Part III - Security 0 / CMD 11 / DECEMBER 13, 2011 /

Transcription

1 Part III - Security 0 / CMD 11 / DECEMBER 13, 2011 /

2 Video clip Morpho today 1 / CMD 11 / DECEMBER 13, 2011 /

3 Building trust Ph.Petitcolin - President Defence / Security / December 13, 2011 / 2 / CMD 11 Q3 REVENUE / DECEMBER 2011 / OCTOBER 13, 2011 / 21, 2011 /

4 Reasons to develop a Security business Ł Security shares Safran s aerospace DNA High and sustainable technological barriers to entry Long term and trustworthy customer relationship High service content alongside OEM Ł Economic cycles are different compared to aerospace 2-digit market growth rate since 9/11 Quicker returns on capital employed Ł Market under consolidation Inherited a business from Sagem that needed refocus Safran now part of worldwide top 3 thru targeted acquisitions Ł New emerging requirements From detection to identification of threats and new threats to cope with Growing ID use needs (increasing mobility, authentication on internet, etc...) Security is a 2-digit revenue growth business with 2-digit margins 3 / CMD 11 / DECEMBER 13, 2011 /

5 Accelerated refocusing since 2007 Acquisitions HLP 81% Divestments Contribution of Sagem Monetel to Ingenico Morpho now top 3 global player - 1.7bn cash outlay since / CMD 11 / DECEMBER 13, 2011 /

6 Business model delivering results ( 2010E proforma incl. L-1 ID) Identification - 800m Detection - 220m MAIN PRODUCTS & SOLUTIONS Civil and Forensic ID solutions Revenue: 1.4bn MAIN PRODUCTS Checked baggage screening Biometric Identification Systems Trace detection Biometric ID documents (Passports, Checkpoint solutions, ID,driving licences ) CBRN for 1st responders Biometrics terminals SERVICES Enrolment and document issuance 33% 57% 16% SERVICES Upgrades and maintenance Background check Multiplexing solutions Upgrades and maintenance Others - 120m 8% 19% Smart cards - 250m MAIN PRODUCTS Vehicle speed control and identification Lottery terminals 72%Government (Federal, local, agencies, authorities) MAIN PRODUCTS SIM for Telcos Banking cards SERVICES Upgrades and maintenance SERVICES Personalization 5 / CMD 11 / DECEMBER 13, 2011 /

7 A global presence reinforced with L-1 ID EMEA 4Employees: 3,000 4Revenue: c. 0.55bn AMERICAS 4Employees: 2,800 4Revenue: c. 0.7bn ASIA / PACIFIC 4Employees: 1,400 4Revenue: c. 0.15bn R&D Production Sales Ł 2010E proforma (incl. L-1 ID) Employees: 7,200 Revenue: 1.4bn 6 / CMD 11 / DECEMBER 13, 2011 /

8 Mastering critical technologies Pattern recognition Data & image processing Biometrics Vehicle recognition Secured printing Secure embedded software Cryptography X-ray, X-Ray Diffraction Computed tomography (CT) ITMS (Ion Trap Mobility Spectrometer) Advanced system architecture High technological content - around 8% of revenue invested in R&D 7 / CMD 11 / DECEMBER 13, 2011 /

9 Addressable markets in identification Identification market by applications Background Check Surveillance Consumer ID and Device System Access, etc Others Identity Management (incl. Border Control and ID documents) Market size bn 4.3bn Biometric Terminals CAGR (%) c.12% Criminal Identification Safran s ranking #1 ww Key competitors 3M, NEC, Gemalto Source: Safran, IBG-2009, IMS / CMD 11 / DECEMBER 13, 2011 /

10 Addressable markets in smart cards Smart cards market by applications Market size bn bn CAGR (%) c.7% Telecommunications Safran s ranking Note: Smart cards for Government & healthcare are included in the Identification segment Source: Safran, ABI-2011 Key competitors Gemalto Giesecke & Devrient Oberthur 9 / CMD 11 / DECEMBER 13, 2011 /

11 Addressable markets in detection systems Detection systems market by applications Market size Explosive Detection / Aviation bn Chemical, Radiological, Biological, and Nuclear CAGR (%) 2.6bn c.8% Explosive Detection / Non-Aviation Safran s ranking A leader in aviation detection Source: Safran, IMS-2010 Key competitors Smiths L3, Nuctech, Rapiscan (OSI Systems) 10 / CMD 11 / DECEMBER 13, 2011 /

