Total revenues: €567.2 million (+21.1%)
Ebitda: €179.8 million (+44%)
Net profit: €80.1 million (+13.8%)
Proposed ordinary dividend: €0.35 per share (+34.6%)
Cards: 6.1 billion operations (+41.1%)
Payments: 3.3 billion operations (+7.1%)
Clearing: 13.1 billion transactions (+7%)
Trading and post-trading: 56.2 billion transactions (+18.8%)
Data carried on the SIAnet network: 784 terabytes (+19.8%)
Milan, 9 March 2018 – The Board of Directors of SIA, meeting under the chairmanship of Giuliano Asperti, has examined and approved the Draft Financial Statements at 31st December 2017.
The results achieved by SIA Group show strong growth, especially in terms of revenues, EBITDA and net profit, over those of the 2016 financial year, also thanks to the positive contribution of P4cards (company acquired in 2017) in the cards area, the revenues of the parent company and the rise in electronic payment transactions and volumes of traffic 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.
“The 2017 results confirm the effectiveness of the strategy of growth and internationalization pursued in recent years which has allowed SIA to consolidate its position in the field of digital payments despite highly competitive market conditions. We will carry on along this path through organic development of the business in Italy and abroad and by seeking out extraordinary corporate transactions in line with our growth prospects. Our objective remains to create a hi-tech infrastructure for European payments with innovative, reliable and secure services” said Massimo Arrighetti, Chief Executive Officer of SIA.
MAIN ECONOMIC-FINANCIAL RESULTS OF SIA GROUP
In 2017, Group revenues rose to €567.2 million with a growth of €99 million (+21.1%) over 2016. The Cards segment accounts for 57% of revenues, the Payments segment 23% and Institutional Services 20%.
At geographic level, revenues in Italy totaled €451.2 million, up €79 million (+21.2%), while those from abroad reached €116 million, an increase of 20 million (+20.8%).
Operating costs amounted to €390.2 million compared to the €346.8 million of 2016 (+12.5%). Staff costs were €175.1 million (+28.4% compared to the previous year).
At year end SIA Group had 2,048 employees – including the 353 people who joined the Group as a result of the acquisition of the cards business unit from UniCredit Business Integrated Solutions (UBIS) – with an increase of 22.6% over 2016.
In 2017, the gross operating margin (EBITDA) increased to €179.8 million, up by €54.9 million (+44%) and EBIT rose to €108.5 million, up by €4.3 million compared to the previous year (+4.2%).
Adjusted EBITDA, which does not take account of extraordinary events and transactions, amounts to €203 million compared to the €142.6 million of the previous financial year (+42.3%).
Net profit was €80.1 million, up by €9.7 million (+13.8%).
At the end of 2017, the net financial position was down at €379.7 million compared to €392.4 million
(-3.2%), in spite of an extraordinary outlay of €35.8 million due to tax redemption relating to the goodwill resulting from the acquisition of the companies P4cards and PforCards from UBIS (UniCredit Group).
The operating investments incurred in 2017 amount to €67.7 million as opposed to the €21.9 million in 2016, up by €45.8 million (+209.1%).
As regards the main consolidated economic and financial ratios, it is worth noting that both the ROE and the ROI are substantially in line with 2016 and are confirmed at the high end of market averages. The values of these indices – albeit with development of the company both in terms of revenues and profitability - are linked to a balanced capital strengthening policy 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 Strategic Plan.
MAIN ECONOMIC- FINANCIAL RESULTS OF SIA S.P.A.
2017 saw a rise in SIA’s revenues of €403.4 million, with a growth of €12.6 million (+3.2%).
EBITDA is down at €114.6 million from €118.6 million in 2016 (-3.4%) and operating result reached €88.5 million (-12.1%). Net profit is €63.4 million, down by €6.4 million (-9.1%) compared to the previous financial year. These results, as well as SIA’s net financial position, were affected by the acquisition of the cards business unit from UBIS for a sum of €500 million.
In 2017 the SIA Group processed overall the clearing of 13.1 billion transactions (+7% compared to 2016), 6.1 billion card transactions (+41.1%) and 3.3 billion payment transactions (+7.1%) relating to credit transfers and collections.
On the financial markets, the number of trading and post-trading transactions rose to 56.2 billion from 47.4 billion in 2016, an increase of 18.8%.
