Investors Presentation May 2011
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 - May 2011• 2
Ingenico at a glance Shareholder structure Group transformation for profitable growth as of March 31 2011 easycash integration & growth in Value Added Services 2010 Phase 3: 2010-2013 easycash acquisition: acceleration of strategic Changing development towards services • company’s profile 2009 Merger with Sagem Monetel: acquisition of best in class R&D Phase 2: 2008-2009 Landi acquisition (#2 in China): investing Consolidating POS leadership • in fast growing countries Business model resilience Market capitalization Market capitalization • as of September 15 2010 as of May 13 2011 2008 Moving to a fabless model Phase 1: 2006-2008 Number of shares: 51.3 million Transforming to profitable group Share price: €30.34 • Money Line acquisition: 2008 Revenue: €728m (vs. 506m 2006 • Market capitalization: €1.6 billion in 2006) pre-processing solutions for Tier 2008 EBIT margin: 12.5% • 1 retailers in (vs. 6% in 2006) France Investors presentation - May 2011• 3
A leader in the payment terminal market, a highly concentrated & protected market World leading manufacturer Payment terminals: of payment terminals a highly concentrated market - Leading world installed base with 15 million POS - Ingenico: 39%* - Strong & balanced geographical presence - Verifone: 35%* Top 3: 85-90% between mature and emerging markets - Hypercom: 14%* Europe - Other players: mostly local players N 1 China North America N 1 (MS>30%) N 2 Middle East-Africa … with high barriers to entry N 1 Asia Pac-Australia - Certification/ Security Latin America N 1 N 1 - Market driven by global & local (Brazil, Colombia standards Mexico) - Constant intensification of the Global Card Regulation over the last 10 years - >1,000 Payments & Value-added Applications in - Scale portfolio - Proximity - Fab-less model / Optimized supply chain - Portfolio of customer application - Focused strategy (*) Estimated market share based on published revenue. Assumed constant share for other players Investors presentation - May 2011• 4
Serving a worldwide blue-chip customer base Major financial institutions and merchants are using our products and solutions all over the world (in more than 100 countries). Dual vendor policy Our blue chip customer base includes banks, processors & acquirers, merchants, integrators, and services providers More than 100,000 small merchants directly managed in France and Germany Investors presentation - May 2011• 5
Innovation driving technological leadership on payment terminals A renewed product range Technological leadership Strong R&D investments: 8% of A comprehensive range of payment terminals revenue in 2010 Rationalized product range to generate: margin improvement – The right investment to reduce cost while addressing commercial opportunities – while increasing customer benefit A single platform: Telium – Addressing traditional market Addressing new market Nb of Generic features: Color, contactless segments segments – Products Reduction of development cycle: -25% – from 12 to 9 months Previous 6 10 5 6 New New New Stable 3 4 3 4 New Driving POS terminal leadership Counter PINPad Sign Wireless Pay Petrol WebP Health First contactless embedded in the Top Capture PDA OS -care – terminal First POS with color display – First PDA with payment solution – certified PCI PED >1 million iCT200 (countertop) terminals sold in 18 months Investors presentation - May 2011• 6
Growth drivers of the payment terminals market Multi-application • Loyalty cards • Gift cards • Prepaid top up Emerging countries Value-added Services Technology - Payment terminals Security & as a marketing tool: design to Regulation advertising (video, - Contactless color display, - Wireless Card touch screen) - Biometry - Fraud: a concern - Source of revenue Penetration - EMV: an for merchants: opportunity loyalty/top up,... - Accelerating POS replacement - 11.5Mio EMV Structural cycle POS (vs. 45Mio - development of installed base) cards vs. checks Investors presentation - May 2011• 7
Emerging countries as key sources of growth Emerging markets & Number of POS terminals per ‘000 people urbanization drive growth Mature Payment Countries Increased middle class with access to financial services avg. 24 terminals p.1,000 inh. Governments pushing for tax collection Emerging Countries avg. 2 terminals p. 1,000 inh. Source: Euromonitor / IMF Investors presentation - May 2011• 8
Payment terminal business: a robust business model… A robust business model Focus on payment terminals business - Demonstrated ability to expand revenue Stable ASP in 2009/2010 - and profitability Continued expansion of Terminal gross profit - 907 over last 5 years 1000 900 Terminal gross profit at 44.0% in 2010 Adjusted EBIT (in % of revenue) Published revenue in m€ - 728 13.9% 700.7 800 Increase >600bp from 2006 to 2010 568 - 700 12.5% 11.4% 600 11.4% 506 Terminal gross profit improvements 500 - 400 - Scale / Optimized supply chain / Fabless model 300 - Telium 2 platform 200 6.6% 100 5% Less 2006 2007 2008 2009 2010 production costs Less repair costs Less Greater - Generating operating cash flow components speed of - 20010 cash conversion: 96% transaction Increased Lighter - Low capital intensive model: capex reliability weight at 20-25m€ Investors presentation - May 2011• 9
… to fuel development towards services Continuous shift towards electronic payments In the payment ecosystem, payment terminal will remain a key element Continuous shift towards electronic payment – Gateway to cash usage moving towards dematerialized services – Convergence of Physical + Online + Mobile payments – Capturing growth of electronic transactions: >10% p.a. checks cash Source: MasterCard 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. *Company estimates Investors presentation - May 2011• 10
Ingenico in the electronic payment value chain Merchant Services Processor Acquirer VAS provider Value Value-added Terminal Connectivity Pre- Hardware Processing Settlement chain services processing Services Fixed fee % of Monthly fee+ Revenue Monthly Monthly Monthly One off per transaction Fixed charge / type fee fee fee transaction in value transaction POS terminal market Transaction services Financial VAS Market institutions mostly Ingenico entities Ingenico mostly provides POS Easycash operates payment & VAS services for merchants terminals to either directly (large Revenue business model relies on recurring revenue through a per transaction payment type of business retailers) or indirectly (banks, distributors) Revenue business model mostly relies on one off fees Investors presentation - May 2011• 11
Providing secure transaction services to merchants Tier 1 / 2 retailers 1 Small merchants 2 In Germany & abroad In South East Asia Solutions combining : Simple to handle and cost efficient secure payment solution (out of the box) – Fast, secure and more sophisticated POS to reduce queue & increase revenues Payment solution to ensure merchants – Transaction management to reduce to be paid for any card payment interchange fees – Terminal: hardware & maintenance According to recent survey* – Connectivity to merchant bank’s server - 2/5 customers refuse to queue for longer than 2min to get transaction approvals - 2/3 customers regularly abandon purchases - 51% of shoppers refuse to enter a store if they see a queue Value added services to increase revenue Cross border / one stop shop solutions – Top up – Loyalty,… Convergent POS+on-line+mobile payment solutions Value added services at the Point of Sale 2010-2013: direct access to merchants as a key growth driver * VISA Europe press release - July 5 2010 Investors presentation - May 2011• 12
2010-2013: towards a new company profile with 40% target of recurring revenues Evolution of revenues Payment terminals: continuing growth >€1bn (average growth of 5% p.a.) €907m €762m Recurring revenues: target of 40% by 2013 Maintenance revenues: expected to – 40% be flat with improved reliability from Telium OS 28% Transactions revenues: x3* – (payment & non payment solutions) 2009 Pro 2010 2013 forma Target Transactions Maintenance Hardware Combination of growth & increased recurring revenues => more visibility *compared to €84m in 2009 PF Investors presentation - May 2011• 13
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