Digital Virgo Registers Its Document de Base with the French Financial Markets Authority

LYON, France–(BUSINESS WIRE)–Apr 25, 2019–Digital Virgo (“the Company”) today announces the registration of itsDocument de Base with the French Financial Markets Authority (the “AMF”) on 24 April 2019 under number I.19-010.

This represents the first step towards Digital Virgo’s planned initial public offering on the regulated Euronext market in Paris, subject to market conditions and AMF approval of the IPO prospectus.

Digital Virgo intends to become a leading player in telecom payment within the mobile and digital ecosystem by:

• supporting telecom operators in the overall management of their payment solutions; and
• providing merchants with a direct solution to monetize goods and services through mobile subscriptions.

Guillaume Briche, Digital Virgo’s Chief Executive Officer, commented: “This IPO project is in line with the Group’s strategy of profitable growth since its creation. Over the past two years, we have made three structuring acquisitions and reduced the debt contracted during the 2016 LBO. We now intend to accelerate our international development, particularly in Africa and Middle East, and increase our visibility within the digital ecosystem. In these regions, our positioning as an expert in payment, monetization and marketing is unique. Combined with our long-standing relationships with telecom operators this positioning now enables us to seize growth opportunities, drawing on the rapid growth of the mobile market. The registration of our Document de Base is a significant stage in our plans for an Initial Public Offering.”

A player in mobile payment driven by its track record and geographical scope

With consolidated revenue of nearly €258 million in 2018, the Company is positioned at the heart of a dynamic ecosystem made up with telecom operators, merchants (content producers, media, ticketing companies, etc.) and digital advertising platforms (Google, Facebook, etc.).

Digital Virgo designs and provides solutions for payment and monetization of goods and services charged to subscribers via the telecom operators’ bill or pre-paid cards (fintech). The performance of these operations is enhanced by strong expertise in mobile digital marketing (adtech). Created in 2008, the Group now operates in 48 countries, through 26 offices, and deals with 120 telecom operators and more than 200 merchants. Its history and its growth are intimately linked to rapid expansion of new mobile usage over the last few years.

Digital Virgo benefits from a dynamic ecosystem…

Digital Virgo operates in a very dynamic global ecosystem, characterized by a rapidly expanding target market, thanks in particular to:

• the growth in the number of mobile phones in use and the number of subscribers;
• the diversity of payment services;
• the continuous improvement of devices use conditions, thanks to progress in bandwidths and infrastructures; and
• the increase of digital content and service offering.

Telecom payment is an easy and secure alternative to debit and credit cards or cash in developed countries via Direct Carrier Billing (DCB), and represents also an alternative to other payment methods available in developing countries with low levels of bank coverage. With 8 billion mobile subscribers worldwide at end-September 2018 2 (compared to 3.7 billion holders of credit and debit cards 3 worldwide), telecom payment allows to reach the largest number of users.

…and a strategic positioning with a diversified, integrated and flexible offering

Digital Virgo is positioned as a key partner for telecom operators, building on:

• a control of payment processes;
• a knowledge of international markets, allowing it to adapt its services to local markets’ specificities and expectations;
• an integrated offering combined with flexible, modular, centralised tools;
• a broad geographical coverage.

Digital Virgo thus occupies a strategic positioning throughout the whole value chain. It offers telecom operators opportunities to increase their ARPU 4 and build subscriber loyalty. It allows merchants and apps publishers to address new audiences and offers new sources of customer acquisition and monetization, with optimized targeting by high-performance mobile marketing. Digital Virgo is one of the few market players to have a position across three complementary business areas: payment, monetization and marketing.

Its deployment is set to accelerate from 2019…

The Group is pursuing a growth strategy focused on its long-standing, cultural and linguistic links to telecom operators and merchants. From 2019 it intends to accelerate its development through:

• intensification in some promising areas such as Africa and Middle East;
• strengthening its positioning towards telecom operators by obtaining the status of PSP (Payment Solutions Provider) and signing exclusivity contracts;
• optimizing sales through cross-selling and up-selling between the various solutions in its offering.

The implementation of this strategy should enable Digital Virgo to begin a new dynamic revenue growth cycle from 2019, based on medium-term targets combining organic growth and acquisitions.

…opening up a new cycle of growth in revenue and income

Over the past two years, Digital Virgo has demonstrated its ability to finance its organic growth and acquisitions (three structural acquisitions in 2017) whilst continuing to pay down the debt contracted during the LBO of July 2016.

Now with greater financial flexibility, the Group is entering a new cycle of organic growth, which should be driven mainly by monetization and marketing activities in 2019 and by its continued development in Africa/Middle East areas.

At the same time, Digital Virgo plans to spend approximately €70 million over the next 24 months on acquisitions, in particular to accelerate the Group’s international development and enhance its technological building blocks. The targets may concern the Group’s three activities, with payment as a priority.

This strategy could draw on cash flow from operations, potentially complemented by additional resources from the capital increase to be completed as part of the planned IPO.

The Group thus plans to achieve the following targets:

• average annual revenue organic growth of around 15% (CAGR) for the period from 2018 to 2021;
• average annual organic growth in Adjusted EBITDA 1 for the period from 2018 to 2021 of around 10% per year; and
• expected Adjusted EBITDA of €35 million in 2019 5 and close to €50 million in 2021 after integration of acquisitions.

Availability of the Document de Base

Digital Virgo’s Document de Base is available on the Company’s website ( www.digitalvirgo.com ) and will be available on the AMF website ( www.amf-france.org ).

