Optimal Payments
Optimal Payments
Disclaimer
Disclaimer (cont’d)
Joel Leonoff, President & Chief Executive Officer
Presenting team
Brian McArthur-Muscroft, Chief Financial Officer
Strong team with track record of integrating acquisitions and delivering
shareholder value
Transaction overview
Optimal Payments + Skrill
3 Diversifies customer base, product offering, geographic exposure and sector presence
2 Highly complementary businesses with compelling strategic fit
1 Creates a leading global payment and digital wallet provider with significant international scale and reach
5
Value uplift opportunity from synergies (targeting on-going c. $40m cost reduction from synergies by end of
FY 2016). EPS accretion expected in first full fiscal year of ownership
6 Well-positioned to capture expected growth in North American gambling market
4 Profit margin expansion, increased scalability and improved expected growth opportunities
A transformational and value enhancing combination
7 Intention to seek a Main Market listing and join FTSE250 as soon as possible following completion
FY 2014 Highlights
Substantial increases in revenue and profitability – boosted by FIFA World Cup in H1
Acquisition of Meritus and GMA businesses in the US (completed July 2014) – contributed to
revenue growth and diversification of the Group in H2; integration progressing well
Full year highlights
Solid foundation to build on in 2015
Continued investment to deliver further growth
Board and Executive Management strengthened
Good progress on strategic initiatives:
Principal Membership granted & launched (with Visa and MasterCard in Europe)
Well positioned in US gaming & fantasy sports
Launch of card issuing services division and NETELLERGO! (for merchants outside of gaming)
Group revenue
Significant increases in revenue - H2 revenues c. 30% higher (to H1) incorporating revenue from US
acquisitions ($45 million from end July)
Material organic and inorganic growth – 44% overall; organic growth of 26% in 2014 (excl. US
acquisitions)
Concentration of Asian revenues balanced by further diversification of Group
Gross Revenue ($m) Fee revenue by geography (2014)
Asia & ROW
52%
North
America
27%
Europe
21%
NETELLER SV
Sustained business growth
VIP Focus
Non VIP program
Revenues H1 2014 H2 2014 FY 2014 Change
Stored Value $41.4 m $48.2 m $89.6 m +50%
FY 2013
$59.8 m
NETELLER Sign ups Jan14-Dec14
85% 84% Gross margin
NETBANX STP
Organic & inorganic growth
Revenues H1 2014 H2 2014 FY 2014 Change
Straight Through
Processing $117.4 m $157.0 m $274.7 m +42%
FY 2013
$193.0 m
NETBANX: Acquiring Volume (Bureau)
41% 42% Gross margin
Strong earnings growth
Adjusted EBITDA ($m) Earnings per Share (cents)
36
38
22
25
Acquisition of Skrill
Skrill offer
enterprise
value
€1,111m
Historical acqn.
multiples1:
(LTM to 30 Sep 14)
EV/EBITDA 13.5x
(Pre-synergies)
EV/EBITDA 9.3x
(Post-synergies2)
Transaction overview
Fully underwritten Rights Issue to raise cash of
approx. €609m (£451m)
37.5m ordinary equity shares in Optimal
Payments to Skrill shareholders, equivalent to
€135m4
New debt raised and drawdown on RCF of
€505m5
Estimated
transaction costs
€62m
Refinanced Optimal
Payments debt
€77m3
Total: €1,250m
A fully funded acquisition financing structure
$275m
$181m
$90m $151m
Merchants – c.16.6k c.40k
20+ global acquiring relationships
Customer accounts – 8m 19m
Merchants – 1.2k 1k
Broadened geographic and sector exposure
€1.6bn transaction value processed in 12 months to 30 September 2014
c. 595k myPSC accounts
442k cash-in locations and 5.7k web shops
The Enlarged Group – a compelling business combination
1
e-Wallet
3 Prepaid
2 Payment gateway
Complementary business combination will create a leading payment provider
Revenue
Revenue
Revenue 2
2
2 2
5
5
6
1 2
3 4
3 4
12m to 31 Dec 2014 12m to 30 Sep 2014
12m to 31 Dec 2014
12m to 30 Sep 2014
5
Optimal Payments - business overview