12 Synergies from acquisitions Ł Achieved synergies at end of 2011E Sdu acquisition contributed growth synergies Additional business in other Morpho divisions enabled by acquisitions œ 40M additional revenue in 2011 in ID œ 80M+ additional revenue in 2012E in ID Ł Synergies brought by L-1 ID acquisition $30M annual run rate confirmed and to be fully realized within months (2013) Acquisitions are synergetic to Morpho 11 / CMD 11 / DECEMBER 13, 2011 /

13 Selected breakthrough security solutions roadmap Forensic & military solutions Multi-biometric forensic AFIS systems Fast DNA for forensic applications 3D & Colour Photo on Polycarbonate cards Civil ID solutions Kiosks and stations (driver licence renewal, boarding pass scanning, ) Digital identity service platforms Border control & Checkpoint solutions Checked luggage & cargo solutions Iris at a distance Shoe scanning systems Compact checked luggage CT screening systems Multi-biometric e- gates Finger on the Fly XRD based checkpoint baggage screening systems Mass spectrometry based explosive trace detection Integrated checkpoint solutions Air cargo screening solutions ID, Telco & banking secured solutions Post issuance card personalisation NFC optimized chips and additional security features 12 / CMD 11 / DECEMBER 13, 2011 / Morpho Identification Morpho e-documents Morpho Detection

14 Longstanding trust FBI 37 years Switzerland 28 years France 26 years Ł FBI MorphoTrak subcontractor to Lockheed Martin since 2010 for the Next Generation Identification (NGI) program Supply of best of breed AFIS technology delivering increased speed, accuracy and capacity Norway 26 years New York State 23 years The Netherlands 21 years Ł TSA Supply of state of the art of EDS (Explosive Detection Systems) and ETD (Explosive Trace Detection) equipments Denmark 21 years Germany 19 years United Arab Emirates, 19 years Ł Netherlands Supply of third generation e-passport with state of the art security features 13 / CMD 11 / DECEMBER 13, 2011 /

15 Conclusion Ł Enhanced security is likely to be well accepted if: Efficient Contributing thru technology to lean government Ł Security enables and enhances government savings in the provision of security to citizens Automation, fluidity, reliability 14 / CMD 11 / DECEMBER 13, 2011 /

16 Morpho in India S.Shriya - Managing Director, Smart Chip Limited / December 13, 2011 / 15 / CMD 11 Q3 REVENUE / DECEMBER 2011 / OCTOBER 13, 2011 / 21, 2011 /

17 Morpho smart cards - Indian presence Ł Leverage the business opportunities of the Indian smart card market Telco: Maintain our leadership position ID: Driving license, enrolment and other UID «related» businesses Banking: Be ready to take leadership position when market picks up Ł Worldwide industrial hub for Morpho Noida Industrial Eco-System (NIES) Supply chain competence centre Low cost card production for Telco, Banking & ID cards Ł Worldwide smart card R&D centre Worldwide products Telco R&D centre Local products HID R&D centre UID: Unique Identification HID: Health & Identification Unmatched presence, 3 strategic objectives 16 / CMD 11 / DECEMBER 13, 2011 /

18 Three global centres of manufacturing excellence SECURE CREDENTIALS CENTRE Capacity: 200M units/yr CARD BODY CENTRE Capacity Mobile: 230M units/yr ID/Banking: 120M units/yr MOBILE CREDENTIALS CENTRE Capacity: 120M units/yr Typical applications Mobile Low Cost ID Pay TV Fax Banking (Visa & MC classic cards) Contactless cards (Transport, Banking) Etc. 1 million units per day today and growing 17 / CMD 11 / DECEMBER 13, 2011 /

19 Global unified R&D (150 staff) Advanced Telco products Java Banking products 3G, NFC, Connect SIM ID, Banking and IAM Products (20 staff) WIB and browser Browser Applications SIMPeria (200 staff) (20 staff) Customization centre Telco 2G products, CDMA Regional ID products Off card tool Apps / applet development TC back office Global, multi-team, multi-location projects 18 / CMD 11 / DECEMBER 13, 2011 /

20 Aadhaar program - Biometric industry transformation Aadhaar program is laying solid foundation of large scale biometrics deployment in India Aadhaar mandate Collect basic demographic and biometric information of residents Provide unique identity numbers of residents of India Guarantee non-duplication through biometrics Offer online authentication services that can be used across India Impact on Biometrics industry Largest Identification program ever undertaken globally Opens Several Biometric Opportunities across the Aadhaar program Establishes biometrics as a enabler of social inclusion rather than criminal detection only Tipping point for the industry for widespread biometric application; generating enduring Authentication / Aadhaar Linked Services business Establishes India the new biometric nucleus of the world Aadhaar Program - Transforming global biometrics industry 19 / CMD 11 / DECEMBER 13, 2011 /

