2015 annual results 16 th March 2016
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Strong finish to a transformational year Joel Leonoff President & Chief Executive Officer
Highlights 2015 revenue $613m, up 68% reported, 13% pro-forma constant currency Adjusted EBITDA $153m, 25% margin Transformative and accretive acquisition of Skrill Integration ahead of pace Reducing concentration of major merchant Asia Gateway revenue continued throughout 2015 Rebranded to Paysafe, moved to London Stock Exchange Main Market, FTSE 250 inclusion from March 2016 4
Paysafe today: delivering end-to-end payment solutions 1 Enabling merchants to accept online and alternative payments securely at scale 2 End-to-end solutions powered by proprietary technology, sophisticated risk & fraud management tools, back office management and analytics 3 Supported by payolution, Acquiring and mobile developer and integrator FANS 1 Skrill and NETELLER wallet offerings provide merchants with more than 100 payment options and 40 currencies 2 Market leader in online gambling wallets; remittance services recently initiated as part of core wallets offering 3 Supported by our Net+ prepaid MasterCard. Our Card Solutions business is authorised to issue e-money in the EEA 1 paysafecard provides cash vouchers, enabling consumers to pay online quickly, easily & safely without the need for a bank account or payment card 2 Distribution network now above 500,000 outlets; ongoing drive into new markets 3 More than 2.5m active users per month. Sold $2.7bn of cash vouchers in 2015 that were converted to digital cash 5
Building a platform for future success Paysafe has delivered another strong performance amid a rapidly-evolving payments industry Ongoing focus on innovation with an emphasis on emerging technologies, particularly mobile We will pursue accretive acquisitions aligned to our strategic priorities We will continue to invest in world-class technology, product, risk and compliance capabilities Positive momentum seen in H2 2015 has continued into the early part of 2016 to date We are well positioned to consolidate our position as a proven and trusted innovator in payments 6
2015 annual results Brian McArthur-Muscroft Chief Financial Officer
2015 financial highlights $m H2 14 H2 15 2014 2015 2015 PRO FORMA Revenue 205.9 390.4 365.0 613.4 830 Growth YoY% 53% 90% 44% 68% 4% Pro-forma CC YoY% 14% 14% 18% 13% 13% Adj. EBITDA 47.1 102.7 86.1 152.6 205 Adj. EBITDA margin 22.9% 26.3% 23.6% 24.9% 25% Cash conversion before Payments Working Capital 110% 89% 102% 92% Net debt 22.9 431.3 431.3 Net debt / pro-forma adj. EBITDA 2.1x Skrill Group acquired on August 10, 2015 Adj EBITDA excludes restructuring and acquisition related expenses, share based payments and other one offs Cash conversion = adj. free cash flow / adj. EBIT. Pro-forma figures include all acquisitions in all periods CC = constant currency 8
Group reported and pro-forma revenue $ million Proforma Reported 390 118 135 159 206 223 H1 13 H2 13 H1 14 H2 14 H1 15 H2 15 2014 2015 Revenue growth YoY % 50% 35% 34% 53% 40% 90% 44% 68% Pro-forma growth CC* 33% 32% 23% 14% 12% 14% 18% 13% Pro-forma CC excl. MMAG* 29% 26% 18% 18% 18% 15% 18% 16% 68% FY revenue growth 16% FY pro-forma constant currency ex MMAG* Pro-forma figures include all acquisitions in all periods * CC = constant currency, MMAG =major merchant Asia Gateway 9
