COMPANY PRESENTATION
INVESTOR RELATIONS DEPARTMENT
1
COMPANY PRESENTATION INVESTOR RELATIONS DEPARTMENT 1 DISCLAIMER - - PowerPoint PPT Presentation
COMPANY PRESENTATION INVESTOR RELATIONS DEPARTMENT 1 DISCLAIMER This presentation contains forward-looking statements and information relating to regulation in countries in which the Company and its subsidiaries do business; [Prosegur
COMPANY PRESENTATION
INVESTOR RELATIONS DEPARTMENT
1
DISCLAIMER
COMPANY PRESENTATION 2019 This presentation contains forward-looking statements and information relating to [Prosegur Compañía de Seguridad, S.A.] (the “Company”) and its subsidiaries that are based on the current beliefs of the Company’s management, key expectations and assumptions, as well as information currently available to the Company and projections of future events as well as assumptions made and information currently available to the Company. These forward-looking statements speak only as of the date they are made. These forward-looking statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends,” and similar words or phrases. Other forward-looking statements can be identified in the context in which the statements are made or by the forward- looking nature of discussions of strategy, plans or intentions. Such forward- looking statements, as well as those included in any other material discussed at any management presentation, reflect the current views of the Company with respect to future events and are subject to known and unknown risks, uncertainties and key assumptions about the Company and its subsidiaries and investments, including, among other things, the development of their businesses, trends in their operating industry, and future capital expenditures. In light of these risks, uncertainties and assumptions, the events or circumstances referred to in the forward-looking statements may not occur. None of the future projections, expectations, estimates or prospects in this presentation should be taken as forecasts or promises nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects have been prepared are correct or exhaustive or, in the case of the assumptions, fully stated in the presentation. Many factors could cause the actual results, performance or achievements of the Company and its subsidiaries to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others: changes in general economic, political, governmental and business conditions globally and in the countries in which the Company and its subsidiaries do business; changes in interest rates; changes in inflation rates; changes in prices; trends affecting the Company and its subsidiaries businesses, financial condition, results
regulation in countries in which the Company and its subsidiaries do business; acquisitions, investments or divestments which the Company and its subsidiaries may make in the future; the Company and its subsidiaries capital expenditures plans; their estimated availability of funds; their ability to repay debt with estimated future cash flows; security threats worldwide and losses of customer valuables; failure to maintain safe work environments; effects of catastrophes, natural disasters, adverse weather conditions, unexpected geological or other physical conditions, or criminal or terrorist acts; public perception of the Company and its subsidiaries businesses and reputation; insufficient insurance coverage and increases in insurance cost; loss of senior management and key personnel; unauthorized use of the Company’s intellectual property and claims of infringement by the Company or its subsidiaries of others’ intellectual property; changes in business strategy and various other factors. Should one or more of these risks or uncertainties materialize, or should any other unknown risk occur,
vary materially from those described herein as anticipated, believed, estimated, expected or targeted. No one intends, or assumes any obligations, to update or revise these forward- looking statements, whether as a result of new information, future events or
reflected in the forward-looking statements. As a result of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements as a prediction of actual results or otherwise. Not for general release, publication or distribution, directly or indirectly, in
Jurisdiction in which the distribution or release would be unlawful. These materials do not constitute an offer to sell, or a solicitation of offers to purchase or subscribe for any securities in the United States or any other
registered under the U.S. Securities Act of 1933, as amended, and may not be
exemption from registration requirements. There is no intention to register any portion of any offering in the United States or to conduct a public offering of securities in the United States.
2
COMPANY PRESENTATION FY 2019
3
PROSEGUR GROUP Prosegur: a success story Since its foundation in 1976, Prosegur has grown to become one of the undisputable global leaders in the security industry…
COMPANY PRESENTATION FY 2019 4 Expansion in LatAm & Europe and Increase of services portfolio
FM and Cleaning businesses
France
Business Unit
Colombia
1998 2008
2,052
Foundation and initial Expansion
Stock Exchange
1976 1997
480
Consolidation of the integrated model and expansion into Asia- Pacific
for different client sectors
and Germany
Issuance of a € 500 million Bond and Entry into Australia
2009 2014
3,783
Yearly revenues of last year in the period in €Million
Focus on Business Lines Profitability and continual expansion
around business lines vs. geographies
services business unit
& Philippines
2015 2018
3,939
PROSEGUR TODAY
>9,000
ARMORED VEHICLES
>100,000
MANAGED ATMS
+550,000 ALARM
CONNECTIONS OVER 220 FULLY INTEGRATED ACQUISITIONS
26
COUNTRIES
+170,000
EMPLOYEES WORLDWIDE
COMPANY PRESENTATION FY 2019 5
A GLOBAL SECURITY COMPANY WITH A LEADERSHIP POSITION IN FOCUS MARKETS
WE ARE MARKET LEADERS IN 17 OUT OF OUR 26 GEOGRAPHIES
Cash in transit & cash management Guarding and technology Alarm Monitoring Position in the market share ranking
1
Prosegur Intl’ Player 1 Intl’ Player 2 Intl’ Player 3 Intl’ Player 4 #2 #3 #1 #4 #2 #1 #3 COMPANY PRESENTATION FY 2019
Source: DBK, Aproser and internal sources
6
CHINA
5
SINGAPORE
1
INDIA
2
PHILIPPINES
1
AUSTRALIA
2
GERMANY
1
TURKEY
n/aFRANCE
3
PORTUGAL
1
SPAIN
1
SOUTH AFRICA
n/aUSA
n/aCHILE
1
PERU
1
COLOMBIA
1
URUGUAY
1
ARGENTINA
1
PARAGUAY
1
BRAZIL
1
MEXICO
3
GUATEMALA HONDURAS COSTA RICA NICARAGUA EL SALVADOR
1
INDONESIA
n/a
DELIVERING SUPERIOR GROWTH AND SHAREHOLDER RETURNS
CUMULATIVE DIVIDEND DISTRIBUTED 2004-2018:
€1,103m
€ 823m ordinary dividend € 280m extraordinary dividend (2017)
Figures in €m
(1) Market Cap in 2017 as of Dec. 2017 was 4.042 – Actual Market Cap €m reflects IPO of CASH Listed in 2017
COMPANY PRESENTATION FY 2019
Revenue (€m) Market Cap (€m) (1) EBIT (€m)
7
2004
3,939
2018
1,112 +254.1% +9.5% 85 301
2004 2018
+252.5% +9.4% 895
2018 2004
2,728 +204.8% +8.3%
Publicly listed in 2017
ORGANISATIONAL MODEL: “ONE GROUP, THREE BUSINESSES”
COMPANY PRESENTATION FY 2019
B C A
ONE GROUP, THREE BUSINESSES
PROSEGUR
CASH
PGA
(Financial and support functions)
PROSEGUR
SECURITY
RATIONALE
▪ Accelerate growth ▪ Increase specialization and efficiency ▪ Simplify the organisation
IMPLICATIONS / BENEFITS
▪ All businesses have reached the maturity to be managed separately ▪ Different capital needs and KPIs ▪ Customer centric model across regions ▪ Accelerates sharing of best practices across regions
PROSEGUR
ALARMS
8
RESILIENT GROWTH AND STRONG CASH GENERATION
SALES*
€1,732 MM
EBIT Margin(%)*
15.5%
Countries / empl.
