Investors Presentation June 21 2011 Disclaimer All forward-looking - - PowerPoint PPT Presentation

Investors Presentation

June 21 2011

Investors presentation - June 2011• 2

Disclaimer

All forward-looking statements are Ingenico management’s present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

Investors presentation - June 2011• 3

Ingenico at a glance

Number of shares: 51.9 million Share price: €31.34 Market capitalization: €1.6 billion

easycash acquisition: acceleration of strategic development towards services Landi acquisition (#2 in China): investing in fast growing countries Merger with Sagem Monetel: acquisition

• f best in class R&D

Money Line acquisition: pre-processing solutions for Tier 1 retailers in France

2009 2008 2006

Moving to a fabless model

2010

easycash integration & growth in Value Added Services

Phase 2: 2008-2009

• Consolidating POS leadership
• Business model resilience

Phase 1: 2006-2008

• Transforming to profitable group
• 2008 Revenue: €728m (vs. 506m

in 2006)

• 2008 EBIT margin: 12.5%

(vs. 6% in 2006)

Group transformation for profitable growth Shareholder structure as of May 31 2011

Market capitalization as of September 15 2010

Market capitalization as of June 17 2011

Phase 3: 2010-2013

• Changing

company’s profile

Investors presentation - June 2011• 4

Leader in the payment terminal market

North America Latin America Europe Middle East-Africa China Asia Pac-Australia

N 1

(Brazil, Colombia Mexico)

N 2 N 1 N 1 N 1 N 1 (MS>30%)

World leading manufacturer

• f payment terminals

Payment terminals: a highly concentrated market … 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 application
• Ingenico: 39%*
• Verifone: 35%*
• Hypercom: 14%*
• Other players: mostly local players

Top 3: 85-90%

(*) Estimated market share based on published revenue. Assumed constant share for other players

• Leading world installed base with 15 million POS
• Strong & balanced geographical presence

between mature and emerging markets

• >1,000 Payments & Value-added Applications in

portfolio

• Fab-less model / Optimized supply chain
• Focused strategy

Investors presentation - June 2011• 5

A global partner of banks and retailers

Providing merchants with POS- based payment solutions:

–

Directly for Tier1/2 retailers

–

Indirectly for small merchants through banks and acquirors

Major financial institutions and merchants are using our products and solutions all over the world (in more than 100 countries). Dual vendor policy More than 100,000 small merchants directly managed in France and Germany

Investors presentation - June 2011• 6

Innovation driving technological leadership on payment terminals

Strong R&D investments: 8% of revenue in 2010 Telium 2 as a cost differenciating factor

–

A single platform

–

Generic features: Color, contactless

Largest range of payment terminals covering all merchant segments Investing in next generation payment form factor

–

NFC: all terminals integrated in all terminal range

–

Multimedia

Less components Greater speed of transaction Lighter weight Increased reliability Less production costs Less repair costs

Telium 2 virtuous dynamics Counter Top Wireless Sign Capture Pay PDA WebP OS Health

• care

Petrol Addressing traditional market segments Addressing new market segments PINPad

Investors presentation - June 2011• 7

Payment terminal business: a robust and recurring business model…

506 568 728 700.7 907

6.6% 11.4% 12.5% 11.4% 13.9%

5% 100 200 300 400 500 600 700 800 900 1000 2006 2007 2008 2009 2010 Published revenue in m€ Adjusted EBIT (in % of revenue)

• Demonstrated ability to expand revenue fueling profitability
• While fueling profitability: Adj. EBIT at 13.9% in 2011, +250 basis points
• Continued expansion of Terminal gross profit over last 5 years: Scale, Optimized supply chain,

Fabless model, Telium2 platform

• Terminal gross profit at 44.0% in 2010, increase >600bp from 2006 to 2010, illustrating group

technological transformation

• Generating strong recurring operating cash flow
• Strong operating cash flow: €158.9m in 2010
• Strong cash conversion* : 96% in 2010
• Low capital intensive model: capex < 3% of revenue

* Net operating cash: EBITDA+working capital changes-capex

Investors presentation - June 2011• 8

Emerging countries Technology Card Penetration

Multi-application

• Loyalty cards
• Gift cards
• Prepaid top up

Value-added Services Security & Regulation

… with growth potential in payment terminals market

• Fraud: a concern
• EMV: an
• pportunity
• 11.5Mio EMV

POS (vs. 45Mio installed base)

• Contactless
• Wireless
• Biometry
• Accelerating POS

replacement cycle

• Payment terminals

as a marketing tool: design to advertising (video, color display, touch screen)

• Source of revenue

for merchants: loyalty/top up,...

• Structural

development of cards vs. checks

Investors presentation - June 2011• 9

Emerging markets & urbanization drive growth Increased middle class with access to financial services Governments pushing for tax collection

• avg. 2 terminals p. 1,000 inh.
• avg. 24 terminals p.1,000 inh.

Source: Euromonitor / IMF

Mature Payment Countries Emerging Countries

Number of POS terminals per ‘000 people

Emerging countries as key sources of growth

Investors presentation - June 2011• 10

Leveraging our robust business model to fuel development towards services

In the payment ecosystem, payment terminal will remain a key element

–

Continuous shift towards card electronic payment

–

Gateway to cash usage moving towards dematerialized services

–

Convergence of Physical + Online + Mobile payments On-going positioning of Ingenico on the fast growing services industry

–

Capturing growth of electronic transactions: >10% p.a.