SIA handled a volume of traffic of over 784 terabytes of data, up 19.8% compared to 2016, on the 174,000 km of the SIAnet network, with total infrastructure availability and 100% service levels.
2017 confirmed a gradual growth in the use of cards and other electronic payment instruments, reinforcing the positive trend that has characterized the past few years.
This for SIA meant a growth of 41.1% in the number of issuing and acquiring transactions processed in the cards sector, rising from 4.3 billion in 2016 to 6.1 billion last year, mainly due to the afore-mentioned acquisition from UBIS and to an increase in transactions in the Maestro and Visa Electron/Vpay international debit networks (+23%).
Also on the increase are operations by credit card (+10.7%), prepaid card (+8.2%) and ATM withdrawals and POS purchases made with debit cards in the domestic Bancomat and PagoBancomat schemes (+1.5%).
SIA managed a portfolio of 73 million payment cards (+11%) and around 928,000 merchants (+25%).
Thanks to this trend and to a growth in consumption, SIA has increasingly established its positioning on the market as a reference technology provider able to offer complete and customized innovative solutions in a digital banking framework with an improved customer experience.
During 2017, thanks to SIA’s technology infrastructure, it was possible to enable the acceptance of mobile payments by Alipay users in Italy, in particular the numerous Chinese tourists visiting our country, at the POS terminals of leading stores through the reading of the barcode generated by the same app used in China.
In the large corporate segment, there was a development of new products and payment services adding value to the customer base and the retail market, along with the acquisition of major accounts at national level, in the automotive, mobility, fuel and utility sectors.
The expansion to foreign markets continued in 2017, especially in Germany, where SIA was selected by Intercard to enable payments with cards issued by four international networks - Diners Club International®, Discover®, JCB and UnionPay - and by FinTech solarisBank to support the launch of new contactless debit cards and contribute to the development of electronic payment solutions in the German market.
In the area of payments, the trend of migration from cash to electronic payments continued. In 2017, SIA recorded an increase in transactions (+7.1%) which reached 3.3 billion, mainly due to the strong development of mobile payment (+53.7%) and payment factory (+10.1%) services, alongside greater volumes of Gateway services (+17.1%).
2017 also saw the completion of "SIA EasyWay", a new digital platform that allows banks and other Payment Service Providers (PSPs) to manage 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 (such as SCT and SDD), and more generally the new open banking scenario linked to the introduction of Payment Services Directive 2 (PSD2). This platform was launched by SIA on 21st November to coincide with the launch of the SEPA Instant Credit Transfer scheme (transfer with immediate and irrevocable credit) of the European Payments Council (EPC).
Through the SIAnet network, which guarantees secure and ultra-fast connections thanks to a new low-latency messaging technology, "SIA EasyWay" provides access to EBA Clearing’s RT1 and is also set up to connect the other European Automated Clearing Houses (ACH) and future Instant Payment platforms.
The development of mobile payment projects also continued, focused mainly on Jiffy - the service created by SIA to send and receive money among private individuals and make payments in real time from smartphone, now provided by even more Italian banks with a total of over 130 at the end of December, and a number of users that has reached approximately 4.5 million.
Jiffy has confirmed its position as the leading mobile payment service in the Eurozone, by number of registered users and number of subscriber banks. In 2017, it extended its acceptance network and also arrived in stores, thanks to the agreement made by Intesa Sanpaolo with about 600 merchants.
A further significant innovation concerns two mobile applications developed by SIA to facilitate and speed up the spread of the service - one for the retail world, which allows private users to pay, transfer and request money - the other “Jiffy Business" intended for merchants, which allows payments to be collected in "app-to-app" mode.
Also worthy of note is the agreement between Poste Italiane and SIA which, thanks to the new "Extra Sconti" app, allows Postepay debit and credit cardholders to save money while shopping. "Extra Sconti" is based on the Ti Frutta digital marketing service developed by SIA subsidiary Ubiq, which through a cash-back mechanism allows users to receive money on their current account for every purchase made in the stores of large-scale retail brands present in the "shop window" of the app.
With regard to the evolution and innovation of services, also thanks to emerging technologies, SIA has designed and realized "SIAchain", a new platform to support financial institutions, corporates and public administration bodies in the development and implementation of innovative blockchain-based applications in a safe and protected manner.
