21 03/2019 13:00

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SIA 2018 Financial Statement: a record year, great progress in card payments

SIA 2018 Financial Statement: a record year, great progress in card payments Download (PDF 301.05 KB)
Consolidated results
Revenues: €614.8 million (+8.4%)
Ebitda: €201.4 million (+12%)

SIA SpA results and dividend:

Revenues: €411.9 million (+2.1%)
Net profit: €84.6 million (+33.4%)
Proposed ordinary dividend: €0.35 euro per share


Business figures:
Card transactions: 7.2 billion card transactions (+18.1%)
Cards managed: 84.2 million (+15.3%)
Merchants managed: 1.1 million (+19.8%)
Institutional services:14 billion transactions (+6.7%)
Data carried on the 186,000 km of SIAnet network: 1,204 terabytes (+53.6%)


Milan, 21 March 2019 – The Board of Directors of SIA, meeting under the chairmanship of Giuliano Asperti, has examined and approved the draft financial statements and the consolidated financial statements at 31st December 2018.
 
The results achieved by SIA Group show strong growth, in terms of revenues and EBITDA, over those of the 2017 financial year, also thanks to the positive contribution of the Parent Company, of subsidiary P4cards and - in the final quarter - of the other companies acquired in central and south-eastern Europe, in addition to the significant rise in electronic payment transactions with cards and traffic volumes on the SIAnet network.
The achievement of these results was made possible thanks to the quality of the solutions offered and the absolute reliability in the management of “mission-critical” infrastructures, with service availability levels of the highest standards on the market.
  
MAIN ECONOMIC-FINANCIAL RESULTS OF SIA GROUP

In 2018, Group revenues rose to €614.8 million with a growth of €47.6 million (+8.4%) over 2017. The Cards segment accounts for 63% of revenues, the Payments segment 19% and Institutional Services 18%.
 
At geographic level, revenues in Italy totaled €466.5 million, up €15.2 million (+3.4%), while those from abroad reached €148.3 million, an increase of €32.4 million (+27.9%).
 
Operating costs amounted to €414.7 million compared to the €390.2 million of 2017 (+6.3%), of which staff costs accounted for €182.5 million (+4.2% compared to the previous year).
At year end SIA Group had 3,465 employees – including the approximately 1,400 people who joined the Group as a result of the acquisition of the cards processing business from First Data in central and south-eastern Europe – with an increase of around 70% over 2017.
220 people were hired at Group level in 2018.
 
In 2018, the gross operating margin (EBITDA) increased to €201.4 million, up by €21.6 million (+12%) and EBIT rose to €122.3 million, up by €13.8 million compared to the previous year (+12.7%).
Adjusted EBITDA, which does not take account of extraordinary events and operations, amounted to €222.1 million compared to the €203 million of the previous financial year (+9.4%).
 
The pre-tax result was €110.3 million, up €10.2 million (+10.2%), while net profit stood at €79.5 million, substantially in line with 2017, taking into account the lower tax benefits deriving from the “Patent Box".
 
At the end of 2018, the net financial position went up to €723.9 million from €379.7 million (+91%) due to the abovementioned extraordinary acquisition from First Data.
 
The operating investments made in 2018 amount to €52.1 million as opposed to the €67.7 million of 2017, down by €15.6 million (-23%).
 
SIA Group 2018 2017 Change %
Revenues
  • Italy
  • Abroad
614.8
466.5
148.3
567.2
451.2
116
47.6
15.2
32.4
8.4%
3.4%
27.9%
Ebitda
% on Revenues
201.4
32.8%
179.8
31.7%
21.6 12%
EBIT (operating result)
% on Revenues
122.3
19.9%
108,5
19.1%
13.8 12.7%
Pre-tax result
% on Revenues
110.3
17.9%
100.1
17.6%
10.2 10.2%
Net profit
% on Revenues
79.5
12.9%
80.1
14.1%
(547) -0.7%
Net Financial Position 723.9 379.7 344.2 91%


As regards the main consolidated economic and financial ratios, the 2018 figures confirm that SIA Group is successfully continuing along the path of growth in terms of revenues and profitability, taking into account the recent acquisition. The ROI index is affected by the sharp increase in net invested capital in the last quarter of the year - following the aforementioned extraordinary operation - and by the fact that the related EBIT includes the contributions of the companies acquired only for the last 3 months of 2018.
Also the capital ratios are affected by this acquisition but remain in solid balance, in line with the objectives pursued by the Group to guarantee adequate levels of capital remuneration, while maintaining the necessary financial resources to support any non-organic growth operations as provided for by the 2019-2021 Strategic Plan.

