SOURCE: INGENICO

August 26, 2009 12:14 ET

INGENICO: H1 2009 results

NEUILLY SUR SEINE, FRANCE--(Marketwire - August 26, 2009) - H1 2009 RESULTS

- Strong increase in gross margin[1] to 39.2% of revenue in H1'09 (+2.5 points)

- Operating expenses under control

- Adjusted operating margin[2] in line with full-year expectations

- A sound financial position:

- Net cash: EUR 90.9m

- Equity: EUR 461.6m

Neuilly sur Seine - August 26, 2009. Ingenico (ISIN: FR0000125346 - Euronext Paris: ING) today announced its audited financial results for the half year ended June 30, 2009.

+-------------------------+-------+--------------------+-------+
|Key figures (EUR m)         |  H1'08|  H1'08 pro forma[3]|  H1'09|
|                         |       |                    |       |
+-------------------------+-------+--------------------+-------+
|Revenue                  |  313.8|               366.6|  317.7|
+-------------------------+-------+--------------------+-------+
|Adjusted gross margin as |  37.2%|               36.7%|  39.2%|
|a % of revenue           |       |                    |       |
+-------------------------+-------+--------------------+-------+
|Adjusted margin on       |  10.7%|               11.0%|   8.4%|
|ordinary activities      |       |                    |       |
+-------------------------+-------+--------------------+-------+
|Net cash                 |   57.5|                57.5|   90.9|
+-------------------------+-------+--------------------+-------+

+-------------------------+--------------------+
|Key figures (EUR m)         |Change H1'09/H1'08  |
|                         |pro forma           |
+-------------------------+--------------------+
|Revenue                  |               (13%)|
+-------------------------+--------------------+
|Adjusted gross margin as |+2.5 points         |
|a % of revenue           |                    |
+-------------------------+--------------------+
|Adjusted margin on       |-2.6 points         |
|ordinary activities      |                    |
+-------------------------+--------------------+
|Net cash                 |                n.a.|
+-------------------------+--------------------+

Philippe Lazare, Ingenico's Chief Executive Officer, commented: "The financial performance we achieved in the first half are in line with our full-year expectations. In addition to maintaining strict control over current operations, we intend to move ahead with our strategic growth plan in order to capitalize on our sales momentum and sound financial structure."

Key figures

+-------------------------+-------+-----------------+-------+
|(EUR m)                     |  H1'08|  H1'08 pro forma|  H1'09|
+-------------------------+-------+-----------------+-------+
|Revenue                  |  313.8|            366.6|  317.7|
+-------------------------+-------+-----------------+-------+
|Adjusted gross profit1   |  116.9|            134.4|  124.7|
+-------------------------+-------+-----------------+-------+
|as a % of revenue        |  37.2%|            36.7%|  39.2%|
+-------------------------+-------+-----------------+-------+
|Adjusted profit from     |   33.5|             40.3|   26.7|
|ordinary activities1     |       |                 |       |
+-------------------------+-------+-----------------+-------+
|Adjusted margin on       |  10.7%|            11.0%|   8.4%|
|ordinary activities1     |       |                 |       |
+-------------------------+-------+-----------------+-------+
|Profit from operations   |   15.6|             19.6|    9.7|
+-------------------------+-------+-----------------+-------+
|Net profit               |    9.2|             11.4|    4.8|
+-------------------------+-------+-----------------+-------+
|Net cash                 |   57.5|             57.5|   90.9|
+-------------------------+-------+-----------------+-------+
|Shareholders' Equity     |  447.9|            447.9|  461,6|
+-------------------------+-------+-----------------+-------+

Revenue

At constant exchange rates, revenue in the first half of 2009 was 10% lower than pro forma revenue in the prior-year first half, with performance holding up well in the second quarter of 2009. During the first half of 2009, Ingenico's business grew substantially in Asia-Pacific (particularly China and Australia) and Latin America, driven by positive trend in sales in Brazil and Mexico.

A strong increase in gross margin as a % of revenue, thanks to the synergies resulting from the merger with Sagem Monetel

Ingenico's adjusted gross margin1 as a percentage of revenue was 39.2%, up from 36.7% in the first half of 2008 (pro forma), thanks to the synergies resulting from the merger with Sagem Monetel and despite the negative impact of stronger U.S. dollar.