20 / 60,000
▪ #2 globally with 14% market share (vs. 7% in 2007) ▪ #1 in our focus Cash markets (14/20 countries) ▪ Leading scale, density and market share ▪ Outperforming the market (business has grown x4 in € sales in the last 7 years) ▪ Solid fundamentals → already growing in new products and capturing the next “outsourcing wave”
OUR BUSINESS OUR OBJECTIVES
▪ Continue delivering above-market organic growth at constant currency ▪ Lead industry consolidation player ▪ Lead the third wave of outsourcing (Cash Automation in Client, IAD, Back Office Management, Branch Teller Staff, etc.) ▪ Strong cash generation to fuel Group’s growth
COMPANY PRESENTATION FY 2019 *FY18 business figures 9
▪ #5 global player with a leading position in selected markets ▪ Industry leading technology-based solutions ▪ Differentiated growth strategies for each market based on development stage ▪ Expanding into mature markets with disruptive value proposition. ▪ Main player in LatAm leading the transformation of the industry
TO BECOME AN “INDUSTRY CHAMPION” AGAIN
SALES*
€1,946 MM
EBIT Margin(%)*
2.8%
Countries / empl.
14 / 103,000
▪ Continue transformation towards technology-based products ▪ Improve margins → all geographies with profitability in line with peers and Group’s best practices ▪ Grow and expand in US ▪ Complete integration of legacy businesses and operational improvements in Brazil ▪ Build a solid “Cybersecurity” platform
COMPANY PRESENTATION FY 2019
OUR BUSINESS OUR OBJECTIVES
10
*FY18 business figures
WHICH WE WANT TO ACCELERATE WITH ADEQUATE INVESTMENTS
SALES*
€262 MM
Total Connections*
547,000
Countries / empl.
10 / 7,000
last 5 years to enter and reach critical mass in 10 countries
alarm “SMART”
markets
marketing (e.g., sales team, lead generation)
OUR OBJECTIVES OUR BUSINESS
COMPANY PRESENTATION FY 2019 11 *FY18 business figures
PGA - CENTRALIZED EXTERNAL SUPPORT TO THE THREE BUSINESSES…
COMPANY PRESENTATION FY 2019 ▪ Human Resources ▪ Finance/Tax ▪ Legal ▪ Security ▪ Corporate Development ▪ IT ▪ Real Estate ▪ Brand ▪ Insurance ▪ Purchase ▪ Marketing
CASH
Commercials & Operations Cash Internal Support
SECURITY
Commercials & Operations Security Internal Support
ALARMS
Commercials & Operations Alarm Internal Support
SERVICES OFFERED PGA – External support
5% Mark Up
PROSEGUR HOLDING
12
… SUPPORTED BY STABLE INVESTMENT GRADE RATINGS
BBB/A-2
Outlook Stable October 2019
SUSTAINED STRONG LIQUIDITY PROFILE EXCELLENT CASH FLOW GENERATION WITH MODERATE CAPITAL EXPENDITURE AND WORKING CAPITAL REQUIREMENTS MINIMAL TRAPPED CASH ACROSS OPERATIONS MODERATE LEVERAGE
13 COMPANY PRESENTATION FY 2019
COMPANY PRESENTATION 2019
Leading the consolidation process
the Group’s growth
14
628 677 806 840 1017 1083 1170 1231
2006 2012
913
2007 2013 2010 2008 2009 2011 2014 2015 2016 2017 2018
763 889 956 1126
5.8%
45 49 50 58 60 64 73 74
2016 2006 2007 2008 2017 2009 2010 2011 2012 2013 2014 2018 2015
37 38 52 55 68
5.9%
853 888 942 1198 1299 1463 1571
2007 2006 2015
1380
2014 2008 2009 2010 2012 2011 2013 2016 2017
1127
2018
784 792 1035 1672
6.5%
101 113 147 158 199 215 297 309
2006 2009
220
2007 2008 2013 2012 2010 2011 2014 2015 2016 2017 2018
128 183 84 270
11.5%
CASH, STRONG GROWTH OF THE UNDERLYING DRIVER…
COMPANY PRESENTATION FY 2019 15
Source:2019 Central Banks data, IE Economics. Trade Economics 2019
BRL EUR USD GBP Despite the growing penetration of alternative payment methods, cash in circulation is a constant growing figure in all economies, representing in 2019 more than 85% of total World transactions. (Source 2018 World Cash Report & Central Banks reports) ■ In Europe (ECB Diary Study), cash represents 78.8% of all transactions in volume and 53.8% in value.
