STORE ELECTRONIC SYSTEMS (SES) (EPA:SESL) SES-imagotag H1 2017: Excellent sales revenue and order intake despite intense price competition Position as global leader consolidated

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  • H1 sales revenue of €95.3 million, an 11% increase
  • Order intake saw strong growth at €103.8 M (+35%)
  • Acceleration of the “G2-Fusion” project, a union of technologies from SES-imagotag, Findbox and PDi, to boost the company's competitive advantage
  • 2017 guidance revised downward to account for product transition and stiff price competition
  • 2018 Acceleration and targets confirmed for Leapfrog 2020 Plan

SES-imagotag (Euronext: SESL, FR0010282822), specialist in digital solutions for physical commerce and global leader in connected digital price tags, today announced its sales for the first half of the year.

Message from Thierry Gadou, Chairman and CEO of the SES-imagotag group:

“SES-imagotag is consolidating its status as leader
in the first semester with new record-high sales revenue and strong growth in order intake. The market for digitalizing physical commerce is clearly entering a new phase of globalization, accelerated adoption and, naturally, heightened competition. During the first semester, SES-imagotag won the lion's share of new contracts on the market, and showed its determination to defend and bolster its leadership. Facing its Asian competitors' attempts to put pressure on prices, SES-imagotag's response is three-fold: accelerating the product and software development roadmap, implementing industrial scale-up, and accelerating globalization. It's part of this long-term logic, necessary in this type of market, that we created our strategic business alliance with BOE Technology Group to strengthen our company and ensure the completion of the Leapfrog 2020 plan.”


Sales France International Total
Q1 2016 14.6 18.3 32.9
Q1 2017 14.1 25.0 39.1
% change -3.4% +36.6% +18.8%
Q2 2016 18.0 35.0 53.0
Q2 2017 23.4 32.8 56.2
% change +29.9% -6.3% +6.0%
H1 2016 32.6 +53.3 85.9
H1 2017 37.5 57.8 95.3
% change +15.0% +8.4% +10.9%

Strong Sales Performance in H1

SES-imagotag documented a record €56.2 M in sales revenue in the second quarter of 2017, an increase of +6% compared to the previous record-setting Q2 in 2016. Order intake soared to €63 M, having risen by 92% compared to the same quarter of the previous year.

In France, growth continued with sales revenue of €23.4 M (+30%). France remains a robust market, as the penetration rate of digital price tags in mass and specialty food retail continues to climb and many new segments (DIY, drugstores, small businesses, luxury cosmetics, industry & logistics, smart offices, etc.) begin to adopt them.

Internationally, Q2 sales revenue was strong at €32.8 M, just -6% off from the record-setting Q2 2016. This result is even more remarkable given that this quarter saw the end of the MSH1 roll-out.

SES-imagotag earned a total sales revenue of €95.3 M in the first half, an increase of 11% compared to the first half of 2016. Growth was driven both by France (+15%) and internationally (+8%), thanks to a higher number of new signatures and the continuation of ongoing roll-outs.

This growth was almost entirely organic, as the Findbox and PDi teams were primarily focused on the development of the new “G2-Fusion” line that will launch in H2, along with the expansion of the e-paper display range and the Fashion Tag project, a unit tagging solution for clothing that offers a combination of digital displays, automated inventory and security features.

In the first semester, the group recorded an order intake worth €103.8 M, representing a strong 35% increase.

Intense activity in the food sector and in new vertical markets

In the food sector in France, in addition to the trend of modernizing the installed base and the ongoing roll-out in Casino supermarkets and Géant hypermarkets, several new contracts were signed with brands like Franprix, Carrefour Market, Grand Frais and G20. Also, 2017 was unquestionably a turning point in terms of adoption in the food retail sector in Germany and Central Europe, with the signing of several important roll-out contracts with the largest German company in the sector and with two leading brands in Switzerland and Austria as well as a leading Hungarian hard-discounter. The Africa & Middle East region is also taking off: SES-imagotag set up its first Carrefour hypermarkets in Dubai and Morocco.

The consumer electronics sector remained extremely dynamic worldwide. In France the roll-out of the Boulanger brand steadily continued and the Darty-Fnac group expanded its digital trial with the installation of the SES-imagotag solution in five additional stores. Internationally, after completing roll-outs of a record 1,000 MSH Group stores, SES-imagotag has now established pilot stores in a large number of retailers in Germany, Hungary, Russia, Italy, Belgium, Spain, Portugal and in the Middle East (Dubai). One of these clients, Dixons Nordics, the Scandinavian leader in household appliance retail and a subsidiary of Dixons Carphone (no. 2 in Europe) chose to roll out with SES-imagotag. In the United States, the number of signed stores in the sector passed the 250 mark (compared to 100 in late 2016). Finally, in Asia, the first pilot projects were also completed in this sector.

In the extremely promising home furnishing sector, Jysk, a household goods retailer with all Scandinavian stores already equipped with SES-imagotag solution last year, began digitizing new facilities in a number of countries (Iceland, Canada, Baltic nations). Moreover, one of the leading European brands in the sector decided to roll out with SES-imagotag after conducting several pilot projects in 2016. Finally, several new brands will launch pilot projects in Europe and the United States.