The main driver of this improvement was higher gross margin on payment terminal sales, which rose from 37.9% in H1 2008 (pro forma) to 42.0% of revenue in H1 2009, as a result of synergies generated by the merger with Sagem Monetel, a shift in product mix, and the fact that prices held up well. Adjusted gross margin on Software and Services declined despite reduced guarantee costs, due in particular to the fixed costs associated with extending the Group's Service business.

Operating expenses under control

Adjusted operating expenses1 in the first half of 2009 amounted to EUR 98.0 million, compared to EUR 94.1 million (pro forma) in the first half of 2008. With the expansion of the Services business unit and the acquisition of Landi in June 2008, this increase was expected, but was limited to EUR 4 million, due to the first benefits from complementary cost savings plan launched in the second quarter.

In fact, with variable costs impacted by activity decrease and cost savings plan, adjusted operating expenses were down 7% from the second half of 2008 (EUR 104.8 million).

Adjusted margin on ordinary activities in line with full-year expectations

Despite lower revenue and thanks to improved gross margin, the adjusted margin2 on ordinary activities stood at 8.4%, compared to 11.0% in the first half of 2008 (pro forma). This result is in line with Ingenico's full-year target.

Profit from operations after accounting for Purchase Price Allocation and restructuring expenses mainly related to cost savings plan.

After accounting for Purchase Price Allocation and restructuring expenses, profit from operations totaled EUR 9.7 million in the first half of 2009, compared to EUR 15.6 million in the prior-year first-half. In H1 2009, expenses related to Price Purchase Allocation for acquisitions (Planet, Sagem Monetel and Landi) amounted to EUR 9.3 million, versus EUR 4.3 million in H1 2008, and other operating expenses totaled EUR 7.7 million, compared to EUR 8.0 million in H1 2008. In H1 2009, other operating expenses include the cost of migrating applications to the new Telium platform and restructuring expenses related to the closing of Ingenico's Barcelona R&D center.

Changes in working capital requirements in line with Group expectations

As anticipated, working capital requirements increased by EUR 22.9 million in the first half of 2009. This change results mostly from the increase in inventory compared to a low level of inventory as of December 31 2008 and the reduction in trade payables. Depending on sales activity, the Group expects working capital requirements at the end of 2009 to be back to a level comparable to the level recorded at December 31, 2008.

A sound financial position, with net cash of EUR 91m and equity of EUR 462m

Net cash at June 30, 2009 totaled EUR 90.9 million, up from EUR 77.5 million at December 31, 2008.

Cash flow generated in the first half includes cash flow from operating activities before changes in working capital requirements of EUR 26.2 million, an increase in working capital requirements of EUR 22.9 million described above, as well as expenditures totaling EUR 13.3 million to upgrade Ingenico's payment terminal range. Cash flow also includes a EUR 27.9 million gain on the disposal of Sagem Denmark and Manison Finland, and decreased cash dividends (EUR 4.3 million, down from EUR 10.8 million in 2008), since a majority of the shareholders opted for stock dividends.

At June 30, 2009, the Group had undrawn confirmed syndicated lines of credit totaling EUR 150 million.

Other highlights

Ingenico Ventures acquires its first equity stake

In July, Ingenico acquired a minority stake in Transfer To, a Singapore-based Payment Service Provider (PSP) that delivers remote prepaid airtime top-ups for mobile phones. This investment of approximately EUR 2 million is held by Ingenico Ventures, a subsidiary of Ingenico S.A. dedicated to acquiring equity interests in companies providing technologically innovative solutions for diversifying payment methods.

Outlook

As the Group already announced, Ingenico should generate full-year revenue from 4% to 8% lower than 2008 pro-forma revenue of EUR 780 million (at constant exchange rates and before taking into account the disposal of Sagem Denmark and Manison Finland, companies expected to generate an estimated EUR 20 million in revenue in the second half of 2009).

Given Ingenico's performance in the first half, with adjusted gross margin1 holding up well and the cost-reduction plan yielding positive results, the Group confirms its objective of generating an adjusted operating margin2 of 12.5% on revenue down 5% by leveraging the cost-reduction plan initiated in April. Assuming a decrease in revenue of between 5% and 8%, adjusted operating margin2 would be between 11% and 12.5%, thanks to its flexible cost structure.