USE OF CASH IN TERMS OF VALUE (MN)
…BOOSTS THE GROWTH OF THE CASH SECTOR, ALTHOUGH AT DIFFERENT LEVELS IN EACH REGION
CASH MARKET SIZE (USD BN)
+4.4%
2015 2020 Main characteristics of attractive markets: (i) Growing economies; (ii) Moderated elevated inflation and interest rates; (iii) Certain level of insecurity; (iv) Degree of sophistication of banking sector
EXPECTED GROWTH BY GEOGRAPHY 2015-2020
Africa & Middle East Latam US & Canada Asia Pacific Europe 4 (26%) 4.7 (31%) 2.7 (18%) 2.4 (16%) 1.4 (9%) COMPANY PRESENTATION FY 2019 8.3% 5.6% 4.0% 2.1% 1.6%
15.2 18.8
Source: Freedonia 2017 report
16
37% 22% 7% 13% 17% 4% 40% 20% 14% 13% 9% 5% 40% 20% 14% 13% 9% 4%
2007 2015 2018 20% 14% 13% 9% 4% CASH GLOBAL MARKET SHARES (2018) (1)
COMPETITOR’S MARKET SHARE EVOLUTION
(1) Market share calculated based on companies revenues: Prosegur Cash , Brinks & Loomis are based on 2018 results; G4S and Garda are based on estimations. Prosegur Cash market share includes India.
#2
Local Players
Change in Market Share '07-18 Others 40%
PROSEGUR HAS BECOME A GLOBAL RELEVANT PLAYER IN THE LAST FEW YEARS…
0bps
+700bps
0bps
Intl’ Player 1 Prosegur Intl’ Player 2 Intl’ Player 3 Intl’ Player 4
Intl’ Player 1 Intl’ Player 2 Intl’ Player 3 Intl’ Player 4
COMPANY PRESENTATION FY 2019 17
2018 MARKET SHARE PROSEGUR
▪ Undisputed market leader in LatAm – leadership position in fastest growing markets ▪ Benefitting from growing security market ▪ Relying on its strong density, reputation, brand and close relationship with clients ▪ Solid presence in key European countries ▪ Expected to be the fastest growing economies in the area ▪ Growing footprint in Asia / Africa ▪ Highest Cash market growth regions globally
Latam Africa & Middle East Europe Asia Pacific US and Canada
PROSEGUR CASH GLOBAL FOOTPRINT
#2 GLOBAL MARKET POSITION
COMPANY PRESENTATION FY 2019
…WITH STRONG POSITIONS IN EACH OF THE LOCAL MARKETS
0% 10% 57% 10% 4% # Market positioning Cash in transit & cash management
Source: Freedonia 2017, DBK, Aproser and internal sources.
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1 MEXICO 3 CHILE 1 PERU 1 ARGENTINA 1 URUGUAY 1 PARAGUAY 1 BRAZIL 1 SPAIN 1 GERMANY 1 PHILIPPINES 1 INDIA 2 AUSTRALIA 2 PORTUGAL 2 COLOMBIA 2 INDONESIA
n/a
DENSITY & SCALE AND PRODUCTIVITY GAINS: SEARCH FOR CONTINUOUS MARGIN IMPROVEMENT
COMPANY PRESENTATION FY 2019
Prosegur Cash Market Share in selected markets (%) Prosegur Cash EBIT Margin (%)
19
2015 2016 2017 2018 2015 2016 2017 2018 382 382 428 340 282 314 360 268
21.9% 13.3% 22.2% 14.8% 22.2% 16.0% 19.7% 15.1% 18.0% 7.5% 18.6% 9.1% 18.7% 10.2% 15.5% 10.2%
EBIT EBIT Margin Peers Average
Positive correlation between market share and profitability
practices
value added cash services
EBIT (€m) and EBIT margin (%)
EBITDA EBITDA Margin Peers Average
FOR THE FUTURE: UNPARALLELED POSITIONING TO BENEFIT FROM THREE KEY GROWTH LEVERS
COMPANY PRESENTATION FY 2019 Today Traditional market growth (Organic) Consolidation play (inorganic) Third Wave of Outsourcing Third Wave of Outsourcing
1 2 3
Source: IMF Nominal GDP forecast from 2016 – 2019. Expected growth calculated as a weighted average between our sales and the expected GDP
EXPECTED GROWTH IN OUR FOOTPRINT
1
CAGR 7.7% 2015 2020
> 500 CASH COMPANIES GLOBALLY
2
Room for further consolidation
#14 #7 #16 #13 #6 #9 #10 #11 #8 #15 #12 #3 #4 #5 #2 #17 #18 #19 #20 … #1
Cash automation in clients
OUTSOURCING OPPORTUNITIES
3
Back office management IAD (Independent ATM Deployer) Branch teller staff 20
OUTSOURCING OPPORTUNITIES
Efficiencies Business process outsourcing
BRANCH TELLER STAFF BACK OFFICE MANAGEMENT IAD (INDEPENDENT ATM DEPLOYER) ATM MGMT. ▪ Maintenance ▪ Fixing ▪ Replacement ▪ Full lifecycle CASH PLANNING & FORECASTING ▪ Branch Network ▪ Displaced ATMs COMPANY PRESENTATION FY 2019 CASH LOGISTICS & PROCESSING
Third wave of outsourcing DAILY RECONCILIATION ▪ Incidence Mgmt. ▪ Branch Network ▪ Central Services CASH AUTOMATION IN CLIENTS
