Part III - Security › sites › group › files › 4... · Identification market by applications Criminal Identification Others Identity Management (incl. Border Control and ID

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0 / CMD’11 / DECEMBER 13, 2011 /

Part III - Security


1 / CMD’11 / DECEMBER 13, 2011 /

Video clipMorpho today


2 / CMD’11 / DECEMBER 13, 2011 /Q3 REVENUE 2011 / OCTOBER 21, 2011 /

Building trustPh.Petitcolin - President Defence / Security

/ December 13, 2011 /


3 / CMD’11 / DECEMBER 13, 2011 /

Reasons to develop a Security business

Security is a 2-digit revenue growth business with 2-digit margins

è Security shares Safran’s aerospace DNA§ High and sustainable technological barriers to entry§ Long term and trustworthy customer relationship§ High service content alongside OEM

è Economic cycles are different compared to aerospace§ 2-digit market growth rate since 9/11§ Quicker returns on capital employed

è Market under consolidation§ Inherited a business from Sagem that needed refocus§ Safran now part of worldwide top 3 thru targeted acquisitions

è 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...)


4 / CMD’11 / DECEMBER 13, 2011 /

Accelerated refocusing since 2007

81%

20072008

Acq

uisi

tions

Div

estm

ents

2009

Contribution of Sagem Monetel to Ingenico

2011

Morpho now top 3 global player - €1.7bn cash outlay since 2008

2010

HLP


5 / CMD’11 / DECEMBER 13, 2011 /

Business model delivering results ( 2010E proforma incl. L-1 ID)

Identification - €800m

Smart cards - €250m

Detection - €220m

Others - €120m

57%

8%

16%

19%

33%

MAIN PRODUCTS & SOLUTIONS§ Civil and Forensic ID solutions§ Biometric Identification Systems§ Biometric ID documents (Passports, § , ID,driving licences …)§ Biometrics terminalsSERVICES§ Enrolment and document issuance§ Background check§ Upgrades and maintenance

MAIN PRODUCTS§ SIM for Telcos§ Banking cards

SERVICES§ Personalization

MAIN PRODUCTS§ Checked baggage screening§ Trace detection§ Checkpoint solutions§ CBRN for 1st responders

SERVICES§ Upgrades and maintenance§ Multiplexing solutions

MAIN PRODUCTS§ Vehicle speed control and identification§ Lottery terminals

SERVICES§ Upgrades and maintenance

Revenue: €1.4bn

72% Government (Federal,local, agencies, authorities)


6 / CMD’11 / DECEMBER 13, 2011 /

A global presence reinforced with L-1 ID

R&DProductionSales

AMERICAS4Employees: 2,8004Revenue: c.€0.7bn

EMEA4Employees: 3,0004Revenue: c.€0.55bn

ASIA / PACIFIC4Employees: 1,4004Revenue: c.€0.15bn

è 2010E proforma (incl. L-1 ID)

§ Employees: 7,200§ Revenue: €1.4bn


7 / CMD’11 / DECEMBER 13, 2011 /

Mastering critical technologies

Pattern recognitionData & image processingBiometricsVehicle recognition

Secure embedded softwareCryptography

Advanced system architecture

X-ray, X-Ray DiffractionComputed tomography (CT) ITMS (Ion Trap Mobility Spectrometer)

Secured printing

High technological content - around 8% of revenue invested in R&D


8 / CMD’11 / DECEMBER 13, 2011 /

Addressable markets in identification

€6.7bn

€4.3bn

c.12%

3M, NEC, Gemalto

2014

Market size

10-14 CAGR (%)

Safran’s ranking

Key competitors

2010

Identification market by applications

Criminal Identification

OthersIdentity Management

(incl. Border Control and ID documents)

Source: Safran, IBG-2009, IMS-2010

§ Background Check§ Surveillance§Consumer ID and Device

System Access, etc

§ Background Check§ Surveillance§Consumer ID and Device

System Access, etc

Biometric Terminals

#1 ww


9 / CMD’11 / DECEMBER 13, 2011 /

Addressable markets in smart cards

€3.9bn

€3.0bn

c.7%

GemaltoGiesecke & Devrient

Oberthur

2014

Market size

10-14 CAGR (%)

Safran’s ranking

Key competitors

2010

Note: Smart cards for Government & healthcare are included in the Identification segmentSource: Safran, ABI-2011

Smart cards market by applications

Telecommunications

Payments

#4 ww


10 / CMD’11 / DECEMBER 13, 2011 /

Addressable markets in detection systems

€3.7bn

€2.6bn

c.8%

SmithsL3, Nuctech,

Rapiscan (OSI Systems)

