WORLDLINE SA : 2016 annual results 2016 ann

2016 annual results

All objectives reached in the upper end of the guidance brackets

Revenue: € 1,309.2 million, up +3.5% organically

OMDA: € 258.7 million, 19.8% of revenue and up +90 bp Free cash flow: € 140.4 million, +9.3%

Solid start of the integration of Equens, Paysquare and KB smartpay

2017 objective: further improvement in revenue, profitability and free cash flow, fully in line with the 2019 ambition

Bezons, February 21, 2017 - Worldline [Euronext: WLN], European leader in the payments and transactional services industry, today announced its 2016 annual results.

Gilles Grapinet, Worldline CEO said:

"Worldline met all its objectives for the year in the upper end of the guidance brackets. I am particularly pleased by the strong start of the integration and of the synergy plans related to the Equens, Paysquare and KB Smartpay transactions, which enables us to begin the year on very solid ground. 2017 inaugurates a new momentum for Worldline, with the materialization of multiple positive structural impacts, notably the planned return to a growth rate comprised between 5% and 7% as soon as H2 2017 and a massive contribution to profitability improvement of the synergy plans linked to the recent mergers and acquisitions. On these very solid achievements since our IPO, Worldline remains more than ever at the centre of the industrial consolidation of payments in Europe."

2016 key figures

The 2016 financial statements of the Group include the performance of Equens, Paysquare and KB Smartpay from the fourth quarter of 2016, following the successful closing of these transactions on September 30 ^th , 2016.

Taking this scope change into consideration, revenue and operating margin before depreciation and amortization (OMDA) for 2016 are compared with 2015 revenue and OMDA at constant scope and exchange rates, which is presented in Appendix.

Performance for 2016, on a like-for-like basis compared with 2015 for revenue and OMDA, was as follows:

At constant scope and exchange rates, Worldline revenue stood at € 1,309.2 million representing an organic growth of +3.5% compared with 2015. The Global Business Lines Merchant Services & Terminals and Financial Services contributed to the revenue growth, while Mobility & e-Transactional Services was impacted by the termination of two historical contracts. Excluding the impact of these contract terminations, the growth of the rest of the businesses was +8.4%.

The Group's OMDA improved by +90bp , reaching € 258.7 million or 19.8% of sales.

Net income Group share included the profit from the disposal of the Visa Europe share for € 51.2 million and stood at € 144.2 million . Net income group share adjusted for non-recurring expenses reached € 129.2 million , which compares to € 119.9 million in 2015.

Diluted adjusted earnings per share ^[1] was € 0.98 in 2016, compared with € 0.91 in 2015 (+7.7%).

Free cash flow in 2016 was € 140.4 million , at the high end of the € 135 million to € 140 million target set for the year and increasing by +9.3% compared with 2015.

Net cash reached € 398.9 million , increasing by €+75.6 million compared with the net cash position as at December 31, 2015. This net cash position includes the proceeds from the sale of Worldline's investment in Visa Europe for € 35.6 million and the net disbursement of € 111.0 million linked to the acquisition of Paysquare and KB Smartpay.

Performance per Global Business Lines

Merchant Services & Terminals

Merchant Services & Terminals , which represented 33.6% of Worldline's revenue in 2016, grew by +7.3% organically and reached € 439.6 million . This performance was mostly due to a double digit growth in Commercial Acquiring driven by higher transaction volumes, good operational performances, and positive price/volume mix effects in Benelux as well as by the good dynamism of the Group's business in India. Sales of Payment Terminals grew very satisfactorily as well, thanks to commercial successes in the Netherlands, in Germany and with resellers on international markets. Revenue in Private Label Cards & Loyalty Services was impacted by lower Digital Self Service kiosks sales in the UK.

The integration of Paysquare and KB Smartpay is well on track. The commercial offerings and processes are being harmonized and the processing activities are being progressively consolidated into a single platform, so as to deliver as soon as 2017 the expected revenue and cost synergies.

Merchant Services & Terminals' OMDA was up by +340 basis points in FY 2016 compared to 2015 and reached € 99.3 million or 22.6% of revenue. Key reasons for this increase were:

• Volume growth and positive price/volume mix effect in Commercial Acquiring for both BCMC and International brands transactions processed in Belgium;
• The very good dynamism of the Commercial Acquiring business in India thanks to the strong terminal base growth and to value added services (e.g. Dynamic Currency Conversion - DCC); and
• Margin recovery in the Merchant Network in the UK and productivity gain in Iberia in Private Label Cards.

