G4S PLC is the largest private security company in the world, operating in over 120 countries. The document provides an overview of G4S, including its subsidiaries and financial performance over the past 5 years. It also analyzes G4S's share price performance compared to benchmarks and conducts a SWOT and financial analysis. The analysis concludes that G4S is undervalued and recommends buying the stock.

1. G4S PLC PROFILE AND SWOT ANALYSIS
DAVID SUTTON
FIELDINGS INVESTMENT MANAGEMENT
28/11/2014

2. FIELDINGS INVESTMENT MANAGEMENT - NOVEMBER 2014
Listed under the support services sector, G4S PLC (G4S) is the largest security company
in the world, employing over 618,000 people in 120 countries and operates in Africa (22%
turnover), Asia and the Middle East (21% turnover), Europe (22% turnover), Latin America
(10% turnover), North America (18% turnover), and the UK and Ireland (22% turnover).
With a large number of subsidiaries, G4S provides a myriad of core services, including
manned security services, security systems, monitoring and response services, secure
facilities services, risk management and consultancy services, electronic tagging and
monitoring of offenders at home and in the community, the management of juvenile and
adult custody centres, and prisoner escorting. The company’s operating structure is
comprised of two branches: secure solutions (84% turnover) and cash solutions (16%
turnover). For the purposes of the current profile, G4S will be examined as a whole.
Over the last five years G4S has experienced several controversies that have become
public knowledge, perhaps tarnishing the company’s image in several economies.
However, G4S has taken steps to improve its public image and renew faith amongst its
shareholders: the North American branch sold off its attachments to Guantánamo Bay for
$135Mn, Canadian services will be consolidated and run from the US branch, the UK
branch has repaid the UK government and has donated to military organisations, recent
reports have indicated that G4S’s provisions of services to Israeli forces do not favourably
impact the ongoing conflict between Israel and Palestine, and lastly Helen Parris - the
Director of Investor Relations for G4S - has confirmed that the company has already won a
new manned securities contract in Latin America and will be establishing a standalone
management team there. Combined with recent restructuring over the last six months, it is
evident that G4S is fighting to maintain face and improve its financial position.
Despite the controversies, G4S reported 2013 year-end revenues of £7.428Bn (see Table
1 for a 5-year revenue summary). In 2014, Q3 results report a revenue growth of +4.2%,
which is a 0.1% increase from H1. Ms. Parris reported +11% growth in the emerging
markets, +6% growth in North America, and -1% growth in the UK. Profit growth is at +6%,
with PBITA growth in line with H1. Contract retention rates in Q3 have reached 90%, and
G4S reports £5.1Bn ACV.
AMAG TECHNOLOGY INC SECURICOR CASH SERVICES
ARMORGROUP SECURICOR EMS INC
COGNISE SECURITY INC SECURICOR INT. VLBLS TRANSPORT
GROUP 4 SECURITIES N.I. INC SECURICOR JUSTICE SERVICES LTD
GROUP 4 SECURITY SYSTEMS LTD SECURICOR NEW CENTURY LLC
GROUP 4 TECHNOLOGY LTD SECURICOR SEC. SERVICES LTD
GROUP 4 TOTAL SECURITY LTD SECURITAS TECHNOLOGY PLC
G4S ISRAEL (HASHMIRA) WACKENHUT CORPORATION
HENDERSON SEC. ELECTRONICS LTD WACKENHUT INTERNATIONAL
PLANTIME LTD WACKENHUT UK LTD
1
BUSINESS OVERVIEW
SUBSIDIARIES

3. FIELDINGS INVESTMENT MANAGEMENT - NOVEMBER 2014
Figure 1. November 2014 REFS
Table 1. G4S 5-Year Fundamental Summary
2
FINANCIAL ANALYSIS
PRICE (p) 256
MARKET CAP (£Mn) 3,964
POSITION 89
INDEX FTSE 100
NORM EPS (PR) 15.9P
TURNOVER (13AR)
(£Mn)
7,428
PRETAX PROFIT
(13AR) (£Mn)
-170
DY 3.51%
PER 16.0
PEG N/A
GROWTH 17.9%
GEARING 191%
ROCE 36.6%
MARGIN 4.83%
YEAR END 31/12/2010 31/12/2011 31/12/2012 31/12/2013 31/12/2014E
REVENUE (£Mn) 7,258 6,966 7,228 7,428 6,994
PRETAXPRF (£Mn) 307 290 273 267 247
EPS (p) 14.8 14.6 15.1 13.2 13.6
EPS GROWTH (%) -0.87 -1.28 +3.07 -12.6 +2.88
DPS (p) 7.33 8.15 8.53 8.96 8.96

4. FIELDINGS INVESTMENT MANAGEMENT - NOVEMBER 2014
SHARE PRICE PERFORMANCE VS BENCHMARKS
6 MONTHS
3
Figure 2. G4S compared to FTSE 100 Index and Support Services Sector
over the last 6 months. Source: London Stock Exchange.
As is evidenced above G4S has significantly outperformed the FTSE
100 and Support Services sector over the last six months. This
superiority can be perceived as G4S being the UK leader in obtaining
security contracts and offering the greatest range of services, therefore
outperforming smaller companies.

