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Press release

Paysafe Group plc: Unaudited Interim Results for the 6 months ended 30 June 2017

Paysafe delivers robust first-half results, as growth normalises     

LONDON (8 August 2017) - Paysafe Group plc (LSE: PAYS, "Paysafe" or the "Group"), a leading global provider of payment solutions, announces its unaudited interim results for the six months ended 30 June 2017.

 Financial highlights

$m

H1 2017

H1 2016

Revenue

538.7

486.7

Year-on-year revenue growth

11%

118%

Organic constant currency year‐on‐year revenue growth1

12%

20%

Adjusted EBITDA2

169.2

144.2

Adjusted EBITDA margin

31.4%

29.6%

Statutory operating profit

99.6

89.7

Adjusted profit after tax3

124.0

101.4

Statutory profit after tax

73.7

64.5

Adjusted fully diluted EPS ($)3

0.25

0.20

Statutory fully diluted EPS ($)

0.15

0.13

Adjusted cash conversion before payments working capital4

77%

78%

Adjusted cash conversion after payments working capital4

98%

74%

$m

30 Jun 17

31 Dec 16

Net debt5

259.9

279.8

Net debt to LTM adjusted EBITDA6

0.8x

0.9x


-          12% organic constant currency revenue growth in H1 2017 (11% statutory revenue growth), representing a return to low double-digit growth compared with the exceptional performance seen in 2016

-          31.4% adjusted EBITDA margin in H1 2017, compared to 30.5% in H2 2016 and 29.6% in H1 2016, the increase driven by improved gross margins in the Payment Processing and Digital Wallets divisions

-          Capitalised development cost was $16.9m, or 3.1% of sales, vs $13.0m (2.7% of sales) in H1 2016 and $14.5m (2.8% of sales) in H2 2016, driven by work on core platform development

-          The adjusted tax rate was 12.3% in H1 2017, compared to 11.1% in H1 2016 and 12.7% in H2 2016 (statutory tax rate H1 17 17.2%, H1 16 13.4%, H2 16 17.1%). The adjusted rate is lower than anticipated driven by the short-term effect of a tax ruling on the transfer of intellectual property from the Isle of Man to the UK. Excluding this, the adjusted tax rate would have been approximately 14%

-          Adjusted cash conversion remained strong at 77%/98% before/after payments working capital ("PWC") compared to 122%/97% in H2 2016

-          Leverage ratio, expressed as net debt to LTM adjusted EBITDA7 was 0.8x, compared to 0.9x at 31 December 2016. The reduction in leverage would have been more pronounced but for the impact of the translation of euro denominated debt into dollar reporting currency, the share buyback programme, and unusually high cash tax paid as described in the operating review

-          The largest customer represented 19% of H1 2017 group revenue, compared to 20% in H1 2016

Operational highlights

·       On 21 July 2017 Paysafe announced the acquisition of Merchants' Choice Payment Solutions ("MCPS") for $470m in an all-cash deal

·       Headcount increased by 9% to 2,299 from 2,116 at 31 December 2016, driven by Hyderabad, India (platform development) and Sofia, Bulgaria (operations, compliance, risk)

·       The Prepaid division launched "paysafecard direct", a QR code-based e-commerce platform enabling consumers to complete online purchases with a cash payment

·       Paysafe teamed up with Google to be one of the first payment service providers to launch in-app Android Pay capabilities to Paysafe merchants in Canada

·       Spain’s state-owned postal company Correos chose Paysafe as a recommended payment provider for businesses using Comandia, its e-commerce platform

·       On 1 August 2017 Paysafe Group plc migrated its tax residence from the Isle of Man to the UK

Additional H1 2017 financial disclosure

In H1 2017, on a pro-forma basis assuming MCPS had been acquired for the period financed by $380m of debt, Paysafe Group revenue would have increased by $167m, adjusted EBITDA by $25m, adjusted EBIT by $18m, adjusted profit before tax by $9m, and adjusted profit after tax by $6m, representing approximately 5% of Paysafe adjusted profit after tax. MCPS consolidated revenue in H1 2017 increased 3% year-on-year. Paysafe continues to anticipate $7.5m per annum of cost synergies to be achieved by the end of 2018.

In light of the recommended offer for Paysafe by Blackstone and CVC and their entry into an agreement to sell the Asia Gateway business, Paysafe is publishing additional financial information on the Asia Gateway business. In H1 2017, the Asia Gateway revenue was $76m, up 20% year-on-year, adjusted EBITDA $30m, adjusted EBIT $29m and adjusted profit after tax $29m, representing approximately 23% of Paysafe adjusted profit after tax.