21
Moving from manned guarding to technological solutions
COMPANY PRESENTATION FY 2019 22
Moving from manned guarding to technological solutions
2015 2020
SECURITY GLOBAL MARKET EVOLUTION ($BN)
125
SECURITY GLOBAL MARKET SHARES (2018) KEY MARKET TRENDS
Commoditization, due to its low capital intensity and entry barriers. Competitiveness intensification and considerable price pressure impacting margins, even with Facility Management companies Increase in staff turnover, scarcity of qualified personnel. Increasing labor pressure Budgeting restrictions in Public Sector Double market: ▪ Client sophistication. Every time the client knows more and it gets more difficult to add value ▪ Stagnant sector that keeps the same criteria for some years and is into a mature phase
6% 5% 4% 2% Others 75% Player 1 Player 2 Player 3 Player 4 Prosegur Source: Freedonia 2017 report and internal company data
LARGE MARKET WITH TECHNOLOGY AS A CATALYST FOR FUTURE GROWTH
+ + + + +
+6.1%
Increasing outsourcing from Public Sector and higher development of services to companies in emerging countries Design of integral offers that combine electronic systems with traditional guarding services improving revenue mix Intensive use of technology and its combination with human factor Trend towards mobile services (dynamic guarding/patrolling) as an alternative Growing market, with significant potential in emergent countries 168
23 COMPANY PRESENTATION FY 2019
PROSEGUR SECURITY HAS GLOBAL PRESENCE ACROSS LATAM, ASIA, EUROPE AND US
EMPLOYEES * PROSEGUR SECURITY GLOBAL FOOTPRINT #5 GLOBAL MARKET POSITION
SPAIN BRAZIL MEXICO COLOMBIA CHILE ARGENTINA URUGUAY PORTUGAL FRANCE CHINA PERU PARAGUAY SINGAPORE
COMPANY PRESENTATION FY 2019 Source: internal data 24
USA
* OPERATIONAL PERSONAL ONLY
Argentina
5,1%
Peru Brazil France
24,8%
Spain Colombia Portugal USA
11,4%
Chile Mexico Paraguay Singapore Uruguay China
5,9% 26,1% 7,3% 8,3% 0,7% 4,7% 4,2% 2,5% 1,9% 1,4% 0,8%
27% 18% 17% 12% 9% 9% 7% 6% 6% 4% 4% 1% 0% 1% 17% 40% 16% 22% 11% 9% 3% 9% 3% 17% 15% 28% 23% 56% 42% 67% 66% 80% 82% 90% 85% 91% 79% 81% 99% 100% 49%
Local Players Largest National Player Intl´ Players Prosegur
WITH A LEADING POSITION IN SELECTED MARKETS ENABLING A SIGNIFICANT OPPORTUNITY FOR CONSOLIDATION
GUARDING MARKET SHARES (%)
COMPANY PRESENTATION FY 2019
Source: DBK, Investors presentations, internal estimates
25
Spain Uruguay Portugal Argentina Colombia Peru Brazil Paraguay Singapore Chile France Mexico China EEUU
#1 #2 #2 #2 #1 #2 #1 N.A. #2 N.A. #3 #7 N.A. N.A.
PROSEGUR’S SECURITY BUSINESS MODEL IS BASED ON THREE KEY LEVERS
COMPANY PRESENTATION FY 2019
TECHNOLOGICAL TRANSFORMATION
▪ Value proposition to client; moving towards integrated solutions with technology
HIGHER MARGIN PRODUCTS
▪ Moving towards a high margin product portfolio
STREAMLINING
▪ Size reduction ▪ Efficiency implementation ▪ Growth recovery ▪ Margin expansion 26
GROSS MARGIN (%) PER PRODUCT TYPE FY15 (ALL COUNTRIES) COMPANY PRESENTATION FY 2019
% Gross Margin % of total sales
Other Services Electronic Systems ATM Cyber ARC
(Alarms Reception Center)
Mobile Guarding Maintenance Fire detection
Indirect costs
Increasing focus
higher margins
Traditional Guarding
+
Betting on growth and shaping the future
COMPANY PRESENTATION FY 2019 28
ALARMS MARKET: SIGNIFICANTLY UNDERPENETRATED
ALARMS PENETRATION RATES BY COUNTRY (%)
▪ World market is under-penetrated ▪ US is the most penetrated market globally and has only 20% penetration ▪ Prosegur core markets are all <10% penetration ▪ Sales and marketing are the main drivers of penetration → enormous growth potential that requires strong sales force and investment
% of households with a connected alarm
COMPANY PRESENTATION FY 2019 29
ALARMS MARKET: FROM SINGLE DIGIT TO DOUBLE DIGIT GROWTH IN FOCUS REGIONS
COMPANY PRESENTATION FY 2019
PROSEGUR’S FOCUS REGIONS EXPECTED TO LEAD THIS GROWTH GLOBAL ALARM MONITORING MARKET ($BN) EXPECTED TO GROW AT 5.0% P.A.