 
SIA Group 2018 2017
ROE
Net profit / Net worth
26.2% 29.5%
ROI
EBIT / Invested Capital
12.1% 16.7%
Cash and cash equivalents/Current liabilities 0.34 0.26


MAIN ECONOMIC- FINANCIAL RESULTS OF SIA S.P.A.
 
2018 saw a rise in SIA’s revenues to €411.9 million, with a growth of €8.5 million (+2.1%).
 
EBITDA is also up at €124.5 million from €114.6 million in 2017 (+8.7%) and the operating result reached €97.4 million (+10%). Net profit is €84.6 million, up by €21.2 million (+33.4%) compared to the previous financial year, also by virtue of the higher dividends paid by Group companies and taking into account the lower fiscal benefits deriving from the “Patent Box”. SIA’s net financial position was affected by the acquisition of the cards processing business from First Data for the sum of €387 million.

 
SIA SpA 2018 2017 Change %
Revenues 411.9 403.4 8.5 2.1%
Ebitda
% on Revenues
124.5
30.2%
114.6
28.4%
9.9 8.7%
 
Ebit (risultato operativo)
% on Revenues
97.4
23.6%
88.5
21.9%
8.8 10%
Net profit
% on Revenues
84.6
20.5%
63.4
15.7%
21.2 33.4%
Net Financial Position 799.6 432.6 367 84.9%


BUSINESS TREND
 
In 2018, SIA Group processed in total 7.2 billion card transactions (+18.1% compared to 2017), 14 billion institutional services transactions (+6.7%) and 3 billion payment transactions relating to credit transfers and collections (-2.4% due to lower non-SEPA payments volumes and activities of branches of foreign banks in Italy).
 
On the financial markets, the number of trading and post-trading transactions was 51.7 billion (-8% related to increased technological efficiency in the market framework which reduced the total number of orders).
SIA handled a volume of traffic of over 1,204 terabytes of data, up 53.6% compared to 2017, on the 186,000 km of the SIAnet network, with total infrastructure availability and 100% service levels.

 
SIA Group 2018 2017 Change
Card transactions 7.2 billion 6.1 billion 18.1%
Payment transactions 3 billion 3.1 billion -2.4%
Institutional services transactions 14 billion 13.1 billion 6.7%
Trading and post-trading transactions 51.7 billion 56.2 billion -8%
Data carried on the network 1,204 terabyte 784 terabyte 53.6%


Cards segment
 
2018 confirmed the strong growth in the use of payment cards, further reinforcing the positive trend of the past few years.
This for SIA has meant a growth of 18.1% in the number of issuing and acquiring transactions processed in the cards sector, rising from 6.1 billion in 2017 to 7.2 billion last year, due to the aforementioned acquisition of processing activities in central and south-eastern Europe from First Data and to an increase in transactions in the Maestro and Visa Electron/Vpay international debit networks (+24.7%).
Also on the increase are transactions by credit card (+16.4%) and prepaid card (+10.1%), while ATM withdrawals and POS purchases made with debit cards in the domestic Bancomat and PagoBancomat networks are down by 1.7%.
SIA managed a portfolio of 84.2 million payment cards (+15.3%) and around 1.1 million merchants (+19.8%).
 
Thanks to this trend and to a growth in consumption, SIA has increasingly established its positioning on the market as a key technology provider able to offer its customers complete and customized innovative solutions.
 
In the path of growth that aims to establish the company's European leadership in electronic payments, SIA has finalized the acquisition of First Data’s business activities in the cards sector in Greece and other Central European countries, mainly Croatia, the Czech Republic, Hungary, Romania, Serbia and Slovakia. The operation concerns the card processing and production, call centers and back-office services for more than 13 million payment cards, 1.4 billion transactions and the management of more than 300,000 POS terminals and 6,500 ATMs.
 
SIA has also signed a contract with Budapest Bank to supply card processing and issuing services. The bank's portfolio was migrated and the system went into production in October 2018.
German tech-company SolarisBank, to which SIA provides issuing services, has completed certification for Visa circuit cards, in addition to those of MasterCard.
 
In Italy in 2018, through its own technological infrastructure, SIA supported the launch of the new Samsung Pay payment system, further contributing to the spread of mobile payment services in our country and continuing on the traditional path of innovation alongside banks.
 
As far as the acceptance network is concerned, in addition to Alipay, also the WeChat Pay payment service was activated. Furthermore, the offering of terminals has been enriched with the Android-based smartPOS line, making value-added services available to consumers and merchants.
 