Financial Services

Following the integration of Equens on October 1, 2016, the Global Business Line Financial Processing & Software Licensing was reorganized into four new divisions and changed its name to "Financial Services". The key changes related to:

• The reallocation of revenue previously reported as Payment Software Licensing into Issuing Processing or Acquiring Processing depending on the nature of the software licenced;
• The reclassification of revenue from the processing of SEPA direct debit and credit transfer transactions from Online Banking to a new business line " Account Payments"
• The renaming of Online banking to Digital banking

Representing 38.2% of Worldline revenue in 2016, Financial Services revenue reached € 500.0 million growing by +4.9% at constant scope and exchange rates. This performance was mainly driven by Acquiring processing activities, thanks to increased run revenue. Sales in Issuing processing increased as well, driven by Authentication and Fraud services, as well as by good volume growth on core card issuing activities. Digital banking benefited from the new contract signed with NS&I in the UK. In the Account Payments division, the solid volume growth of SEPA transactions, in particular on the iDEAL platform, was offset by less project activity compared with last year.

Integration activities at equensWorldline have been focused during the fourth quarter of 2016 on 18 work streams and showed a very satisfactory start, with already a few streams running ahead of schedule, fully securing the ambition to deliver c.€40 million of run-rate OMDA synergies in 2018, of which half in 2017.

Financial Services reached an OMDA of 26.1% ( € 130.6 million ), +160 basis points compared to 2015, mainly thanks to authorizations volume growth in the Acquiring business division and more authentication volumes in the Issuing business line, as well as some early synergies.

Mobility & e-Transactional Services

Revenue in Mobility & e-Transactional Services , which represented 28.2% of Worldline's revenue in 2016, was € 369.6 million , declining by -2.5%. As previously communicated, e-Government collection was impacted by the termination of both the automated traffic offence management system (the RADAR contract) in France in June 2016 and of the VOSA contract in the UK public sector, which occurred at end of Q3 2015. Excluding the negative comparison effect arising from those contract terminations, the growth rate of Mobility & e-Transactional Services was above +15%. This performance could be achieved thanks:

• To a double digit growth in e-Consumer & Mobility activities, with several new contracts signed and projects ramp-up mainly in France and in Germany;
• To very dynamic E-Ticketing activities, with increased project delivery with railways companies in the UK and higher activity in Latin America;
• To solid e-Government collection business activity, notably in healthcare and tax collection services in Latin America, and more project work delivered with French and European government agencies.

Mobility & e-Transactional Services OMDA reached € 51.5 million or 13.9% of revenue, decreasing by -240 basis points . The profitability of the Global Business Line was indeed impacted by the end of two mature contracts (RADAR & VOSA), which were partly substituted by new business consisting of project activities and ramping-up volumes with, as usual, a temporary lower profitability.

2017 Commercial activity

2017 Commercial activity was satisfactory, particularly in terms of new customers gained and new solutions sold to existing customers. Main achievements per Global Business Lines are presented thereafter. These signatures confirm the quality of the product roadmap of the Company and perfectly illustrate its growth strategy, which is based, beyond the secular growth trends of non-cash payment in Europe, on international expansion of value added solutions and innovation.

Merchant Services & Terminals

The commercial activity in Merchant Services & Terminals was dynamic in 2016. In Commercial Acquiring, Worldline maintained its market leader position in Benelux and notably promoted card payment for low value purchases, which increased by over 30% since the introduction of a specific pricing structure, and extended all major contracts with retailers in Belgium and in the Netherlands. The Payment Terminal division confirmed its positive momentum, with new retail customers in France and in the Netherlands, as well as the renewals of major contracts with Dutch banks. In Online Services, a number of new contracts were signed with various large enterprises and governmental institutions in France. The commercial successes of Worldline omni-channel solutions included in particular the implementation of digital retail concepts and of merchant wallet solutions with several large European retailers or brands.

Financial Services

Key commercial successes of Financial Services in 2016 included the win of several new clients such as Degussa Bank in Germany for payment back-office processing, as well as the renewal and extension of key contracts in the Group's home markets across Europe. In this respect:

• In December 2016, the card processing contract with the Finnish bank OP was extended until 2025 and a new contract was signed for the outsourcing of the bank's cardholder customer service. Also, Danske Bank chose Worldline's ACS solution to secure e-commerce with 3D-Secure in Denmark, Sweden, Finland, Norway and the United Kingdom. These two contracts further strengthen Worldline's footprint in the Nordic market;
• The iDEAL processing contract with ING was extended as well, with more complete iDEAL functionalities combined with electronic identity services for the Dutch community (iDIN). Through this deal, equensWorldline has positioned itself as a trusted supplier of these functionalities and is confident its technologies will also be of interest to other Dutch banking groups;
• Capitalizing on an existing client relationship, the Group has won the ATM Global Management contract for a French bank.

