FINANCIAL COMMUNICATION 2019 RESULTS Casablanca - 20 March 2020 - - PowerPoint PPT Presentation

2019 RESULTS

Casablanca - 20 March 2020

FINANCIAL COMMUNICATION

1

Summary

Context of the year 2019 Financial review Operations review Prospects

CONTEXT OF THE YEAR 2019

3

The payment market in the world

CAGR (2017–22F) Growth (2017–18F) Global 14.0% 11.2% MEA 21.6% 17.9% Latin America 6.0% 5.5% Emerging Asia 29.7% 28.6% Mature Asia-Pacific 10.2% 10.2% Europe

(Including Eurozone)

8.5% 6.3% North America 4.7% 4.7% 7.1% Developing 23.5% Mature Non-cash transactions (billions) 1.200 900 600 300 2017 2019F 2020F 2021F 2022F 176.3 192.8 201.8 156.3 185.9 203.6 161.1 269.5 352.8 67.6 81.7 90.2 48.4 54.3 111.2 57.7 139.3 160.6 133.8 96.2 55.6 43.1 49.3 538.6 168.2 144.2 123.7 61.3 45.5 604.7 684.1 184.5 170.4 208.7 74.2 51.1 90.2 779.2 895.5 1,045.5 2018F 61.9 74.4

Source: Capgimini payment report 2020

4

2019, moving towards meeting our strategic goals

Achievements in 2019 Ambitions Solutions Processing Services Regional diversification Diversification of the offer Recurring revenue Operational excellence

FINANCIAL REVIEW

6

• Strong growth in Solutions

(+13,0%) and Processing (+22,4%)

• 27.7% increase in recurring

revenue

Operating revenue

719.6

M MAD

+8.6%

• Increase in Processing

activity with recurring revenue recognition linked to this activity

Operating income

126.9

M MAD

+14.4%

• Impact of the currency effect
• n the financial result
• Non-recurring items linked

mainly to the social solidarity contribution

Net income

93.8

M MAD

+1.7%

• Deployment of large-scale

projects with longer implementation cycles

• Payment of the balance

relating to the acquisition of the Switch activity in Morocco

Treasury

85.5

M MAD

• 30.5%

2019 in short

• Operating margin of 17.6%

up 0.90 pts

• Positive impact of
• perational excellence

efforts

Operating margin

17.6%

vs.

+16.7%

7

22% 25% 21% 6% 1,5% 8,5% 74% 16% 10%

2019 highlights by activity

Diversification with the strengthening of our position in mobile banking Strong momentum in diversifying geographic presence Growth in upselling Delay in the renewal of major contracts completed in the 4th quarter of 2019 New listings with major players in France and start of projects with new clients Dynamics of Switching in Morocco Increase in recurring revenue linked to Payment projects Deployment of the Société Générale project in 13 African countries (Payment) and in production in 2 countries

+13.0%*

Solutions

+22.4%*

Processing

• 13.3%*

Services

Projects Upselling Maintenance Licence Switching Payment

*Compared to 2018

8

Diversification of the offer & strengthening of recurring revenues

Solutions

Solid performance of upselling and licence revenues Growth at maintenance level Launch of major projects Strengthening of our position in M-Banking

Processing

Recognition of the first revenues from the Payment Processing activity Signing of the first Microfinance Processing contracts

Services

Late renewal of contracts in the 4th quarter of 2019

662.5 +58.6 +12.3 +2.9 719.6

• 16.7

Operating revenue 2018 Solutions activity Processing activity Services activity Other Operating revenue 2019 320.8

(48%)

409.7

(57%)

Recurring revenue

In M MAD In % of operating revenues

In M MAD

9

Geographic footprint and regional diversification

Americas

23.4 M MAD 2019

• 24.8% vs. 2018

Europe

206.2 M MAD 2019 +8.8% vs. 2018

Asia

148.3 M MAD 2019 +17.4% vs. 2018

Africa

297.3 M MAD 2019 +1.7% vs. 2018

Africa

Continued high production pace with customers in South Africa Expansion of the client portfolio

Europe

Growth in the upselling of the Solutions activity which offsets the decline in the Services activity in the region

Asia

Strengthening the customer base in our historic Middle East regions Successful deployment of the Singapore office with the adding

• f several countries

Increase in the customer base with 3 new customers

Americas

3.5%

Europe

30.5%

Africa

44.0%

Asia

22.0%

10

Operational excellence

Staff expenses

Change in the workforce (+9%) combined with an increase in salaries

External expenses

Sustained commercial effort through a presence in 23 major events in the payment industry Increase in rental expenses relating to the installation of new premises

Consumables purchased

Stable trends in subcontracting

Operating allowances

Amortisation in relation to investments made in the context

• f PCA

* Compared to 2018 ** Share in operating income

719.5

• 360.2

+6.8%* (42.6%)**

• 139.5

+16.5%* (19.4%)* *

• 84.5

+0.3%* (11.7%)* *

• 41.4

+0.7* (5.8%)**

• 10.3

+24.6* (1.4%)**

• 10.7

126.9

+14.4* (17.6%)**

Operating revenue Staff expenses External expenses Consumable s purchased Operating provisions Other

• perating

exp. Other Operating income

In M MAD

OPERATIONS REVIEW

12

Sales

Processing

Switch Cards Switch Mobile Payment Processing

Microfinance

Solutions Europe Africa Asia Services

13

Solutions activity

Contribution to overall income Strategic directions

Anchor our presence by targeting “Tier 3” banks and ISOs in the United States Offer our solutions to major European processors and middle-ranking banks in Europe Develop a presence through partnerships in Southeast Asia and Latin America Develop E-Wallet solutions and solutions for various players (telecom, retail, etc.)

