43
Bond investor presentation May 2014
Bond investor presentation
May 2014
2
Disclaimer
This presentation contains forward-looking statements. The trends and objectives givenin this presentation are based on data, assumptions and estimates considered reasonableby Ingenico. These data, assumptions and estimates may change or be amended as aresult of uncertainties connected in particular with the performance of Ingenico and itssubsidiaries. These statements are by their nature subject to risks and uncertainties.These forward-looking statements in no case constitute a guarantee of futureperformance, involves risks and uncertainties and actual performance may differmaterially from that expressed or suggested in the forward-looking statements. Ingenicotherefore makes no firm commitment on the realization of the growth objectives shownin this release. Ingenico and its subsidiaries, as well as their executives, representatives,employees and respective advisors, undertake no obligation to update or revise anyforward-looking statements contained in this release, whether as a result of newinformation, future developments or otherwise.
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Table of contents
1. Ingenico at a glance
2. Ingenico key assets
3. Solid business fundamentals
4. Strong financial profile
5. Outlook
6. Conclusion
7. Appendix
Ingenico at a glance1
Ingenico, a world leading provider of payment transactionsA truly global player, with strong scale effect
Positioned all across the value chain from payment terminals to services, including e-commerce and mobile
Market leader in hardware: >20 million POS installed, accepting more than 250 payment means and connected to more than 1,000 acquirers/banks
Managing 3.5bn payment transactions/year
A well-balanced presence in mature and emerging markets
A large and diversified customer base
A proven track record in executing strategy5
A large and diversified customer base
Deeper access to Tier 1 merchants & banks
> Certified by more than 1,000 acquirers/banks in over 125 countries
> 70% of top 30 global retailers*
Providing solutions to the full spectrum: from large to small customers
Partnering with top global players
> Apple, Google, Paypal, Microsoft
*From “Global Powers of Retailing 2013” by Deloitte
6
Active presence in fast-growing markets
The right geographies
Source: Euromonitor & World payment report
9%
22%
47%
2011-2013 CAGR
High-growth segments
223
286
413
Source: Euromonitor
Emerging: LAR, Eastern Europe, MEA, emerging APACMature: NAR, Western Europe, mature APAC
+7%
+14%
+9%
+5%
+12%
+8%
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Ingenico, the central player thanks to payment expertise and white labelling
Multiple payment standards, with local/global protocols
and regulations
Merchants
Acquirers
GATEWAYMulti-channel
Issuers
Consumers
Certified connections
Gifts, Loyalty programs,
Prepaid services
Approval Schemes
Reporting, VAS, CRM and Data
analytics
Certified connections
8
Our ambition: to enable merchants to increase their sales with secured and cost effective payment solutions
For merchants – directly or through acquirers & banks
> Facilitating acceptance of all payment means for a multi-channel approach
> Providing cost effective payment and business solutions
> Enabling data capture
For consumers: providing a seamless purchasing experience whatever the sales channel and the payment means
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Ready for a new development phase
Achieving profitability
> Moved towards fabless model
> Acquired Moneylineto cover pre-processing solutions for Tier1 retailers
> Philippe Lazare is appointed CEO (2007)
Consolidating POS leadership
> Merged with SagemMonetel
> Launched new product range on a single platform
> Acquired Landi in China
> Invested in mobile with ROAM Data
Building foundations for expansion into
services
> Acquired Easycash, leading payment service provider
> Increased presence in emerging markets (acquisitions in Russia and Indonesia)
Our ambition
> Acquisition of Ogone, the leading pan-European online payment services provider
> Continuation of strategic partnership (Samsung, telecoms operator,…)
> Double digit growth and increase profitability
2006 - 2008 2008 - 2009 2010 - 2012 2013 - 2016
> FY08 Rev: €728m vs. €506m in FY06
> EBITDA: 15.9% vs. 11% in FY06
> Demonstrated business model resilience
> FY12 rev: €1.2bn
> FY12 Transactions & services: 30% of total revenue (+12pts/2008)
> EBITDA: 18.5%
10
Ingenico: developing a well-balanced business model…
Payment Terminals Growth Driver
> New business segments in both mature and emerging markets
> First equipment in emerging markets
> Replacement cycle (upgrade security, government requirements, …)