The Group's ambition to support financial institutions in their digital transformation was reconfirmed by the extension of the business relationship with Sparda-bank for six years, with the aim to develop further digital services for customers. Beyond Europe, the payments security services business achieved further growth with Philippine's EastWest Bank choosing the Group's ACS solution and the launch of a prepaid currency card solution by the Bank of Bhutan.

In the broader sense of innovation, the mobile payments services have shown good progress with a further HCE launch and a pilot for mobile person to person ("P2P") payments. Furthermore, Worldline's Instant Payments solution has shown good traction in continental Europe. To secure further future growth, the Group went into production of phase 1 for its development programs "Virtual Accounts" and "Payments 2.0". The Group reached a new innovative milestone by launching an API (Application Programming Interface) developer portal, which will accelerate the time-to-market for clients and supports co-creation of products, services and solutions.

Mobility & e-Transactional Services

Commercial activity in Mobility & e-Transactional Services has been solid in 2016, with a high level of new business signed (new customers or new services sold to existing customers). Indeed, significant new contracts were signed in 2016 and include in particular:

• In e-Consumer & Mobility:
  • The provision of a omni-channel Cloud Contact solution for a large French bank: Worldline will provide a solution in the cloud including voice, chat, email and video as well as a cutting edge semantic search service, allowing real time access to various banking services including payment services;
  • The extension of the current B/S/H "Home Connect" program to two new strategical geographies in an enlarged scope in order to connect tens of millions of B/S/H appliances.
• In e-Ticketing, the Group will implement for a city in Germany a state of the art ticketing retail system according to German regulation and eTicketing standard. 800 million passengers will be served by the connected transport companies per annum through 6 public transport companies operating in major German cities. The solution covers the provision of ticketing services, as well as the related accounting and payment.
• In e-Government Collection, Worldline's digital identity suite "ID Center" was deployed in various clinics and private companies, and a Trusted Digitization solution was sold to GIP Renater in France, for which Worldline will build and run a very large secured personal document access platform for middle and high school students. Trusted Digitization's core products include Digital Signature, Digital Preservation and Digital Identity. Those offerings allow Worldline to deliver digital transformation projects, from e-contracts to national digital ID schemes.

Backlog and commercial perspectives

The backlog at the end of December 2016 amounted to € 2.6 billion . It includes the backlog acquired from Equens on October 1, 2016, reflecting mainly the application of the group's reporting definitions to the commercial contracts with equensWorldline's banking shareholders.

Commercial perspectives are solid, with several large contracts expected to be signed in the next few quarters, particularly around Digital Platform/Transformation in Merchant Services, Issuing Processing and ATM management in Financial Services as well as Connected Living offers and e-Ticketing in Mobility & e-Transaction Services.

Operating Income and Net Income

Depreciation, amortization and Other non-cash items was € 62.1 million .

Operating margin progressed to € 196.6 million representing 15.0% of sales .

Non-recurring items amounted to €+13.3 million and consisted mainly of the proceeds from the sale of the Visa Europe share to Visa Inc for € 51.2 million, compensated by transaction costs related to the acquisition of Equens and Paysquare and post-acquisition integration costs, purchase price allocation amortization, restructuring costs induced by the adaptation of the organization and some rationalization expenses

Financial result was a charge of € 5.9 million and the tax charge represented € 53.7 million ( effective tax rate of 26.3% ).

Non-controlling interests amounted to € 6.2 million and were related to the minority shareholders in equensWorldline.

As the result of the items above, net income group share was € 144.2 million .

Free Cash Flow and net cash

Free cash flow in 2016 was € 140.4 million , at the high end of the € 135 million to € 140 million target set for the year and increasing by +9.3% compared with 2015.

Net cash reached € 398.9 million , increasing by €+75.6 million compared with the net cash position as at December 31, 2015. This net cash position includes the proceeds from the sale of Worldline's investment in Visa Europe for € 35.6 million and the net disbursement of € 111.0 million linked to the acquisition of Paysquare and KB Smartpay.