2014

Market size

10-14 CAGR (%)

Safran’s ranking

Key competitors

2010

Source: Safran, IMS-2010

Detection systems market by applications

Explosive Detection / Aviation

Chemical, Radiological,

Biological, and Nuclear

Explosive Detection / Non-Aviation A leader in

aviation detection


11 / CMD’11 / DECEMBER 13, 2011 /

Synergies from acquisitions

è Achieved synergies at end of 2011E§ Sdu acquisition contributed growth synergies

§ Additional business in other Morpho divisions enabled by acquisitionsú €40M additional revenue in 2011 in IDú €80M+ additional revenue in 2012E in ID

è Synergies brought by L-1 ID acquisition§ $30M annual run rate confirmed and to be fully realized within 18-24 months (2013)

Acquisitions are synergetic to Morpho


12 / CMD’11 / DECEMBER 13, 2011 /

Selected breakthrough security solutions roadmap

2012 2013 2014 +

3D & Colour Photo on Polycarbonate cards

XRD based checkpoint baggage screening systems

Fast DNA for forensic applications

Fore

nsic

& m

ilita

ry

solu

tions

Civ

il ID

so

lutio

nsB

orde

r con

trol

& C

heck

poin

tso

lutio

ns

ID, T

elco

&

ban

king

se

cure

d so

lutio

ns

Post issuance card personalisation

Iris at a distance

Morpho e-documents Morpho DetectionMorpho Identification

Compact checked luggage CT screening systems

Multi-biometric forensic AFIS systems

Integrated checkpoint solutions

Mass spectrometry based explosive trace detection Air cargo

screening solutionsC

heck

edlu

ggag

e&

car

goso

lutio

ns

Kiosks and stations (driver licence renewal, boarding pass scanning, …)

NFC optimized chips and additional security features

Finger on the Fly

Shoe scanning systems

Multi-biometric e-gates

Digital identity service platforms


13 / CMD’11 / DECEMBER 13, 2011 /

Longstanding trust

è 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

è TSA§ Supply of state of the art of EDS (Explosive

Detection Systems) and ETD (Explosive Trace Detection) equipments

è Netherlands§ Supply of third generation e-passport with

state of the art security features

The Netherlands21 years

New York State23 years

Denmark21 years

Germany19 years

Norway26 years

FBI37 years

France26 years

Switzerland28 years

United Arab Emirates, 19 years


14 / CMD’11 / DECEMBER 13, 2011 /

Conclusion

è Enhanced security is likely to be well accepted if:§ Efficient§ Contributing thru technology to lean government

è Security enables and enhances government savings in the provision of security to citizens§ Automation, fluidity, reliability



Morpho in IndiaS.Shriya - Managing Director, Smart Chip Limited

/ December 13, 2011 /


16 / CMD’11 / DECEMBER 13, 2011 /

Morpho smart cards - Indian presence

è 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

è Worldwide industrial hub for Morpho§ Noida Industrial Eco-System (NIES)§ Supply chain competence centre§ Low cost card production for Telco, Banking & ID cards

è Worldwide smart card R&D centre§ Worldwide products Telco R&D centre§ Local products HID R&D centre

Unmatched presence, 3 strategic objectives

UID: Unique Identification HID: Health & Identification


17 / CMD’11 / DECEMBER 13, 2011 /

SECURE CREDENTIALS CENTRE

CARD BODY CENTRE MOBILE CREDENTIALSCENTRE

Three global centres of manufacturing excellence

Typical applications§ Mobile§ Low Cost ID§ Pay TV§ Fax§ Banking (Visa & MC “classic” cards) § Contactless cards (Transport, Banking)§ Etc.

Capacity: 200M units/yr

Capacity: 120M units/yrCapacityMobile: 230M units/yrID/Banking: 120M units/yr

1 million units per day today and growing


18 / CMD’11 / DECEMBER 13, 2011 /

Global unified R&D

§Telco 2G products, CDMA§ Regional ID products§ Off card tool§ Apps / applet development§ TC back office

§WIB and S@T browser§Browser Applications§ SIMPeria

§Advanced Telco products§ Java Banking products§ 3G, NFC, Connect SIM§ ID, Banking and IAM Products

§Customization centre

(20 staff)

(200 staff)

(20 staff)(150 staff)

Global, multi-team, multi-location projects


19 / CMD’11 / DECEMBER 13, 2011 /

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 globallyOpens Several Biometric Opportunities across the Aadhaar program

§ Establishes biometrics as a enabler of social inclusion rather than criminal detection onlyTipping 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


