Worldpay Group Half Year 2017 Results 9 August 2017

Transcription

1 Worldpay Group Half Year 2017 Results 9 August 2017

2 DISCLAIMER Important Notice The information set out in this document and any discussion which follows it does not constitute a public offer for the purposes of any applicable law, an offer to sell or solicitation of any offer to buy securities or financial instruments, or any advice or recommendation in relation to any such financial instruments or securities. Forward-looking statements This document and discussion which follows it may include certain forward-looking statements with respect to the business, strategy and plans of Worldpay Group plc (the Company and, together with its subsidiaries, the Group ) and its current goals and expectations relating to its future financial condition and performance. Statements that are not historical or current facts, including statements about the Group or its directors and/or management s beliefs and expectations, are forwardlooking statements. Forward-looking statements may include words such as achieves, aims, anticipates, believes, continues, estimates, expects, goal, intends, likely, may, plans, projected, seeks, sees, should, targets, will or the inverse of such terms or other similar words. These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond the Group s control and all of which are based on the Directors current beliefs and expectations about future events. They are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Company, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements, such as (but not limited to) future market and economic conditions, currency fluctuations, the behaviour of other market participants, the performance, security and reliability of the Group s global payments platform and other information technology systems, the Group s ability to maintain payment scheme memberships or financial institution sponsorship, the Group s ability to identify, complete and integrate acquisitions, joint ventures and partnerships, increases in credit card network fees, political, economic and regulatory changes in the countries in which the Group operates or in economic or technological trends or conditions and the success of the Group in managing the risks of the foregoing. As a result, investors are cautioned not to place undue reliance on such forward-looking statements. Forward-looking statements speak only as of their date and the Company s shareholders, and any of such person s respective directors, officers, employees, agents, affiliates or advisers expressly disclaim any obligation to supplement, amend, update or revise any of the forward-looking statements made herein, except where it would be required to do so under applicable law. It is up to the recipient of this document and any participant in the discussion which follows it to make its own assessment as to the validity of such forward-looking statements and assumptions. No statement in this document or any discussion which follows it is intended as a profit forecast or a profit estimate and no statement in this document or any discussion which follows it or any related materials should be interpreted to mean that earnings per share for the future or current financial periods would necessarily match or exceed historical published earning per share. Any forward-looking statements made in this document or any discussion which follows it speak only as of the date they are made and it should not be assumed that they have been revised or updated in the light of new information of future events. Except as required by the Financial Conduct Authority, the London Stock Exchange plc or applicable law, the Company expressly disclaims any obligation or undertaking to release publicly any updates of revisions to any forward-looking statements contained in this document to reflect any change in the Company s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

3 Review of H Philip Jansen, Chief Executive Officer

4 Strong performance in the first half of 2017 Continued strong progress across the business Robust financial performance against tough first half comparatives Acceleration of our technology, innovation and product development Continued successful boarding and migration of customers onto the new acquiring platform Strengthening customer relationships and market reach Well positioned to deliver sustainable strong growth; medium-term net revenue growth guidance unchanged 4

5 Financial highlights HY2017 vs HY2016 Transaction value bn +11% Net revenue 601 m +11% Gross profit 524 m +11% Underlying EBITDA 248 m +14% Free cash flow 60 m - 23m 5

6 Global ecom: Continued strong strategic and financial delivery Net revenue 221.2m +17% 37% of Group Strong divisional performance: 17% net revenue growth against tough first half comparatives Substantial growth in Latin America and Asia-Pacific regions, supported by strengthening of our global capabilities New acquiring capabilities in Brazil and Argentina creating a platform for growth in Latin America Robust growth across verticals, particularly Retail and Airlines Underlying EBITDA 127.1m +20% 51% of Group 1 Customer pipeline remains strong: retentions, expansions and wins including Vanilla Air, Hobby King, Televisa and COPA A broad range of new products delivered o Updated mobile wallets: ApplePay and AndroidPay o Updated APMs: Klarna, MOLPay, Billdesk and Trustly o Kicked off development for China UnionPay Singleclick Migrating customers onto Pazien, enhancing reporting and data insights (1) Corporate costs of 12.0m account for (5)% of Group underlying EBITDA 6