Fee revenue by geography 45% 38% 26% 61% Asia / ROW 29% N. America Europe 16% 35% 43% 45% 23% 20% 19% H1 14 H2 14 H1 15 H2 15 pro-forma Fee revenue excludes revenue from investment income; i.e. interest income 10
H2 2015 pro-forma fee revenue Division Geography Vertical PREPAID 23% PAYMENT PROCESSING 48% EUROPE 45% ONLINE GAMBLING 44% N. AMERICA 29% DIGITAL WALLETS 29% ASIA / ROW 26% E- COMMERCE & OTHER 46% GAMING 10% Fee revenue excludes revenue from investment income; i.e. interest income 11
Payment Processing $ million 300 37% 37% 250 Processing 39% 39% 37% 37% Proforma revenue 200 150 Reported revenue 100 202 157 173 Pro-forma 50 90 103 117 gross margin 0 H1 13 H2 13 H1 14 H2 14 H1 15 H2 15 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2014 2015 Reported revenue YoY % 45% 34% 31% 53% 47% 28% 42% 37% Pro-forma growth CC* 63% 46% 29% 14% 7% 25% 21% 16% Pro-forma CC excl. MMAG* 60% 34% 18% 24% 24% 33% 21% 29% 29% pro-forma FY 2015 constant currency growth excl MMAG* 37% FY 2015 gross margin, mix driven decline CC = constant currency MMAG =major merchant Asia Gateway 12
Digital Wallets $ million Proforma revenue Reported revenue 150 100 50 Pro forma gross margin 0 71% 70% 72% 73% 72% 74% 28 32 41 48 50 109 H1 13 H2 13 H1 14 H2 14 H1 15 H2 15 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% 2014 2015 Reported revenue YoY % 74% 39% 46% 53% 20% 127% 50% 78% Pro-forma growth CC* 19% 18% 21% 24% 20% 14% 23% 17% 17% Pro-forma 2015 constant currency revenue growth 73% Pro-forma 2015 gross margin (restated to Skrill Wallet accounting) *CC = constant currency 13
Prepaid $ million 150 Proforma revenue 100 50% 51% 50% 50% 50% 51% 50% 40% Reported revenue 50 Pro forma gross margin 76 30% 20% 10% 0 H1 13 H2 13 H1 14 H2 14 H1 15 H2 15 0% 2014 2015 Pro-forma CC* growth 17% 29% 16% 8% 12% -2% 12% 5% 5% 2015 pro-forma CC revenue growth Pro-forma $ figures impacted by weak euro revenue base Greece and Ukash in H2 2015 *CC = constant currency 14
Paysafe reported divisional summary H2 2015 Fee Revenue Prepaid 20% Digital Wallets 28% Payment Processing 52% Gross profit Prepaid 20% Digital Wallets 41% Payment Processing 39% $m 2014 2015 H1 15 H2 15 Revenue Payment Processing 274.7 375.1 173.0 202.0 Digital Wallets 89.6 159.1 49.8 109.4 Prepaid 76.4 76.4 Interest income 0.7 2.8 0.2 2.5 Total 365.0 613.4 223.0 390.4 Gross profit Payment Processing 112.5 138.5 64.2 74.3 Digital Wallets 64.5 116.0 36.4 79.6 Prepaid 39.2 39.2 Interest income 0.7 2.8 0.2 2.5 Total 177.7 296.5 100.8 195.6 Gross margin Payment Processing 40.9% 36.9% 37.1% 36.8% Digital Wallets 72.0% 72.9% 73.1% 72.8% Prepaid 51.3% 51.3% Interest income 100.0% 100.0% 100.0% 100.0% Total 48.7% 48.3% 45.2% 50.1% 15
Adjusted income statement $m H1 15 % rev % YoY H2 15 % rev % YoY 2014 % rev % YoY 2015 % rev % YoY Revenue 223.0 100.0% 40% 390.4 100.0% 90% 365.0 100.0% 44% 613.4 100.0% 68% Gross profit 100.9 45.2% 25% 195.6 50.1% 102% 177.7 48.7% 42% 296.5 48.3% 67% Salaries excl SBP 27.6 12.4% 27% 48.1 12.3% 94% 46.5 12.7% 27% 75.7 12.3% 63% Other administrative 23.4 10.5% 17% 44.8 11.5% 78% 45.1 12.4% 24% 68.2 11.1% 51% Adj opex 51.0 22.9% 22% 92.9 23.8% 86% 91.6 25.1% 26% 143.9 23.5% 57% Adj EBITDA 49.9 22.4% 28% 102.7 26.3% 118% 86.1 23.6% 65% 152.6 24.9% 77% Adj D&A 6.6 3.0% 15% 12.8 3.3% 110% 11.8 3.2% 15% 19.4 3.2% 65% Adj EBIT 43.3 19.4% 30% 89.9 23.0% 119% 74.3 20.4% 77% 133.2 21.7% 79% Finance exp. 2.7 1.2% - 11.7 3.0% - 2.0 0.6% - 14.4 2.4% - Adj profit before tax 40.6 18.2% 22% 78.2 20.0% 101% 72.2 19.8% 76% 118.7 19.4% 64% Adj tax 3.3 1.5% - 6.7 1.7% - 4.2 1.2% - 10.0 1.6% - Adj tax rate 8.0% - - 8.6% - - 5.8% - - 8.5% - - Adj profit after tax 37.3 16.7% 19% 71.4 18.3% 95% 68.0 18.6% 72.2% 108.7 17.7% 60% Adjusted Av FD shares m 307.5-15% 425.2-38% Adj FD EPS 0.22-43% 0.26-18% Adjusted numbers exclude exceptional items including acquisition related costs, restructuring, acquired intangible amortisation, share based payments, gains and losses on acquisition and disposal. 