CAGR: 5.0% 44 58
KEY DRIVERS
burglaries
automation and security systems
smartphones Alarm monitoring market 2015-20 CAGR Revenue expected growth by Region
2015 2020 8.35% 5.03% 4.12% 1.93% 1.67% LATAM Asia Pacific World North America Western Europe
Source: Freedonia report 2017
30
2015 2020 75 2025
Installation Revenues Product cost Installation cost Sales cost Marketing cost
ALARMS: A DIFFERENT BUSINESS MODEL, SIGNIFICANT VALUE CREATION
VERY ATTRACTIVE RETURNS WITH UPFRONT CAPITAL REQUIREMENTS
CLIENT CONTRACT CASH FLOW
ARPU Year 0 Operating costs (Including monitoring, customer care, maintenance,...) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 … Year N Average life-cycle
▪ Payback period over 4 years ▪ Average subscription period of 10 years ▪ Increasing ARPU on local currency basis ▪ Very attractive returns with upfront capital requirements COMPANY PRESENTATION FY 2019 31
…
B2C
(residential & small business)
PORTFOLIO OF PRODUCTS OFFERING A FULL RANGE OF SOLUTIONS ADAPTED TO CLIENTS’ NEEDS
B2B
(transferred to Security)
▪ Complex CCTV systems ▪ Complex hybrid and wired systems COMPANY PRESENTATION FY 2019 ▪ Anti-theft systems, ▪ Smoke screen 2010 2015 2020 ▪ Wireless System (video-verification) ▪ Professional Hybrid & Wired Solutions ▪ Video in the Cloud ▪ Professional CCTV Solutions
VIDEO
▪ Vehicle Security Systems ▪ Mobile E-Health Solutions ‘Smartlife’ ▪ Internet of Things applied to security
HOME AUTOMATION
32 2018 2012 ▪ SMART solutions for Technology- Security integration
E-HEALTH HAWK EYE INCLUSION LOCATION
▪ Intelligent security services
SMART PLATFORM AS THE CORE TOOL TO INTERACT WITH OUR CLIENTS AND BUILD LOYALTY
SMART PLATFORM
▪ SMART: Platform to interact with our clients which builds loyalty ▪ Launched in 2016 ▪ Productivity increase: Lower service costs ▪ Churn reduction: Connected clients have lower churn rates (empirically proven 2-4% below average) COMPANY PRESENTATION FY 2019 ▪ Protection: In case of need, we send our response teams to provide protection ▪ Police: Critical in those countries where Police does not have the resources to provide reliable response ▪ Even in countries where Police provides a response we provide value added services
RESPONSE
33
UNPARALLELED PLATFORM WITH CRITICAL MASS IN 10 COUNTRIES AND OVER 550,000 CONNECTIONS
COMPANY PRESENTATION FY 2019 Close to 7,000 employees Presence in 10 countries with high potential growth 10 monitoring centres duplicated More than 1,100 response professionals Base of over 550,000 connections Commercial Residential 45% 55%
Source: FY 2018 business figures
34
More than 20,000 vehicles tracked TURKEY
n/a
COLOMBIA
2
PORTUGAL
2
SPAIN
2
ARGENTINA
2
SOUTH AFRICA
n/a
URUGUAY
1
PERU
1
PARAGUAY
3
CHILE
3
SOLID FINANCIAL PERFORMANCE BEING THE FASTEST GROWING BUSINESS LINE WITHIN THE GROUP DRIVEN BY OUR FOCUS TO INCREASE OUR CUSTOMER BASE
CUSTOMER BASE EVOLUTION (# CONNECTIONS) AVERAGE REVENUE PER UNIT (ARPU)
2013 2014 2015 2016 2017 36.8 35 38 36 38 Ø 36.5
+11.4% 35 355 389 424 499 547
2014 2015 2016 2017 2018 2018 36
▪ Net additions Increment of 10%
▪ Growth still over industry
average despite Argentina slowdown
▪
Recurrent quota remains in line in the long term despite the adverse macro economic environment in Ibero-America
▪
Positive evolution in local currency terms COMPANY PRESENTATION 2019
Excellent
Low market penetration level
Out of a total of nearly 19 million households, only 9% have currently a professionally monitored alarm Industry with annual growth exceeding 5%
“Best in class” Alliance 6 millions potential
clients
The combination of the largest telephone operator in the country, and the leading private security provider with best in class reputation and quality of service
Very good valuation 50% of the Spanish
business valued in
300M
Spain represents close to 40% of Prosegur's total alarms connections Valuation in the upper range of the current industry benchmark
(1) Operation is pending approval by market regulatory entities
(1)
PARTNERSHIP FOR THE SPANISH ALARM MARKET
36
COMPANY PRESENTATION FY 2019 37
+2 MILLION
HOURS OF TRAINING DELIVERED
+1,000
PROFESSIONALS WITH DISABILITIES
+170,000
PROFESSIONALS
+€12.MM
INVESTED IN TRAINING We ensure the utmost respect for the principle of equal treatment. We take no risks when it comes to safeguarding the physical safety and integrity of our professionals, raising their image and profiles. THE BEST HUMAN TEAM
COMPANY PRESENTATION FY 2019 38
+200 COLLECTIVE
BARGAING AGREEMENTS
PROSEGUR IS A GLOBAL BENCHMARK IN THE PRIVATE SECURITY INDUSTRY
TRADE-UNION FREEDOM AND FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING
+200 UNIONS +2,000
UNION DELEGATES
16%
OF EMPLOYEES ARE MEMBERS OF A TRADE UNION
* OECD average rate (2016): 12%
EUROPEAN WORKS COUNCIL
UGT, CC.OO y USO (ESP) VERDI (GER) CGT (FRA) STAD y SITESE (POR) *Advisor: UNI GLOBAL UNION
69% OF ANNUAL
REVENUES DISTRIBUTED TO EMPLOYEES
27% OF ANNUAL
REVENUES DISTRIBUTED TO SUPPLIERS
2 million HOURS OF
TRAINING
1.6 million hours
OF ONLINE TRAINING THROUGH THE PROSEGUR UNIVERSITY EFFECTIVE TAX RATE IN 2017 FOR PROSEGUR WAS 36.6%
SOCIAL CASH FLOW
COMPANY PRESENTATION FY 2019 39
PROSEGUR, A RESPONSIBLE COMPANY
COMMITMENT WITH OUR EMPLOYEES AND HSE
PROSEGUR COMPETITOR 1 COMPETITOR 2 Fatality rate per 10.000 employees
0.41 0.43 0.20
Attacks Traffic Others
FATALITIES IN 2017 ADHERENCE TO STANDARDS AND REGULATIONS Priority IN ALL OF
OUR BUSINESSES
“ZERO INJURIES” GOAL,
REGARDLESS OF OUR BUSINESS DIFFICULTIES PREVENTIVE APPROACH WITH