2017 Objectives

Revenue The Group expects to achieve an organic growth of its revenue, at constant scope and exchange rates, of approximatively +3.5% for the full year , with H2 2017 at +5% to +7%.

OMDA The Group targets an OMDA margin between 20.0% and 20.5%.

Free cash flow The Group has the ambition to generate a free cash flow of between € 160 million and € 170 million, including c.€20 million of synergy implementation costs

Appendix: Statutory to constant scope and exchange rates reconciliation

For the analysis of the Group's performance, revenue and OMDA for 2016 is compared with 2015 revenue and OMDA at constant scope and foreign exchange rates.

Reconciliation between the 2015 reported revenue and 2015 revenue at constant scope and foreign exchange rates, per Global Business Line and by geography, is presented below:

Reconciliation between the 2015 reported OMDA and 2015 ODMA at constant scope and foreign exchange rates, per Global Business Line, is presented below:

Scope effects refer mainly to the acquisitions of Equens, Paysquare and KB Smartpay on September 30, 2016. Hence, Equens, Paysquare and KB Smartpay revenue and OMDA for the fourth quarter of 2015 are included in the 2015 revenue and OMDA at constant scope and exchange rates, for a like-for-like comparison with 2016.

Exchange rate effects reflect mostly the appreciation of the Euro versus the British Pound and the Argentinian Peso.

The 2015 figures presented in this document are based on the constant scope and foreign exchange rates data.

Conference call

Worldline's CEO Gilles Grapinet, along with General Manager Marc-Henri Desportes, and Chief Financial Officer Eric Heurtaux will comment on the Group results for 2016 on Tuesday, February 21, 2017 at 6:15pm (CET- Paris).

You can join the webcast of the conference:

- on worldline.com , in the Investors section

- by smartphones or tablets through the scan of :

Direct access to the webcast : http://edge.media-server.com/m/p/6gmoopws

- by telephone with the dial-in:

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

Forthcoming event

April 24, 2017              Q1 2017 revenue July 25, 2017               First half 2017 results

Contacts

Worldline Investors Contact David Pierre-Kahn Email: David.pierre-kahn@worldline.com

Worldline Press Contact Tiphaine Hecketsweiler Email: tiphaine.hecketsweiler@atos.net

About Worldline

Worldline [Euronext: WLN] is the European leader in the payments and transactional services industry. Worldline delivers new-generation services, enabling its customers to offer smooth and innovative solutions to the end consumer. Key actor for B2B2C industries, with over 40 years of experience, Worldline supports and contributes to the success of all businesses and administrative services in a perpetually evolving market. Worldline offers a unique and flexible business model built around a global and growing portfolio, thus enabling end-to-end support. Worldline activities are organized around three axes: Merchant Services & Terminals, Mobility & e-Transactional Services, Financial Services including equensWorldline. Worldline employs more than 8,700 people worldwide, with estimated pro forma revenue of more than € 1.5 billion on a yearly basis. Worldline is an Atos company. worldline.com

Disclaimer

This document contains further forward-looking statements that involve risks and uncertainties concerning the Group's expected growth and profitability in the future. 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 2015 Registration Document filed with the Autorité des Marches Financiers (AMF) on April 28, 2016 under the registration number: R.16-031 and its update filed on August 4, 2016 under the registration number D.16-0288-A01.

Worldline consolidated and statutory financial statements for the year ended December 31, 2016, were approved by the Board of Directors on February 21, 2017. Audit procedures on these financial statements have been performed by the statutory auditors and their audit reports will be issued after the completion of the specific verifications required by French law and of procedures for the purposes of the Registration Document filing.

Revenue organic growth is presented at constant scope and exchange rates. 2017 objectives have been considered with exchange rates as of December 31, 2016.

Global Business Lines include Merchant Services & Terminals (in Belgium, France, Germany, India, Luxembourg, Spain, The Netherlands, Poland, Czech Republic, Slovakia and the United Kingdom), Financial Services (in France, Belgium, The Netherlands, Germany, Italy, Finland, China, Hong Kong, India, Indonesia, Malaysia, Singapore, Spain, Taiwan), and Mobility & e-Transactional Services (in Argentina, Austria, Belgium, Chile, France, Germany, Spain, and the United Kingdom).

This press release does not contain or constitute an offer of Worldline's shares for sale or an invitation or inducement to invest in Worldline's shares in France, the United States of America or any other jurisdiction.

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^[1] EPS including the impacts of potentially dilutive instruments, calculated on the net result adjusted for non-recurring items, net of tax

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