2015 EPS is negatively impacted by the one time effect of the 272m rights issue on May 1, 2015 vs consolidation of Skrill Group earnings from August 10, 2015. 16
Capital spending $m H1 13 H2 13 H1 14 H2 14 H1 15 H2 15 2014 2015 PP&E 1.0 3.6 2.9 0.4 3.7 2.0 3.3 5.7 % sales 0.9% 2.7% 1.8% 0.2% 1.7% 0.5% 0.9% 0.9% Capitalisation of development 2.0 2.2 2.5 2.9 3.2 9.7 5.4 12.9 % sales 1.7% 1.6% 1.5% 1.4% 1.5% 2.5% 1.5% 2.1% Other intangible 2.3 2.4 0.0 2.4 0.0 5.1 2.4 5.1 % sales 1.9% 1.8% 0.0% 1.2% 0.0% 1.3% 0.7% 0.8% Capex 5.3 8.3 5.4 5.7 7.0 16.7 11.1 23.7 % sales 4.4% 6.2% 3.4% 2.8% 3.2% 4.3% 3.0% 3.9% Depreciation 1.9 2.3 2.5 3.0 1.4 1.8 5.5 3.2 Amortisation of cap. dev. 1.8 2.7 2.5 2.7 3.0 8.2 5.2 11.3 Other amort. excl PPA 1.1 0.4 0.6 0.4 2.2 2.8 1.0 5.0 Adj. depreciation & amortisation 4.8 5.4 5.6 6.1 6.6 12.8 11.8 19.4 Purchase price amortisation (PPA) 1.7 1.6 1.6 7.6 8.2 23.7 9.2 31.9 Depreciation & amortisation 6.5 7.0 7.2 13.7 14.8 36.5 20.9 51.3 17
Summarised balance sheet payments working capital $m H1 13 H2 13 H1 14 H2 14 H1 15 H2 15 Non current assets 66.3 65.6 63.5 294.8 298.0 1,569.3 Cash & cash equivalents excl. rights issue 84.1 129.3 139.8 109.9 113.3 117.9 Rights issue cash 685.3 Total cash & cash equivalents 84.1 129.3 139.8 109.9 798.6 117.9 Restricted cash 4.3 6.2 4.7 8.8 8.4 29.1 Cash held as reserves 7.7 7.2 8.1 8.8 8.9 14.5 Settlement assets 39.2 32.7 51.8 29.8 40.1 51.9 Trade & other receivables 6.4 4.8 5.3 14.7 17.1 31.2 Other current assets 3.0 4.4 5.0 5.3 4.8 14.6 Current assets 144.8 184.5 214.7 177.3 877.8 259.0 Merchant processing liability 60.4 76.8 76.6 30.6 35.5 16.8 Trade payables 22.9 26.4 25.7 39.1 41.2 88.2 Current debt 0.2 0.6 0.4 20.6 20.3 30.9 Forward exchange contract (Skrill acquistion) 28.9 Other current liabilties 13.7 13.8 3.4 23.4 26.7 35.1 Current liabilities 97.3 117.6 106.1 113.6 152.6 170.9 Long term debt 0.8 0.8 0.7 107.0 97.0 493.3 Other long-term liabilities 0.0 0.0 0.0 43.2 47.2 89.5 Net assets 113.0 131.6 171.4 208.3 879.0 1,074.6 Shareholders funds 113.0 131.6 171.4 208.3 879.0 1,074.6 18
Net debt 3.5x covenant net debt to EBITDA at time of acquisition announcement, reduced to 2.1x at year end EUR500m debt issuance completed and drawn on 10 August 2015 Main covenants are total leverage and fixed charge cover Option available to pay down all or part of B tranche from February 2016 BB/BB+ company/ instrument ratings obtained * Deferred financing fees of EUR21.4m amortised through income statement over term of loan, and credited to balance sheet debt over that time. $m 2015 Current portion of LT debt and capital lease 30.9 LT debt and capital lease 493.3 Deferred financing fees* 21.6 Deferred cash consideration 3.3 Total debt 549.2 Cash & cash equivalents 117.9 Net debt 431.3 Facility A EUR280m Amortise over 5 years 3.00% margin reducing to 2.75% when adjusted leverage is less than or equal to 3.00:1 Facility B EUR220m Repay in 7 years, option to repay without penalty from February 2016 4.00% margin reducing to 3.75% when adjusted leverage is less than or equal to 3.00:1 19