Worthy of mention, among the most successful SIA innovation initiatives, was the creation of the digital platform that allows passengers to pay the fare for the Milan urban and extra-urban underground network directly at the turnstile using contactless MasterCard and Visa cards. The new payment system launched in Milan by municipal transport company ATM, the first of its kind in Italy, is currently offered abroad by leading companies in the sector, such as those in London, Moscow, Chicago, Singapore and Vancouver.
 
2018 confirmed the role of the subsidiary SIApay as enabler of issuing and acquiring services to support financial institutions in the mobility sector.
In the petrol sector, also subsidiary P4cards has strengthened its key role at national level, confirming its partnership with leading market players. The first collaborations in the field of electronic invoicing have also been launched.
 
Payments segment
 
During 2018, the Payments segment reached a total of 3 billion transactions managed, down 2.4% compared to 2017. Even though there was a sharp increase in volumes relating to Jiffy (+79.3%) and to Gateway services (+10.3%), there was in fact a decrease in volumes linked to non-SEPA payments and to the operations of branches of foreign banks in Italy.
 
Instant Payments represent the most significant change in the global payment scenario and form the basis for the development of payment services in the near future. In 2018 the digital platform SIA EasyWay offered banks and other Payment Service Providers (PSPs) a rapid "go to market" option supporting and managing at European level the instant payments available on EBA Clearing's RT1 infrastructure - developed by SIA - as well as all other SEPA payment and collection instruments. Credit Agricole Italia and Banca Popolare di Sondrio are among the first banks to have adopted this solution.
 
In the area of instant payments, in June 2018 SIA obtained certification as the first Network Service Provider from the Eurosystem (ECB and national Central Banks of the Eurozone) to provide access to TIPS - Target Instant Payment Settlement - the new pan-European service for the settlement in central bank money of instant payments started up at the end of last year.
The SIAnet network, which guarantees direct, secure, ultra-fast connections, was also the first to enable connection between banks and EBA Clearing's RT1 platform.
Dutch bank ABN AMRO and the Central Bank of Lithuania have chosen SIA's network infrastructure to access instant payments.
 
In 2018, with the introduction of the Payment Services Directive 2 (PSD2), SIA launched a new Open Banking platform to allow banks, fintech companies, corporates, SMEs and Public Sector bodies, Italian and European, to promote and accelerate the creation of innovative payment services and to seize new business opportunities as well as ensuring compliance with the regulations.
 
The Multinetwork offering for the centralized management of interbank relations at domestic and cross-border levels continues to generate interest from the market. Gateway services between companies, banks and sales channels have also seen consistent growth in volumes, in particular thanks to the contribution provided by the payment services available on pagoPA.
 
Furthermore, to facilitate compliance with the new legislation on electronic invoicing, SIA has created the FatturAmica App, which can be used by VAT-registered parties and by merchants to initiate the issue of an e-invoice following a purchase.
 
In the area of digital payments, the Jiffy service - developed by SIA to transfer money in real time between individuals simply by using the contacts in their smartphone and to make payments in stores - recorded an increase both in the number of participants (about 130 banks) and of registered users (5 million). The development of the acceptance network focused on small merchants not equipped with POS terminals and large-scale retail with major players like Carrefour Italia and Iper.
 
As of fall 2018, it is possible to pay Hera Group utility bills through Jiffy simply by entering the user’s mobile phone number and without having to enter credit card or current account details, through the MyHera app or the online services of the Group. Customers receive a notification on their smartphone and with a simple click can authorize the transaction in real time on their bank current account.
 
Of particular importance is the agreement between SIA and Bancomat SpA to launch the new BANCOMAT Pay service starting from January 2019. The agreement provides for the integration into BANCOMAT Pay of the Jiffy service, allowing approximately 37 million PagoBANCOMAT card holders to make payments in stores and on e-commerce sites, send and receive money in real time from their smartphone in complete security simply by using their mobile phone number. The agreement increases the synergies between Jiffy's innovative technology and the recognizability of Bancomat, a brand that is extremely widespread in Italy, with the aim of rapidly increasing the use of the new payment service.
 
Finally, the collaboration between SIA and major national financial operators was consolidated to simplify the connection of the local and central public sector to PagoPA.
 
Institutional Services segment
 
2018 also confirmed the growth trend in transactions managed in the Institutional Services segment which reached 14 billion with an increase of 6.7% over the previous year. An increase was also recorded in volumes handled by STEP2, EBA Clearing’s pan-European technology platform for the settlement of SEPA payments, to which over 4,800 financial institutions in 34 countries are connected. Compared to 2017, SEPA Credit Transfers grew by 5%, while SEPA Direct Debits saw a 3% increase. SIA guaranteed excellent service levels, offering EBA Clearing and subscribing banks 100% availability for the sixth consecutive year.
 
