Hightech Payment Systems Sa · CSEMA:HPS
Hightech Payment Systems Sa — Investor Day (July 2023)
50 slides from Hightech Payment Systems Sa's investor day presentation, July 2023
Slide 1: Investors Day Conference
Investors Day Conference BUSINESS & STRATEGY UPDATE July, 2023 hps-worldwide.com 1
Slide 2: HPS Today & Growth Strategy
HPS TODAY & GROWTH STRATEGY Abdeslam ALAOUI CEO 2
Slide 3: HPS, industry leader worldwide
HPS, industry leader worldwide Aspirants Challengers Technology Leaders 3 banks 11 banks Customer Impact of of HPS TOP 10 TOP 100 HPS 2022 worldwide worldwide 2021 HPS MQT* R&D costs (% of revenue) 14% 14% R&D cost ACI 10% WDL Spark Matrix : Card Management Systems (CMS) - 2022 Technology excellence
Slide 4: What makes HPS one of the leaders worldwide
What makes HPS one of the leaders worldwide STRONG R&D RE-BORN ORIGIN FOUNDERS 50 MUSD spent Every 10 years, PowerCARD Morocco, payment Founders payment- over the last 5 years is re-developed gateway into Africa business oriented 4
Slide 5: Our footprint worldwide
Our footprint worldwide Aix-en-Provence Sales Paris Delivery centre Sales R&D centre Athens M&A Delivery centre Europe 20% GPS - Bahrain JV + 95 Processing platform for Middle East Countries where PowerCARD is deployed Morocco Americas 13% 06 7% Middle East 19% Asia 9,5% National Switchs Singapore S
Slide 6: Long-term operational performance
Long-term operational performance New logos (USD) Backlog (USD) 30.000.000 100.000.000 90.000.000 ⏵ Recurring & regular revenues increase 25.000.000 from 45% to 71% 80.000.000 ⏵ New Tier-1 customers who have 70.000.000 20.000.000 adopted PowerCARD technology 60.000.000 ⏵ Diversification of the busin
Slide 7: Key 2022 highlights
Key 2022 highlights Historic level of 2022 FY Results ⏵ Revenues of >1 billion MAD + 21%, a 1st in HPS’s history ⏵ Net Income Group share at 117 MMAD +18%, a record level Booming backlog (+27.5%) setting the company up for revenue acceleration in 2023 ⏵ Doubling of sales led to growth of 84% growth
Slide 8: Strong shareholder value creation
Strong shareholder value creation 8.000 Performance over 3 years +73.3% 7.000 6.000 5.000 HPS : +2,372% Performance over 5 years +306% 4.000 3.000 2.000 Performance over 10 years MASI : +14,4% +2,372% 1.000 0 02/01/2013 02/01/2014 02/01/2015 02/01/2016 02/01/2017 02/01/2018 02/01/2019 02/01/2020 02/
Slide 9: Our Market
Our Market Number of cards in circulation Global volume of non-cash transactions Capgemini World Payments Report 2022 Nilson Report 2023 Revenus Contribution of the digital economy to global GDP McKinsey Global Payments Report 2021 World Bank 2022 9
Slide 10: 2022: Gouvernance & Transformation
2022 : Gouvernance & Transformation NEW GOVERNANCE STRATEGIC REVUE FUTURE ORIENTED ALIGNMENT PROGRAM STRUCTURE • Segregation between the roles • Evaluation of strategic Transformation Program: Organizational alignment to support of Chairman of the Board and alternatives by the Executive • Accelerati
Slide 11: AccelR8 - Strategic Initiatives
AccelR8 - Strategic Initiatives Sustainable growth ⏵ New business stream 2 Product & service quality 1 ⏵ New territories stream ⏵ Software versions consolidation ⏵ New business models ⏵ M&A stream ⏵ Package of the software in order to minimize deployment effort ⏵ Partnerships stream ⏵ Build ‘‘ Ready
Slide 12: AccelR8 - Transformation Program 2023-2027
AccelR8 - Transformation Program 2023-2027 ACCELR8 HPS in 2022 Non-recurring HPS in 2027 Non-recurring 15% 29% Between Organic growth 12% < CAGR < 17% 220 MUSD Recurring 100 MUSD and Recurring 48% Regular External growth 60% 300 MUSD Regular 25% Between 40 MUSD and 23% 80 MUSD EBITDA margin Between
