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Worldline - 2020: a landmark year - FY 2020 results

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WORLDLINE SA
·20 min read
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2020: a landmark year

FY 2020 results: all objectives reached or exceeded
Resilient revenue in Covid-19 environment: € 2,748 million, -4.6% organically
OMDA: € 700 million, 25.5% of revenue, +60 bps on a comparable basis
Free cash flow: € 349 million1, +200 bps increase in OMDA conversion (50%)

Full execution of the strategic roadmap
Transformative acquisition of Ingenico and fast execution of the integration plan
Ongoing strategic review of payment terminals activity
Major strategic commercial acquiring alliance with ANZ Bank in Australia

2021 objectives based on a progressive
normalization in H2 2021
At least mid-single digit revenue organic growth
c. 200 bps OMDA margin improvement vs. 2020 proforma (23.9%)
Circa 50% OMDA conversion to FCF

Bezons, February 24, 2021 – Worldline [Euronext: WLN], leader in the payments industry, today announces its 2020 annual results.

Gilles Grapinet, Worldline’s Chairman and CEO, said: “2020 was a landmark year for Worldline. I am indeed very proud with the 2020 results reported today. All the objectives for the year published as recently as April 28th, 2020 have been reached or exceeded and show the strong resilience and robustness of Worldline’s business model in the COVID-19 context. Moreover, these results demonstrate the full commitment and engagement of Worldline’s employees to collectively overcome the challenging times we are going through. I would like to warmly thank them.

Of course, the most important strategic development of Worldline in 2020 has been the acquisition of Ingenico. Our integration and synergy plans are progressing at a rapid pace. More than ever, we cover the entire payment value chain, with outstanding market positions in online payments, merchant acquiring and transaction processing. The acquisition has ideally and timely positioned Worldline for the structural transformation of our markets.

I am indeed pleased to see that this unprecedented macro situation has triggered an acceleration of the payment secular trends, towards more cashless payments and e-commerce developments. On the back of this acceleration, our industry continues to renew itself with initiatives in which Worldline is actively participating, such as EPI, the Digital Euro or EDPIA, fostering further long term digital payment perspectives.

In 2021, on the back of the progressive improvement in the health situation, Worldline will focus on enhancing its growth and margin profile, in particular thanks to a fast and flawless integration of Ingenico. In parallel, Worldline keeps a strong momentum on its strategic initiatives with the expected completion of the strategic review of the payment terminals business and the pursuit of the Group development with value-creative consolidation opportunities.”

2020 key figures

For the analysis of the Group’s performance, revenue and Operating Margin before Depreciation and Amortization (OMDA) for 2020 are compared 2019 revenue and OMDA at constant scope and exchange rates. Worldline’s 2020 performance was as follows:

In € million

FY 2020

FY 2019

Change

Revenue*

2,748

2,881

-4.6%

OMDA*

700

716

% of revenue

25.5%

24.9%

+60 bps

Net income Group share

164

311

% of statutory revenue

6.0%

13.1%

Normalized net income Group share**

361

301

+20.2%

% of statutory revenue

13.1%

12.6%

+50 bps

Free cash flow***

349

288

+21.3%

% of statutory OMDA

49.8%

47.8%

+200 bps

Closing net debt

-3,165

-641

* FY 2019 at constant scope and exchange rates
** adjusted for (Group share): staff reorganization, rationalization, integration & acquisition costs, equity based compensation, and customer relationships & patents amortization
*** excluding € 54.3 million of Ingenico transaction acquisition costs

In 2020, Worldline’s revenue reached € 2,748 million. Throughout the year, the activity of the Group was impacted by the Covid-19 related measures and their effects on the European economies, mainly during the second and, to a lesser extent, the fourth quarter of the year. Facing this unprecedented situation, the Group leveraged its resilient and diversified business model as well as its customer focused organization to implement an early response to the health situation. As a result, the revenue organic decline for the year has been limited to -4.6%.

The Group’s Operating Margin before Depreciation and Amortization (OMDA) reached € 700 million or 25.5% of revenue representing an increase of +60 basis points compared to 2019 at constant scope and exchange rates. This solid performance compared to the 2020 objective to reach circa the same percentage than in 2019, reflects the ongoing transformation and synergy plans of the combined Group, as well as the strong actions taken to adapt the cost base in order to mitigate the impact of the Covid-19 on the combined Group’s profitability while continuing investing in strategic projects to feed future growth.

