Agreed pay cuts and the fact that key customers have signed new, long-term contracts mean that Ireland’s largest cash-in- transit company has been able to implement a successful restructuring.
In August G4S Cash Solutions (Ireland) warned customers that its publicly quoted UK parent would withdraw financial support for the loss-making business if they did not agree to revised contract terms and higher prices.
A spokeswoman for the company told The Irish Times that the company has received the support it needed to deliver a viable restructuring plan. "The goals of the restructuring plan are now well on the way to being delivered," she said.
“The restructuring plan is progressing and our parent company, G4S Group, is providing funding to modernise the transport fleet and introduce new cash handling equipment and systems.”
Movement of money
G4S has a more than 60 per cent market share of the cash-in-transit business in the Republic and the collapse of the company could see major disruption to the movement of money. Its customers include most of the main banks.
The company has also closed its defined-benefit pension scheme, which was seriously underfunded.
“The Irish subsidiary did not have the resources to address the deficit, so G4S Group provided a significant injection of capital to make good the deficit,” the spokeswoman said.
“The cash was provided to the pension fund and was subsequently paid over to a new defined-contribution scheme for members. The new defined-contribution scheme is fully operational, and the old defined-benefit scheme is now in the final stages of wind up.”
The latest accounts on file for G4S Cash Solutions are for 2011 and show that a pension liability of €18.2 million existed at the end of that year. Notes to the accounts say the company has committed to making a €10.9 million contribution to the scheme, of which €6.5 million was outstanding at the end of 2011.
The spokeswoman said the market in Ireland continues to be challenging but that the support and understanding of the company’s customers and staff over the past six months has ensured it can provide a sustainable business into the future.
The company, which has almost 600 employees, is to close its Athlone and Tralee branches before the end of the year. The company intends offering redeployment to staff impacted by the closures.
Declining cash demand
The cash-in-transit market in Ireland has been operating in very challenging circumstances for all providers for some time, the spokeswoman said, and with the economic downturn, demand for cash has decreased significantly.
Over the past number of years there has been a 27 per cent decline in volumes in the market place. Prices for services are coming under pressure while costs have remained high due to the requirement to maintain a country-wide network for customers.
The 2011 accounts show that turnover was €42.6 million, down from €44.2 million the previous year. Pre-tax losses on ordinary activities were €360,000, with pre-tax profits the previous year having been €2.1 million.
Directors' remuneration in 2011 was €565,000, up from €365,000 the previous year. The directors in 2011 were Bernard Smith and Declan Murphy. In August of last year they resigned and Niall Feely and Leo Crawford were appointed.
The UK parent has been in the headlines for all the wrong reasons in recent times, with scandals concerning its work for the London Olympics and the overcharging of the British government for the tagging of prisoners. The latter issue is now the subject of a criminal inquiry. Last week the company, and its UK peer Serco, told a Westminster committee they were working to clean up their businesses.