20 / CMD’11 / DECEMBER 13, 2011 /

Aadhaar - The current status

§ On 29 September 2010, Ranjna Sadashiv Sonwane, a tribal woman from Tembhalivillage 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

Over 85 million Aadhaars issued till date; estimated 150 million enrolments completed in field

UIDAI: Unique Identification Authority of India


21 / CMD’11 / DECEMBER 13, 2011 /

Aadhaar - A multi-step approach

TodayTrial phase

TomorrowProduction phase

200 million ID numbersValue of $500M

1.2 billion ID numbersPotential value of $1,200M

Backend biometric engines

Authentication enabled services

Morpho/L-1 currently have leadership positions on trial phase; contracts yet to be awarded for production phase

Suppliers yet to be selected

Safran is the only contractor across the 3 markets

Suppliers yet to be selected

After tomorrowServices phase

Potential value > $1,300M

Field enrolment services

Biometric devices

Backend biometric engines

Field enrolment services

Biometric devices

Authentication transaction terminals


22 / CMD’11 / DECEMBER 13, 2011 /

Aadhaar - Morpho’s current positioning

Strong presence in current opportunities. Strategically positioned for enduring Aadhaar Leveraged “Authentication” business

Leadership position across all program

segments


23 / CMD’11 / DECEMBER 13, 2011 /

Aadhaar - The road ahead

Market potential$300-325M

Leverage Morpho’s end-to-end biometric value chain capability to be a key biometric enabler in India

§ Lead market making and guide costumer aspirations§ Market potential of over 85M terminals§ Capture 10% market share

§ Leverage Morpho’s e2e competence for market making§ Focus is volume transaction sectors; i.e. banking,

social schemes, travel, education

Market potential$1bn

Authentication enabled services

Authentication transaction

terminals

Enduring authentication-led services built on Aadhaar foundation



Biometrics IDJ.Westerouen Van Meeteren - Managing Director Morpho BV

/ December 13, 2011 /


25 / CMD’11 / DECEMBER 13, 2011 /

ID Documents integrating biometrics

TechnologiesèBiometrics

èEmbedded software & Cryptography

èSecure printing

èSecurity / certification

Market driversè Increased National Security & Combat fraud

è Standards & mandates (ICAO, ISO/IEC)

è European regulations: ID1 & Polycarbonate§ Driving License (Chip/biometrics optional (2013))§ Residence Permit (2011) (Chip/biometrics mandatory)§ Vehicle registration card (Chip optional)

è Recycle 1st generation ePassports (2006)§ 2nd generation ePassports

è Growth in Latam & Asia§ Trend towards high-end products

è Multi-application solutions§ The path to convergence (border control, payment, health)

è U.S.§ Opportunities for travel documents§ Gradual acceptance of smart ID credentials

ID1: Credit card formatICAO: International Civil Aviation OrganizationISO: International Standards OrganizationIEC: International Electro technical Commission


26 / CMD’11 / DECEMBER 13, 2011 /

ID & ePassport management market


Iden

tity

man

agem

ent m

arke

t >> Market by application

ePassport

National eID

Driving License

eHealth eVoting

2010 2014E

CAGR+11%

€2.0bn

€3.0bn

>> 2-digit CAGR growth

€2.0bn

Ann

ual s

hipm

ents

(in

units

) >> National eID

>> ePassport2010 2014E

CAGR+10%

2010 2014E

CAGR+12%

Source: IMS-2010

250M

371M

66M

104M


27 / CMD’11 / DECEMBER 13, 2011 /

ID & ePassport management market: regional trends

è 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


20%

39%

15%

26%

Europe

Middle-East Africa

America

Asia Pacific

€2.0Bn

€2.0Bn

€3Bn€3Bn

2010 2014


28 / CMD’11 / DECEMBER 13, 2011 /

Sdu acquisition strengthening the offering

TECHNOLOGY

è Vast experience in setting up and operating a production facility§ Including personalisation

è Solid experience in passport technology: Polycarbonate, secure printing, binding technology, ImagePerf, lens structures (protected by patents)

è Product Development§ 3D Photo ID§ ePersonalisation Software § Enhanced security features (matt surface, colour

personalisation, transparent window, ...)