It may be obtained free of charge upon request to Digital Virgo, 88 rue Paul Bert, 69003, Lyon.

The Document de Base contains a detailed description of Digital Virgo, notably its business, its strategy, its financial position and results, as well as the associated risks factors. Digital Virgo draws the attention of the public to the risks factors identified in Chapter 4 of the Document de Base.

About Digital Virgo

Digital Virgo is an international BtoB Group that operates in the payment and monetization markets through telecom operators’ billing solutions. Positioned at the heart of an ecosystem made up with operators, merchants (content producers, media, ticketing professionals) and digital advertising platforms (Google, Facebook, etc.), its role consists in interconnecting these players to meet their main challenges: optimizing payments, monetizing content, services and audiences and ensuring their performance through mobile marketing campaigns.

The Group’s success is based on its mobile DNA, its mastery of the telecom environment and its ability to anticipate developments linked to the digital marketing sector. Digital Virgo’s expertise is rolled out in 48 countries through 26 offices, driven by local teams, focused on the countries’ issues, uses and culture in which they operate.

The Group deals with 120 telecom operators and over 200 merchants. In 2018, it generated revenue of nearly €258 million. For more information: digitalvirgo.com

Forward-looking statements

This press release contains forward-looking statements. These statements do not constitute a guarantee of Digital Virgo’s actual results. Information expressed or implied by such statements relates to forecasts, growth and the business strategy of Digital Virgo and are based on analyses of forecasted results and market estimates. By its nature, prospective information is subject to risks and uncertainties because it relates to events and depends on circumstances that may or may not occur in the future. In no event should such prospective information be understood to constitute a guarantee of Digital Virgo’s future performance, financial condition, results of operations or actual cash flows, and changes in the markets in which Digital Virgo operates may differ materially from those described or implied by the forward-looking statements contained in this press release. Even if Digital Virgo’s financial condition, results of operations and cash flows and the changes in the markets in which it operates are consistent with the forward-looking statements contained in this press release, such statements may be unreliable indicators of Digital Virgo’s actual future results or changes with respect to the Group and its markets. A description of factors that may have a significant adverse effect on Digital Virgo’s business, financial condition or results of operations, or on its ability to achieve its targets and objectives, is contained in Chapter 4 “Risk Factors” of the Document de Base.

Disclaimer

This announcement does not, and shall not, in any circumstances constitute a public offering nor an invitation to the public in connection with any offer.

The distribution of this document may be restricted by law in certain jurisdictions. Persons into whose possession this document comes are required to inform themselves about and to observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

This announcement is an advertisement and not a prospectus within the meaning of Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003, as amended, in particular, by Directive 2010/73/EU of the European Parliament and of the Council of 4 November 2003 (the “Prospectus Directive”).

In France, an offer of securities to the public may not be made except pursuant to a prospectus that has received a visa from the French Financial Markets Authority (the “AMF”).

With respect to the member States of the European Economic Area which have implemented the Prospectus Directive, no action has been undertaken or will be undertaken to make an offer to the public of the securities referred to herein requiring a publication of a prospectus in any relevant member State other than France. As a result, the securities may not and will not be offered in any relevant member State other than France except in accordance with the exemptions set forth in Article 3(2) of the Prospectus Directive, if they have been implemented in that relevant member State, or under any other circumstances which do not require the publication by Digital Virgo of a prospectus pursuant to Article 3 of the Prospectus Directive and/or to applicable regulations of that relevant member State.

For the purposes of the provisions above, the expression “offer to the public” in relation to any securities in any relevant member State, means any communication, to individuals or legal entities, in any form and by any means, of sufficient information on the terms and conditions of the offering and on the securities to be offered, thereby enabling an investor to decide to purchase or subscribe for the securities, as the same may be varied in that relevant member State.

These selling restrictions with respect to relevant member States apply in addition to any other selling restrictions which may be applicable in the relevant member States.

This document may not be distributed, directly or indirectly, in or into the United States of America. This document is not an offer of securities for sale nor the solicitation of an offer to purchase securities in the United States of America or any other jurisdiction where such offer may be restricted. Securities may not be offered or sold in the United States of America absent registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or an exemption from registration. The securities of Digital Virgo have not been and will not be registered under the U.S. Securities Act, and Digital Virgo does not intend to make a public offer of its securities in the United States of America.

This document is only being distributed to, and is only directed at, persons in the United Kingdom that (i) are “investment professionals” falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Order”), (ii) are persons falling within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations, etc.”) of the Order, or (iii) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of Article 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “Relevant Persons”). This document is directed only at Relevant Persons and must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this document relates is available only to Relevant Persons and will be engaged in only with Relevant Persons. Any person other than a Relevant Person should not act or rely on this document or any of its content.

Any investment decision to buy securities must be made solely on the basis of publicly available information regarding Digital Virgo.

This document may not be distributed, directly or indirectly, in or into the United States of America, Australia, Canada or Japan.

1 Adjusted EBITDA corresponds to operating income corrected for non-current items (adding back non-recurring expenses and deducting non-recurring income), depreciation and impairment of fixed assets and the calculated costs of stock options and similar schemes.
2 Source: Ericsson Mobility Report, November 2018
3 Source: The Global Findex Database, November 2017
4 Average Revenue Per User
5 Including the impact of the application of IFRS 16 from 1 January 2019 which should contribute €2 million to Adjusted EBITDA in 2019.

NOT FOR DIRECT OR INDIRECT DISTRIBUTION IN THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA OR JAPAN

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