Innovation-driven performance

SES-imagotag's sales in H1 resoundingly outperformed its competitors, and confirmed its leading position and the success of its innovation policy, which was particularly active in H1 in terms of the enhancement of its software platform:

  • In the first half of the year, SES-imagotag finished migrating its software platform onto the Cloud, enabling it to offer customers a simplified roll-out and implementation solution that is both scalable and affordable. Several hundred stores are already using this Cloud-based solution (notably in the USA) and SES-imagotag concluded a deal in Q2 for the first Cloud-based roll-out for a major account.
  • NFC momentum. In the second quarter of 2017, Apple announced it was fully adopting NFC technology, a step all other smartphone manufacturers have already taken, which makes it possible to significantly increase the ways in-store connectivity can be used to provide more information, services and opportunities for customization to consumers. Since 2012, SES-imagotag was convinced that NFC would become the dominant contactless technology. As such, SES-imagotag already has nearly 30 million “NFC-ready” smart labels installed in thousands of stores and in the first half of the year has accelerated development of its line of shopper engagement solutions. These features have been resounding commercial successes due to their ability to improve the ROI for electronic tagging solutions.

Current Market Dynamics

The market for digital tagging solutions entered a new phase of global development this year—on every continent, major retailers now have this technology on their radar when it comes to future investments, and in Europe it is one of their strategic priorities. The number of pilot projects has never increased so quickly. The most recent study from ABI Research focusing on electronic tags predicts a massive expansion in the market within five years from now, estimating that it will be worth $5 bn by 2022; the previous ABI estimate from 2014 put the figure at $1.8 bn by 2019.

These growth forecasts have made the competition, particularly Asian players from South Korea and China, sit up and take notice; they have escalated their pressure on prices in Europe in hopes of carving out a place for themselves in the largest, standard-setting market. Faced with this approach, SES-imagotag chose to come out swinging on several fronts: accelerating product roadmap, industrial scale-up, intensifying growth in Asia and allying with BOE Technology.

  • Accelerating the “G2-Fusion” Project. To boost its competitive advantage in the context of intense price pressures, in the first half of the year the Group decided to anticipate and accelerate the plan to develop a new product range combining all technology assets from SES-imagotag and those of 2 recent acquisitions (PDi and Findbox): multi-color e-paper, high-speed flashing LEDs, HF dual radio, active-NFC, Easylock2 high-security mountings, automatic geolocation, onboard sensors, and more. This new line will enter into production at the end of the third quarter.
  • Accelerating the “Fire” Industrial Project. The “G2-Fusion” project is linked with an industrial improvement plan that will make it possible to add significant cost competitiveness gains to other product benefits.
  • Acceleration in Asia. Growth in Asia is essential in order to capitalize on future world market volumes. Since the acquisition, PDi has actively worked to lay the groundwork for this growth. The partnership with BOE in the Chinese market is one of the highlights of the half-year; thanks to this collaboration, SES-imagotag has already set up its first points of sale in China, and has set up a portfolio of a large number of opportunities. Beyond China, major partnerships have been formed in Japan and South Korea.
  • Business Alliance with BOE Technology. On June 16, 2017, the BOE Technology Group and SES-imagotag entered into exclusive negotiations regarding the acquisition by BOE of a majority stake in SES-imagotag; solidifying SES-imagotag's standing as an international technological and industrial leader. Since then, SES-imagotag and BOE Technology have reported the signature of a share purchase agreement and unanimous approval from the SES-imagotag works council in recognition of the highly positive impact the plan will have on the company's growth. Certain regulatory authorizations are currently being obtained before BOE can acquire the block and launch the mandatory tender offer, which is expected in Q4 of 2017.

2017: A Year of Transition: Leapfrog 2020 Targets Confirmed

2017 is proving to be transitional year in a market that is confirming its high potential (growing adoption of digital price tags) yet also marked by escalating price competition. This situation will impact margins, despite the excellent sales performance from the first half of the year. This pressure on margins, when combined with shouldering the costs of PDi and Findbox during the first half-year, is expected to result in an operating profit that underperforms initial expectations and the results of the first half of 2016.

Deliveries will be reduced in Q3 due to the industrialization schedule for the “G2-Fusion” project and the fact that certain customers are switching their orders to this new product line. The decision to accelerate the product timeline came as a response to SES-imagotag's determination to cement its leading position and its market share precisely as the ESL market starts its transition to a mass market.

This offensive strategy, which is already translating into excellent growth in order intake, prepares the way for a sales acceleration in 2018 and strengthens the ability to achieve the "Leapfrog 2020" objectives, ie. total sales between €400 M and €500 M (CAGR 2015-2020 >30%) with an EBITDA margin of 15% to 20%.

About SES-imagotag

For 25 years, SES-imagotag is the trusted partner of retailers for the use of digital technology in stores. SES-imagotag, the worldwide leader in smart digital labels and pricing automation, develops a comprehensive IoT and digital platform that delivers a complete set of services to retailers. The SES-imagotag solution enables retailers to connect and digitize their physical stores; automate low-value-added processes; improve operational efficiency; inform and serve customers; ensure information integrity to continuously optimize on-hand inventory; prevent stock-outs and waste and create an omnichannel service platform that builds loyalty and meets evolving consumer expectations.

SES-imagotag is listed in compartment B of the Euronext™ Paris
Ticker: SESL - ISIN code: FR0010282822 - Reuters: SESL.PA - Bloomberg: SESL

NewCap - Investor Relations & Financial Communications
Marc Willaume / Tristan Roquet Montégon: Tel : +33 (0)1 44 71 00 13 /

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