21 Aadhaar - The current status Over 85 million Aadhaars issued till date; estimated 150 million enrolments completed in field On 29 September 2010, Ranjna Sadashiv Sonwane, a tribal woman from Tembhali village in Nandurbar, Maharashtra, became the first recipient of the Aadhaar number More than 85M Aadhaar numbers generated so far into the project UIDAI has an install capacity to generate more than 1M Aadhaar numbers/day Initial pilots of Aadhaar authenticated service delivery in critical government programs such as Financial Inclusion Employment Guarantee Schemes Various Subsidy Disbursement UIDAI: Unique Identification Authority of India 20 / CMD 11 / DECEMBER 13, 2011 /

22 Aadhaar - A multi-step approach Today Trial phase 200 million ID numbers Value of $500M Backend biometric engines Field enrolment services Biometric devices Tomorrow Production phase 1.2 billion ID numbers Potential value of $1,200M Backend biometric engines Field enrolment services Biometric devices After tomorrow Services phase Potential value > $1,300M Authentication enabled services Safran is the only contractor across the 3 markets Authentication transaction terminals Suppliers yet to be selected Suppliers yet to be selected Morpho/L-1 currently have leadership positions on trial phase; contracts yet to be awarded for production phase 21 / CMD 11 / DECEMBER 13, 2011 /

23 Aadhaar - Morpho s current positioning Leadership position across all program segments Strong presence in current opportunities. Strategically positioned for enduring Aadhaar Leveraged Authentication business 22 / CMD 11 / DECEMBER 13, 2011 /

24 Aadhaar - The road ahead Enduring authentication-led services built on Aadhaar foundation Authentication transaction terminals Lead market making and guide costumer aspirations Market potential of over 85M terminals Capture 10% market share Market potential $ M Authentication enabled services Leverage Morpho s e2e competence for market making Focus is volume transaction sectors; i.e. banking, social schemes, travel, education Market potential $1bn Leverage Morpho s end-to-end biometric value chain capability to be a key biometric enabler in India 23 / CMD 11 / DECEMBER 13, 2011 /

25 Biometrics ID J.Westerouen Van Meeteren - Managing Director Morpho BV / December 13, 2011 / 24 / CMD 11 Q3 REVENUE / DECEMBER 2011 / OCTOBER 13, 2011 / 21, 2011 /

26 ID Documents integrating biometrics Technologies ŁBiometrics ŁEmbedded software & Cryptography ŁSecure printing ŁSecurity / certification Market drivers Ł Increased National Security & Combat fraud Ł Standards & mandates (ICAO, ISO/IEC) Ł European regulations: ID1 & Polycarbonate Driving License (Chip/biometrics optional (2013)) Residence Permit (2011) (Chip/biometrics mandatory) Vehicle registration card (Chip optional) Ł Recycle 1 st generation epassports (2006) 2 nd generation epassports Ł Growth in Latam & Asia Trend towards high-end products Ł Multi-application solutions The path to convergence (border control, payment, health) Ł U.S. Opportunities for travel documents Gradual acceptance of smart ID credentials ID1: Credit card format ICAO: International Civil Aviation Organization ISO: International Standards Organization IEC: International Electro technical Commission 25 / CMD 11 / DECEMBER 13, 2011 /

27 ID & epassport management market Identity management market >> Market by application Driving License epassport ehealth 2.0bn evoting >> 2-digit CAGR growth National eid Annual shipments (in units) >> National eid 250M >> epassport CAGR +10% 371M E CAGR +11% 3.0bn CAGR +12% 104M 2.0bn 66M E E Source: Safran, IMS-2010 Source: IMS / CMD 11 / DECEMBER 13, 2011 /

28 ID & epassport management market: regional trends 39% 26% Europe Middle-East Africa America As ia Pacific 3Bn 2.0 Bn 20% 15% Source: Safran, IMS-2010 Ł Identity projects growing in each part of the world driven by: The launch of new large National Identity programs: India, Germany, Russia, etc. New services: egovernment Services, ehealth, Automated Border Control A demand for an increase security (Real ID, epassport, evoting) and interoperability: evisa 27 / CMD 11 / DECEMBER 13, 2011 /

