Market Overview

INGENICO GROUP: Half-year results and signing of the combination agreement of BS PAYONE and Ingenico Retail in Germany, Austria and Switzerland

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Press Release
Paris,
 25 July 2018
  • Revenue of €1,229 million
    • Up 1% on a reported basis
    • Down 3% on a comparable basis[1] and up 3% adjusted from the 2017 one-offs
       
  • Retail grew by 6% on a comparable1 basis, in line with our expectations
     
  • Banks & Acquirers impacted by a high comparison basis
     
  • EBITDA[2]: €193 million
     
  • Strong improvement of the profitability expected in H2 thanks to a significant operating leverage
     
  • 2018 outlook adjusted: EBITDA2 at least €545m
    • Outlook adjusted from the progressive phasing out of the sales to Iran representing €16 million EBITDA
       
  • Signing of a deal with Sparkassen-Finanzgruppe to create a joint venture combining BS PAYONE and Ingenico Retail in Germany, Austria and Switzerland
    • Strengthen the Group's position as a leader in these three countries, which is one of the largest growth opportunities in Europe
    • Accelerate the direct-to-merchants strategy with the integration of a portfolio of more than 250,000 merchants (SMBs and large accounts)
    • Joint venture majority owned and controlled by Ingenico Group

         
Ingenico Group, (Euronext: FR0000125346 - ING), global leader in seamless payment, announced today its results for the six-month period ended as of 30 June 2018.

Philippe Lazare, Chairman and Chief Executive Officer of Ingenico Group, commented: "The first half year came in line with our expectations. The Bambora integration is very satisfactory and the direct access to merchant strategy is already paying off. In this timeframe we have successfully launched the Axium platform with great commercial successes. Furthermore, as we are in line with US law, we have anticipated in our full year guidance the phasing out of our activities in Iran." He also welcomed the agreement with BS Payone: "I am proud to announce that we have signed the agreement with the Sparkassen-Finanzgruppe in order to create the undisputed leader in payment services in Germany, Austria and Switzerland. The Joint Venture between BS PAYONE and Ingenico Group will enable to create value through the combination of the respective portfolio of merchants and to accelerate the deployment of our Retail strategy across all channels within the DACH1 region, the largest growth opportunity in Europe."

H1 2018 results

Key figures

 (in millions of euros) H1'18 H1'17 PF* H1'17 Changes vs. H1'17
Revenue 1,229 1,345 1,222 1%
Adjusted gross profit 489 567 517 (5)%
  As a % of revenue 39.7% 42.2% 42.3% (260) bps
Adjusted operating expenses -295 -307 -272 8%
  As a % of revenue -24.0% -22.8% -22.3% 170 bps
EBITDA 193 260 244 (21)%
  As a % of revenue 15.7% 19.3% 20.0% (430) bps
Profit from ordinary activities, adjusted (EBIT) 159 235 221 (28)%
  As a % of revenue 12.9% 17.5% 18.1% (520) bps
Operating margin 94 183 191 (51)%
Net profit 55 122 132 (58)%
Net profit attributable to Group shareholders 54 120 130 (58)%
         
Adjusted Free cash-flow[3] 40 - 76 (47)%
Free cash-flow 23 - 69 (67)%
Net debt 1,702 - 178 N/A
  Net debt-to-EBITDA ratio[4] 3.6x - 0.4x 3.2x
Equity attributable to Group shareholders 1,686 - 1,771 (5)%

* The H1 2017 PF figures include the acquisitions made during 2017 at 100%

2018 outlook adjusted from the anticipated phasing out from Iran

In 2018 Ingenico Group expects an EBITDA of at least €545m vs. a range of €545 million and €570 million previously. Following the US withdrawal from the JCPOA[5] announced on 8th May 2018, the Group has anticipated the phasing out of its distribution partnership in Iran, in line with the US law. The Iran contribution, now excluded from our 2018 adjusted guidance, represents €16 million. However, the EBITDA related to these sales to Iran is still possible to execute within the timeframe.
The guidance factors in a negative impact from currencies of c. €25-30 million.

Given the high comparison basis in the first half and the projects pipeline, the phasing of the year has resulted in a soft first half and we expect a stronger second half. The adjusted FCF2 to EBITDA conversion ratio is expected to be above 45%.

