambassadors who are responsible for communicating the values across all businesses. In addition, we are embedding the values in our processes for selecting, hiring, on-boarding, training and development of colleagues around the world. We are launching a scheme to recognise colleagues who are living the values and will share best practice case studies across the Group. This includes a new video for induction training which makes the values relevant to our day to day activities, a revised competency framework for managers so that expected behaviours and assessment of their performance is aligned to the new values, as well as on-line management training. Every opportunity will be taken to promote Speak Out in these materials so colleagues can report any concerns with behaviour that appears contrary to our values.

PEOPLE
Risk description
In a global and diverse security business such as ours, employing over 585,000 people across around 100 countries, there are risks associated with recruiting, supervising, motivating and training employees on such a large scale, as well as rewarding appropriately and retaining critical talent to ensure effective succession in management roles. Screening is also a particular challenge in some territories which lack supporting infrastructure from the relevant authorities. While our controls are robust we still face the risk of a rogue employee not complying with our values.

Risk mitigation
The Group has mandatory human resources controls which all countries are required to comply with. These HR core standards were reviewed and re-launched during the year with appropriate training and support and are assessed through a control self-assessment process within our GRC tool. This provides visibility of compliance and monitoring of action plans to mitigate any non-compliance. In those territories where local circumstances make it impossible to comply fully with the screening and vetting elements, we identify alternative measures, approved by Group human resources, to mitigate the risk as much as possible.
We review in detail the performance and potential of approximately 3,000 managers across the Group to help identify development needs and build succession plans. We also run a regional leadership programme to nurture talented individuals early in their careers and develop them into more senior roles as they move through the organisation.

We monitor staff turnover monthly to ensure that our employee engagement initiatives are achieving desired results of improved employee loyalty and retention. During the year voluntary staff turnover reduced by 7.1%, for more details see page 15.

Mitigation priorities for 2017
We will undertake our fifth global employee engagement survey. The questions will be aligned to the revised corporate values to help businesses identify whether our employees believe the company is living up to them. The results will guide further enhancements to policies and incentive mechanisms to improve productivity, customer satisfaction, personal development and engagement. Self-assessments against the HR core standards are completed annually so progress in closing any gaps identified in the 2016 assessments and any new ones will be followed up.

MAJOR CONTRACTS
Risk description
The Group has a number of long-term, complex, high-value contracts with multinational, government or other strategic customers. For such contracts there are risks to 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
We have strict thresholds for the approval of major bids involving both detailed legal review and senior management oversight. These are embedded into our SalesForce opportunity management tool. For our most significant contracts in the UK, we perform 360° 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 we have account managers who oversee performance of these contracts across relevant countries and have regular updates with these customers to ensure we deliver to contract terms. We believe the improvements made to controls in this area over the last three years have significantly reduced the risk of entering into new contracts which will become materially onerous.

Mitigation priorities for 2017
We will continue to enhance the review and approval process to mitigate further the risk of poor contracts and ensure lessons learned from underperforming contracts and those we have turned around lead to better performance and the identified issues are part of future approvals for all contracts.

LAWS AND REGULATIONS
Risk description
G4S operates in many jurisdictions globally, with complex and diverse regulatory frameworks. An additional complexity arises from the extraterritorial reach of some of the legislation to which the Group is subject.

Risks include increasing litigation and class actions; bribery and corruption; obtaining operating licences; complying with local tax regulations; changes to employment legislation; complying with human rights legislation; and new or changed restrictions on foreign ownership. Risk also arises from new or changing regulations which require modification of our processes and staff training. These can lead to higher costs from claims and litigation; inability to operate in certain jurisdictions, either through 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 all local management to comply with local laws and regulations. Group and regional leadership together with our Ethics Committees at Group and regional level provide oversight and support compliance with these policies and procedures 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 2017
We will continue through Group and regional leadership to monitor for changes in laws and regulations and ensure that compliance with them is maintained in all countries. In addition we will continue to liaise constructively with governments and relevant authorities.

GEOPOLITICAL
Risk description
We operate in many countries across the world, with wide-ranging government and political systems, different cultures and varying degrees of rule of law and compliance with human rights within conflict and post-conflict zones. The risk factors include political volatility, revolution, terrorism, military intervention and insurgency. The geopolitical risks we face 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 have developed a global process for assessing geopolitical risks of different countries which determines the types of customers we will serve and the types of service we will provide. We also have a great deal of experience of operating in a wide range of difficult territories. We collaborate with our local partners; conduct early risk assessments before and during security assignments; have robust operating procedures; and work closely with our local and global customers in managing the risks of operating in such environments including compliance with human rights. Our G4S Risk Management business has particular expertise in providing secure solutions in very high risk, low infrastructure environments.

Mitigation priorities for 2017
We will continue to assess and monitor geopolitical risks, including exposure to potential human rights abuses, across the high risk countries in which we operate.