Outlook

Given the restrictions placed on forward-looking statements as a result of the recommended offer by Blackstone and CVC for Paysafe, it is not appropriate to provide the usual full-year 2017 guidance. For this reason, there will not be a conference call for analysts and investors. The usual finance slides on the H1 2017 results are available at https://www.paysafe.com/investors/results-presentations/

Commenting on the results, Paysafe Chairman Dennis Jones said:

“After exceptional trading in 2016, Paysafe Group has returned to a more sustainable level of low-double-digit revenue growth in the first half of 2017. This reflects our increasingly diversified set of businesses as the management team continues to build a stable and robust global payments platform. To that end, we were pleased to announce the acquisition of US-based MCPS in July, which strengthens our processing business, increases Paysafe Group’s scale in North American acquiring and helps us to continue re-balancing our portfolio away from online gambling.”

About Paysafe

Paysafe is a leading global provider of end to end payment solutions. Our core purpose is to enable businesses and consumers to connect and transact seamlessly through our industry-leading capabilities in payment processing, digital wallets and online cash solutions. Delivered through an integrated platform, our solutions are geared towards mobile-initiated transactions, real-time analytics and the convergence between bricks-and-mortar and online payments. With over 20 years of online payment experience, a combined transactional volume of US$48 billion in 2016 and over 2,300 staff located in 12 global locations, Paysafe connects businesses and consumers across 200 payment types in over 40 currencies around the world. Paysafe Group plc shares trade on the London Stock Exchange under the symbol (PAYS.L). For more information, visit: www.paysafe.com.

This announcement contains inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014.

The person who arranged for the release of this announcement on behalf of Paysafe was Andrew Griffin, SVP Market Intelligence and Investor Relations at Paysafe.

 

Read the full RNS.



For further information, contact:

Paysafe Group plc

Andrew Griffin, SVP Market Intelligence and Investor Relations

JJ Aiston, Investor Relations Manager

+44 (0) 20 3826 9854 / investorrelations@paysafe.com

Brunswick Group LLP

Brian Buckley / Rowan Brown

+44 (0) 20 7404 5959 / paysafe@brunswickgroup.com

Certain statements in this announcement are forward-looking statements, for example, statements including the words "anticipate", "expects", "believe" or other similar words. These forward-looking statements speak only as at the date of this announcement. These statements concern, or may affect, future matters and include matters that are opinions. Such statements are based on current expectations and beliefs and, by their nature, are subject to a number of known and unknown risks and uncertainties that could cause actual results and outcomes to differ materially from any expected future results or performance expressed or implied by the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements. The information and opinions expressed in this announcement are subject to change without notice and, except as required by law, neither Paysafe Group plc nor any other person assumes any responsibility or obligation to update publicly or review any of the forward-looking statements contained within this announcement, regardless of whether those statements are affected as a result of new information, future events or otherwise.

Please note that due to rounding, numbers presented throughout this document may not add up precisely to the totals provided. Percentage changes are calculated on unrounded figures.

[1] Organic constant currency year-on-year revenue growth is an alternative performance measure that the Group uses to communicate the revenue performance of the Group excluding the impact of acquisitions and currency movements. Further information on our alternative performance measures, including definitions, explanations and reconciliations, is included at the end of this results release.

2Adjusted EBITDA is an alternative performance defined as results of operating activities before depreciation and amortisation, share-based payment expense, fair value gains and losses on contingent and share consideration payable, foreign exchange gains and losses, and gains and losses on disposals of assets. It is also adjusted for exceptional items which are defined as items of income and expense of such size, nature or incidence that, in the view of management, should be disclosed to explain the performance of the Group. Adjusted EBIT is adjusted EBITDA less depreciation and amortisation, excluding amortisation of acquired intangible assets.

3Adjusted profit after tax is defined as reported profit after tax excluding share-based payment expense, fair value gains and losses on contingent and share consideration payable, foreign exchange gains and losses, losses on disposals of assets and exceptional items as explained within the Adjusted EBITDA footnote above. It also excludes amortisation of acquired intangibles, and the tax effect of the adjustments set out above. No adjustments are made to reported fully diluted weighted average number of shares to calculate adjusted fully diluted earnings per share (EPS).

4Adjusted cash conversion is an alternative performance measure the Group has adopted to demonstrate our ability to convert our EBIT growth into cash that can be reinvested in the business through investment, returned to shareholders, or used to support our strategic pillar of bold M&A.

5Reported net debt includes long-term debt, the current portion thereof, deferred financing fees, deferred cash consideration payable and contingent cash consideration payable, less cash and cash equivalents.

6Net debt and net debt to LTM adjusted EBITDA are alternative performance measures which management uses to give investors and stakeholders an indication of the debt capacity of the Group.

7LTM (last-12-months) adjusted EBITDA.

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