–

Increasing addressable market: from c. €2-2.5bn to more than €10bn* Providing secure transaction services to merchants (payment & non-payment)

–

Increased direct access to (small) merchants

–

Long term contracts

–

Recurring revenue through a per monthly fee and fixed transaction fee business model

Improving visibility on revenues & margins. Increasing business model resilience to economic conditions.

Continuous shift towards electronic payments

checks cash Source: MasterCard *Company estimates

Investors presentation - June 2011• 11

easycash: a major step to move up the value chain

POS terminal market Market Transaction services VAS Financial institutions mostly Value chain Hardware Terminal services Connectivity Pre- processing Processing Value-added Services Settlement Ingenico entities Revenue type Monthly fee Monthly fee One off Monthly fee % of transaction in value Monthly fee+ Fixed charge / transaction Fixed fee per transaction Merchant Services Acquirer Processor VAS provider

Ingenico mostly provides POS terminals to either directly (large retailers) or indirectly (banks, distributors) Revenue business model mostly relies on one off fees Easycash operates payment & VAS services for merchants Revenue business model relies on recurring revenue through a per transaction payment type of business

Investors presentation - June 2011• 12

Payment terminals: continuing growth (average growth of 5% p.a.) Recurring service revenues: target of 40% by 2013

–

Maintenance revenues: expected to be flat with improved reliability from Telium OS

–

Transactions revenues: x3* (payment & non payment solutions)

Combination of growth & increased recurring revenues => more visibility

2010-2013: towards a new company profile with 40% target of recurring service revenues

2009 Pro forma 2010 2013 Target Transactions Maintenance Hardware

*compared to €84m in 2009 PF

>€1bn €762m

40% 28%

Evolution of revenues

€907m

Investors presentation - June 2011• 13

2011: in line with expectations

Q1’11 : a good start of the year

–

Sustained growth:

–

Revenue of €204.9m (+18% year-on-year; like-for-like: +9%)

–

Strong performance of both terminals (+6.4%*) and Transactions (+25%*)

–

Continuation of trends observed at the end of 2010 2011 guidance confirmed

–

2011 revenue target revised upwards

–

Like-for-like revenue* ≥ 985m€ (as against 965-985m€)

–

Like-for-like growth: ≥ 6.3%

–

Continuous profitability improvement

–

Adjusted profit from ordinary activities** ≥ 13.9%

–

EBITDA: ≥ 18.3%

Enhanced financial flexibility

–

€250m raised through convertible bonds (OCEANE) due 1 January 2017

* At constant group perimeter & FX ** Before Price Purchase Allocation

Investors presentation - June 2011• 14

Ingenico investment case

Investors presentation - June 2011• 15

Appendix

Investors presentation - June 2011• 16

Glossary

POS: Point of Sale / e-payment terminal VAS: Value-added Services SEPA: Single Euro Payment Area. 27 European Union members, Island, Liechtenstein, Norway and Switzerland Acquirer: financial institution responsible for the underlying transactions (authorization, clearing & settlement) with its merchant-customers Issuer: Cardholder’s bank Processor: a technical operator providing infrastructure to support acquirer functions, such as authorization, clearing and settlement services. In practice, acquirers outsourced merchant acquiring services to processor PSP: A Payment Service Provider is a company performing all or part of electronic payment services and potentially including settlement as per Payment Service Directive in Europe. In the US, settlement is always performed by financial institutions Scheme: provides a payments mechanism through the existing (debit or credit) card payment infrastructure ISO: Independent Sales Offices

Investors presentation - June 2011• 17

Processing (pipes to support authorization, clearing & settlement) Merchant Connectivity Acquirer server Acquirer Card associations

(Visa, Mastercard,…)

Issuer Issuer server POS terminal Value chain* Avg merchant fees: 2% [1.5-3.5%] 0.4% 0.1% 1.5% + Fixed fee / transaction for processing + Fixed fee / transaction for processing Card server Cardholder makes purchase 100

• 2. Batching
• 3. Clearing and settlement
• 4. Funding

1.Request for approval Purchase approved Cardholder makes purchase Cardholder billed Approved transactions (stored in batch) Batch submitted for funding Merchant receives payment Funds transferred Verification € Issuer pays

Typical payment transaction flow

*Source: Federal reserve of Philadelphia

Investors presentation - June 2011• 18

Large customers + Fixed fee / transaction

easycash business model at a glance

Hardware Terminal services Connectivity Processing Value-added Services Settlement Merchant Services Acquirer Processor

Small customers OLV Visa ZKA % of transaction in value (1.5-3.5%)* One-off + monthly charge + fee (based on volume) One-off Monthly rental fee and and and and and and/or

VAS provider

Monthly charge

Revenue type

and and and/or and/or

• r
• r

N/A N/A

Monthly (variable) charge

Revenue type

*Source: Federal reserve of Philadelphia

One-off + monthly charge + fee (based on volume) % of transaction in value (1.5-3.5%)* + Fixed fee / transaction

Investors presentation - June 2011• 19

easycash integration accelerating the evolution towards services

2009 revenue at 2010 perimeter* 2009 revenue** 2009 combined revenue

One off & fee per month Revenue business model One off & fee per transaction

15% 16% 22% 2009 EBITDA* margin

652 m€

* Excluding Sagem Danemark, Manison and Moneyline Business Systems starting January 1 2009 ** IFRS based revenue

20% 28% 84% 2009 Revenue * profile % of revenue from services

17 m€ €762m

€93m

€669m

2009 Adj. EBIT margin 11% 17% 12%

Transaction

Services Hardware & Maintenance Services

€17m €652m €67m €26m €84m €678m