Customers of G4S’s cash-in-transit business in Ireland are warned that it faces insolvency
UK parent could pull plug unless staff agree to cuts and customers accept higher prices
Ireland’s biggest cash-in-transit operator G4S recently warned its customers that its publicly quoted UK-based parent company would withdraw its financial support for the loss-making business here unless they agreed to revised contract terms and higher prices.
A loss of support from its parent company would have the effect of making G4S Cash Solutions Ireland Ltd insolvent and would leave it depending on a possible examinership process for its survival, customers were told.
This could result in a major disruption to the availability and movement of money here as G4S’s Irish business has a 63 per cent share of the cash-in-transit market and transports €50 million around the country each day.
Its customers include most of the country’s main banks, An Post and many large retailers such as Dunnes Stores and Boots. It is understood the price increase is being resisted by many of its customers.
The move to charge higher prices is part of a major restructuring of G4S’s Irish business that also includes 100 redundancies among its 615 employees, and a renegotiation of contracts with suppliers.
The Irish Times has seen a copy of a presentation provided recently to customers of G4S Cash Solutions Ireland Ltd. It warned that the business had traded at a loss for three years and that its parent would “withdraw further support” on August 5th “if we are unable to implement an acceptable restructure”.
The company stated that it had 30 days to “restore the business to viability and ensure that G4S plc continued to support the business financially and so avoid insolvency”.
“If possible we will seek to have an examiner appointed,” G4S said, adding that the outcome of this process was “uncertain”.
The presentation stated that an examiner was likely to make similar offers to stakeholders as were being put forward by the company.
In a statement issued to The Irish Times yesterday, a spokeswoman for G4S said: “We can confirm that we have been carrying out a review of our cash solutions business in Ireland and are talking with employees and customers about how we can create a sustainable business model for the future. As that review and those discussions are ongoing, we have not made any decisions about next steps and therefore it would not be appropriate to comment further.”
It is understood that Siptu members at the company will ballot this week on the cost cutting proposals, with a result expected tomorrow evening.
G4S is seeking a “significant reduction in payroll costs”, to include redundancies and changes to working practices.
G4S replenishes 370 ATMs cash machines each week and visits 11,520 other outlets on a daily basis. It operates from nine secure sites in Athlone, Dublin, Drogheda, Cork, Galway, Limerick, Sligo, Tralee and Waterford. Its nearest competitor is Brinks, which has a 17 per cent market share.
G4S’s Irish business posted turnover of €48.2 million in 2009 but this has declined over the past four years and is projected to come in at €38.5 million for 2013.
It is forecasting a loss before interest, tax, and amortisation of €10.07 million this year. This compares with a deficit of €3.7 million in 2012 and €2.8 million in the previous year.
G4S blamed the losses on “severe turbulence” in the Irish economy since 2008, and a 27 per cent decline in its cash-in- transit volumes since 2011. It said there was “price pressure from a market which is over-served as companies chase volume”.
Listed in London and Copenhagen, G4S is the world’s biggest security company but has attracted negative headlines in the UK over the past 12 months after bungling a major contract for the 2012 London Olympics and overcharging the British government for the electronic tagging of prisoners.
G4S yesterday pulled out of bidding for new contracts for tagging criminals in the UK following an overcharging scandal.
They initially refused to withdraw from the bidding process despite revelations that the firm, with its rival Serco, had among other errors billed the government for monitoring dead offenders.