Slide 13: PowerCARD V4
POWERCARD V4 At the heart of AccelR8 Pierre-Olivier SAINT-JOANIS Software Factory 13
Slide 14: PowerCARD Version 4 main differentiators
PowerCARD Version 4 main differentiators C L O U D N AT I V E MICRO-SERVICES D ATA B A S E A G N O S T I C Scalability: Customers instantly scale up or Scalability: Scaling of individual services Constraint free: Utilizing state-of-the-art down their IT resources helping businesses database technolo
Slide 15: PowerCARD V4 Customers business acceleration
PowerCARD V4 Customers business acceleration All in real-time User experience Instant Payouts Parallel processing Digitized journey Service extensibility Real-time operations Enhanced engagement 15
Slide 16: PowerCARD V4 Save costs, direct and indirect
PowerCARD V4 Save costs, direct and indirect Save direct software CAPEX and OPEX costs Database costs • Database portability • Open source alternatives • Multi-model support Scaling costs Multi-Cloud • Pay-As-You-Go • Components spread through • Scale resources as needed multiple cloud providers • O
Slide 17: Example of cost breakdown on AWS, Version 3.5
PowerCARD V4 Save costs, direct and indirect Example of cost breakdown on AWS Sizing assumptions: 100 TPS, 10M Cards, 500M Transactions Modules : PowerCARD-Switch + PowerCARD-Issuer Version V 3.5 initial Yearly Monthly CAPEX OPEX CAPX+OPEX 17
Slide 18: Example of cost breakdown on AWS, Version 4
PowerCARD V4 Save costs, direct and indirect Example of cost breakdown on AWS Sizing assumptions: 100 TPS, 10M Cards, 500M Transactions Modules : PowerCARD-Switch + PowerCARD-Issuer Version V 4 initial Yearly Monthly CAPEX OPEX CAPX+OPEX 85 % decrease in the Infrastructure cost 18
Slide 19: PowerCARD V4 Roadmap
PowerCARD V4 HPS/ Roadmap Q2 Q4 Q2 Interchanges (Continued) Prepaid Credit management management Tokenization WebPublisher Switch - Fraud - xPOS - ATM Merchant Card management - Interchanges Switch Mobile management eSecure Wallet Corporate & Fleet 3 Qi Q3 19
Slide 20: The new versions are growth accelerators
The new versions are growth accelerators 1.200 V4 CAGR : 14.5% 1.000 800 600 CAGR : 21% V3 400 CAGR : 20% V2 200 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 20
Slide 21: Convergence Program
CONVERGENCE PROGRAM Productivity, quality, and costs Mohamed CHAIBI Payment Services 21
Slide 22: Current Situation: Large number of PowerCARD versions in production
Current Situation Large number of PowerCARD versions in production Potential to reduce maintenance costs Rationalization of maintenance and operation teams Multiplication of PowerCARD instances Heterogeneous infrastructures, significant operating effort and different level of industrialization from
Slide 23: Convergence program objectives
Convergence program objectives Rationalise the number of instances Reduce the number of production versions Implementation of a customer support plan for migration Reduce the number of PowerCARD instances to our main PowerCARD version or to the SaaS model by generalizing multi-client platforms Stand
Slide 24: Current Situation
Current Situation Rose Belle (Mauritius) Port-Louis (Mauritius) Clients V3.2 Clients V3.5 Clients V2 Backup Nouaceur (Morocco) Settat (Morocco) Clients V3.2 Clients V3.5 Clients V4 Backup 24
Slide 25: Future Situation
Future Situation Rose Belle (Mauritius) Port-Louis (Mauritius) Clients V3.2 Clients V3.5 Clients V2 Backup Nouaceur (Morocco) Settat (Morocco) Clients V3.2 Clients V3.5 Clients V4 Backup 25