In addition to maintaining strict control over current operations, the Group intends to move ahead with its strategic growth plan in order to capitalize on its sales momentum and sound financial structure.

Conference call

A conference call to discuss Ingenico's results in the first half of 2009 will be held on August 27, 2009 at 3p.m. (Paris time). Dial-in number: 01 70 99 32 08 (French domestic) or +44 (0)20 7162 0025 (international). The presentation will also be available on www.ingenico.com/finance on August 27 at 2p.m. (Paris time).

This press release contains forward-looking statements. The trends and objectives given in this release are based on data, assumptions and estimates considered reasonable by Ingenico. These data, assumptions and estimates may change or be amended as a result of uncertainties connected in particular with the performance of Ingenico and its subsidiaries. These forward-looking statements in no case constitute a guarantee of future performance, involves risks and uncertainties and actual performance may differ materially from that expressed or suggested in the forward-looking statements. Ingenico therefore makes no firm commitment on the realization of the growth objectives shown in this release. Ingenico and its subsidiaries, as well as their executives, representatives, employees and respective advisors, undertake no obligation to update or revise any forward-looking statements contained in this release, whether as a result of new information, future developments or otherwise. This release does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for securities or financial instruments.

About Ingenico (ING)

Ingenico is the world's leading provider of payment solutions, with over 15 million terminals deployed in more than 125 countries. Its 2,500 employees worldwide support retailers, banks and service providers to optimize and secure their electronic payments solutions, develop their offer of services and increase their point of sales revenue. Ingenico generated pro-forma revenue of EUR 780M in 2008. More information on www.ingenico.com.

+--------------+-----------+---------+
|   ISIN code  |  Bloomberg|  Reuters|
+--------------+-----------+---------+
|  FR0000125346|     ING FP|   ING.PA|
+--------------+-----------+---------+
+--------------+-----------+---------+


+-------------------------+--------------------+
|INGENICO - Investor      |INGENICO - Press    |
|Relations                |Contact             |
+-------------------------+--------------------+
|Catherine Blanchet       |      Max-Paul Sebag|
+-------------------------+--------------------+
|Investor Relations       |CEO's Public        |
|Director                 |Relations Director  |
+-------------------------+--------------------+
|catherine.blanchet@ingeni|max-paul.sebag@ingen|
|co.com                   |ico.com             |
+-------------------------+--------------------+
|01.46.25.82.20           |      01.41.44.68.56|
+-------------------------+--------------------+
+-------------------------+--------------------+

Upcoming events

Conference call on H1 2009 results: August 27, 2009 at 3 p.m. (Paris time)

Publication of Q3 revenue: October 22, 2009

APPENDIX 1

Basis of preparation of financial information

The summary consolidated financial statements presented in Appendix 2 have been prepared in accordance with IAS 34, "Interim Financial Reporting".

Complementary financial data, prepared on an (unaudited) adjusted basis and not in accordance with IFRS, is also presented. In particular, adjustments have been made to the cost of sales, as well as to the presentation of operating expenses and profit from ordinary activities, operating margin and net profit, excluding non-recurring expenses in relation to the acquisition, in 2008, of Sagem Monetel, merger-related restructuring expenses or expenses resulting from the accounting treatment of the merger. The latter comprise the amortization of the intangible assets recognized at the time of the merger and the cancellation of the accounting entry for inventories at resale value. Non-recurring expenses in relation to the merger are expenses that would not have been recorded if the merger had not taken place, i.e. essential professional fees to ensure the success of the integration process. Merger-related restructuring expenses include costs in relation to the reduction in Head Office manning levels (particularly termination benefits).

Ingenico considers that these indicators are nevertheless useful inasmuch as they provide extra information enabling a clearer assessment of the company's past and future financial performance. In addition, the company's management uses such indicators in the planning and assessment of its operational performance. This information may not be comparable to similar information disclosed by other companies, even if it goes under the same heading.

IFRS results and reconciliation between adjusted results and IFRS

In the tables below, the company provides information enabling reconciliation between the IFRS income statement and the adjusted (unaudited) income statement for the half year ended June 30, 2009 and for the half year ended June 30, 2008. This reconciliation includes EUR 9.3m of amortization and intangible assets. A more detailed description of the adjustments made to the IFRS income statement can be found below.