7 Global ecom: Delivering substantial commercial benefits for our merchants Confidential International Worldpay Customer A world leading hobby store Low-cost carrier owned by Japan s largest airline Chose Worldpay for its global expertise and ability to work with companies in the cryptocurrency and blockchain space Worked with major card schemes to facilitate processing of transactions Enabled the customer to launch in multiple European and Asian markets, and provided expertise on reducing fraud rates Supported them in becoming one of the leading players in the industry across multiple markets Worldpay selected to strengthen Hobby King s payments breadth and reporting efficiency Added multiple payment methods for increased global coverage, including AliPay and Boleto Provided access to real-time sales data Uplift in acceptance rates driven by data reporting enhancements and consulting services based on deep market knowledge Broadened their access to South East Asia; Taiwan, Hong Kong, Vietnam and the Philippines Now able to support all popular payment methods and platforms in the region via Worldpay technology Integrated to the Air Black Box booking platform via Worldpay to simplify multiflight payments and Worldpay s real-time fraud prevention and data insight tools >10x growth in customer s revenue expected in % increase payment acceptance rate, and reduced fraud rate Increased transaction acceptance and reduced fraud rates 7

8 UK: Good progress on strategy to deliver further value added for customers Net revenue 218.7m +2% 36% of Group Resilient performance against very strong 1H16 results; reflects scheme fee increases, as well as consumer spend trends o Net revenue grew 2%, good performance against tough first half comparative (12% growth in 1H 2016); scheme fee costs increased by more than 70% o Underlying EBITDA reflects allocated NAP costs; strong control of underlying operating costs o Expect a strong H2, primarily driven by changes in sales strategy, pricing and take up of value-added products and services Underlying EBITDA 94.6m +2% 38% of Group 1 Delivering more value added for SME customers o Dashboard now at >100k users o Business Finance: c. 20m advanced to date; repeat business from >50% of initial customers; c.80% of applications approved; average amount advanced 15K o Distribution: launched Online customer self-service with a 20% lead to sales conversion rate o SME Net Promoter Score up 5 pts and churn down 0.8% to 16.2% Worldpay Total continuing to deliver better outcomes for merchants o 50% year on year growth in Worldpay Total installed terminals since end of 2016; transaction volumes doubled since 1H16 o Continued expansion into the hospitality sector o Worldpay Total now supported in France with additional countries to follow (1) Corporate costs of 12.0m account for (5)% of Group underlying EBITDA 8

9 UK: Supporting merchants with value-added products and superior service Worldpay chosen for strong industry track record and expertise in fraud prevention and development efficiency development efficiency Partnered for streamlined payments operations Worldpay chosen for strong industry track record and expertise in fraud prevention and Partnered for streamlined payments operations Online Payments Gateway enabled, with MO/TO and recurring functionality for payments taken over the phone Online Payments Gateway enabled, with MO/TO and recurring functionality for payments taken over the phone Reduced digital development costs through Worldpay Hosted Payments Pages Reduced digital development costs through Worldpay Hosted Payments Pages Now partnering with Worldpay to consolidate their full payments suite Worldpay chosen for thorough and quick integration and omni-channel solution Rolled-out Worldpay Total and Point-to-point encryption across c.100 stores in 1 month American Golf also benefited from reduced time and cost for PCI compliance Partnering to deliver their omni-channel ambitions Merchant PCI costs reduced by 88% Merchant PCI costs reduced by 88% 9

10 US: Further progress in building a stronger business Net revenue 160.6m +18% 27% of Group Improved operational effectiveness o Infrastructure investments delivering better resilience and improved performance o Improved customer service resulting in stronger customer advocacy: NPS up 5 percentage points Strengthened product delivery o Further progress on EMV: quarterly rate of external certifications tripled o Virtual Terminal product in full market availability o Worldpay Total in full development and now live with over 200 customers o Positive feedback from ISV partners on WPUS developer tools Underlying EBITDA 37.8m +27% 15% of Group 1 Further progress in rebuilding sales capability o Including Alliance Partners, SME Direct, Midmarket Corporate, Domestic ecommerce, and ISVs Leadership team further strengthened o New hires: Chief Commercial Officer, Chief Product Officer, SVP Partnerships and President SBU o Driving better commercial and product outcomes (1) Corporate costs of 12.0m account for (5)% of Group underlying EBITDA 10

11 US: Specialised vertical expertise increasing merchant efficiency Worldpay chosen for strong industry Worldpay track US record chosen for and expertise expertise within the in Petro fraud vertical prevention and development efficiency Partnered for streamlined payments operations Cary Oil is a national leader in refined oil distribution Worldpay has driven improvements in overall efficiency and service by reducing the overall cost of acceptance and amount of time taken to settle funds Online Payments Gateway enabled, with MO/TO and recurring functionality for payments taken over the phone Cary Oil now able to accept payments on major integrated Point-of-Sale within the Petro sector Reduced digital development costs through Worldpay Hosted Payments Pages Lowered cost of transaction processing & reduced time to receive funds by 30 days Worldpay US chosen for specialisation in the franchisee operator market Global Franchise Group includes names such as Marble Slab Creamery, Great American Cookies and Pretzelmaker; operates in over 1,100 quick service restaurants franchise locations The Worldpay Point-of-Sale offering has enabled improved authorisation and settlement processing Worldpay s high touch service model delivers franchisee payments expertise On track to deliver improvements in payments efficiency Merchant PCI costs reduced by 88% 11