Over the full year, our assumptions are based on a soft organic decline for the Banks & Acquirers business unit and a double-digit organic growth in Retail. The second half of the year will benefit from a higher growth, driven by an acceleration of growth in the Retail business unit and an improvement in the Banks & Acquirers business unit.




 
Q2 2018 H1 2018
€m % Change €m % Change
Comparable1 Reported Comparable1 Reported
Retail 328 5% 21% 630 6% 22%
SMBs 98 12% 150% 186 12% 146%
Global Online 126 5% -1% 245 8% 3%
Enterprise 105 -1% -1% 200 -2% -1%
Banks & Acquirers 319 -8% -10% 599 -11% -15%
EMEA 128 -11% -13% 243 -13% -16%
Latin America 38 21% 3% 72 10% -7%
North America 46 -9% -15% 77 -8% -17%
Asia-Pacific 107 -13% -9% 208 -17% -17%
TOTAL 648 -2% 3% 1,229 -3% 1%

Key financial highlights of the first half of 2018

In the first half of 2018, revenue totalled €1,229 million, up 1% on a reported basis, including a negative foreign exchange impact of €71 million. On a comparable basis, revenue was 3% lower than the first half of 2017. Restated from the impact coming from the PCI V1 to V3 migration in Europe and the demonetization process in India, revenue would have grown 3% on a comparable basis.

EBITDA reached €193 million in the first half of 2018, i.e. a 15.7% EBITDA margin on gross revenues, down 3.6 points compared to last year on a pro forma basis. It has been impacted by the business mix. The second half of the year will be more favourable in terms of business mix which gives us confidence in the EBITDA improvement to reach our adjusted full-year guidance.

During the period, the Retail Business Unit reported a revenue of €630 million, an increase of 22% on reported figures, including a negative foreign exchange impact of €34 million. On a comparable basis, revenue was up 6%, driven by the strong SMB dynamic and the Global Online performance. In Enterprise, growth has been impacted by the tough comparison basis of the first semester 2017 related to the demonetization process in India and a contract that sifted to Q3.
EBITDA reached €77 million, representing an EBITDA margin of 12.2%, compared to €63 million last year.

The Banks and Acquirers Business Unit posted a revenue of €599 million, a 15% decline on reported figures including a negative foreign exchange impact of €37 million. On a comparable basis revenue declined by 11%, mainly impacted by the very tough comparison basis in India (demonetization process) and in Europe (PCI V1 to V3 migration), partially offset by the strong recovery in Latin America, especially in Brazil. Restated from these tough comparison basis, revenue would have been stable on a comparable basis.
EBITDA reached €116 million, representing an EBITDA margin of 19.4%, compared to €182 million last year.

Key strategic highlight of the first half of 2018:

Signing of BS PAYONE combination with Ingenico Retail assets in DACH

Ingenico Group today announced it signed a deal with DSV Group (Deutscher Sparkassenverlag), a subsidiary of the Sparkassen-Finanzgruppe, regarding the combination of BS PAYONE with Ingenico Retail assets in DACH (Germany, Austria, Switzerland). This non-cash business combination, at a time when transaction multiples keep on rising, will be 52% owned and controlled by Ingenico Group.

Within the DACH region, Germany, which is the main exposure of BS PAYONE, is the third largest market in Europe and the most dynamic country in the region in terms of electronic payment. With predominant cash transactions representing more than 70% of the overall transactions, cashless volumes are accelerating and should grow by 7% over the next five years. It offers strong growth perspectives for those players who are able to provide comprehensive and end-to-end electronic payment acceptance solutions to merchants.

Headquartered in Frankfurt, BS PAYONE is a leading full-service payment provider offering instore and online payment solutions and employing around 700 people. Serving more than 250,000 merchants in various industries, from small and medium-sized businesses to large international accounts, BS PAYONE is the second largest international card acquirer in Germany and a major Network Service Provider (NSP), with a volume of over €50 billion processed, of which €27 billion is from international card acquiring, and more than 135,000 point-of-acceptance devices. BS PAYONE benefits from close partnerships with the savings banks ("Sparkassen") in Germany. In 2017 BS PAYONE generated €324 million in gross revenues6 and €31m EBITDA6.

