Pioneering Progress

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  • Ship Luxco Holding & CY S.C.A.Annual Report and Accounts 2013

    Pioneering Progress

    Ship Luxco Holding & CY S.C

    .A. Annual Report and Accounts 2013

  • Worldpay is one of the worlds leading independent payment processing companies. Formerly the merchant acquiring division of the Royal Bank of Scotland Group (RBS), it was jointly acquired by Advent International and Bain Capital (with RBS maintaining an 18% stake) in 2010. In December 2013, Advent International and Bain Capital purchased the remaining RBS shareholding.

    Worldpay has three operating divisions:

    Worldpay UK (WPUK previously referred to by the brand name Streamline, this is our UK market-leading multi-channel merchant acquirer and processor.

    Worldpay US (WPUS) based in Atlanta, WPUS primarily provides point-of-sale and internet capabilities to small and medium-sized US-based businesses but is also one of the leading off-premises automated teller machine (ATM) processors in the USA.

    eCommerce provider of global internet payment solutions focused on large, mainly multinational, enterprises with complex and cross-border online payment processing and acquiring needs.

    Ship Luxco Holding & CY S.C.A. is a company domiciled in Luxembourg. It is a holding company of the Worldpay Group whose ultimate holding company is Ship Investor & CY S.C.A., registered in Luxembourg.

    Worldpay operates in the global payments market, principally by providing a suite of services known as merchant services to its customers. We offer all aspects of transaction processing: capturing the transaction, acquiring it, processing it; and settling funds to our customer. Worldpay is one of the few global companies to be able to offer this comprehensive approach.

    Transaction processing enables the exchange of money for goods or services without the need for cash or cheques. Worldpay provides a seamless link between our customers and card schemes (such as VISA, MasterCard or China UnionPay), thus allowing our customers to accept the widest possible range of electronic payment types (e.g. debit cards, credit cards, e-wallets). Worldpay also provides a full suite of associated services including gateway services (which allow customers to access electronic payments via the internet); security products (to mitigate risk and help identify fraud); and reporting, offering data insight and intelligence to our customers.

    Worldpays customers entrust it with a vital part of their businesses. Our role is to repay that trust with services that help our customers to prosper.

    Overview 1Worldpay Annual report and accounts 2013

    2013 3,394m3,089m

    3,000m20122011*

    2013 136m99m99m

    20122011**

    2013 (65)m28m

    73m20122011**

    2013 346m305m

    270m20122011*

    2013 (165)m(52)m

    (63)m20122011**

    2013 (2,107)m(1,375)m

    (1,307)m2012***2011*

    Underlying revenue

    3,394mUnderlying EBITDA

    346m

    Underlying profi t before tax

    136mLoss for the year

    (165)m

    Free cash fl ow

    (65)mNet debt

    (2,107)m

    Operational highlights

    * Represents managements estimate of pro forma 12 months period to 31 December 2011.

    ** Represents 17 months period ended 31 December 2011.*** Includes WPUS net debt.

    New business wins in the year included Sainsburys, Arnotts, Abercrombie & Fitch and Valve Corporation. In addition, we successfully retained a number of significant customers including Speedway in the US.

    Acquisition of YESpay and Century Payments completed in the year increasing our future growth potential.

    Strategic review of the US business completed in the year; Worldpay US retained by the Group.

    Detailed design of new platform completed leading to delay in separation from RBS and increased costs.

    Major refinancing of the Group completed in May 2013 with two further refinancing events later in the year; 728m repaid to shareholders.