12 Delivering better merchant outcomes through a flexible, world-beating technology architecture Gateway 2.0 build going to plan. Expect to start product delivery to customers by end of the year Futureready acquiring platform Next generation gateway Leading payments innovation My Business Mobile: Launched early trial of the UK s first downloadable (hardware free) terminal Speed, reliability & safety Best in class security Better throughput: DevOps culture Continuing to successfully board and migrate customers Enterprise Data Platform Continued build out of capability, including advanced analytics and machine learning Open source software technology Machine learning & Automation 12

13 H Financial Results Rick Medlock, Chief Financial Officer

14 Key financial highlights H underlying and reported measures m (except where stated) Underlying Change vs H Revenue 2, % Net revenue % Gross profit % Reported Change vs H EBITDA % % EBITDA margin 41.2% +80bps Profit before tax % % Profit after tax % % Diluted Earnings per share (p) p 4.7 Dividend per share (p) % - - Free cash flow m Net debt (excl. CVR-related cash) (1,309.1) +58.9m * * Change since 31 December (1) Underlying EPS is calculated by taking profit for the period before separately disclosed items, divided by the weighted average number of ordinary shares in issue during the financial period. 14

15 Revenue and Underlying EBITDA (in m, unless stated otherwise; changes shown are vs HY 2016) +6.4% +11.1% +17.5% +11.3% +10.8% (8.4%) +13.6% 241,352 2,509.5 (1,909.0) 7,707 25bps of Total Transaction Value 41.2% of Net Revenue x 1.0% = x 31.3 = (76.8) (167.1) (109.1) # of Transactions (m) ATV ( ) Total Transaction Value Margin (%) Gross Revenue Interchange & Scheme Fees Net Revenue COGS Gross Profit Personnel Expense Other Opex Underlying EBITDA IFRS Non-IFRS 15

16 Net revenue drivers m (1.4) % % H Net revenue Card related income Scheme fee effects FX services = Effect of scheme fee increases not passed on to customers in H1 Terminal rental fees Ancillary services FX translation effect on WPUS H Net revenue (1) Constant currency growth at 7.4% is calculated by first re-stating the PY for the FX impact. 16

17 Robust sales performance supported by a healthy growth in transactions Worldpay Group Global ecom 7,241 +6% 7, % % 601 2,446 +8% 1 2, % % % 0.25% 0.31% 0.31% H H H H H H H H H H H H Worldpay UK Worldpay US +9% +4% +2% +0% +2% +3% 2,749 3, ,047 2, % 0.21% 0.24% 0.24% H H H H H H H H H H H H (1) 8% transaction growth reflects the reduction of high volume, low transaction value business from three customers following the incident with our high capacity gateway last year. Excluding this, like-for-like transaction volume increased by 26%. # of transactions (m) Total transaction value ( bn) (US in constant currency) Net revenue ( m) (US in constant currency) Change 1H2016-1H2017 Net revenue as % of transaction value 17

18 Underlying operating costs +8.4% m (10.5) (276.2) +4.1% ( ) (3.1 1 (2) ) 3.7 (1.0) (265.7) (254.9) H Underlying Operating Costs Global ecom UK US (constant currency) Corporate (1) Global ecom and UK include first-time allocation of costs associated with the running of the New Acquiring Platform of 2.9m and 3.0m respectively. (2) WPUK includes a bad debt write-off of 3.3m relating to the collapse of a travel merchant in the period. FX Translation Effect on WPUS H Underlying Operating Costs 18

19 Underlying net income and earnings per share m (except where stated) H H % Change Underlying EBITDA % Underlying D&A (57.2) (36.4) (57%) Underlying operating profit % Underlying finance costs (29.3) (28.2) (4%) Share of results of JV and Associate (0.6) (0.5) (20%) Gain on disposal of investment & subsidiary Underlying tax 6.9 (38.8) - (40.5) Underlying net income % Nm 4% Underlying D&A o Reflects higher capex and start of amortisation of new acquiring platform Underlying finance costs o Consistent with prior year: average cost of debt 3.1% Effective tax rate o Effective tax rate of 23.2% Dividend per share o Consistent with policy of 20% to 30% payout ratio of full year reported earnings Underlying diluted earnings per share (p) p Dividend per share (p) p (1) Underlying EPS is calculated by taking profit for the period before separately disclosed items, divided by the weighted average number of ordinary shares in issue during the period. 19