The joint venture would have a unique footprint in DACH with a combined volume processed of €125 billion and close to 335,000 point-of-acceptance devices. The combined entity would have generated a gross revenue[6] of over €500 million and an EBITDA6 of c.€75 million in 2017. Over the period 2017-2021, the combined entity is expected to grow at a low double digit CAGR in term of revenues and a high double digit CAGR in term of EBITDA. The ambition of the combined entity is to become the largest acquirer in DACH and to further consolidate its Network Service Provider (NSP) leadership. The combination between the two assets is expected to generate significant synergies of €30 million, largely realized by 2022.

The partnership will represent a significant milestone in the execution of Ingenico Group's strategy:

  • Create the clear market leader in the attractive German market with the broadest offering instore and online covering the specific needs of all types of merchants;
  • Build an operational long-term partnership with the Sparkassen, including an 8-year lock-up;
  • Develop the SMB offering by combining Ingenico and BS PAYONE portfolios while rolling-out Bambora's customer-centric approach in the future JV;
  • Offer end-to-end payment acceptance solutions to large accounts;
  • Leverage Ingenico's global infrastructure to capture growth potential in the region and beyond.

The closing is expected to occur during the first quarter of 2019, subject to approval from the relevant regulatory and antitrust authorities.


Performance in the second quarter of 2018

In the second quarter of 2018, Ingenico Group reported a revenue of €648 million, up 3% on a reported basis, including a negative foreign exchange impact of €31 million. On a comparable basis, revenue declined by 2% compared to the second quarter of 2017. Adjusted from the tough comparison basis coming from the PCI V1 to V3 migration in Europe and the demonetization process in India, revenue would have grown 3% on a comparable basis.

The Retail Business Unit has continued to grow in the second quarter, following a similar trend to the first quarter despite some non-recurring low growth profile in Global Online. Over the second quarter, revenue reached €328 million, up 21% on a reported basis and impacted by a negative foreign exchange impact of €16 million. On a comparable basis, revenue increased by 5%. Compared with Q2'17, the various activities performed as follows on a like-for-like basis:

  • SMB (up 12%): The quarterly performance has been strong, including Bambora growing fully in line with the expectations stated at the time of the acquisition. Over the second quarter, the teams have been able to sign more than 4,000 new merchants per month, to successfully deploy the pilot of the merchant cash advance offering and to increase the acquiring volumes by more than 20% compared to the second quarter of 2017. The Switzerland activities continue to grow and significant technical milestones have been reached in Germany regarding its Bambora model roll out. The pilot of the new offer is on track and its commercial launch is planned for the third quarter. Online SMB activities were still very dynamic, driven by the full-services offer which grew by more than 50% this quarter.
     
  • Global Online (up 5%): As already stated, the performance of the quarter came in line with our expectations. The churn rate continues to improve, with this being the second consecutive quarter it has reached an historical low level and the lowest since 2015. These improvements enabled us to gain new merchants such as Pearson, ShineZone or Liverpool Football Club with whom the Fraugster solution has been implemented. Several awards have been won during the quarter, such as the best international CNP Program awarded by the merchants for the third consecutive year, as well as the Best Use of Social networks or Gamification thanks to its partnership with LuckyCycle. In the meantime, teams were focused on optimizing the cost base enabling us to be more agile and flexible.
     
  • Enterprise (down 1%): The overall dynamic has been strongly impacted by the North American following a tough comparison basis this quarter with a client that made a meaningful order last year. On top of that a significant contract has been shifted to the third quarter, impacting the region's dynamic. Nevertheless, we remain confident in the dynamic ramp up in the second part of the year driven by the beginning of the EMV refreshment cycle. Europe is still strong, sustained by the instore gateway processing business growing at 15% in the second quarter. Significant projects have been managed in order to support big retailers abroad and iconic new clients have been won over the quarter. In the meantime, the Enterprise strategy is still focused on expanding its geographical footprint both in Europe and outside Europe, with ongoing new local certifications. It will enable the Group to reach a wider geographical area where it could leverage the positioning of its existing clients as well as enlarging its addressable market.