The strong interest in Instant Payments was further confirmed in 2018 as they represent an important support to the increasingly widespread use of payment instruments on mobile platforms and to the development of e-commerce. On behalf of EBA Clearing, SIA started up the first pan-European infrastructure for Instant Payments, which during 2018 managed 10 million transactions.
 
The portfolio of Central Institutions that use SIA solutions has also expanded. The company has developed the new Real-Time Gross Settlement system of the Central Bank of Denmark and has thus further strengthened its positioning in the Nordic countries.
 
In 2018, SIA confirmed its role as key technology partner to the London Stock Exchange Group, thanks to the excellent level of the services provided and the development of new business functionalities for the fixed-income trading (MTS) and post-trading (Monte Titoli) platforms.
 
From a regulatory viewpoint, the Market in Financial Instruments Directive II (MiFID II), which aims to consolidate the European financial marketplace and protect the final investor, has come into force.
 
In this scenario, the financial intermediaries sector has shown interesting progress, in particular with the consolidation of TODEAL, the leading access platform for trading on the primary market of Italian and international public debt, and of SIA EAGLE, an integrated trade compliance technology for trading on capital markets that was further enhanced to include unstructured information sources such as phone calls, emails and chats that have proven very useful in identifying possible violations. Currently over 100 financial intermediaries located in 18 countries use SIA's compliance and surveillance systems.
 
2018 saw the continuation of activities for the development of SIABookBuilding, the new IPO process management application that allows financial brokers from all over the world to manage different types of operations on a single platform simultaneously using info vendor data and accessing advanced functionalities for order collection, document management, monitoring of compliance activities and report generation
SIABookbuilding was used last year in Italy also for several placements on the AIM market.
 
At the end of 2018, 44 trading venues operating in Europe and the United States were connected to SIA’s “Financial Ring” which enables financial intermediaries to access, via a single high-speed, low-latency network infrastructure, the main international stock markets using date centers in Milan, Rome, London, Frankfurt, and New York.
The SIAnet network has a total of around 570 active nodes. For the ninth year in a row, the service level of network services was 100%, thereby ensuring the full availability of the infrastructure 24 hours a day, 365 days a year, supporting the supply of SIA’s services.
 
Overall, the network traffic on the SIAnet infrastructure increased by 53% throughout the perimeter of the infrastructure managed, bringing volumes to around 120,000 GB of traffic over 1,000 km of network connections with a stable 100% availability.
 
2018 was also the year when the new SIAchain network infrastructure went into production to support financial institutions, corporates and the public sector in the development and implementation of innovative applications based on blockchain technology in a secure and protected manner.
Thanks to SIAchain, it is possible to launch and make available a series of business applications in which distributed ledger technology (DLT) represents an emerging innovation to meet the needs of specific communities of registered and approved members. SIA also guarantees the organization of these communities in a context of transparency, confidentiality and security.
 
SIAchain was selected for the operational testing of the "Spunta Banca" project - coordinated by ABI Lab, the research and innovation center promoted by the Italian Banking Association - based on blockchain technology that currently involves 18 Italian banks. SIA participates in the project together with other technological partners such as R3 and NTT Data.
 
In Belgium, SIA is one of the founding members of IATBA (International Association of Trusted Blockchain Applications), led by the European Commission, which will bring together all stakeholders interested in the transparent promotion of interoperability, governance, legal certainty and trust in services made possible by Blockchain and Distributed Ledger technologies.


PROPOSED DIVIDEND DISTRIBUTION AND CONVENING OF THE SHAREHOLDERS’ MEETING

Thanks to the results achieved in 2018, with a net profit of €84.6 million, and in the light of the objectives of growth and stabilization of profitability within the timescale set out in the three-year Strategic Plan, also taking into account the financial debt due to corporate acquisitions completed in 2018, the Board of Directors will propose to the Shareholders’ Meeting – convened on first call for 16th April at SIA’s headquarters at via Gonin 36, Milan - the distribution of an ordinary dividend for the 2018 financial year of approximately €60 million corresponding to €0.35 for each of the 171,343,227 shares.
 

Media Contacts:

Filippo Fantasia

Head of Media Coordination
Phone +39 02.6084.2833
Mobile +39 335.1202713
Email: filippo.fantasia@sia.eu

Valentina Piana

Media Coordination
Phone +39 02.6084.2334
Mobile +39 342.0467761
Email: valentina.piana@sia.eu