20 Separately Disclosed Items (SDIs) m H H SDIs affecting EBITDA (23.6) (35.6) of which: Platform costs (11.4) (15.3) Other separation costs (8.4) (8.0) Reorganisation and restructuring costs (0.7) (4.5) Costs of IPO (1.8) (4.6) Other costs (1.3) (3.2) SDIs affecting D&A (23.7) (24.9) SDIs affecting finance costs of which: Net gain on Visa Europe Foreign exchange (losses) (4.3) (24.1) SDIs affecting EBITDA o o Principally comprise platform and separation costs Costs of IPO relate to employee share grants SDIs affecting D&A o Comprises amortisation of acquisition intangibles; expect a similar charge in second half SDIs affecting finance costs o o Net gain on Visa Europe comprises fair value and foreign exchange gains in relation to the disposal of Visa Europe shares in 2016, dividends on Visa preference shares, partly offset by a loss on valuation of the related CVR liabilities Also includes a net foreign exchange loss of 4.3m resulting from the period end translation of the Group s non-sterling assets and liabilities Tax on SDIs 3.0 (69.5) Total SDIs (35.4) (53.7) 20

21 Cash flow m H H Change Underlying EBITDA Separately Disclosed Items (23.6) (35.6) 12.0 Capex (100.5) (81.6) (18.9) Working Capital (3.4) (1.2) (2.2) Tax (Paid) / Received (30.8) 5.9 (36.7) Non-cash items Underlying Finance Costs (30.4) (23.2) (7.2) Capex o Consistent with guidance for full year 2017 capex of 180m - 200m Working capital o Broadly in line with prior year and largely reflects timing of receipts and payments around the year end Tax paid o Reflects more normal schedule of payments on account Underlying cash finance costs o Increase reflects timing of finance leases raised Free Cash Flow (22.6) 21

22 Conclusion Philip Jansen, Chief Executive Officer

23 Strong performance in the first half of 2017 Continued strong progress across the business Robust financial performance against tough first half comparatives Acceleration of our technology, innovation and product development Continued successful boarding and migration of customers onto the new acquiring platform Strengthening customer relationships and market reach Well positioned to deliver sustainable strong growth; medium-term net revenue growth guidance unchanged 23

24 Any questions?

25 Appendix

26 Income statement 6 months ended 30 June months ended 30 June 2016 vs PY vs PY % Separately Separately Separately Separately Underlying Result disclosed items TOTAL Underlying Result disclosed items TOTAL Underlying Result disclosed items TOTAL Underlying Result disclosed items TOTAL Revenue 2, , , , % n/a 18% Interchange and scheme fees (1,909.0) - (1,909.0) (1,595.9) - (1,595.9) (313.1) - (313.1) (20%) n/a (20%) Net Revenue % n/a 11% Other cost of sales (76.8) - (76.8) (66.9) - (66.9) (9.9) - (9.9) (15%) n/a (15%) Gross profit % n/a 11% - Personnel expenses (167.1) (11.8) (178.9) (153.1) (11.8) (164.9) (14.0) - (14.0) (9%) - (9%) General, selling and administrative expenses (109.1) (11.8) (120.9) (101.8) (23.8) (125.6) (7.3) (7%) 50% 4% - EBITDA (23.6) (35.6) % 34% 23% - Depreciation, amortisation and impairment (57.2) (23.7) (80.9) (36.4) (24.9) (61.3) (20.8) 1.2 (19.6) (57%) 5% (32%) Operating profit (47.3) (60.5) % 22% 18% - Finance (costs)/income (29.3) 8.9 (20.4) (28.2) (1.1) (67.4) (68.5) (4%) (88%) (142%) Gain on disposal of Investment and Subsidiary Share of result of joint venture (0.6) - (0.6) (0.5) - (0.5) (0.1) - (0.1) (22%) n/a (22%) - Profit/(loss) before tax (38.4) (54.2) (39.7) 9% (343%) (24%) Tax (charge)/credit (38.8) 3.0 (35.8) (40.5) (69.5) (110.0) % 104% 67% Profit/(loss) for the period (35.4) (53.7) % 34% 59% Total earnings/(loss) per share (pence) Basic % n/a 62% Diluted % n/a 62% 26