Net income Group share stood at € 164 million, decreasing by € 147 million compared to FY 2019 Net income which included two non-recurring exceptional items:

  • A €+118 million profit linked to a fair value adjustment of a contingent liability towards SIX group;

  • A €+24 million profit linked to variation of the fair value adjustment of Visa preferred shares.

Normalized net income Group share (excluding unusual and infrequent items, Group share, net of tax) stood at € 361 million (€+61 million vs. FY 2019) or 13.1% of revenue (+50 basis points improvement year-on-year).

Free cash flow in 2020 was € 295 million, including € 54 million of Ingenico transaction acquisition costs. Excluding these costs, the Group free cash flow increased by +21.3% compared to 2019, representing a 49.8% cash conversion of OMDA (free cash flow divided by OMDA), well above the objective of the year to reach circa the same conversion percentage than in 2019 (i.e. 47.8%) and representing a strong improvement by +200 basis points year-on-year.

Group Net debt at the end of the year amounted to € 3,165 million. Change in net debt in 2020 was mainly related to the free cash flow generated over the year, the cash part of Ingenico and GoPay acquisitions, as well as collection of the price adjustment related to SPS acquisition.

2020 performance per Global Business Line

Revenue

OMDA

OMDA %

In € million

FY 2020

FY 2019*

Organic change

FY 2020

FY 2019*

Organic change

FY 2020

FY 2019*

Organic change

Merchant Services

1,246

1,349

-7.7%

310

316

-1.9%

24.9%

23.4%

+150 bps

Financial Services

904

918

-1.6%

282

308

-8.5%

31.2%

33.5%

-240 bps

Mobility & e-Transactional Services

325

335

-3.1%

48

52

-8.4%

14.7%

15.5%

-90 bps

Terminals, Solutions & Services

274

279

-1.9%

89

72

+23.0%

32.4%

25.8%

+660 bps

Corporate costs

-28

-31

-11.1%

-1.0%

-1.1%

+10 bps

Worldline

2,748

2,881

-4.6%

700

716

-2.3%

25.5%

24.9%

+60 bps

* at constant scope and exchange rates

Merchant Services

Merchant Services’ revenue in 2020 reached € 1,246 million, representing an organic decline by -7.7%. Most of the decrease was in Commercial Acquiring and to a lesser extent in Digital Services, impacted by a lower number of commercial acquiring transactions in Continental Europe due to Covid-19 related measures, in particular in the travel, retail and hospitality sectors. Regarding Online and Omnichannel Payment Acceptance businesses, the situation was contrasted with growing revenue overall thanks to much stronger e-commerce transactions in verticals such as digital goods and services and on market places and despite a lack of transaction volumes in some vertical such as travel and hospitality.

During the last quarter of the year, Merchant Services continue to accompany merchants to accelerate their digitization plans with, among others:

  • McDonald’s: Implementation of contactless payment solutions at their drive-through restaurants in Belgium, an acceptance solution and service based on Valina terminals;

  • Olymp: Deployment of instore and online payment full service capabilities in five European countries (Germany, Austria, France, Austria, Hungary, and The Netherlands);

  • Auchan: Roll-out of omnichannel acceptance solutions with value-added services (smart routing and financial reconciliation) on more than 500 stores in France, representing more than 300 million transactions processed per year.

In December, the group has announced a major strategic commercial acquiring alliance with ANZ Bank in Australia through a joint venture 51% owned by Worldline. With this operation, the Group will take over the control of ANZ’s merchant acquiring business to jointly deliver state-of-the-art products, platform, and services to its very large portfolio of merchant customers.

Merchant Services’ OMDA in 2020 amounted to € 310 million, 24.9% of revenue, representing an improvement by +150 basis points. Despite the severe impact of Covid-19 on revenue, the Global Business Line was able to strongly improve its profitability through:

  • Specific and operational cost control actions, notably on personnel costs and discretionary expenses (e.g. marketing and communication);

  • incremental synergies resulting from the second year of the SIX Payment Services integration program;

  • the first synergies from the integration of Ingenico; and

  • the impacts of transversal productivity improvement actions.

Financial Services

Financial Services’ revenue showed resilience with an organic decrease limited to -1.6% over the year, to €904 million. The performance of each division continued to be contrasted. Notably, on the one hand:

  • Account Payments remaining almost unaffected by the Covid-19 situation and the division’s revenue strongly grew supported by increased volumes and ramp-up of contracts, in particular UniCredit.