THREE ACTION LEVELS:
▪
Training
▪
Monitoring and follow up
▪
Technological innovation
RISK MANAGEMENT CYCLE
4
MONITOR
3
MANAGE
1
IDENTIFY
2
ANALYZE “PROSEGUR CODE OF ETHICS AND CONDUCT” CODE FROM THE LIGUE INTERNATIONALE DES SOCIÉTÉS DE SURVEILLANCE
Code from the Confederation
Services (CoESS)
UN GLOBAL COMPACT WHISTLEBLOWER CHANNEL CORPORATE COMPLIANCE PROGRAM APPLICATION OF THE RIGHTS LISTED IN THE UNIVERSAL DECLARATION OF HUMAN RIGHTS (UDHR) TRANSPARENCY We draw up our Annual Reports using the Global Reporting Initiative (GRI) standards COMPANY PRESENTATION FY 2019
40
WE ARE COMMITTED TO PEOPLE
COMPANY PRESENTATION FY 2019
Prosegur Foundation channels the company’s social and cultural activities to help build a more giving society while generating
making tangible our commitment to contribute to the development of the regions the Group
Our institution works to educate and improve the job prospects of people with intellectual disabilities and is also involved in corporate volunteering and cultural outreach We develop our own projects that are sustainable, transparent and replicate best practices
F O U N D A T I O N P R O S E G U R
46
PIECITOS COLORADOS SCHOOLS
4
FIELDS OF ACTION
10
COUNTRIES
34
PROJECTS COMPLETED IN 2018
€3MM INVESTED
IN 2018
+43,000
BENEFICIARIES IN 2018
41
9M 2019 FINANCIAL INFORMATION
COMPANY PRESENTATION FY 2019 42
43
P&L
Consolidated Results
FY 2018 9M 2018 9M 2019
% Variation
Sales
3,939 2,829 3,098
9.5%
EBITDA
456 332 378
14.0%
Margin 11.6% 11.7% 12.20% Depreciation (129) (90) (129)
EBITA
327 242 249
3.2%
Margin 8.3% 8.6% 8.0% Amortization of intangibles (26) (18) (21)
EBIT
301 224 228
2.2%
Margin 7.7% 7.9% 7.4% Financial result (21) 13 (45)
Profit before Taxes
280 237 183
(22.7)%
Margin 7.1% 8.4% 5.9% Taxes (100) (82) (65) Tax rate 35.7% 34.7% 35.7%
Net Profit
180 155 118
(23.9)%
Minority Interests 48 39 35
Consolidated Net Profit
132 116 83
(28.3)%
Earnings per share
(Euros per share)
0.2 0.19 0.14
close to 15%
recent divestments
9M 2018
2,829
+7.8%
Org
+7.1%
Inorg
FX(1) 9M 2019
3,098
+9.5%
Amounts in Eur. millions - 2018 & 2019 figures have been elaborated applying IAS 21 & 2 9, additionally 2019 figures also include the application of IAS16 -
(1) Includes exchange rate effect and IAS 21 & 2944
Consolidated Revenues by Region and Business Line
110 246
1,297 1,316 Europe 1,422 1,535 Ibero-America RoW +1.5% +7.9% +123.5%
186 205
1,217 1,337 Alarms Cash 1,425 1,555 Security +9.8% +9.1% +10.3% 9M 2018 9M 2019
%
Growth in Local Currency (1)
%
Growth in Euros
+18.0% +12.2% +16.0%
Revenues by Business Line Revenues by Region
+1.5% +18.8% +123.4%
9M 2018 9M 2019 Amounts in Eur. millions -
(1) Includes organic growth and acquisitions
Amounts in Eur. millions -
(1) Includes organic growth and acquisitions
45
+6.3% +11.7%
9M 2018 Org Inorg
FX(1) 9M 2019
1,217 1,337
+9.8%
PROSEGUR CASH
198 213
9M 2019
15.9% 16.3%
9M 2018 +7.3%
total sales in 9M 2019
euros fueled by Smart Cash, AVOS and ATMs
stand-alone quarterly margins
France partially compensate the negative effect FX
markets except Australia
Revenues Profitability New Products
EBIT EBIT Margin
FY 2016 FY 2017 9M 2019 FY 2018
6.4% 8.7% 11.8% 16.0%
+420 bps
Amounts in Eur. millions -
(1) Includes exchange rate effect and IAS 21 & 29
46
PROSEGUR SECURITY
“Integra” Solutions reaching 27.2% of current client portfolio
IAS21&29 impact in Argentina, integration of acquisitions in USA and reorganization in France
12%
9% driven by USA
Revenues Profitability(2) New Products(3)
1,425
+3.5%
9M 2018 Org Inorg
+8.7%
FX(1)
9M 2019
1,555
+9.1%
39 34
9M 2019
2.7%
9M 2018
2.2%
EBIT Margin EBIT
9M 2019 FY 2016 FY 2017 FY 2018
17.0% 20.0% 23.0% 27.2%
+420 bps
Amounts in Eur. millions -
(1) Includes exchange rate effect and IAS 21 & 29
(3) Excludes USA
47
PROSEGUR ALARMS
Amounts in Eur. millions - Installed base in thousands of connections - ARPU in Euros - (1) Includes exchange rate effect and IAS 21 & 29
strategic focus on quality of client portfolio
Installed Base
maintained despite the strong adverse FX.
exceeding 23% of the installed base
ARPU
and 16% in local currency
growth of the sector
Revenues
9M 2018 Inorg
+16.0%
Org
FX(1) 9M 2019 186
+0.0%
205
+10.3%
424 499 547 539 559
2017 9M 2018 2016 2018 9M 2019
+3.6% +13.6%
38 36 38 36 36
2017 2016 2015 2018 9M 2019
48
Consolidated Cash Flow
FY 2018 9M 2018 9M 2019
EBITDA
456 332 378
Provisions and other non-cash items
14 37 4
Tax on profit (ordinary)
(102) (96) (83)
Changes in working capital
(5) (92) (103)
Interests payments
(20) (22) (11) Operating cash flow
343 159 184
Acquisition of property, plant & equipment
(214) (140) (143)
Payments for acquisitions of subsidiaries
(83) (54) (124)
Dividend payments
(118) (92) (82)
Other flows
(35) (2) 13 Cash flow from investing / financing
(450) (288) (336)
Total net cash flow
(107) (129) (151)
Initial net financial debt
(252) (252) (425)
Net increase / (decrease) in cash
(107) (129) (151)
Exchange rate
(66) (77) (27) Final net financial debt
(425) (458) (603) (1)
Cash Flow by Quarters
24 81 161 330 159 98 184 40 343 6 82 Q1 6M 9M FY 2019 2017 2018
18% 5% 35%
Q1
33% 33% 40%
6M
75% 43% 48%
9M
63%
FY
49%
EBITDA to CASH conversion ratio
2017 2018 2019 Amounts in Eur. millions -
(1) Excludes IAS 16 debt
49
Financial Position
458 425
61
581 594 603 78 95 109
1.4% 1.7%
54 1.7%
127
1.4% 133
1.4% 132
Average Cost of Debt Treasury Stock (2) Net Financial Debt Deferred Payments
deriving mainly from inorganic growth initiatives.