The Banks & Acquirers Business Unit has shown, in the second quarter, the beginning of the expected recovery, despite the very tough comparison basis. Revenue reached €319 million, down 10% on a reported basis and negatively impacted by €15 million of foreign exchange. On a comparable basis revenue declined by 8%. Adjusted from the impact coming from the PCI V1 to V3 migration in Europe and the demonetization process in India, revenue would have been up 1% on a comparable basis. Compared with Q2'17, the various regions performed as follows on a like-for-like basis:

  • Europe, Middle-East & Africa (down 11%): The performance was strongly impacted by the tough comparison basis of the PCI V1 to V3 migration that took place during the first half of last year and a softer than expected dynamic in Middle East. Despite those specific situations, the remaining dynamic was in line with our expectations in most of the countries in Western and Eastern Europe, except for Germany and Switzerland, that came in softer than expected. Those two countries have been impacted by the ongoing consolidation that creates turmoil in the market landscape and its evolution. We are continuing to closely monitor developments and expect a return to stabilization over the near to medium term. As already stated, the launch of Axium has raised lot of interest from clients and the first orders have already been signed with Lottomatica in Italy, which should fuel the growth of the second half of the year.
     
  • Asia-Pacific (down 13%): The tough comparison basis in India is still impacting the region's overall dynamic despite good momentum in the market. India continues to return to normal after the strong demonetization process that positively impacted the region last year. The South-East Asia market has experienced a slowdown in demand in Thailand and Indonesia following an important cycle of orders and shipments. China performed in line with our expectations, i.e. no major evolution in terms of activity, still benefiting from the APOS (c. 380k unit shipped) but with a comparison basis that limits the growth potential. As expected, Australia is now back on track after the phasing of local tenders that negatively impacted the first quarter, and Japan is still ramping up in light of the EMV equipment phase.

  • Latin America (up 21%): The recovery expected for a few quarters in Brazil is now live as the Group has benefited from the impact of the first local tender offers, using Telium Tetra and in some cases APOS solutions designed and manufactured by Landi. Therefore, Brazil is accelerating significantly with an important pipeline of projects that give confidence for the remaining part of the year. Other countries, such as Argentina, remain very dynamic whereas Mexico is slowing down temporarily due to to recent presidential elections.
     
  • North America (down 9%): The performance came in as expected overall, with Canada performing strongly thanks to last time buys tied to the conversion to Telium Tetra deployment with one of the major local acquirers. In the United States, the Independent Sales Vendors (ISV) certifications are still ongoing and the channel continues to see traction especially in the Healthcare, Unattended and Hospitality verticals. The second half of the year should benefit from these new certifications as well as the acceleration of the mobility range of products, especially the newly launched M70 that is currently in the pilot phase.

             
Gross profit

During the first half of 2018, adjusted gross profit reached €489 million, or 39.7% of revenue, representing a 250 basis points drop compared to the first half of 2017 pro forma adjusted gross profit. This fall is mainly attributable to the business mix evolution this semester that has weighed on the margin.

Operating expenses contained over the semester

In the first half of 2018, adjusted operating costs were €295 million, representing 24% of revenue compared to 22.3% in the first half of 2017. Compared to the same period last year on a pro forma basis, the OPEX have decreased by €12 million during the first semester.

EBITDA margin and profit from operating activities

EBITDA was €193 million in the first half of 2018, equal to 15.7% and has been negatively impacted by €19 million of foreign exchange. The margin has been impacted this semester by an incompressible part of OPEX in a declining Banks & Acquirers business unit. The latter was facing two significant comparison bases that led to a strong fall this first half and so a compression of the EBITDA margin. Nevertheless, thanks to the growth acceleration we expect in both our business unit and to the operating leverage, we remain confident with our adjusted full year EBITDA objective.

After accounting for Purchase Price Allocation and other operating income and expenses, profit from operations totalled €94 million. The Group's operating margin was equal to 7.7% of revenue.

Profit attributable to Group shareholders

Financial results reached €-19 million, against €-10 million last year on the same period.

Income tax expense decreased to €20 million compared to €51 million in the first half of 2017. The reduction of the tax expenses is the consequence of the decline in income before taxes as well as a weakening of the effective tax rate.

The net profit attributable to Ingenico's shareholders in the first half of 2018 reached €54 million.

Free cash flow and financial position

The adjusted free cash flow[7] reached €40 million, i.e. an EBITDA conversion rate of 20.7% compared to €76 million last year. Following a dynamic year in terms of acquisition, the first semester 2018 has been impacted by a non-recurring expenses increase. The Group's operations, post other income and expenses, generated a free cash flow of €23 million, i.e. an FCF/EBITDA conversion ratio of 11.7%. Investments increased to €53 million, related to the acquisition of Bambora.