Business trends in M MAD Highlights

Signing of a contract with one of the top 10 global banks for the deployment of debit cards in 2 countries (Europe and Asia) Continued high production pace with customers in South Africa Sustained growth in upselling Completion of the SIA project and migration of the first customers to PowerCARD Option of PowerCARD for the SIA platform in Greece PowerCARD selected for M-Payment in Saudi Arabia Level of sales of 315 M MAD

509.4 M MAD

+13.0% vs. 2018

74%

327 378 455 509 2016 2017 2018 2019 410 321 304 244

TCAM 18.8%

Recurring revenue

TCAM +16.0%

Solutions activity

14

Solutions activity

Asia

30%

2019 Americas

5%

2019 Europe

20%

2019 Africa

45%

2019 Projects Upselling Maintenance

Licence

30.1% 34.3% 27.6% 8.0%

Africa

Sustained activity with regard to South Africa Strengthening of our position through the signing of new contracts

Europe

Continued launch of major projects Signing of a contract with a Tier 1 financial services player

Asia

Confirmation of growth potential with the conclusion of several new contracts Signature of contract for the implementation of M-payment in Saudi Arabia

Americas

Implementation of an action plan for the development of the region's growth potential

15

Processing activity

Organic growth in the activity and by acquisition in Africa and the Middle East Diversification of the offer

67.1 M MAD

+22.4% vs. 2018

41 59 59 67 2016 2017 2018 2019

TCAM 18.1%

Processing

Contribution to overall income Strategic directions Business trends in M MAD Highlights

Payment Société Générale Africa Project: first revenue linked to the electronic payment management contract in 13 African countries Signature of Payment Processing contracts in the Middle East and Europe Microfinance processing with the ALAFIA consortium project Switching Completion of the Switching platform launch for mobile and start of actual transactions Signing of several contracts for Switch Mobile in Morocco

10%

16

Switching Activity / electronic banking in Morocco in numbers

16.2 million cards +0.4 million vs. 2018 413.8 million transactions +5.9% vs. 2018 7,613 units +324 installations Overall number of cards issued Transactions per card GAB network Withdrawal

Number of operations in millions

1.2x

256,2 271,8 294,5 316,1 2016 2017 2018 2019

Payment

Number of operations in millions 40,5 53,5 68,0 85,4 2016 2017 2018 2019

2.1x

Payment via Internet

Number of operations in millions

2.7x

3,6 6,6 8,3 9,8

2016 2017 2018 2019

29% 7.5%

Change in interoperable

• perations processed by HPS

Switch vs. 2018

17

January February March April May June July August September October November December

2018 2019

Switching Activity / Volumes processed and Changes in rates

0,4258 0,3247 0,2823 0,2614 2016 2017 2018 2019 0,8171 0,7466 0,7362 0,7271 2016 2017 2018 2019

+22%

• vs. 2018

Change in the Weighted Average Price for withdrawal transactions Change in the Weighted Average Price for payment transactions

• 39%

in the WAP

• 11%

in the WAP

Number of payment transactions + withdrawals comparison 2019 vs 2018

18

Services activity 108.2 M MAD

• 13.3% vs. 2018

112 111 125 108 2016 2017 2018 2019

TCAM -1.1%

Services Activity

16%

Renewal of contracts postponed to the fourth quarter of the year Growth of the client base (TF1, EDF, Allo Pneu, PMU, Vinci, etc.) Reorganisation of the sales force Referencing with major players in France and conclusion of new contracts

Contribution to overall income Strategic directions Business trends in M MAD Highlights

Diversification of activity towards high added value services Diversification in French territory and establishment of regional agencies

19

R&D effort in 2019

PowerCARD - WebPublisher PowerCARD

• eSecure

2016 2017 2018 2019 2020

PowerCARD - eCommerce PowerCARD - Switch PowerCARD - Issuer PowerCARD - Acquirer PowerCARD - ATM PowerCARD - xPOS

80.8 M MAD

Strengthening of R&D efforts

+18%

• vs. 2018

20

R&D in 2020 and beyond

Strategic directions for PowerCARD

Have “infinite” scalability. Take advantage of cloud possibilities to vary the infrastructure costs, especially in peak management. Ensure all PowerCARD processing is real-time to meet the challenges of new instant payment methods. Remove dependency on Oracle

80.8 M MAD

Strengthening of R&D efforts

+18%

• vs. 2018

All services are real- time with supervision V4 must be compatible with v3.X clients existing IT infrastructure From monolith to small blocks independent updates Database agnostic Infinite Scalability On-Premise and Cloud compliant: Hybrid Cloud

21

PowerCARD Users Meeting 2019

+400

participants

+30

speakers

+70

countries

22

ISO 27001 Certification PCI-DSS Certification PCA Test

A failover test at the backup site took place on 12/11/2019 This operation was carried out in coordination with all customers The backup site was used as a production site for 2 weeks After the success of this operation, the return to the main production site took place on 26/11/2019

Operational Performance

23

Backlog end 2019

Backlog of more than 500 MDH, representing more than 70% of the total income

• f 2019.