Dual growth engine supporting each other…
… with Telium 3, our next generation payment
platform, as a key accelerating component
Services Growth Driver
> Growth in e-commerce and m-commerce transaction volumes
> Competitive advantage from integrated capabilities across physical, on-line and mobile payments
> Further growth, driven by technological leadership, experience and global footprint
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Ingenico key assets2
We have a multi-local differentiated strategy
13
14%
17%
9%
9%8%
43%2013 Revenue
€1.37bn
LatinAmerica
Asia Pacific
EEMEA
North America
Central operations
Europe SEPA
Still strong growth potential in payment terminals worldwide
> In mature markets: US (EMV, new use cases)
> Multi-channel driving new terminal sales in Europe
> In emerging markets: growing middle-class (50% of the world’s population by 2030, vs 30% today)*
> New regulations (Turkey) / verticals
Services: further growth, driven by technological leadership, experience and global footprint
Innovation as a key pillar of our strategy
8% of group revenue (9% excluding TransferTo)
R&D engineers: 25% of group employees through a multi local presence
Broad expertise in development: from hardware to software
A worldwide network of data centers managing >3.5bn transactions/per year
Improving consumer’s experience, whatever the channel:
14
A pragmatic innovation approach
32%
15
37%
In-house research for cutting-edge payment
security
Strategic technological partnerships for non
payment features
Acquisition of technology for better “time-to-market”
efficiency
A comprehensive offer to work with our customers and partners
16
New consumers habitsMobility, Internet, social medias
Increased payment touch points
Introduction of tablets/smartphones combined with mPOS for merchants
Multichannel strategy across the full payment value chain
Mobile, multi-lane, kiosk, desk, etc
Smart terminals Transaction
gateway
Collecting
Acquiring
VAS
Solid business fundamentals3
We are the leader in smart terminals, a market with high barriers to entry
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World leading provider of payment terminals
> Installed base with >20m POS
> Fabless model / Optimized supply chain
> Focused strategy
…in a highly concentrated market
> Ingenico : 44%1
> VeriFone : 38% 1
> Pax: 6% 1
> Other players: mostly local players
… with high barriers to entry
> Certification / Security
� Market driven by global & local standards
� Constant intensification of the Global Card Regulation over the last 10 years
> Scale
> Proximity
> Portfolio of customer applications
> More and more technology on board
1 Estimated market share based on 2013 published revenues
Top 3: [85-90]%
...with increase software and technology into smart terminals
Global StandardsGlobal Compliance
Local Standards & Apps
Multiple payment options
Terminals represent the tip of the iceberg
A unique & comprehensive network, connected to >1,000 acquirers/banks, with >2,000
applications
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A unique platform for services (Telium): NFC, multimedia as a standard
Open to all payment methods (international schemes, close-loop, NFC, wallets, QR code, etc.)
Tailored to new regulations (ex: ECRPOS in Turkey)
We have the right and innovative products and services
Fiscal Memory solutions
New payment methods
Mobile Apps
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We have started to diversify the business model towards payment services
Group Europe-SEPA
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48%52%
2013 Revenue
28%
5%67%
2013 Revenue
Europe/SEPA as the forefront of business diversification
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~50% of revenue derived from services (vs. 27% in 2009)
1000 employees on payment services
160k merchants connected to our platforms in Europe
Managing payment services, whatever the channel in-store / on-line / mobile
Strong financial profile4
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Strong financial track record
568728 701
9071001
1206
1371
2007 2008 2009 2010 2011 2012 2013
Revenue EBITDA
Merger with Sagem
Monetel
Easycashacquisition
Ogoneacquisition
Moving to Telium 2 platform
Investing into promising segments and markets
2013 organic growth: +14% 2013 EBITDA: +25%
2013 EBITDA margin: 20.4%
87
116105
166180
223
279
15,3%15,9% 15,0%
18,3% 18,0%18,5%
20,4%
14,0%
19,0%
24,0%
29,0%
34,0%
0
50
100
150
200
250
300
2007 2008 2009 2010 2011 2012 2013
25
Revenues and gross profit by business
In M€ FY 2013FY 2013 / FY 2012
Revenue 1 074 +14%*
Gross Profit 494 +13%
In % of revenue 46.0% +160bps
Increased volumes
Strong purchasing capacity
Strong track record in managing supply chain