5. FIELDINGS INVESTMENT MANAGEMENT - NOVEMBER 2014
SHARE PRICE PERFORMANCE VS BENCHMARKS
1 YEAR
4
Figure 3. G4S versus FTSE 100 and Support Services sector over the
last year. Source: London Stock Exchange.
G4S share prices were volatile in the past year, with a significant
downturn at the beginning of 2014. However, the company experienced
steady continuous growth, and in the last quarter (Q3) was able to
supersede the FTSE 100 Index and Support Services sector. It should
also be noted that G4S stock price increases in Q1 began at the same
time the benchmarks declined, indicating the company’s resilience and
capability for robust growth in the face of adversity.

6. FIELDINGS INVESTMENT MANAGEMENT - NOVEMBER 2014
SHARE PRICE PERFORMANCE VS BENCHMARKS
5 YEARS
5
Figure 4. G4S stock prices valued against FTSE 100 and Support
Services sector over the past five years. Source: London Stock
Exchange.
G4S is shown at the bottom of the chart, signifying a poorer
performance than the FTSE 100 and Support Services sector. The
support services sector has experienced a very high increase due to
greater demand on security measures, the Olympic Games, and other
various improvements conducted throughout the UK. G4S has
underperformed in the UK due to various controversies throughout the
last five years, which will have impacted the stock value price over time.
Overall, recent G4S share values are outperforming both of the
benchmarks, and signifies EPS appreciation in the future. Compare to
the Point and Figures Chart in Appendix 1. to ascertain the supply and
demand trends.

7. FIELDINGS INVESTMENT MANAGEMENT - NOVEMBER 2014
6
SWOT ANALYSIS
STRENGTHS WEAKNESSES
Operates in emerging and developing
markets - appeals to broad audience
Poor public image can lead to diminished
revenue from new contracts
New upper management restructuring
improve profits and operating cash flow
Poor performance in UK and Ireland
means that G4S is losing business in one
of its highest-earning sectors
Majority of 618,000 employees are from
emerging markets - lower labour costs
Progressive changes looking ahead to
continue growth and expansion
In many emerging markets G4S displays
promise of future revenue as it is the only
far-reaching security services company
OPPORTUNITIES THREATS
Establishment of standalone management
team in Latin America - Olympics 2016
Rival security companies taking UK and
Ireland contracts, possibly reducing
turnover in largest sector
Cash handling in emerging markets Loss of trust by UK government can lead to
other governments taking business
elsewhere
£800m in new contracts throughout North
America, Latin America, and Europe
Risk management contract in Iraq
Consolidation philosophy by CEO Almanza
reduces capital expenditure and will help to
balance out G4S - continuous growth

8. FIELDINGS INVESTMENT MANAGEMENT - NOVEMBER 2014
Financial analysis has conveyed that stock prices in G4S have entered a continuous
growth phase, with future EPS to increase in value over time. Normalised EPS Growth
took a plummet in 2014 but future predictions calculate returns to positive growth, with a
very high 2015 expectation of +20.9%. 2013 ROCE showed significant improvement for
the first time in two years, leading to the expectation of a higher 2014 ROCE with the
growth that is currently being experienced.
Compared to the market and sector in Q3 2014, G4S shows the traits of a growth
investment, with above average growth rates of 17.9% and ROCE of 36.6%. However,
recent efforts to restructure the company have improved the PCF (12.8 times) and PSR
(0.50 times) ratios, which should be tantalising to value investors as well. No director sales
indicates the faith that the executive team have in the company’s continued growth.
The Broker’s Consensus is buy. With recent high performance of stocks, steady growth,
increasing ROCE, current trend upwards, promising future plans in emerging markets, and
forecasted year-ending 2015 EPS of 16.0 and year-ending 2016 EPS of 18.4 with DPS
increasing to 9.2p and 9.5p respectively, I rate the stock as BUY.
7
CONCLUSION

9. FIELDINGS INVESTMENT MANAGEMENT - NOVEMBER 2014
5-YEAR POINT AND FIGURES CHART OF G4S STOCK PRICE (p)
8
APPENDIX 1.