Fulfilment and delivery of several large-scale projects. Signature postponement of certain important projects in 2020. A growth in the share of Processing revenues in the backlog due to the commercial success of 2019 (Middle East and Europe).

23% 21% 33% 19% 3%

Projects Upselling Maintenance Click Fees Processing

PROSPECTS

25

Strategy

Regional diversification Operational excellence Recurring revenue Diversification

• f the offer

26

2020 Prospects

The Group benefits from a unique position given the diversity and resilience of its portfolio. While managing the disruptions linked to the Covid-19 force majeure situation, HPS plans in 2020: To maintain a solid organic revenue growth To continue improving the operating margin To accelerate growth and diversification through external growth

27

Conclusion

Sustained growth of business Solid operational performance Continuation of the initiatives in our strategic plan

Q & A

29

Scope of Consolidation

100% 100% 100% 100% 100%

HPS Switch ACPQualife HPS Europe HPS Dubaï HPS Singapore ACPQ Switzerland Subsidiaries HPS S.A.

Corporate Financial Statements

JV GPS ICPS

Consolidated Accounts 25% 20% 100%

30

Consolidated balance sheet (revenues and expenses)

Consolidated balance sheet (revenues and expenses) 2019 2018 Change Turnover 683,684,278 616,683,910 10.86% Changes in inventories 5,091,646 18,508,127

• 72.49%

Capitalised production

• 0.00%

Other operating revenues 30,824,403 27,269,804 13.03% Operating Revenue 719,600,327 662,461,841 8.63% Goods purchased for resale

• 1,774,989
• 3,426,393
• 48.20%

Consumables purchased

• 84,461,142
• 84,234,655

0.27% External expenses

• 139,497,796
• 119,740,516

16.50% Staff expenses

• 306,242,429
• 286,676,749

6.82% Other operating expenses

• 10,338,185
• 8,298,031

24.59% Taxes and levies

• 8,953,821
• 8,062,574

11.05% Operating provisions

• 41,412,541
• 41,109,948

0.74% Operating expenses

• 592,680,904
• 551,548,867

7.46% Operating income 126,919,423 110,912,974 14.43% Operating margin 17.64% 16.74% 0.89% Financial expenses and income

• 6,305,297
• 76,938

8095.33% Profit on ordinary activities for consolidated companies 120,614,126 110,836,037 8.82% Extraordinary revenues and expenses

• 4,612,673
• 2,670,800

72.71% Income taxes

• 29,114,774
• 24,687,593

17.93% Net profit for consolidated companies 86,886,679 83,477,643 4.08% Share in earnings from equity affiliates 10,600,607 12,444,860

• 14.82%

Acquisition adjustment depreciations

• 3,690,912
• 3,690,912

0.00% Consolidated net income 93,796,375 92,231,592 1.70% Minority interests

• 0.00%

Net profit (Group share) 93,796,375 92,231,592 1.70% Net margin 13.03% 13.92% Earnings per share 133.31 131.09

31

2019 Consolidated cash flow statement

CASH FLOW STATEMENT 31/12/2019 31/12/2018 Net income 93,796,375 92,231,592 Elimination of net income and expenses without effect on available cash or not related to the business.

• Depreciation allowances

19,702,875 15,797,632

• Change in deferred income taxes
• 1,143,132
• 1,574,718
• Gains or losses on disposal

2,956 19,969

• Other net non-cash income (expense)

3,622,813 3,748,522 Net share in earnings from equity affiliates of dividends received

• 6,088,172
• 6,379,688

Consolidated companies’ self-financing capacity 109,893,714 103,843,310 Dividends received from equity affiliates

• Change in operational working capital requirement
• 61,024,039
• 20,184,284

Net cash flow provided by operating activities 48,869,674 83,659,026 Acquisition of tangible and intangible fixed assets

• 30,429,281
• 11,747,245

Disposals of fixed assets net of tax

• 40,948

Disposal of investments in companies accounted for by the equity method

• Net consolidated company acquisition
• Cash flows from investing activities
• 30,429,281
• 11,706,297

Dividends paid to shareholders of parent company

• 35,179,950
• 28,143,960

Capital increase in cash

• Other
• 336,667
• 56,422

Changes in borrowings

• 19,210,542
• 15,517,186

Cash flows from financial operations

• 54,727,159
• 43,717,568

Conversion adjustment

• 1,140,883
• 1,452,188

Increase (decrease) in cash account

• 37,427,648

26,782,972 Cash and cash equivalents at beginning of year 122,893,992 96,111,020 Cash and cash equivalents at end of year 85,466,344 122,893,992