Consolidated income statement for the half year ended June 30, 2009

Reconciliation of the IFRS financial statements and the (unaudited) adjusted financial statements

+-------------------------+--------------------+--------------------+
|(EUR m)                     |IFRS financial      |Amortization of     |
|                         |statements          |intangible assets   |
|                         |                    |(1)                 |
+-------------------------+--------------------+--------------------+
|Sales                    |               317.7|                    |
+-------------------------+--------------------+--------------------+
|Cost of sales            |             (193.0)|                    |
+-------------------------+--------------------+--------------------+
|Gross margin             |               124.7|                    |
+-------------------------+--------------------+--------------------+
|Research and development |              (39.1)|                 5.7|
+-------------------------+--------------------+--------------------+
|Sales expenses           |              (27.8)|                 3.6|
+-------------------------+--------------------+--------------------+
|General and              |              (40.4)|                    |
|administrative expenses  |                    |                    |
+-------------------------+--------------------+--------------------+
|Operating profit from    |                17.4|                 9.3|
|ordinary activities      |                    |                    |
|(EBIT)                   |                    |                    |
+-------------------------+--------------------+--------------------+

+-------------------------+--------------------+
|(EUR m)                     |Adjusted financial  |
|                         |statements          |
|                         |                    |
+-------------------------+--------------------+
|Sales                    |               317.7|
+-------------------------+--------------------+
|Cost of sales            |             (193.0)|
+-------------------------+--------------------+
|Gross margin             |               124.7|
+-------------------------+--------------------+
|Research and development |              (33.3)|
+-------------------------+--------------------+
|Sales expenses           |              (24.2)|
+-------------------------+--------------------+
|General and              |              (35.9)|
|administrative expenses  |                    |
+-------------------------+--------------------+
|Operating profit from    |                26.7|
|ordinary activities      |                    |
|(EBIT)                   |                    |
+-------------------------+--------------------+

(1) The adjustments to intangible assets correspond to the amortization in Q2 2008 of the intangible assets recognized in relation to business combinations, i.e. customer relationships and existing technologies or in-process research and development. The total amount of this amortization before tax was EUR 9.3m, including EUR 7.6m related to the Sagem Monetel acquisition and EUR 1.7m related to the other acquisitions (MoneyLine, Planet and Landi).

Consolidated income statement for the half year ending on June 30,2008

Reconciliation of the IFRS financial statements and the (unaudited) adjusted financial statements

+-------------------------+--------------------+--------------------+
|(EUR m)                     |IFRS financial      |Merger-related      |
|                         |statements          |expenses (1)        |
+-------------------------+--------------------+--------------------+
|Sales                    |               313.8|                    |
+-------------------------+--------------------+--------------------+
|Cost of sales            |             (202.5)|                    |
+-------------------------+--------------------+--------------------+
|Gross margin             |               111.3|                    |
+-------------------------+--------------------+--------------------+
|Research and development |              (28.6)|                    |
+-------------------------+--------------------+--------------------+
|Sales expenses           |              (23.2)|                    |
+-------------------------+--------------------+--------------------+
|General and              |              (35.9)|                    |
|administrative expenses  |                    |                    |
+-------------------------+--------------------+--------------------+
|Operating profit from    |                23.6|                    |
|ordinary activities      |                    |                    |
|(EBIT)                   |                    |                    |
+-------------------------+--------------------+--------------------+
|Other operating income   |               (8.0)|                 7.6|
|and expenses             |                    |                    |
+-------------------------+--------------------+--------------------+
|Operating profit         |                15.6|                 7.6|
+-------------------------+--------------------+--------------------+
|Financial result         |               (2.3)|                    |
+-------------------------+--------------------+--------------------+
|Taxation (4)             |               (4.2)|               (2.5)|
+-------------------------+--------------------+--------------------+
|Net profit               |                 9.2|                 5.1|
+-------------------------+--------------------+--------------------+