The Group net debt increased to €1,702 million, against €1,471 million at the beginning of the year. The increase of the net debt level is mainly related to the Fosun stake purchase, share buyback and the dividend payment. The cash dividend paid in respect of 2017 was €48 million, whereas 50.3% of the total dividend amount was paid in stock (781,413 shares), reflecting the shareholder confidence. The ratio of net debt to equity is 101% and the ratio of net debt to EBITDA is up to 3.6x from 2.8x at the end of 2017.


Conference Call

The results for the first half 2018 will be discussed in a Group telephone conference call which will be held on the July, 25th 2018 at 6.00pm Paris Time (5.00pm UK Time). The call will be accessible by dialing one of the following numbers: +33 (0)1 72 72 74 03 (from France), +1 646 722 4916 (from the US) and +44 (0)20 7194 3759 (from other countries), with the conference ID: 27107040#. A presentation will be available at www.ingenico.com/finance

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 Group. These data, assumptions and estimates may change or be amended as a result of uncertainties connected in particular with the performance of Ingenico Group and its subsidiaries. These forward-looking statements in no case constitute a guarantee of future performance, and involve risks and uncertainties. Actual performance may differ materially from that expressed or suggested in the forward-looking statements. Ingenico Group therefore makes no firm commitment on the realization of the growth objectives shown in this release. Ingenico Group 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 shall not constitute an offer to sell or the solicitation of an offer to buy or subscribe for securities or financial instruments.

About Ingenico Group

Ingenico Group (Euronext: FR0000125346 - ING) is the global leader in seamless payment, providing smart, trusted and secure solutions to empower commerce across all channels, in-store, online and mobile. With the world's largest payment acceptance network, we deliver secure payment solutions with a local, national and international scope. We are the trusted world-class partner for financial institutions and retailers, from small merchants to several of the world's best known global brands. Our solutions enable merchants to simplify payment and deliver their brand promise.
Learn more at www.ingenico.com         twitter.com/ingenico 

Contacts / Ingenico Group

Investors
Laurent Marie
VP Investor Relations &
Financial Communication
laurent.marie@ingenico.com
(T) / +33 (0)1 58 01 92 98
Investors
Kevin Woringer
Investor Relations Manager
kevin.woringer@ingenico.com
(T) / +33 (0)1 58 01 85 09

 
Communication
Stephane Grand
Media Communication
coba.taillefer@ingenico.com
(T) / +33 (0) 1 58 01 89 62

Upcoming events

Q3'18 revenue: 24th October 2018


EXHIBIT 1
Basis for preparing the 2018 interim financial statements

The consolidated interim financial statements have been drawn up in accordance with International Financial Reporting Standards (IFRS). In order to provide meaningful comparable information, these data have been presented on an adjusted basis, i.e. restated to reflect the depreciation and amortization expenses arising on the acquisition of new entities. Pursuant to IFRS3R, the purchase price for new entities is allocated to the identifiable assets acquired and subsequently amortized over specified periods.

The main financial data for 2018 has been analyzed on an adjusted basis, i.e., before purchase price allocation (PPA). Please see Exhibit 4.

The adjusted gross margin and the adjusted operational expenses disclosed are excluded from depreciation and amortization, provisions, expenses for share distributed to employees and officers and purchase price allocation ("PPA"). - Please see Exhibit 4.

EBITDA is not an accounting term; it is a financial metric defined here as profit from ordinary activities before depreciation, amortization and provisions, and before expenses for shares distributed to employees and officers. The reconciliation of adjusted profit from ordinary operations to EBITDA is available in Exhibit 4.

EBIT (Earnings Before Interest and Taxes) is equal to profit from ordinary activities, adjusted for amortization of the purchase price for newly acquired entities allocated to the identifiable assets acquired.

Free cash flow is equal to EBITDA less: cash and other operating income and expenses, changes in working capital requirements, investing activities net of disposals, financial expenses net of financial income, and tax paid.

The financial net debt disclosed excludes the financing line of merchants pre-financing.


EXHIBIT 2

Following the evolution of its activities and in order to support its position as world leader in omnichannel payments, Ingenico Group has put in place a new client-focused organization. The Group's reporting is structured around two business units: Banks and Acquirers (B&A) and Retail.

The pro forma revenue for the period ended on 31st December 2017 integrates Techprocess, IECISA, SST and Bambora. It has been produced as if each of these acquisitions were integrated from 1st January 2017.

