Market Characteristics Cash Solutions Key Characteristics Above group average margins Consolidated markets Very high G4S competitive expertise Cost base fixed in short term Long Term Growth Drivers Development phases of the cash cycle Role and strategy of Central Banks Increased willingness to outsource Product innovation - End to end ATM management, CASH360, etc High single digit market growth Market Participants Defensive Qualities Loomis Brinks Prosegur Garda Technology companies Cash usage trends in economic downturns Long term contracts / relationships G4S integral part of customer process 1
Cash Solutions Ken Niven Cash Solutions - Divisional President
G4S Cash Solutions North America Canada Europe Belgium, Bulgaria, Cyprus, Czech Republic, Estonia, Finland, Greece, Hungary, Ireland, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Offshore(3), Poland, Romania, Serbia, Slovakia, Slovenia, Sweden, Turkey, United Kingdom Central/South America Barbados Colombia Costa Rica Dominican Republic Ecuador Grenada Peru Paraguay St Lucia Trinidad & Tobago Africa Botswana Kenya Morocco Malawi Namibia Tanzania Uganda Zambia Mozambique South Africa Lesotho DRC Middle East Bahrain Jordan Kuwait Lebanon Pakistan Qatar Saudi Arabia UAE Bangladesh Asia Pacific Cambodia Nepal Bangladesh Brunei China Guam Hong Kong Indonesia India Macau Malaysia Papua New Guinea Taiwan Thailand 3
G4S Cash Solutions 1.3 bn revenue Turnover and organic growth ( m)* 11.4% PBITA margin 1,800 15% 12.5% 1,600 15% PBITA CAGR 1,400 10.6% last five years 1,200 1,341 7.6% 1,201 72 countries 1,000 6.2% 9% 800 987 45,000 employees 600 866 873 9,500 vehicles 400 3% 200 600 Cash 0 0% management 2005 2006 2007 2008 2009 locations *As published 4.7% 12% 6% 4
G4S versus Competition 12 months ended 31 December 2009 Cash Solutions Global Cash Market Shares Top Players m Brinks Loomis Turnover 1,341.2 1,793.9 1,039.8 19% Organic Growth 4.7% 0.1% -3.0% 42% 15% PBITA 152.4 84.8 72.6 PBITA Margin 11.4% 4.7% 7.0% Margin % vs FY08 +0.1% -1.3% +0.4% 4% 8% 12% Brinks G4S Loomis Prosegur Garda Others *Brinks: adjusted results, excluding 2009 one-offs 31 st December exchange rates used: 1 GBP = SEK 11.53; US$1.61 5
Value of GBP & Euro notes in circulation Value of GBP Notes in Circulation 2002-2008 Value of Euro notes in circulation 2002-2009 50,000 10000 45,000 40,000 9000 CAGR +7.6% CAGR + 14.6% 8000 35,000 7000 30,000 6000 ( ) Millions ( ) Milli ions 25,000 5000 20,000 4000 15,000 3000 10,000 2000 5,000 1000-0 2002 2003 2004 2005 2006 2007 2008 2002 2003 2004 2005 2006 2007 2008 2009 Value of notes in circulation ( millions) Value of notes in circulation ( millions) Source: Bank of England Source: European Central Bank 6
Cash Market Development Increase Revenues and increase PBITA Market development Manned security Cash transportation Cash ATM replenish- ATM repair and Outsourcing processing ment maintenance solutions Cash cycle management ATM Cash centres Forecasting Retail solutions 7
Cash Market Development Basic transportation and grow branch network Cash counting in transportation branches Outsourcing Solutions Financial Sector Retail Sector ATM replenishment ATM repair and maintenance 8
Cash Market Development Evolving the Cash Product Basic secure transportation Migrate from bank and government operated secure transportation Cash counting Process retail deposits of transportation hubs co-location efficiency benefits ATM replenishment Support of ATM s not positioned at bank branches ATM repair and maintenance Introduction of technical services based on ATM knowledge 9
Cash Market Development Outsourcing Solutions Retail Solutions Outsource retail store cash offices Real time cash balance information Secure environment Cash Cycle Management Cash centre outsourcing ATM network outsourcing Cash forecasting 10
Factors that impact cash market characteristics Government structure Central bank infrastructure Commercial banking structure Security regulations Cash management companies 11
National Cash Market Drivers No two markets are the same Government structure and strategy : central vs decentralised Central bank strategy and infrastructure many central bank branches or a few strategic locations? Commercial banking structure national banks or many regional players? Regional bank infrastructure result in fragmented cash markets Security regulation Police carrying weapons usually results in armed cash crews Strategy of government on required levels of secure transport regulation 12
National Cash Markets Two Key Drivers Central Bank Strategy Central bank view on need to closely control physical cash Central bank infrastructure Many cash branches High control Security Regulation Some countries reluctant to permit private security Government intent to regulate? light touch or detailed requirements / regulations Few cash branches Armed crews generally mean Low intervention and increased lower operating costs outsourcing Low investment Central banks moving towards Lower crewing levels less intervention and more Technology increasingly a basis currency management outsourcing for regulation Operating centres Vehicles 13
Benefit of technology solutions Ireland Since 2008 Ireland has invested in a multimillion pound new build infrastructure with eight branches and a new purpose built control centre. One third of the vehicle fleet has been renewed during the same period. The branches incorporate an onion ring defence strategy with fences, detection systems and layered internal design. Since 2008 attacks have halved End to End systems will follow later this year following the introduction of the Private Security Authority (PSA) minimum standards in 2009. 14
Development of a Cash market Product revenues - UK 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Other 15
UK Cash Solutions Revenue Split 2009 Cash Centres 13% Retail 360 <1% Other 4% ATM 29% Secure Transport 54% 16
Sustainable Development of a Large Cash Market : UK Example Original market entry manned security Extension into cash transportation, then counting retail deposits G4S developed nationwide cash services leadership : No. 1 ATM s rolled out in 1970 s and 1980 s Major cash logisti tics chall llenge for central bank Cash in circulation 1970 4bn 1980 12bn 2000 33bn (2009 49bn 8% yoy) Cash note distribution delegated to commercial banks : interest relief through Note Held To Order scheme (NHTO) 17
Sustainable Development of a Large Cash Market: UK Example cont d Commercial banks created networks of non-core centres to fitness sort and counterfeit check for central bank Note Circulation Scheme replaced NHTO in 2001 tighter controls and increased efficiency Significant outsourcing in following three years UK bank processing centres now outsourced with exception of one major G4S only commercial cash management organisation providing outsourcing processing solutions 18
Sustainable Development of Cash Markets Next Steps in Market Development INBOUND CASH OUTBOUND CASH Retailers Retailers Cash count, reconciliation, counterfeit Retailers detection ti Fitness sort ATM s Banks Outbound logistics highly efficient Inbound logistics material efficiencies yet to be released Launch of Cash 360 retailer outsourcing 19
G4S Cash Solutions Global Opportunity Fully outsourced solutions 1 8 Partial FI outsource and retail solution 1 3 21 ATM Maintenance 2 1 21 ATM Replenishment 3 6 38 3 12 39 Increasing complexity Counting Secure transport 3 16 53 Depicts countries with G4S Cash Solutions Market position 3 2 1 20
Summary Growth through Solutions Five year CAGR 11.6% Growth in 2009 New Markets 12% Developed markets 2.7% Significant, sustainable solutions opportunities in New Markets and developed markets Central banks moving to delegated distribution models ATM outsource solutions e.g. Standard Chartered Best practice transfer all New Markets regions have cash solutions specialists Growing cash solutions consultancy to position for growth 21