  • As a result of changes in consumer behavior triggered by Covid-19, authentication volumes related to e-commerce payment transactions and PSD2 strongly increased and supported revenue growth in the last months of the year. Higher transaction volumes were also processed on Worldline’s e-brokerage platforms notably related the strong volatility on stock markets. Consequently, a strong double digit growth was recorded in Digital Banking.

While on the other hand, revenue linked to card based payment processing activities (Issuing Processing and Acquiring Processing altogether) strongly decreased due to the pandemic’s impact on transaction volumes as well as lower project activity and discretionary spending from banks.

Commercial activity of Financial Services in Q4 remained strong with contract gains and renewals such as PSA Payment Services Austria. Following many years of successful partnership in the area of card based payments, Worldline will accompany PSA Payment Services Austria in the expansion of their business portfolio. As part of a new agreement, Worldline will also provide core services for the new e-identity program of PSA, which aims at leveraging the banks’ relationships with their customers for trusted identification services. Despite the remaining challenging situation, a significant level of activity and investments was maintained over the year on key transformation projects and the new organization of the Business Line was implemented in the second semester, in order to generate structural profitability improvements in the future.

Financial Services’ OMDA remained high in 2020 at 31.2% of revenue, reaching € 282 million. Nevertheless, being the Global Business Line with the highest proportion of fixed costs, the division was the most affected by volume decrease, particularly in the card payments divisions, leading to an organic deterioration of profitability by -240 basis points. In addition, significant investments were made for the ramp-up phase of recently signed large contracts. In order to mitigate these effects, strong measures were taken in terms of cost base monitoring and workforce management.

Terminals, Solutions & Services

The Global Business Line was created on November 1st, 2020 and reported revenue over the last two months of the year reached € 274 million, recording an overall solid performance of -1.9% organic evolution with the following regional dynamics:

  • In Europe, Middle East & Africa, resilient volumes were recorded in Western Europe fueled by several projects in France and the shift to contactless in Germany. Eastern Europe experienced a continuous positive dynamic market environment led by a renewal cycle. In parallel, sales in Middle East & Africa were fueled by the execution of the Saudi Arabia terminalization project won in 2020;

  • In Asia-Pacific, the situation was more contrasted, presenting a strong resilience in Australia with good level of business for main customer banks, in particular translating into a solid momentum with ANZ and its fleet renewal currently ongoing, while in the rest of the region, the activity continued to suffer, notably of Covid-19 consequences, in particular in China, in India and in South East Asia.

  • Sales in Latin America showed an overall resilient performance driven by a continuing very strong momentum in Central America and Argentina with market share gains and equipment phase ongoing in these countries and the successful execution of the pipeline of projects, allowing broadly offsetting Brazil normalization after a peak in 2019 activity.

  • Finally, North America continued to benefit from the EMV renewal cycle despite delays in customers deployment of terminals related to the Covid-19 situation.

Over the fourth quarter of the year, the Business Line continued to implement the transformation roadmap from a “Hardware + Service” to “Payment-Platform-as-a-Service” business model. This transformation will accelerate thanks to the contribution of the developers teams of Easypymtz acquired in Q4.

In term of profitability, Terminals, Solutions & Services delivered a strong performance with an OMDA reaching € 89 million, representing 32.4% of revenue, driven by a favorable geographical mix as well as the continuing benefits from the recovery plan launched in H2 2019 (stricter pricing discipline and improved purchase performance), and the continuing effect of the Covid-19 cost control program launched in 2020.

Mobility & e-Transactional Services

Revenue in Mobility & e-Transactional Services reached € 325 million, decreasing organically by -3.1%, with contrasted evolution between each of the three divisions:

Revenue in e-Consumer & Mobility grew strongly at a double digit percentage rate, thanks to the continuous increase of Contact contracts for secured omnichannel consumer interaction solutions, as well as to digital health solutions, notably in Germany.

This strong performance could not completely offset the revenue decline in Trusted Digitization, due to a lower project activity as some contracts are reaching the run phase, as well as in e-Ticketing, severely impacted by the health situation in the United Kingdom and in Latin America, with a massive decrease of rail and bus ticketing volumes and much less projects.