29 Sdu acquisition strengthening the offering Ł Milestones SDU acquisition in September 2008 Market leader of epassports in Europe Business synergies c. 30M consolidated at end 2011 in Morpho bv Enables more than 80M per annum (2012 estimate) additional revenue for ID solutions in Morpho COMMERCIAL TECHNOLOGY Ł Leverage customer base to secure new markets Renewal Dutch contract passport and ID card Mauritanian passport and ID card Ł Leverage cross-selling ID Documents & ID Systems Turnkey solutions Concession œ North Carolina driving license œ Albania passport and ID card Ł Vast experience in setting up and operating a production facility Including personalisation Ł Solid experience in passport technology: Polycarbonate, secure printing, binding technology, ImagePerf, lens structures (protected by patents) Ł Product Development 3D Photo ID epersonalisation Software Enhanced security features (matt surface, colour personalisation, transparent window,...) 28 / CMD 11 / DECEMBER 13, 2011 /

30 Security features: how to prevent photo substitution ImagePerf/TLI Tactile relief 3D Photo ID Colour personalisation Photo substitution is a key risk, and remains the number one abuse of travel documents 29 / CMD 11 / DECEMBER 13, 2011 / TLI: laser technology

31 ID Document references (e)id Cards Albania Aruba Botswana Brazil (Bahia state) Columbia Costa Rica Ghana Guatemala Honduras India Ivory Coast Kazakhstan Kosovo Lebanon Mauritania Nigeria Philippines Peru Spain UAE Resident Permit /immigration/voting UK (Asylum seeker) Malaysia Mexico Netherlands epassports Albania Croatia Finland Ireland Kazakhstan Mauritania Netherlands Romania Slovakia Switzerland 30 / CMD 11 / DECEMBER 13, 2011 /

32 From L-1 ID to MorphoTrust Leading U.S. Identity Company R.Eckel - President and CEO MorphoTrust USA Inc / December 13, 2011 / 31 / CMD 11 Q3 REVENUE / DECEMBER 2011 / OCTOBER 13, 2011 / 21, 2011 /

33 Former L-1 ID: A U.S. leading identity solutions provider Ł L-1ID has developed its activities as a U.S.-based end-to-end identity solutions provider with integration, deployment and ongoing support services Ł Involved in mission-critical programs for the U.S. government across Federal, State and local agencies, with expertise and an installed base creating a strong barrier to entry Ł Until the acquisition by Safran, L-1 ID was organized in three operational divisions, totalling $450M in revenue, > $1bn in backlog, and about 1,300 employees (2010 figures) Biometrics & Enterprise Access Solutions Secure Credentialing Enrollment Services Global supplier of multimodal biometric solutions Leading iris and facial recognition capabilities Deep relationships with US Federal Agencies Impressive portfolio of intellectual property Turnkey solutions PIER IBIS HIIDE 3D Face Reader Major North American provider of secure credentialing solutions for both Federal and State programs Contracts with 42 out of 50 U.S. State Department of Motor Vehicle Agencies Produce over 100 million credentials annually Passports, IDs Kiosks Major North American provider of biometric based identity vetting for Federal and State programs Operates over 1,200 enrolment centres Across the U.S. and Canada Captures 2+ million identities annually including biometric & biographic data 30% of L1-ID 2010 revenue 44% of L1-ID 2010 revenue 26% of L1-ID 2010 revenue 32 / CMD 11 / DECEMBER 13, 2011 /

34 Acquisition dates and expected 2011 contribution Ł The acquisition of L-1 ID activities by Safran was: Announced on September 20, 2010 Completed on July 25, 2011 Ł L-1 ID estimated contribution to Safran 2011 accounts (5 months) is in the range of: $200M revenue $30M EBITDA $8M recurring EBIT Ł L-1 ID integration into Morpho organization is well underway 33 / CMD 11 / DECEMBER 13, 2011 /

35 Secure credentials business environment Ł L-1 ID is the leader on the U.S. Secure credentials market having developed strong positions with U.S. State and Federal government agencies Federal credentials (U.S. Passport & Passport card, Border crossing card) Driver license solutions in the U.S. (current supplier in 42 states) Ł Estimated market CAGR : c.10% Ł Growth drivers for 2012 and beyond State & Local Modernization of Driver License (DL) legacy systems (Front back office) Increased demand for more secured, higher value DL credentials Consumer self-service solutions (kiosks for renewal, web) Citizen identity management (verified benefits enrolment) Federal New epassport components Boarding pass & document authentication at airports 34 / CMD 11 / DECEMBER 13, 2011 /