INFORMATION SECURITY
Risk description
The customers, staff, suppliers and partners of G4S which entrust their sensitive and confidential business information into our care rightly expect that we will take all reasonable steps to protect it. We are at risk of cyber and physical attack by criminal organisations and individual hackers which 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 plans and disaster recovery.

Risk mitigation
We have "defence-in-depth" technologies (i.e. multiple layers of defence) in key systems to protect business information entrusted to us. We have mandatory policies and best practice guidance for application by operating businesses across the Group. Our Minimum Information Security Controls are continually refined and updated in line with our assessment of threats. Compliance with the controls is measured through self-assessment and independently audited by group internal audit.

In 2016, G4S migrated successfully all its businesses to one unified office productivity suite, Google Cloud, covering around 65,000 employees. This further improves our control and security of email and corporate documents.

Mitigation priorities for 2017
Group IT will refine policies into standards and will continue to provide direct technical and hardware solutions to improve performance of IT systems, backup routines and resilience across the world. We will deploy appropriate IT security controls to ensure that we have the right levels of monitoring, reporting and protection of our business information.

CASH LOSSES
Risk description
There are risks in our cash business from external attacks, internal theft and poor cash reconciliation as we transport and safeguard high value cash and valuables including international shipments.

We provide a wide range of cash management services including cash processing, sorting of notes for ATMs, holding funds on behalf of customers, secure storage, and a range of ATM services. Loss of cash or valuables could lead to loss of profit, increased cost of insurance and health and safety considerations for our staff and the public.

Risk mitigation
We have clearly defined standards for reconciliation and operational cash controls and have developed an e-learning 'academy' for cash reconciliation and controls to facilitate quick deployment and continued effective operation of these controls across our cash businesses. Group and regional teams monitor compliance with the reconciliation and control standards and support our cash businesses to improve them.

We also have clearly defined standards for physical cash security for our employees, vehicles and processing centres. The Group cash security function is responsible for monitoring compliance with these; for monitoring attacks and other cash losses; and for communicating lessons learned. Innovative security defence products are in use, cash box tracking, vehicle protection foam and protective boxes.

Mitigation priorities for 2017
We will continue to drive improvement in cash reconciliation and physical cash security across our cash businesses through both Group and regional teams.

GROWTH STRATEGY
Risk description
Our growth strategy is to leverage our expertise to drive innovation in our core service lines to improve service for our customers and so increase the value of long-term customer relationships.

There are risks that we will 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 government legislation changes could impact on our growth potential or force exit from markets and territories.

Risk mitigation
We have best practice service delivery guidelines for both secure solutions and cash service lines and are developing a global information system supporting the end to end order to cash process in our secure solutions service lines, including finance, human resources and operational delivery.

Our development of new service offerings, particularly in electronic security and cash solutions, is focused on those centres of excellence where we have the strongest capability.
We leverage our global network to offer integrated solutions internationally. In particular, our global accounts programme supports and promotes our multinational accounts and focuses selling our more specialist services such as investigations and secure logistics.

Our 'outbound' programme works with Chinese and North American multinational customers to provide services to them on a global scale. 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.

We also have a consistent approach across all countries to assess customer satisfaction and ensure we deliver our service commitments, key performance indicators and thus improve retention of customers.

Mitigation priorities for 2017
We will continue to invest in our business development capabilities in both people and systems. The results of understanding our customers' levels of satisfaction in how we deliver our services will be used to improve further customer satisfaction and guide how we deliver integrated solutions to existing and potential customers across all businesses.

The global information system is planned to be piloted in our UK & Ireland businesses, and then rolled out globally over a number of years. Further enhancements will be made to our business resilience mechanisms to enhance business continuity and thus mitigate the risk of interruption of service to customers.

Related party transactions (note 40 to the consolidated financial statements)

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 £49m (2015: £48m). Amounts due from related parties include £8m (2015: £5m) from joint ventures. There are no amounts due to joint ventures (2015: £nil).

No expense (2015: £nil) has been recognised in the year for bad and doubtful debts 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:

The Group had outstanding balances of £12m due from these entities as at 31 December 2016 (2015: £10m).

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 £0.5m at 31 December 2016 (2015: £0.4m).

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 78 to 98.

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 102 of the Company's 2016 Integrated Report and Accounts.  Responsibility is for the full 2016 Integrated 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.

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 58 and 59 of this annual report, confirm that, to the best of his or her knowledge:

• the financial statements in this annual report 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 55 includes information on the Group structure, the performance of the business and the principal risks and uncertainties it faces. The financial statements on pages 110 to 185 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 110 to 176 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 55 of the annual report and accounts.

The directors consider that the annual 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, 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 28 March 2017 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 95 countries and has over 585,000 employees.  For more information on G4S, visit www.g4s.com.