Terminals (Hardware, Services & Maintenance)
*Growth rate at constant FX & scope** TransferTo divested as of December 1st, 2013
In M€ FY 2013FY 2013 / FY 2012
Revenue 297 +11%*
Gross Profit 106 +38%
In % of revenue 35.8% + 140bps
In % of revenue excluding TransferTo**
43.8% - 50 bps
Transactions
Gross profit fostered by on-line development of Ogone
26
Operating expenses: Continuing to invest in a fast moving environment to support future growth
In M€FY 2012 FY 2013
Research & Development
85 94
Sales & Marketing
105 121
General & Administrative
133 146
Operating expenses
In % of revenue
323
26.8%
361
26.4%
Preserving our capacity to keep on investing in fast moving ecosystem through focused R&D roadmap and S&M: US market, mobility, multi-channel
Strict control of G&A costs following a past but necessary phase of spending to take the Group to the next level
2013 PF** operating expenses at 27.5% of revenue
*Excluding PPA**Excluding the contribution of TransferTo divested on December 1, 2013
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Continuing to strongly focus on cash generation
58
101
69
125
177
55,2%
60,8%
38,3%
56,1%
63,4%
30,0%
40,0%
50,0%
60,0%
70,0%
80,0%
90,0%
100,0%
110,0%
0
20
40
60
80
100
120
140
160
180
200
2009 2010 2011 2012 2013
Free cash flow (FCF) Conversion (from EBITDA to FCF)
Free cash flow (in €m)
Strict monitoring of our working capital
Targeting conversion ratio by 2016 between 45 and 50%
Capex remain limited
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Maintaining a solid financial structure to support the group’s strategy
In m€ FY 2013 FY 2012
Net debt as of January 1 75 110
Free Cash Flow 177 125
Dividend paid (13) (14)
Acquisitions net of disposals (363) (69)
Others (22) (7)
Change in net debt (221) 35
Net debt as of December 31 296 75
Net debt (in m€)
*2012 Pro forma Net debt assuming the acquisition of Ogone as of Dec 31 2012
Strong cash flow generation ensuring a rapid deleveraging
2013 Free cash flow representing 50% of Ogone acquisition
Debt ratios remain strong
430
1.8x
0.6x
-77,5
144109 110
75
296
00,3x 0,2x
0,2x 0,1x0,4x
1,4x
0,7x 0,6x
0,3x
1,1x
-200
-100
0
100
200
300
400
500
2008 2009 2010 2011 2012 2013
Net debt Net Debt/Equity Net Debt/EBITDA
201320132012 PF*
Oceane(227)
Resulting in a smooth debt maturity profile
Long debt maturity profile and strong liquidity
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Well balanced debt structure with diversified sources of funding
Convertible bond
1 As of April 30th 2014, share price at [•]2 Initial conversion price of €37.44 and initial Soft Call Price of €48.672 adjusted for dividend payment as of May 2013 which leads to a new conversion ratio of 1,010 shares per OCEANE3 Including finance lease obligations
… with untapped liquidity facilities> €100m of undrawn facilities
> €352m of cash and cash equivalents as at 31 dec 2013
Bank debt 3
o/w bank confirmed facilities (including syndicated facility) as of dec 31, 2013 :
> Amounts to €482.5m
> Drawn amount as at dec31, 2013 : €382m
> Maturity: 1st Jan 2017
> Accounted for 227M€ as at dec 31, 2013 under IFRS
> €250m, coupon of 2.75%
> adjusted conversion price of €37.072
> deeply in the money1 with Soft Call Price of €48.19 from January 15th, 2015
250
53 53
242
35
2014 2015 2016 2017 2018
Convertible bond Bank debt
In m€
39%61%
Outlook5
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Q1 & 2014 targets: Continued growth
� Revenue: €325millions� Like-for-like: +20%� Double digit growth in all business segments� Strong performance across all regions
Outstanding performance in Q1
� Organic growth between 10% and 15%* � EBITDA margin ≥ 21%
Specified guidance for 2014
* At constant exchange rate and based on FY13 pro forma revenue at €1.301bn (excluding TransferTo disposed on December 1, 2013)
Ambitious 2016 targets
Positioning Ingenico as the global leader in seamless payment, whatever the channel: in store, on line, mobile
Continued profitable growth> Revenue > €1.8bn> EBITDA margin> 20%
Maintaining a strict financial discipline> Free Cash Flow conversion between 45% and 50%
Complementing organic growth through targeted acquisitions
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Conclusion5
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Key investment considerations
A global expert in payment solutions
Business model diversification
Technological leadership
Large and diversified customer base
� Positioned all across the value chain� Leveraging on #1 in terminal � Present in 125 countries
� To provide payment solutions whatever the channel: in-store, on line and mobile
� Strong, pragmatic and proven innovation strategy
� A strong network connected >1000 acquirers & banks� Deep access to all tier merchants � Partnering with top global players