NEW ORGANIZATIONAL REPORTING ON A REPORTED BASIS
In millions of euros Q1 2017 Q2 2017 Q3 2017 Q4 2017 2017
Retail 243 272 260 325 1 099
SMBs 33 35 35 72 175
Global Online 111 127 124 131 494
Enterprise 99 110 101 122 431
Banks & Acquirers 351 356 337 367 1,411
EMEA 142 147 155 159 602
Latin America 40 37 44 49 170
North America 37 55 45 50 187
APAC 132 118 93 111 454
TOTAL 594 628 597 692 2,510
           
 2. NEW ORGANIZATIONAL REPORTING ON A PRO FORMA BASIS
In millions of euros Q1 2017 PF Q2 2017 PF Q3 2017 PF Q4 2017 PF 2017 PF
Retail 299 328 316 343 1,286
SMBs 81 90 89 89 349
Global Online 118 127 124 131 500
Enterprise 100 112 103 122 438
Banks & Acquirers 354 363 343 369 1,428
EMEA 137 146 152 158 594
Latin America 40 37 44 49 170
North America 37 55 45 50 187
APAC 140 126 101 114 480
TOTAL 653 692 658 711 2,714



EXHIBIT 3 
Income statements, balance sheet, cash flow statements

1.     INTERIM CONSOLIDATED INCOME STATEMENTS (REVIEWED)

(in millions of euros)   30 June 2018 30 June 2017*
       
REVENUE   1,229 1,222
Cost of sales   -768 -715
       
GROSS PROFIT   461 507
       
Distribution and marketing costs   -131 -108
Research and development expenses   -87 -91
Administrative expenses   -132 -109
       
PROFIT FROM ORDINARY ACTIVITIES   112 200
       
Other operating income   0 0
Other operating expenses   -17 -7
       
PROFIT FROM OPERATING ACTIVITIES   94 194
       
Finance income   49 21
Finance costs   -68 -31
       
NET FINANCE COSTS   -19 -10
       
Share of profits in equity-accounted investees   0 0
       
PROFIT BEFORE INCOME TAX   75 184
       
Income tax expense   -20 -51
       
NET PROFIT   55 132
       
Attributable to:      
- Ingenico Group SA shareholders   54 130
- non-controlling interests   0 2
       
EARNINGS PER SHARE (in euros)      
Net earnings:      
- basic earnings per share   0.88 2,12
- diluted earnings per share   0.88 2,08

* Restated from IFRS 15

  1. INTERIM CONSOLIDATED BALANCE SHEET (REVIEWED)
ASSETS      
(in millions of euros) 30 June 2018 31 Dec. 2017*  
Goodwill 2,367 2,479  
Other intangible assets 983 958  
Property, plant and equipment 88 88  
Investments in equity-accounted investees 8 8  
Financial assets 21 20  
Deferred tax assets 61 63  
Other non-current assets 36 39  
TOTAL NON-CURRENT ASSETS 3,564 3,654  
Inventories 190 171  
Trade and related receivables 596 557  
Receivables related to intermediation activities 171 173  
Other current assets 48 46  
Current tax assets 33 21  
Derivative financial instruments 10 8  
Funds related to intermediation activities 574 461  
Cash and cash equivalents 606 596  
TOTAL CURRENT ASSETS 2,230 2,031  
TOTAL ASSETS 5,794 5,685  
       
EQUITY AND LIABILITIES -- --  
(in millions of euros) 30 June 18 31 Dec. 2017*  
Share capital 63 62  
Share premium account 867 818  
Other reserves 851 973  
Translation differences (95) (22)  
Equity for the period attributable to Ingenico Group SA shareholders 1,686 1,832  
Non-controlling interests 5 11  
TOTAL EQUITY 1,691 1,843  
Non-current borrowings and long-term debt 1,860 1,549  
Provisions for retirement and benefit obligations 25 25  
Other long-term provisions 24 24  
Deferred tax liabilities 242 227  
Other non-current liabilities 53 67  
TOTAL NON-CURRENT LIABILITIES 2,204 1,892  
Short-term loans and borrowings 504 553  
Other short-term provisions 18 19  
Trade and related payables 559 511  
Payables related to intermediation activities 688 598  
Other current liabilities 118 243  
Current tax liabilities 10 24  
Derivative financial instruments 2 3  
TOTAL CURRENT LIABILITIES 1,900 1,951  
TOTAL LIABILITIES 4,103 3,843  
TOTAL EQUITY AND LIABILITIES 5,794 5,685  