+-------------------------+--------------------+--------------------+
|(EUR m)                     |Inventory           |Amortization of     |
|                         |adjustments (2)     |intangible assets(3)|
+-------------------------+--------------------+--------------------+
|Sales                    |                    |                    |
+-------------------------+--------------------+--------------------+
|Cost of sales            |                 5.6|                    |
+-------------------------+--------------------+--------------------+
|Gross margin             |                 5.6|                    |
+-------------------------+--------------------+--------------------+
|Research and development |                    |                 2.1|
+-------------------------+--------------------+--------------------+
|Sales expenses           |                    |                 2.2|
+-------------------------+--------------------+--------------------+
|General and              |                    |                    |
|administrative expenses  |                    |                    |
+-------------------------+--------------------+--------------------+
|Operating profit from    |                 5.6|                 4.3|
|ordinary activities      |                    |                    |
|(EBIT)                   |                    |                    |
+-------------------------+--------------------+--------------------+
|Other operating income   |                    |                    |
|and expenses             |                    |                    |
+-------------------------+--------------------+--------------------+
|Operating profit         |                 5.6|                 4.3|
+-------------------------+--------------------+--------------------+
|Financial result         |                    |                    |
+-------------------------+--------------------+--------------------+
|Taxation (4)             |               (1.9)|               (1.4)|
+-------------------------+--------------------+--------------------+
|Net profit               |                 3.7|                 2.9|
+-------------------------+--------------------+--------------------+

+-------------------------+--------------------+
|(EUR m)                     |Adjusted financial  |
|                         |statements          |
+-------------------------+--------------------+
|Sales                    |               313.8|
+-------------------------+--------------------+
|Cost of sales            |             (196.9)|
+-------------------------+--------------------+
|Gross margin             |               116.9|
+-------------------------+--------------------+
|Research and development |              (26.5)|
+-------------------------+--------------------+
|Sales expenses           |              (21.0)|
+-------------------------+--------------------+
|General and              |              (35.9)|
|administrative expenses  |                    |
+-------------------------+--------------------+
|Operating profit from    |                33.5|
|ordinary activities      |                    |
|(EBIT)                   |                    |
+-------------------------+--------------------+
|Other operating income   |               (0.4)|
|and expenses             |                    |
+-------------------------+--------------------+
|Operating profit         |                33.1|
+-------------------------+--------------------+
|Financial result         |               (2.3)|
+-------------------------+--------------------+
|Taxation (4)             |              (10.1)|
+-------------------------+--------------------+
|Net profit               |                20.7|
+-------------------------+--------------------+

(1) In 2008, merger related expenses: restructuring costs, which would not have been incurred if the merger had not taken place. These are very largely the costs relating to the adjustment of manning levels in the Barcelona R&D center. In 2007, includes all restructuring costs booked.

(2) Inventory adjustment: IFRS standards imply that the value of inventories of the acquired company is recognized at fair value on the day of the acquisition, minus the future cost of their sale. The effect of this inventory revaluation is to reduce margins when the inventories are eventually sold. It has been cancelled here to enable monitoring of the gross margin.

(3) The adjustments to intangible assets correspond to the amortization in Q2 2008 of the intangible assets recognized in relation to business combinations, i.e. customer relationships and existing technologies or in-process research and development. The amount of this amortization, calculated for durations described in the note to the opening balance sheet of Sagem "payment terminals", was EUR 3.4m, to which a pre-tax EUR 0.9m amortization charge for intangible assets related to previous acquisitions (MoneyLine, Planet) should be added.

(4) The tax rate on the restated figures is estimated on average for the group at 33.33%.

APPENDIX 2: Income statement, Balance Sheet, Cash Flow Statement

A complete set of IFRS financial statements is available on www. ingenico.com

1. INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT (Audited)

2. INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (AUDITED)

3. INTERIM CONSOLIDATED CASH FLOW STATEMENTS (AUDITED)

[1] Adjusted figures, before Price Purchase Allocation and restructuring expenses.

[2] Profit from ordinary activities, before Price Purchase Allocation.

[3] Includes Sagem Monetel from January 1, 2008.

This information is provided by HUGIN

Contact Information

  • INGENICO - Investor Relations
    Catherine Blanchet
    Investor Relations Director
    Email Contact
    01.46.25.82.20

    INGENICO - Press Contact
    Max-Paul Sebag
    CEO's Public Relations Director
    Email Contact
    01.41.44.68.56