COMMERCIAL

è Leverage customer base to secure new markets§ Renewal Dutch contract passport and ID card§ Mauritanian passport and ID card

è Leverage cross-selling ID Documents & ID Systems§ Turnkey solutions§ Concession

ú North Carolina driving licenseú Albania passport and ID card

èMilestones§ 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


29 / CMD’11 / DECEMBER 13, 2011 /

Tactile relief

ImagePerf/TLI

Colour personalisation

3D Photo ID

Photo substitution is a key risk, and remains the number one abuse of travel documents

Security features: how to prevent photo substitution

TLI: laser technology


30 / CMD’11 / DECEMBER 13, 2011 /

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



From L-1 ID to MorphoTrustLeading U.S. Identity Company

R.Eckel - President and CEO MorphoTrust USA Inc

/ December 13, 2011 /


32 / CMD’11 / DECEMBER 13, 2011 /

Former L-1 ID: A U.S. leading identity solutions provider

Secure Credentialing Enrollment ServicesBiometrics & Enterprise Access Solutions

§ Major North American provider of secure credentialing solutions for both Federal and State programs

Ø Contracts with 42 out of 50 U.S. State Department of Motor Vehicle Agencies

Ø Produce over 100 million credentials annually

§ Global supplier of multimodal biometric solutions

Ø Leading iris and facial recognition capabilities

Ø Deep relationships with US Federal Agencies

Ø Impressive portfolio of intellectual property

Ø Turnkey solutions

Passports, IDs

Kiosks

HIIDE

PIER

3D Face Reader

IBIS

26% of L1-ID 2010 revenue

§ Major North American provider of biometric based identity vetting for Federal and State programs

Ø Operates over 1,200 enrolment centresØ Across the U.S. and CanadaØ Captures 2+ million identities annually

including biometric & biographic data

30% of L1-ID 2010 revenue 44% of L1-ID 2010 revenue

è L-1ID has developed its activities as a U.S.-based end-to-end identity solutions provider with integration, deployment and ongoing support services

è 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

è 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)


33 / CMD’11 / DECEMBER 13, 2011 /

Acquisition dates and expected 2011 contribution

è The acquisition of L-1 ID activities by Safran was:§ Announced on September 20, 2010§ Completed on July 25, 2011

è L-1 ID estimated contribution to Safran 2011 accounts (5 months) is in the range of:§ $200M revenue§ $30M EBITDA§ $8M recurring EBIT

è L-1 ID integration into Morpho organization is well underway


34 / CMD’11 / DECEMBER 13, 2011 /

Secure credentials business environment

è 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)

è Estimated market CAGR 2010-2014: c.10%

è 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


35 / CMD’11 / DECEMBER 13, 2011 /

Enrollment Services business environment

è 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

è L-1 ID has also developed a strong presence in Canada, where market is growing fast

è Estimated market CAGR 2010-2014: 10-15%

è 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 holdersTWIC:Transportation Worker Identification CredentialHazmat: Hazardous materials


36 / CMD’11 / DECEMBER 13, 2011 /

Biometrics & Enterprise Access business environment

è L-1 ID biometric activities serve U.S. and non-U.S. governments as well as commercial customers

è Technologies are complementary to Morpho’s§ Multimodal biometrics platform§ Livescans and mobile terminals§ Iris, facial recognition

è 2011 revenues impacted by customer decision inertia in context of protracted ownership execution

è Estimated market CAGR 2010-2014: c.10%

è 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


37 / CMD’11 / DECEMBER 13, 2011 /

Integration synergies

è $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

ü 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)


38 / CMD’11 / DECEMBER 13, 2011 /

Secure Credentialing Enrollment Services

MorphoTrust (US Proxy Company)Other Morphocompanies (US, Int’al)

Biometrics & Enterprise Access Solutions

Former organizationas L-1 ID

New organization within Safran

c. 80% of formerL-1 ID perimeter activity

c. 20% of formerL-1 ID perimeter activity

L-1 ID / Morpho integration main principles

è 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

è 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


39 / CMD’11 / DECEMBER 13, 2011 /

L-1 IdentitySolutions

§ Biometrics (hardware/software)

§ Enterprise Access Solutions

§ Secure credentials

§ Enrollment services

MorphoTrust§ 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

MorphoTrust

MorphoTrak and other Morpho comp.§ Enterprise Access§ Biometric hardware devices§ Non U.S.

Other Morphocomp. (non-

Proxy)

$450M rev. in 2010

Est. $400M rev. in 2012

Est. $100M+ rev. in 2012

Transition to MorphoTrust (end 2011)

Share of ex- L-1 ID revenue falling outside of MorphoTrust

Common shared components


40 / CMD’11 / DECEMBER 13, 2011 /

Conclusion

The acquisition of L-1 ID and integration into Morpho brings:

è 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

è 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

è A broad geographical fit with balanced operations in 40 countries

è 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


41 / CMD’11 / DECEMBER 13, 2011 /

Q&A sessionSecurity


42 / CMD’11 / DECEMBER 13, 2011 /