* Restated from IFRS 15

  1. INTERIM CONSOLIDATED CASH FLOW STATEMENTS (REVIEWED)
(in millions of euros) 30 June 2018 31 Dec. 2017
Profit for the period 55 260
Adjustments for:    
- Share of profit of equity-accounted investees 0 1
- Income tax expense/(income) 20 87
- Depreciation, amortization and provisions 83 111
- Change in fair value 1 3
- (Gains)/losses on disposal of assets 0 0
- Net interest costs/(revenue) 15 19
- Share-based payment expense(1) 1 13
Interest paid (11) (12)
Income tax paid (48) (97)
Cash flows from operating activities before change in net working capital 115 386
  Inventories (23) (10)
  Trade and other receivables (45) (65)
  Trade payables and other payables 24 7
Change in net working capital (44) (68)
Change in NWC related to intermediation activities (26) 21
NET CASH FLOWS FROM OPERATING ACTIVITIES 45 340
Acquisition of fixed assets (54) (88)
Proceeds from sale of tangible and intangible fixed assets 0 1
Acquisition of subsidiaries, net of cash acquired - 0
Disposal of subsidiaries, net of cash disposed of (15) (1,257)
Loans and advances granted and other financial assets (1) (4)
Loan repayments received 1 8
Dividend received 0 6
Interest received 4 7
CASH FLOWS FROM INVESTING ACTIVITIES (64) (1,327)
Proceeds from share capital issues 0 2
Purchase/sale of treasury shares (87) 0
Proceeds from loans and borrowings 304 919
Repayment of loans and borrowings (69) (275)
Change in the Group's ownership interests in controlled entities (93) 9
Bambora merchant prefinancing 24 (21)
Changes in other financial liabilities 0 (1)
Effect of financial derivative instruments 0 -
Dividends paid to shareholders (55) (40)
Taxes on financing activities 4 (2)
NET CASH FLOWS FROM FINANCING ACTIVITIES 28 591
Effect of exchange rate fluctuations 3 (18)
CHANGE IN CASH AND CASH EQUIVALENTS 12 (415)
     
Net cash and cash equivalents at beginning of the year 589 1,003
Net cash and cash equivalents at year end 600 589
     
CASH AND CASH EQUIVALENT    
Short-term investments and short-term deposits 94 90
Cash 512 506
Bank overdrafts (6) (7)
TOTAL NET CASH AND CASH EQUIVALENTS 600 589

EXHIBIT 4

Impact of purchase price allocation ("PPA")

(in millions of euros) H1'18 excl.
PPA
PPA Impact H1'18
Gross profit 478 (17) 461
Operating expenses (319) (30) (349)
Profit from ordinary activities 159 (47) 112

Reconciliation of profit from ordinary activities to EBITDA

EBITDA represents profit from ordinary activities, restated to include the following:

  • Provisions for impairment of tangible and intangible assets, net of reversals (including impairment of goodwill or other intangible assets with indefinite lives, but not provisions for impairment of inventories, trade and related receivables and other current assets), and provisions for risks and charges (both current and non-current) on the liability side of the balance sheet, net of reversals.
  • Expenses related to the restatement of finance lease obligations on consolidation.
  • Expenses recognized in connection with the award of stock options, free shares or any other payments to be accounted for using IFRS 2, Share-based compensation.

Reconciliation:

(in millions of euros) H1'18 H1'17
Profit from ordinary activities 112 198
Allocated assets amortization 47 23
EBIT 159 221
Other D&A and changes in provisions 34 17
Share-based compensation 1 7
EBITDA 193 244




[1]On a like-for-like basis at constant exchange rates

[2] EBITDA is not an accounting term; it is a financial metric defined here as profit from ordinary activities before depreciation, amortization and provisions, and before share-based compensations

[3] Free Cash flow adjusted from non-recurring items (acquisition and restructuring costs)

[4]On an LTM basis

[5] Joint comprehensive plan of action

[6] Estimated IFRS figures derived from German GAAP subject to adjustment

[7]Free Cash flow adjusted from non-recurring items (acquisition and restructuring costs)


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