Slide 26: Expected benefits
Expected benefits Cost optimization Lower license and infrastructure costs once shared Reduced number of resources due to fewer versions Reduced support and maintenance efforts Mutualization of skills between different sites Improving safety and service quality Simplified infrastructure management a
Slide 27: Expected benefits
Expected benefits < 15 PowerCARD instances A unique PowerCARD version on multi-client instances ≃ 30% reduced operating costs - 30% Reducing instances and the number of data centers will cut annual costs by 30%. 50 - 40% ≃ 40% reduced maintenance costs Convergence of all versions to just 2 will redu
Slide 28: M&A Strategy
M&A STRATEGY Acceleration gear Nacer AMRAOUI M&A 28
Slide 29: Acquisition of the Switching business in 2016
Acquisition of the Switching business in 2016 N° of cards transactions 120.000.000 Switch taken over by HPS Before 2004 HPS 100.000.000 CAGR : 25% • Several co-existing networks • No interoperability • Very low usage of cards 80.000.000 CAGR : 27,5% Between 2004 and 2016 • Creation of the CMI as a N
Slide 30: IPRC acquisition in 2021
IPRC acquisition in 2021 IPRC overview in 2021 Key customers IPRC activities ATM MONITORING ⏵ Over 7 million cards monitored for fraud ⏵ Real-time ATM management ⏵ Automatic incident reporting to customers ⏵ 45% of all transactions in Morocco ⏵ Real-time updating of instructions monitored ⏵ Manageme
Slide 31: IPRC acquisition in 2021
IPRC acquisition in 2021 Beginning 2021 SYNERGY PROGRAM End 2022 IPRC business acceleration thanks to: • Cross selling IPRC services to HPS existing customers • HPS's commercial strength, enabling IPRC to quickly address all markets Strengthening the HPS SaaS offering: • Offering BPO services on top
Slide 32: ICPS acquisition in 2021
ICPS acquisition in 2021 CURRENT SITUATION HPS in Africa 1 Technology : PowerCARD 2 Data centers 13 Countries +50 Experts Center of excellence for PowerCARD ICPS technology in Mauritius and processor with technology skills 1 Technology: PowerCARD 2 Data centers 18 Countries +100 Experts Delivery Cen
Slide 33: M&A priorities
M&A priorities Priorities Priority 1 Priority 2 Priority 3 Geographic growth On premise offer ü SaaS offer ü Consolidating our market share On premise offer ü SaaS offer ü Expanding our technology and services offering ü New business in payment ü Priority 1: Targets that are essential to achieving H
Slide 34: M&A Objectives
M&A Objectives 3.000 Growth excluding M&A: between 12% and 17% per year 2.000 CAGR: 17% 1.000 CAGR: 12% 2022 2023 2024 2025 2026 2027 34
Slide 35: M&A Objectives
M&A Objectives 3.000 Growth including M&A: between 17% and 25% per year CAGR: 25% 2.000 CAGR: 17% 1.000 2022 2023 2024 2025 2026 2027 35
Slide 36: HR & Corporate Strategy
HR & CORPORATE STRATEGY Key development pillar Brahim BERRADA Corporate Services 36
Slide 37: Our collaborators profiles
Our collaborators profiles ≃ 1,000 collaborators 21 Nationalities Morocco Mauritius France France India Pakistan +72,3% Philippines Mauritius Sinagapore 920 Togo Tunisia Ghana 534 Zimbabwe United Kingdom Syria 2019 2022 Morocco Ukraine Canada Average age: 34 years old Malaysia Egypt Jordan Germany >
Slide 38: What we've already done
What we've already done Loyalty management Career management Recruitment capabilities Well-being at work ⏵Social Survey in 2019 ⏵Succession management ⏵Reinforcing employer brand ⏵Institutionalization of leading to a 3-year roadmap and career planning for top through the stock option remote work sin