the same period in 2018 (1.4% vs. 1.7%)
(October 9, 2019)
IAS 16 Debt
Amounts in Eur. millions - (1) Excludes IAS 16 impact -
(2) Treasury Stock of Prosegur and Prosegur Cash at closing market price of the period
50
Balance Sheet
FY 2018 9M 2019
Non-current assets
1,721 1,967
Tangible fixed assets and real estate investments
745 873
Intangible assets
842 954
Others
133 141 Current assets
2,099 2,091
Inventory
76 68
Customer and other receivables
975 1,080
Cash and equivalents and other financial assets
1,048 943
TOTAL ASSETS
3,820 4,058
Net equity
1,066 1,068
Share capital
37 36
Treasury shares
(53) (14)
Retained earnings and other reserves
1,013 958
Minority interest
69 88 Non-current liabilities
1,676 1,742
Bank borrowings and other financial liabilities
1,392 1,434
Other non-current liabilities
285 308 Current liabilities
1,077 1,248
Bank borrowings and other financial liabilities
151 358
Trade payables and other current liabilities
926 890
TOTAL NET EQUITY AND LIABILITIES
3,820 4,058
long-term nature
Amounts in Eur. millions - 2018 & 2019 figures have been elaborated applying IAS 21 & 2 9, additionally 2019 figures also include the application of IAS16
Recent M&A
COMPANY PRESENTATION FY 2019
USA Central America Peru Paraguay Colombia Uruguay Brazil Spain Germany South Africa Singapore Philippines Australia
51
Indonesia
52
Scalable Growth Process Improvement Savings
Reduction of payroll calculation hours in Brazil
Robotization of the employee registration process in Spain +25,000 contracts / year + social security payment Reduces the time of incorporation from 48 to 24 hours
Reduced cost in the monitoring of 2,600 armoured vehicles using IOT
Robotized Processes to achieve efficiencies of 120,000 hours/year
Digital Transformation – an ongoing transformational project to reshape the group
Use of electric and low consumption vehicles in "car sharing" model for Alarms and Security
Process improvement in “Opportunity 2 Cash” & “Procure 2 Pay” focusing on DSO reduction
COMPANY PRESENTATION FY 2019 52
53
53
March 2019
Prosegur USA Investor Relations Presentation
COMPANY PRESENTATION 2018
54
54
US is the world’s largest Security market in terms of revenues, combined with strong profitability levels…
(1) Source: Freedonia Group. Figures estimates for Security services (2020 projection); (2) FY17 figures, corresponding to main international security players; (3) Source: Markets&Markets. MMS: Managed Security Services (2020 projection)
North America Western Europe Eastern Europe Africa/ Mideast Central & South America 19.4 18.4 24.2 5.4 48.6 42.8 5.8
US Canada & Mexico
Revenues: Billions of USD1
~6% ~6% ~4%
Average EBITA margin2
China & Japan 20.5 Rest of Asia Pacific 31.4
~3% ~5%
Prosegur
EBITA Margin Revenues ~40% Latam ~60% ROW*
3%**
Note: Figures FY18; *Rest of the world; ** Excludes Overhead Costs
+$13B in MSS CyberSecurity revenues3 +$9B in MSS CyberSecurity revenues3 +$8B in MSS CyberSecurity revenues3 +$1.5B in MSS CyberSecurity revenues3 +$3B in MSS CyberSecurity revenues3
55
55
…where the guarding market characteristics and the labor regulation allow for a great opportunity for the sale of integrated solutions… …benefitting from the attractiveness of the US technology market, a global reference that leads the way for other geographies…
… and where Cybersecurity plays a prominent role in a mature market with access to the latest solutions and best in class professionals to combine physical and logical solutions
Positive perception
profession High labour costs, due to increasing minimum wage Security guards scarcity Highly compliant market Matured technological market with strong growth potential Leading innovation market (observatory
Market underpinned by a favourable regulation Highly efficient solutions for customers Greater exploitation of economies of scale Differentiated value proposition with respect to manned guarding Cultivated market with double digit growth expectations Market where all the largest players are present Most technology- advanced market with top talent and skilled professionals Differentiated value proposition when combining physical and logical solutions Large benefits from economies of scale Favourable market regulation
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56
As of today, the US market has been traditionally focused on guarding, with an increasing weight of tech solutions, that only international players are positioned to combine
#
Market Rank
Guarding market1
Employees Revenues ($M)
Integrators & Technology market2
Employees Revenues ($M) …
(1) Source: Security magazine; figures for 2018; (2) Source: SDM Magazine. Figures for 2017; (1)(2) Considers recent acquisitions
~160 >5,200 #8 ~7,000 >200,000 #1 ~4,200 >110,000 #2 ~300 >6,500 #4 ~200 >5,500 #5 ~200 >7,000 #6 ~180 >5,700 #7 ~850 ~2,500 #3 ~300 ~1,200 #6 ~2,000 >54,000 #3 #4 ~760 ~2,500 #1 ~8,400 ~13,600 #2 ~4,500 ~19,500 ~750 ~1,700 #5
Note: This ranking excludes companies whose majority of their revenues come from integrated residential and burglar alarm systems: Vivint (~$900M); Brinks Home Security (~$550M), Guardian Protection Services (~$200M), CPI Security Systems (~$100M) and Central Security Group (~$100M)
~100 ~550
#10
~160 ~900 #7 … … ~35 ~150
N/A
… … …
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57
Prosegur’s entry into the US is based on four strategic pillars
Brand awareness and reputation
Global Security player
Cross-selling opportunities
complementary services to our existing customer base
Integrated commercial model
technology services, defining its offering as Enterprise Risk Management Solutions
Strong post merger integration Plan
executing our solid integration Plan
58
58
Prosegur is #5 Global Security player and it can leverage top tier global reputation
5,000 CORPORATE
PROJECTS / YEAR
100,000 SECURITY
GUARDS
+7,000 CORPORATE
CLIENTS INTEGRATED SECURITY SOLUTIONS
+10,000
CAMERAS / YEAR
Global security revenues2
(1) Integrated Advanced Security Solutions; Includes Cybersecurity & Enterprise Risk Advisory; (2) Market share represented by revenues