Balanced presence between matured and
emerging countries
� Active presence in fast growing markets� Right international presence to leverage market
opportunities
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Key investment considerations
Delivering profitable growth
Strong cash flow generation
Focused acquisition strategy
Solid financial position
Strong liquidity profile
� Revenues x2.4 from 2007 to 2013� EBITDA x3.2 from 2007 to 2013
� Strong increase in EBITDA and control on working capital requirements and capex => Free cash flow of €177m in 2013 (+42%)
� 3 unchanged areas: Geographical Scope, Services and Technology
� Strong debt ratios: Gearing of 0.39x and leverage of 1.1x in 2013
� Convertible bond maturing in 2017 in the money
� As of 31/12/13: €100m of undrawn facilities and €352m of cash and cash equivalents
� Smooth debt maturity profile
Appendix6
Group Regions & Business Line
Patrice Durand EVP Finance and Operation
Pierre-Antoine VacheronEVP SEPA – Europe
Jacques GuérinEVP Chief Solutions Officer
Oscar BelloEVP Latin America
Michel LégerEVP Global Sales and Marketing
Patrice Le MarreEVP Asia-Pacific and China
Martine BirotEVP HR and Internal Communication
Thierry DenisEVP North America
Chloé MayenobeEVP Governance, Audit & Risk
Jacques BehrEVP EMEA
Jean-Marc ThienpontEVP Mobile Payment
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Ingenico management team
Philippe LazareChairman & CEO
Key data on selective acquisitions to position Ingenico on the whole payment value chain
EasycashA leading German payment services provider
Enabling customers all over Europe to use electronic payment transaction
Acquisition completed in November 2009
Roam DataMobile payment solutions market in the US
Strategic investment in November 2009 completed with the acquisition of a controlling interest in February 2012
Ogonea leading independent provider of « Non Card Present » payment service
Acquisition in January 2013
+32% revenue growth in 2013
Ogone and easycash platforms connected 2 months after the acquisition
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39
P&L (1/2)
*+14%: growth rate at constant FX & scope
In M€FY 2013 FY 2012 Changes
vs. FY 2012
Revenue 1371 1 206 +14%*
Gross Profit
In % of revenue
600
43.8%
513
42.5%
+17%
+ 130 bpts
EBITDA
In % of revenue
279
20.3%
223
18.5%
+25%
+ 180 bpts
EBIT
In % of revenue
239
17.4%
190
15.7%
+26%
+ 170 bpts
Net profit, attributable to shareholders
114 97 +18%
40
In M€ FY 2013 FY 2012
EBIT
in % of revenue
239
17.4%
190
15.7%
Purchase Price Allocation (30) (26)
Other income & expenses (21) 1
Financial result & Equity Method (18) (15)
Income before tax 169 150
Income tax
Income tax rate
(56)
33%
(50)
33%
Net Result
Net Result, attributable to shareholders
113
114
100
97
P&L (2/2)
Limited increase despite Ogoneacquisition of €360 millions
Impact of TransferTo divestment & Ogone acquisition
271
366
413
513
600
38,7%
40,4%
41,3%42,5%
43,8%
38,0%
39,0%
40,0%
41,0%
42,0%
43,0%
44,0%
45,0%
0
100
200
300
400
500
600
700
2009 2010 2011 2012 2013
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Sustaining high level of gross profit
Gross profit (in €M)
Moving to Telium 2 platform
Key strengths mitigating potential price pressure
> Telium successive generations
• Improved design to cost
• Increased value for customers
> Strong purchasing capacity
> Track record in managing supply chain
• Strong relationship with key suppliers
• Proven ability to manage external factors (Japan, volcano in Iceland, floods in Thailand)
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Operating expenses: Continuing to invest in a fast moving environment
> As expected, accelerating investment in H2 in focused R&D and Sales & Marketing to support strategy deployment: Telium 3, mobility and multichannel
> G&A costs under control
> 2013 PF* operating expenses at 27.5% of revenue
*Excluding the contribution of TransferTo divested on December 1, 2013
64 71 71 85 94
4669 83
105121
78
100
118
133
146
2009 2010 2011 2012 2013
R&D S&M G&A
188
272
26.8%26.3%
Operating expenses (in €M)
323
240
361
26.8%27.2%
26.4%
In M€FY 2013
Pro forma
FY 2013Reported
Revenue 1301 1371
Adjusted Gross Profit
In % of revenue
593
45.6%
600
43.8%
Adjusted OPEX
In % of revenue
(358)
27.5%
(361)
26.4%
EBITDA
In % of revenue
276
21.2%
279
20.3%
Adjusted EBIT
In % of revenue
235
18.1%
239
17.4%
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2013 Pro Forma, excluding TransferTo for the full year
To ensure continuity in reporting and facilitate the assessment of Ingenico’s performance, key financial figures for FY13 are presented to reflect the disposal of TransferTo occured on Decembre 1st 2013