Summary IFRS cash flow statement $m H1 13 H2 13 H1 14 H2 14 H1 15 H2 15 Profit after tax 14.4 17.1 27.5 30.2 2.4 5.0 Tax 1.1 0.2 0.0 1.3 2.2 2.2 Profit before tax 15.5 17.3 27.5 31.5 4.6 7.2 Depreciation and amortisation 6.5 7.0 7.4 13.7 14.8 36.5 FX, exceptional gains and losses 3.8 3.3 4.0 2.8 22.8 29.6 Finance cost 0.6 0.3 0.0 2.0 2.7 9.5 Op CF before movements in working capital 26.4 27.8 38.9 50.0 45.0 82.8 Working capital cash flow -0.2 4.0-3.0 3.8 0.2-6.3 Op CF before payments working capital 26.1 31.8 35.9 53.8 45.2 76.5 Payments working capital cash flow 23.1 19.1-18.7-28.1-4.2-37.7 Tax paid -0.9-0.3-0.9-0.6-2.1-2.8 Cash flows from operating activities 48.3 50.6 16.3 25.0 38.9 36.0 Purchase of PP&E and intangible assets -5.3-8.3-5.4-5.7-7.0-16.7 Finance costs 0.0 0.0 0.0-1.9-2.0-6.4 Free cash flow* 43.0 42.3 10.9 17.4 29.9 12.9 Free cash flow excl payments w/c* 20.0 23.2 29.6 45.6 34.1 50.6 * Free cash flow (non IFRS) = operating cash flow after working capital movements, interest and capex. 20
Cash conversion $m H1 13 H2 13 H1 14 H2 14 H1 15 H2 15 2014 2015 Adj EBIT 20.5 21.5 33.2 41.0 43.2 89.9 74.3 133.2 Adj depreciation & amortisation 4.8 5.4 5.8 6.1 6.7 12.8 11.8 19.4 Adj EBITDA 25.3 26.9 39.0 47.1 49.9 102.7 86.1 152.6 Working capital movement 2-0.2 4.0-3.0 3.8 0.2-6.3 0.8-6.0 Less restructuring cost not yet paid 3 0.0 0.0 0.0 0.0-0.6 0.0 0.0-0.6 Purchase of PP&E and intangible assets 2-5.3-8.3-5.4-5.7-7.0-16.7-11.1-23.7 Adj free cash flow before payments w/capital 1 19.8 22.6 30.6 45.1 42.4 79.7 75.7 122.2 Cash conversion before payments working capital 1 97% 105% 92% 110% 98% 89% 102% 92% Payments working capital 2 23.1 19.1-18.7-28.1-4.2-37.7-46.8-41.9 Adj free cash flow 1 42.9 41.7 12.0 17.0 38.2 42.1 29.0 80.3 Cash conversion 1 209% 194% 36% 41% 89% 47% 39% 60% (1) Cash conversion measured as % of adj. EBIT. Adjusted free cash flow therefore excludes one off items, interest costs, and tax. (2) Figure from IFRS cash flow statement (3) adjustment to exclude restructuring cost accrual movement from IFRS working capital. H2 2014 cash conversion figure updated vs H1 15 results deck for FX adjustment. 21
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Appendix
Enhanced disclosure: pro-forma division transaction volume $ billion H1 14 H2 14 H1 15 H2 15 Payment Processing 8.3 8.3 8.2 8.9 Rev / volume 2.0% 2.0% 2.2% 2.3% Digital Wallets 9.1 9.8 9.7 10.2 Rev / volume 1.2% 1.2% 1.2% 1.2% Prepaid 1.5 1.5 1.4 1.3 Rev / volume 7.8% 7.6% 7.7% 7.3% Transaction volume definition: Pro-forma dollar (not constant currency) Payment Processing: all transactions, chargebacks, credits Digital Wallets: wallet load and withdrawal, member-merchant and member-member transactions Prepaid: card based transactions 24
IFRS profit after tax reconciliation $m H1 13 H2 13 H1 14 H2 14 H1 15 H2 15 2014 2015 Profit after tax 14.4 17.1 27.5 30.2 2.4 5.0 57.7 7.4 Tax 1.1 0.2 0.0 1.3 2.2 2.2 1.3 4.4 Profit before tax 15.5 17.3 27.5 31.5 4.6 7.2 59.0 11.8 Foreign exchange (gain) / loss -0.2-0.7-0.1 3.1 5.8 3.9 3.0 9.7 Acquisition, restructuring and other exceptional costs 0.7 0.7 1.5 10.1 16.5 21.3 11.6 37.7 Share based payments 2.2 2.3 2.8 5.5 7.1 7.0 8.3 14.1 FV gains on share consideration payable 0.0 0.0 0.0-18.8-1.6 15.2-18.8 13.6 Purchase price amortisation (PPA) 1.7 1.6 1.6 7.6 8.2 23.7 9.2 31.9 Adj. profit before tax 19.9 21.1 33.3 39.0 40.6 78.2 72.3 118.7 Adjusted tax 0.8 0.7 1.9 2.3 3.3 6.7 4.2 10.0 Adj. profit after tax 19.1 20.4 31.4 36.6 37.3 71.4 68.0 108.7 25