Optimal Payments provides payment solutions and stored value products through two
principal business divisions
Skrill - business overview
Leading provider of online payment and e-money solutions
Creating a leading payments provider
The combined entity would be a more diversified, vertically integrated player
facilitating payments across a wider addressable market
Immediate funding Pre-funding Future funding
Drives transaction value
Acquiring
De-risking for merchants
Prepaid1
Digital wallet Payment processing Invoice payment
22+
languages
100+
payment types
41
currencies
Creates a global payments player with a full suite of
products
Digital Wallet
Integrated global
payments provider
PSP
eVoucher
Emerging payments
Traditional payment providers
Customer
Key players / verticals Online bank
transfer Mobile
Cash-in/
prepaid
voucher
Prepaid
debit card Remittance
Invoice &
instalments
Digital
wallet
Currency
services Online PSP
Merchant
Acquiring banks
Medium term
Near term
Longer term
Significant consolidation opportunities
Targeting on-going c. $40m cost reduction from synergies by end of FY 2016
28 52
86
0
20
40
60
80
100
120
140
160
180
200
0
20
40
60
80
100
120
140
160
180
200
0
20
40
60
80
100
120
140
160
180
200
--
100
200
300
400
500
600
700
800
--
100
200
300
400
500
600
700
800
--
100
200
300
400
500
600
700
800
EBITDA3
($m)
Historical financial performance
EBITDA Margin
Skrill
Revenue2,3
($m)
Enlarged Group1
Creates a diversified business with significant scale and strong financial profile
0
Optimal Payments
Revenue by
geography4
12m to 31 Dec 2014 12m to 30 Sep 2014 20141
Strong and efficient financing structure
Balance sheet efficiency and expected rapid deleveraging profile
New debt
Leverage
―
―
―
Currency
summary
Enlarged group future growth strategy
Leverage strong
position in stored
value
Continued focus
on online
gambling
Continue to
pursue inorganic
growth
Monetise wider
addressable
market
Drive organic
growth in
payment
processing
Transaction expected to deliver on stated strategic objectives
Conclusions
Substantially diversified customer base, product offering, geographic exposure and sector
presence
Compelling strategic fit of two complementary businesses, well-positioned for long term
organic growth
Creates a leading global payment and digital wallet provider
Significant annual cost saving synergies (targeting on-going c. $40m cost reduction by end
of FY 2016) and value creation opportunity. EPS accretion expected in first full fiscal year of
ownership
A transformational and value enhancing combination
Intention to seek a Main Market listing and join FTSE250 as soon as possible following
completion
Listing
Size
Deal type
Rights ratio
Discount to TERP2
Use of proceeds
Syndicate structure
Financial Adviser
Arrangers
Quantum
Maturity
Amortisation
Covenants
Indicative term sheets
Indicative terms of equity capital raising Indicative terms of debt
Quantum
Pricing1,2
Fees1
Maturity
Amortisation
Covenants
Headroom
Arrangers
3 13
1
2
3
4
5
6
7
8
9 Expected completion of acquisition
Expected timetable
Transaction announcement and publication of the prospectus 23 March 2015
Posting of rights issue prospectus, including notice of General Meeting 23 March 2015
Record date for rights issue 14 April 2015
General Meeting 16 April 2015
Nil-paids trading expected to commence 17 April 2015
Latest time for acceptance of rights issue 1 May 2015
Announcement of results of rights issue expected 5 May 2015
Commencement of dealing in new ordinary shares, fully paid 5 May 2015
Q3 2015
Appendix I: FY 2014
Financials
Business performance
Fee Revenue ($m) Gross Profit ($m)
Continued improvement in high margin NETELLER SV revenues; strong growth in NETBANX STP (incorporating
contribution of Meritus & GMA from end July 2014)
NETELLER SV: 50% YOY growth in fee revenue
NETBANX STP: 42% YOY growth in fee revenue; organic growth of 19% in full year (excluding Meritus/GMA in H2)