    Financial key performance indicators

    Overview 115

    Chairmans statement 2 Chief Executives statement 3Our progress 6 Executive Committ ee 12

    Strategic review 1637

    Market overview 18 Our business model 20 Our strategy 22 Our resources and technology 26 Risk report 30 Operating responsibly 36

    Performance review 3852

    Financial review 40 Operating review 46

    Governance review 5363

    Chairmans introduction to governance 53Directors of Ship Midco Board 54 Corporate governance 55 Managers report 62

    Financial statements 64107

    Audit opinion 64Consolidated Income Statement 65 Consolidated Statement ofComprehensive Income 66 Consolidated Balance Sheet 67Consolidated Statement ofChanges in Equity 68Consolidated Cash Flow Statement 69Notes to the ConsolidatedFinancial Statements 70

    Contents

    What we do

    Who we are

  • Chairmans statement Chief Executives statementI am delighted to report that Worldpay continued to make very positive progress in 2013. Total underlying EBITDA grew by 13.5% and all three Business Units showed positive growth. Worldpay UK grew by 11%, eCommerce was up by 13%, and our US business increased earnings by 20%. We refreshed the strategies for each of our businesses during 2013 and are confident that they are all capable of sustained growth in the years ahead.

    After considering strategic alternatives, we decided in mid-year to retain and build our US business. The acquisition of Century in the second half of the year will enable and support future growth and permit us to access new market opportunities.

    Philip Jansen joined us as Chief Executive Officer in the spring of 2013 and the partnership between him and Ron Kalifa, our Deputy Chairman, is working extremely well. Philip has further strengthened the Executive Committee with a number of senior appointments, including Dave Hobday as the Managing Director of Worldpay UK, and Andy Doyle as Chief Human Resources Officer. Philip is providing great leadership to an extremely talented team.

    We continued to make progress in 2013 on our planned separation from RBS. The most complex set of issues is in IT and, despite some challenges and delays, we are now on track to achieve total separation in the first half of 2015. We remain committed, post-separation, to maintaining a positive and fruitful trading partnership with RBS.

    The markets in which we operate are evolving fast and we are committed to innovation, intensifying our customer focus and selectively broadening our product offering and geographic coverage. In all of these areas we made progress in 2013 and will move further forward in 2014 and beyond as we build a long-term growth platform and business.

    On behalf of the Board, I would like to thank all of our colleagues for their commitment, hard work and achievement in 2013. I would like to say a particular thank you to our US colleagues who achieved a great deal during the year while coping with the inevitable uncertainty that surrounded our strategic review of the business.

    Worldpay has a strong track record of performance and considerable potential for the future which we are confident we will deliver in 2014 and beyond.

    Worldpays performance in 2013 has continued its excellent trajectory since it was divested from the RBS Group at the end of 2010. Worldpays year on year underlying EBITDA grew by 13.5% to 346 million up from 305 million in 2012. This represents a growth of c.100 million in profitability since divestment.

    It is particularly pleasing to note that this performance has been underpinned by strong contributions across all three divisions:

    Worldpay UK has begun to grow market share in a highly competitive domestic market and has launched a number of new customer propositions in 2013.

    Worldpay US has refocused its business model on the small and medium enterprises (SME) market and our growth in that market has justified that strategic decision.

    Additionally, our global eCommerce division has enjoyed particularly strong growth by expanding our reach and capabilities in its six key customer verticals.

    We elaborate further on our divisional performance later in this report. However, it is worth stating here that, whilst historically the divisions have operated somewhat autonomously, in 2013 we have seen the benefit of a much more integrated and coordinated Group agenda. This has manifested itself in a more collaborative leadership team; increased synergies between the divisions; and a shared sense of the Worldpay purpose and vision. Our vision at Worldpay is based on the premise that success in our industry will come not just by processing a wide variety of customer transactions safely, reliably and quickly rather it will come when those transactions allow us to offer true insight. Each transaction leaves a trail as it passes through our and others systems. In todays connected world, money is digital and comes with information attached. Real insight comes from understanding the trails, discerning the patterns money creates, and allowing insight into the behaviour and intent of those using modern money.

    We, at Worldpay, aspire to become Leaders in Modern Money. More and more we are focused on being able to bring valuable insights to our customers. These can inform anything from their business strategy and their customer engagement model to their pricing architecture or levels of customer advocacy and loyalty.

    Looking ahead, we are excited by the chance to set a new benchmark in our industry. By helping our customers to prosper in new and exciting ways, we will ourselves realise significant growth and create more opportunities to reinvest that growth in better serving our customers. We know that today we are far from perfect. Nevertheless, we believe that no one i