% Sales IASS over total Security revenues1 13% 13% 13% 14% 17% 20% 23% 2012 2013 2014 2015 2016 2017 2018
LEADING POSITION IN 14 COUNTRIES
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59
There is an opportunity to rapidly increase our penetration in USA by cross-selling complementary services
Main targets Global accounts (US based) Global accounts (Non-US based) Acquired accounts (US) US-based clients served by Prosegur in other countries Non-US based clients served by Prosegur in other countries, that have relevant presence in US Recently acquired US customer base (CSC, Cipher, Viewpoint, and BSI) 1 2 3 Description
60
60
Prosegur Integra
Guarding Technology
Prosegur is in the best position to combine guarding and technology services, sold by risk management specialists at higher margins…
labor scarcity and customers in need of integrated solutions
traditional guarding contracts are struggling to change their culture
up a risk specialists team who sell high value added bundles, following a consulting approach, and at better margins
Rationale
61
61
…as we have already demonstrated in some of our core markets
Integra has proven to be a great success story in Singapore, a Security market with similar characteristics to US. Singapore has achieved the 2nd best operating margins of Prosegur in just a few years, driven by profitable Integra contracts, where margins keep improving as weight of technology increases year on year. The recent sale of the greatest ever Integra contract to the Brazilian branch of a major US delivery company represents a milestone for Prosegur Security. Services include manned guarding, monitoring, and technology installation & maintenance for the client’s +130 branches around the country with ~1,000 partners involved. The sale of a long-term Integra contract to a top CAC40 French engineering and defence company was a success story for Prosegur Security in Europe. With presence in two key locations in the North of France, this contract has enhanced Prosegur sales and margin in the country.
Singapore Brazil France
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Once the strategic intent was defined, we are ensuring that existing business momentum is maintained and that the integration plan drives value creation
Execute rigorously
3
Prepare well
2
Prosegur USA’s integration process is prioritizing the following strategic drivers: Focus on value creation
1
combination of the different commercial/ operations teams
ready to start the integration execution since day 1
(1) IMO: Integration Management Office
Prosegur USA capitalizes on our Group’s track record in +200 M&A operations, and leverages each target competitive advantage and strong management team.
63
63
Following this entry strategy and integrated model approach, the acquisitions roadmap was designed to build a strong platform…
Manned Guarding Remote video monitoring Security Integrator Cybersecurity
64
64
…and highly specialised targets in their niches, with the perfect fit in our desired platform, were identified to build Prosegur USA
services, Installation, Call center support
Safeguards
Solutions & Electronic Article Surveillance Solutions
the US (Miami, FL)
(MSS), Security & Risk Consulting Services
65
65
Relevant presence in regions with the highest concentration of clients and growth potential This new brand national platform leaves us in a unique position as a full services integrator to cater for
Guarding Monitoring / Technology Systems Integrator Cybersecurity
WA OR CA NV ID MT WY UT AZ NM ND SD CO NE KS OK TX LA AR MO IA MN WI MI IL IN OH KY MS AL TN GA FL SC NC VA WV PA NY VT ME NH MA RI CT NJ DE MDC B V
66
66 Entry into the largest and most profitable security market with the ambition to become Prosegur’s second biggest market in the midterm Geographical portfolio rebalancing, leading to strong revenues increase in a very stable market Innovation and new trends
models to other countries
In conclusion, US Market entry will provide us with great benefits that will allow us to improve our profitability and become a leader in Enterprise Risk Management Solutions
Market attractiveness Rationale for Prosegur
Brand awareness and reputation
Cross-selling
Integrated commercial model Strong post merger integration Plan
Strategic pillars Manned guarding Technology
profession
strong growth potential
customers
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Legal Disclaimer
This document has been prepared exclusively by Prosegur for use as part of this presentation. The information contained in this document is provided by Prosegur solely for information purposes, in
interested in undertaking a preliminary analysis
it; the information it contains is limited and may be subject to additions
amendments without prior notice. This document may contain projections or estimates concerning the future performance and results
These estimates derive from expectations and
Prosegur and, therefore, are subject to and qualified by risks, uncertainties, changes in circumstances and
factors that may result in actual results differing significantly from forecasts
liability nor obligation to update or review its estimates, forecasts,
The distribution of this document in
jurisdictions may be prohibited; therefore, the recipients
this document
anybody accessing a copy of it must be warned
said restrictions and comply with them. This document has been provided for informative purposes only and does not constitute, nor should it be interpreted as an
to sell, exchange or acquire or a request for proposal to purchase any shares in Prosegur. Any decision to purchase or invest in shares must be taken based on the information contained in the brochures filled out by Prosegur from time to time .
www.prosegur.com
THANK
YOU
CONTACT INFORMATION:
Antonio de Cárcer Investor Relations Director Tel: +34 91 589 83 29 antonio.decarcer@prosegur.com Cristina Casado Investor Relations Officer Tel: +34 91 589 83 29 cristina.casado@prosegur.com