($m) FY 2014 FY 2013 Growth
Total 103 79.6 29%
Selling, general & administrative costs
($’000s) FY 2014 FY 2013
Profit before provision for income taxes 58,979 32,713
EBITDA (1)
86,063 52,212
Reconciliation of profit before tax to EBITDA
FY 2014 FY 2013 FY 2014 FY 2013
($m) ($m) EPS ($) EPS ($)
Reported profit before tax / diluted EPS* 59.0 32.7 0.32 0.20
Adjusted profit before tax / adjusted
diluted EPS* 72.2 41.0 0.40 0.26
Adjusted profit after tax / diluted EPS* 68.0 39.5 0.38 0.25
Adjusted results
Balance sheet
Group
Cash
Group own cash of $106.5m (2013: $93.8m) with free cash of $44.0m after using
$26.6m cash to partly fund US acquisitions
Highly cash generative with strong cash conversion
Group
Loans
Shareholder loans converted and cleared in Jan-2014 with successful placement
of c25% shares in issue
Net debt of $23.2m - $150m bank facility secured to fund US acquisitions; in full
compliance with debt covenants
Capacity to raise additional funding for further M&A opportunities
Strategic initiatives
Delivering the present and building the future
1 2 3 4 5
Drive growth in
core business
lines
Develop multi-
channel
solutions
Deliver new
white-label
propositions
Position for US
gaming
opportunity
Inorganic
growth through
acquisition
Appendix II: Optimal
Payments + Skrill
Transaction
Joel Leonoff, President & Chief Executive Officer
Executive directors
Executive team
Danny Chazonoff, Chief Operating Officer
Brian McArthur Muscroft, Chief Financial Officer
Elliott Wiseman, General Counsel
Supporting executive team
Dennis Jones, Non-Executive Chairman
Ian Francis, Non-Executive Director
Ian Jenks, Non-Executive Director
Andrew Dark, Non-Executive Director
Brahm Gelfand, Non-Executive Director
Stephen Shaper, Non-Executive Director
Board member
Board of Directors
Highly experienced team with significant payment industry expertise
Global e-Commerce market (US$bn)
Global online gross gambling yield (US$bn)
Market overview - estimates
Transaction value for payment methods 2012 vs. 2017
Geographic trends
Europe
41% of e-transactions made using non-card
methods
US & Canada
29% of e-transactions made using non-card
methods
Asia
63% of e-transactions made using non-card
methods
Enlarged group even better positioned to capture opportunities in dynamic, structural growth
markets
Stored value business model
a
b
c
d
Stored value transactional flow and revenue model
Consumer
Fee flows
Merchant
a
c
e
PREPAID
MASTERCARD
b
CARDS
BANK ACCOUNT
ALTERNATIVE
UPLOAD METHODS
BANK
ACCOUNT
e-Wallet
d
e
f
f
Typical STP transaction
STP + acquirer
relationship /
merchant acquirer
status
Optimal Payments has merchant acquirer status, and so can achieve higher fees on
transactions in which it acts as the acquiring bank
Skrill – paysafecard overview
Growing, incremental revenue stream that would broaden Optimal Payments’
payment offering
Y/E Dec 2012A 2013A 12m to Sept 14 Y/E Dec 2012A 2013A 2014A1
Historical financials
Dec 14
Topco
Regulatory overview
Compliance procedures in place for both Optimal Payments and Skrill
Online gambling regulation
The gambling regulatory landscape is varied and subject to change. Both Optimal
Payments and Skrill have systems for identification of a customer’s geography and
the corresponding regulatory regime
Introduction
Compliance and market categorisation
North America Europe Rest of the world
Optimal Payments evolution
At the forefront of payment innovation since 1996
2006 1996 2001 2004 2014 2011
1996: NETBANX
1999: SureFire
Commerce
Terra
Payments
1999: Neteller 2001: Neteller
2004: Terra
Payments
OP
Payments
2004: Neteller
2005:
NETBANX
2006:
Neteller
2005: OP
Payments
2006: 2008:
2008:
Neteller
Neovia
Financial
2011:
Neovia
Financial
OP
Payments
Optimal
Payments
plc
Jan 2014:
Optimal
Payments plc
July 2014:
Optimal
Payments plc
Meritus
GMA,
SureFire
Bonus adjustments
The effects of the Rights Issue Rights Issue summary(1)