During the fourth quarter, The Agence de Services et de Paiement (ASP), a public institution in France has renewed Worldline in the building and operating of a scalable platform supporting the public program to deliver energy vouchers to 5 million precarious citizens in France during a 5 weeks campaign to pay bills.

Mobility & e-Transactional Services’ OMDA reached € 48 million, representing 14.7% of revenue. The Business Line has been able to compensate a large part of the profitability decrease related to revenue decline thanks to cost optimization plan addressing both fixed and variable costs.

Significant progress of the integration of Ingenico

Thanks to Worldline’s Day-one readiness proven methodology, and the full mobilization of teams on both sides on preliminary activities to prepare integration, the Group has been operating as a single company since November 2nd, enabling the timely implementation of the detailed integration and synergy plans.

The Group has quickly started the team integration and business transformation of its Merchants Services activities, through a new go-to-market organization with transversal products (acquiring, acceptance and digital services) to provide best-in class solutions to merchants. In parallel, several projects of technological platforms convergence have been initiated.

All these workstreams should provide the first tangible benefits on OMDA, with a positive € 66 million expected in 2021 from the de-duplication of development projects, the massification of purchasing spent or the transformation of support and back-office functions.

Ongoing payment terminals business strategic review

The Group launched the strategic review of its payment terminal business; Terminals, Solutions & Services (TSS) as soon as the closing of the acquisition on October 28, 2020, as planned. This process is well engaged and Worldline intends to have completed it in 2021.

2021 revenue trend scenario

2021 objectives are based on the following hypothesis for 2021:

  • In H1 2021:

    • Severe governmental domestic restrictions during Q1, including lockdowns of non-essential merchants, curfew, and borders’ restrictions in most of our key countries;

    • Partial relief of restrictions in the course of H1 2021, in particular in Q2 2021;

    • No significant intra-European travels;

    • No intercontinental travels;

    • Ramping-up of vaccination campaigns.

  • In H2 2021:

    • Ease of domestic restrictions with end of lockdowns for non-essential merchants, end of curfews and borders’ restrictions;

    • Intra-European travels fully allowed and progressive return to normal level of travel flows;

    • No significant intercontinental travel.

These assumptions should lead to the following revenue trends:

  • Flat to slightly negative organic growth in H1 2021;

  • Circa double-digit organic growth in H2 2021.

2021 objectives

2021 objectives are based on revenue trend scenario described above and are the following:

  • Revenue organic growth: At least mid-single digit

  • OMDA margin: c. +200 basis points improvement vs. proforma 2020 OMDA margin of 23.9%

  • Free cash flow: c. 50% OMDA conversion rate

Appendices

Q4 2020 revenue by Global Business Line

In € million

Q4 2020

Q4 2019*

Organic change

Merchant Services

492

523

-6.1%

Financial Services

237

247

-4.0%

Mobility & e-Transactional Services

83

87

-4.5%

Terminals, Solutions & Services

274

279

-1.9%

Worldline

1,086

1,137

-4.5%

* at constant scope and exchange rates

Reconciliation of FY 2019 statutory revenue and OMDA with FY 2019 revenue and OMDA at constant scope and exchange rates

For the analysis of the Group’s performance, revenue and Operating Margin before Depreciation and Amortization (OMDA) for 2020 are compared with 2019 revenue and OMDA at constant scope and exchange rates. Reconciliation between the FY 2019 reported revenue and OMDA and the FY 2019 revenue and OMDA at constant scope and foreign exchange rates is presented below (per Global Business Lines):

Revenue

OMDA

In € million

FY 2019

Scope effects**

Exchange rates effect

FY 2019*

FY 2019

Scope effects**

Exchange rates effect

FY 2019*

Merchant Services

1,119

229

0

1,349

265

49

1

316

Financial Services

918

-1

1

918

307

0

1

308

Terminals, Solutions & Services

0

302

-23

279

0

74

-2

72

Mobility & e-Transactional Services

344

0

-9

335

53

0

-1

52

Corporate costs

-24

-8

0

-31

Worldline

2,382

531

-31

2,881

602

116

-2

716

* at constant scope and December 2020 exchange rates
** at December 2019 exchange rates

Over the year, compared to FY 2019, the Euro appreciation versus most of international currencies was partly offset by its depreciation versus the Swiss Franc. Scope effects are related to the consolidation of Ingenico from November 1st, 2020, and to a lesser extent of GoPay from September 1st, 2020.