36 Enrollment Services business environment Ł L-1 ID is the leader in the U.S. Enrolment services market with 1,200+ centres in 46 states Federal programs account for 20% of revenue (TWIC, Hazmat, etc...) State and local agency applicant services programs (banking, insurance, education, etc...) account for 70% of revenue Ł L-1 ID has also developed a strong presence in Canada, where market is growing fast Ł Estimated market CAGR : 10-15% Ł Growth drivers for 2012 and beyond Citizen Identity Management - Universal Enrolment Services Leverage extensive nationwide enrolment centres to provide a one-stop-shop services for all identity needs (Federal and State) Expanded vetting of Government and private sector employees (health/senior care, child care, education, finance, etc...) TWIC and Hazmat program upgrades U.S. Citizen Immigration Services Application Centres - Vetting of Green Card holders TWIC:Transportation Worker Identification Credential Hazmat: Hazardous materials 35 / CMD 11 / DECEMBER 13, 2011 /

37 Biometrics & Enterprise Access business environment Ł L-1 ID biometric activities serve U.S. and non-u.s. governments as well as commercial customers Ł Technologies are complementary to Morpho s Multimodal biometrics platform Livescans and mobile terminals Iris, facial recognition Ł 2011 revenues impacted by customer decision inertia in context of protracted ownership execution Ł Estimated market CAGR : c.10% Ł Growth drivers for 2012 and beyond De facto biometric solution provider to a number of U.S. Federal Agencies Leverage into other State and Federal opportunities Emerging democracies adopting biometrics to ensure citizen receive benefits as deserved Deployment of infrastructures (systems, enrolment and ID verification equipments,...) Leverage on mutli-biometrics capability and broader geographical reach with Morpho 36 / CMD 11 / DECEMBER 13, 2011 /

38 Integration synergies Ł $30M annual run rate synergy plan is confirmed and currently being implemented L1-ID HQ closure Rationalization of sites Rationalization of international sales teams Rationalization of R&D Rationalization of other support and operations Sourcing synergies Completed On-going On-going On-going On-going On-going Full target of run rate synergies to be realized by 2013 (i.e. within 18 to 24 months from closing date) 37 / CMD 11 / DECEMBER 13, 2011 /

39 L-1 ID / Morpho integration main principles Ł All former L-1 ID U.S. government related activities are re-grouped in a Proxy Company, MorphoTrust Operating under a NSA (National Security Agreement) Designed to protect U.S. citizen Personally Identifiable information and technology critical to U.S. National Security MorphoTrust positioned to expand in the field of solutions and services delivered to U.S. Federal and State and local government customers Ł In order to ensure optimized level of synergies Other former L-1 ID U.S. activities (biometric terminals, etc.) are merged with Morpho s existing U.S. identification business company, MorphoTrak, to optimize synergies Non-U.S. former L-1 ID activities are merged with Morpho existing structure Former organization as L-1 ID Biometrics & Enterprise Access Solutions Secure Credentialing Enrollment Services New organization within Safran Other Morpho companies (US, Int al) c. 20% of former L-1 ID perimeter activity MorphoTrust (US Proxy Company) c. 80% of former L-1 ID perimeter activity 38 / CMD 11 / DECEMBER 13, 2011 /

40 Transition to MorphoTrust (end 2011) L-1 Identity Solutions Biometrics (hardware/software) Enterprise Access Solutions Secure credentials Enrollment services $450M rev. in 2010 MorphoTrust Other Morpho comp. (non- Proxy) MorphoTrust Est. $400M rev. in 2012 US DL Issuance Solutions US Federal Credentials US Public Safety US Consumer Self-service US DMV Modernization US Citizen Identity Management US Identity Verification US Privatization Services Common shared components MorphoTrak and other Morpho comp. Enterprise Access Biometric hardware devices Non U.S. Est. $100M+ rev. in 2012 Share of ex- L-1 ID revenue falling outside of MorphoTrust 39 / CMD 11 / DECEMBER 13, 2011 /

41 Conclusion The acquisition of L-1 ID and integration into Morpho brings: Ł A highly complementary combination of security technologies and products that are second to none in offering enhanced ID solutions with best-of-class biometrics and secure credential technologies Ł A combination of outstanding teams sharing a strategic vision and ideally positioned to address the high growth and attractive potential of the biometric and identity management markets Ł A broad geographical fit with balanced operations in 40 countries Ł Deep, long term relationships with the vast majority of U.S. State and Federal Government Agencies, positioning MorphoTrust well for classified and sensitive new business opportunities according to CFIUS guidelines 40 / CMD 11 / DECEMBER 13, 2011 /

42 Q&A session Security 41 / CMD 11 / DECEMBER 13, 2011 /

43 42 / CMD 11 / DECEMBER 13, 2011 /