Thanks to the SIAchain private infrastructure, which makes use of the approximately 600 network nodes in Europe of SIAnet - the over 170,000 km-wide, high-speed and low latency fiber-optic network - a series of business applications will be launched and made available in which distributed ledger technology (DLT) is an emerging innovation capable of meeting 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.
Moreover, SIAchain is at the heart of the strategic partnership between SIA and R3 that will permit an acceleration in the development and global adoption of applications based on blockchain technology.
Over the year, SIA consolidated its collaboration with public sector institutions to support them in the implementation of services aimed at citizens and simplification of operative processes, in line with the three-year plan for information technology in the public sector as set out by the Agency for Digital Italy and the Digital Transformation Team. This plan offers all public sector institutions strategic, technological and economic guidelines to accompany them in the digital transformation process and, in particular, to help them connect to the PagoPa Payments Node.
Institutional Services segment
2017 also confirmed the growth trend in transactions managed in the Institutional Services segment which reached 13.1 billion (+7%). An increase was also reported 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 2016, SEPA Credit Transfers grew by 5%, while SEPA Direct Debits saw an 8% increase.
SIA guaranteed excellent service levels, offering EBA Clearing and subscribing banks 100% availability for the fifth consecutive year.
Over the course of the year, interest intensified amongst a wide number of players in solutions that guarantee real time clearing of Instant Payments in the retail sector, which represent an important support to the increasingly widespread use of payment instruments on mobile platforms and to the development of e-commerce. On 21st November 2017, RT1 was launched. RT1 is EBA Clearing's pan-European Instant Payments infrastructure created by SIA, compliant with the SEPA Instant Credit Transfer scheme (SCT Inst) of the European Payments Council (EPC) and with international messaging standards for payments in real time (ISO 20022).
To meet the various needs of Central Institutions, more solutions were added to the offer portfolio of solutions for the processing of instant payments integrated with RTGS. SIA was also chosen by the Central Bank of Iceland (CBI) to develop the new system for the settlement of large-value transactions in real time and the new Instant Payments platform.
From a regulatory viewpoint, there were significant factors that have affected the settlement of securities trading transactions at international level, such as the Market in Financial Instruments Directive II (MiFID II) introduced with the aim of consolidating the European financial marketplace and protecting the final investor.
In 2017, SIA played the role again of technology partner to the London Stock Exchange Group, thanks to the excellent level of the services provided and the development of new functionalities for fixed-income trading (MTS) and post-trading (Monte Titoli) platforms.
The financial intermediaries sector also showed significant progress, in particular the consolidation of the European business development of TODEAL, the leading platform to access the primary market for Italian and international public debt, and of SIA-EAGLE, an integrated compliance technology for operations on capital markets. Currently, over 100 financial intermediaries located in 18 countries use SIA’s compliance and surveillance systems.
Furthermore, an important partnership with Thomson Reuters was signed. A new application developed by SIA for the management of the IPO process on the Eikon platform was launched as part of this partnership. Thanks to "SIABookbuilding", investment banks all over the world can manage different types of operation, such as initial public offers, subsequent issues and convertible bonds, using simultaneously Thomson Reuters’ data on investor profiles and league tables, in addition to news and a significant amount of exclusive research and analysis. The availability of financial data and execution functionalities on a single platform ensures greater effectiveness in the deal management process and allows placement consortia to optimize investment decisions.
SIA’s “Financial Ring” was further strengthened. This enables financial intermediaries to access, via a single high-speed, low-latency network infrastructure, the main international stock markets using hubs in Milan, London, Frankfurt, Budapest and New York. At the end of 2017, 44 trading venues operating in Europe and the United States were connected (+42% compared to 2016) and 574 customers.
In total, the active nodes of the SIAnet network are 574 (420 of which in Italy and 154 in the rest of Europe).
For the eighth 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.
PROPOSED DIVIDEND DISTRIBUTION AND CONVENING OF THE SHAREHOLDERS’ MEETING
Thanks to the results achieved in 2017, with a net profit of €63.4 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 2016, the Board of Directors will propose to the Shareholders’ Meeting - called on 17th April at 11.30 a.m. at SIA’s headquarters at via Gonin 36, Milan - the distribution of an ordinary dividend for the 2016 financial year of €59.9 million corresponding to €0.35 for each of the 171,343,227 shares.
Last year, the shareholders received an ordinary dividend of €44.55 million, corresponding to €0.26 per share (total 171,343,227 shares).