Conference call

The Management of Worldline invites you to an international conference call on the Group 2020 results, on Wednesday, February 24, 2021 at 8:00 am (CET – Paris).

You can join the webcast of the conference:

United Kingdom (Local):

+44 (0) 844 481 9752

France (Local):

+33 (0)1 70 70 07 81

Germany (Local):

+49 (0)69 22 22 26 25

United States, New York (Local):

+1-646-741-3167

Confirmation Code: 6667035

After the conference, a replay of the webcast will be available on worldline.com, in the Investors section.

Forthcoming events

  • April 21, 2021 Q1 2021 revenue

  • May 20, 2021 Annual General Shareholders’ Meeting

  • July 27, 2021 H1 2021 results

  • October 19, 2021 Q3 2021 revenue

Contacts

Investor Relations

Laurent Marie
+33 7 84 50 18 90
laurent.marie@ingenico.com

Benoit d’Amécourt
+33 6 75 51 41 47
benoit.damecourt@worldline.com

Communication

Sandrine van der Ghinst
+32 499 585 380
sandrine.vanderghinst@worldline.com

Hélène Carlander
+33 7 72 25 96 04
helene.carlander@worldline.com

About Worldline
Worldline [Euronext: WLN] is the European leader in the payments and transactional services industry and #4 player worldwide. With its global reach and its commitment to innovation, Worldline is the technology partner of choice for merchants, banks and third-party acquirers as well as public transport operators, government agencies and industrial companies in all sectors. Powered by over 20,000 employees in more than 50 countries, Worldline provides its clients with sustainable, trusted and secure solutions across the payment value chain, fostering their business growth wherever they are. Services offered by Worldline in the areas of Merchant Services; Terminals, Solutions & Services; Financial Services and Mobility & e-Transactional Services include domestic and cross-border commercial acquiring, both in-store and online, highly-secure payment transaction processing, a broad portfolio of payment terminals as well as e-ticketing and digital services in the industrial environment. In 2020 Worldline generated a proforma revenue of 4.8 billion euros. worldline.com

Worldline’s corporate purpose (“raison d’être”) is to design and operate leading digital payment and transactional solutions that enable sustainable economic growth and reinforce trust and security in our societies. Worldline makes them environmentally friendly, widely accessible, and supports social transformation.


Disclaimer

This document contains forward-looking statements that involve risks and uncertainties, including references, concerning the Group's expected growth and profitability in the future which may significantly impact the expected performance indicated in the forward-looking statements. These risks and uncertainties are linked to factors out of the control of the Company and not precisely estimated, such as market conditions or competitors’ behaviors. Any forward-looking statements made in this document are statements about Worldline’s beliefs and expectations and should be evaluated as such. Forward-looking statements include statements that may relate to Worldline’s plans, objectives, strategies, goals, future events, future revenues or synergies, or performance, and other information that is not historical information. Actual events or results may differ from those described in this document due to a number of risks and uncertainties that are described within the 2019 Universal Registration Document filed with the Autorité des marchés financiers (AMF) on April 29, 2020 under the filling number: D.20-0411 and its Amendment filed with the AMF on August 6, 2020 under the filling number: D.20-0411-A01.

Revenue organic growth and Operating Margin before Depreciation and Amortization (OMDA) improvement are presented at constant scope and exchange rate. OMDA is presented as defined in the 2019 Universal Registration Document. All amounts are presented in € million without decimal. This may in certain circumstances lead to non-material differences between the sum of the figures and the subtotals that appear in the tables. 2021 objectives are expressed at constant scope and exchange rates and according to Group’s accounting standards.

Worldline does not undertake, and specifically disclaims, any obligation or responsibility to update or amend any of the information above except as otherwise required by law.

This document is disseminated for information purposes only and does not constitute an offer to purchase, or a solicitation of an offer to sell, any securities in the United States or any other jurisdiction. Securities may not be offered or sold in the United States unless they have been registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) or the securities laws of any U.S. state, or are exempt from registration. The securities that may be offered in any transaction have not been and will not be registered under the U.S. Securities Act or the securities laws of any U.S. state and Worldline does not intend to make a public offering of any such securities in the United States.

The audit procedures have been completed and the auditors' report on the financial statements is in the process of being issued



1 Excluding Ingenico transaction acquisition costs of € 54 million


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