Slide 39: Our ESOP
Our ESOP Key figures of the plan Concerned employees All employees (excluding founders), including all new recruits and employees from acquisitions Exercise price 1,500 MAD (150 USD) representing 50% of the average share price over the last 3 months of 2019 Program Program running from January 1, 20
Slide 40: Our ESOP: Observed Benefits
Our ESOP Observed Benefits Retention Recruitments Thought Leader Involvement < 10% ≃ 600 1st ESOP ≃ 40% growth Departure rate of middle and Represents 3% of all new IT First ESOP plan in Morocco and ESOP promotes engagement, top management over the engineers in Morocco strong differentiation from in
Slide 41: Next initiatives planned
Next initiatives planned Loyalty management Career Management Recruitment capabilities Well-being at work ⏵New Social Survey in 2023 ⏵Systematization of People ⏵New implementation of ⏵Rethinking the work to take stock and draw a Reviews HPS in India, high potential environment in Morocco new roadmap
Slide 42: Key takeaways
Key takeaways Strong historical growth and ROE driven by investment in best in class technology World-class software serving Growth acceleration between 30% of the world's top 10 17% and 25% per year, based banks on realistic assumptions A new version of PowerCARD to drive accelerated growth with in
Slide 43: High potential growth in valuation
High potential growth in valuation Based on peer multiples, if HPS were to grow revenues at a 15% - 21% CAGR, it should trade at 28-43x EV/EBITDA Source: Capital IQ estimates Note: HPS growth rates shown are midpoints of management organic and inorganic revenue growth guidance ranges 43
Slide 44: IR calendar
IR calendar Upcoming regulated communication Upcoming regional conferences AUGUST 28, 2023 OCTOBER 5 & 6, 2023 (Physical) Publication of 2nd quarter 2023 indicators CFG Bank One-on-One Equity Conference SEPTEMBER 25, 2023 MARCH 4th to the 7th, 2024 (Physical) Publication of the situation for the 1st
Slide 45: Annexes
ANNEXES 45
Slide 46: Consolidated balance sheet – in MAD
Consolidated balance sheet – in MAD ACTIVE 31/12/2022 31/12/2021 PASSIVE 31/12/2022 31/12/2021 Fixed assets 300 052 568 293 636 527 Equity 652 158 218 556 582 145 - Capital 70 359 900 70 359 900 Gap acquisition 92 321 077 103 589 946 - Issuance premiums 31 623 410 31 623 410 Intangible assets 88 102
Slide 47: Consolidated income and expense account – in MAD
Consolidated income and expense account – in MAD 31/12/2022 31/12/2021 Variation 31/12/2021 PROFORMA Variation Sales figures 980 722 582 796 695 604 23.1% 812 542 709 20.7% Change in product inventories 1 989 444 2 152 441 -7.6% 197 606 NA Fixed assets - 509 252 - NA - NA Other operating income 24 8
Slide 48: Cash flow statement - In MAD
Cash flow statement - In MAD 31/12/2022 31/12/2021 Net income 117 078 596 98 853 277 Elimination of expenses and net products with no effect on finances or not related to the activity - - Depreciation and amortization 34 700 113 33 048 322 - Change in deferred taxes 656 307 927 547 - Capital gains o
Slide 49: Subsidiaries' financial statements - In MAD
Subsidiaries' financial statements - In MAD 31-Dec-22 31-Dec-21 Exploitation Exploitation Exploitation Exploitation Subsidiaries product results Net profit product results Net results Full consolidation (Morocco) HPS SA 754 640 292 100 660 922 85 500 797 613 754 290 72 235 220 76 555 397 HPS Switch
Slide 50: Contact: invest@hps-worldwide.com
Contact: invest@hps-worldwide.com 50
HPS (Hightech Payment Systems SA) — Investor Day (July 2023) on 6ix