83 / 354
9
Operation and financial review
Overview
83
Worldline
2016 Registration Document
on the number of transactions or records processed and
additional system capacity. After a service has begun
operations, the Group may also earn new project revenue to
further expand its capabilities;
fees for maintaining and running the program based on the
system’s capacity. The Group also earns some fees based
systems and other services to public sector entities under a
range of contract types, often of significant size. Many of
these services are provided on a build to run project basis
where the Group earns an initial fee for the design and
E-Government Collection.
The Group’s e-Government
●
Collection business line offers a range of services, including
large scale digitization services, road traffic enforcement, tax
collection, healthcare information and reimbursement
implementation of the project and thereafter earns ongoing
include build revenue and then an ongoing fee based on the
number of connected devices managed.
Revenue from these services may also include some project
revenue in connection with implementing new services.
Contact services are typically based on the number and
duration of connections. Connected Living projects typically
E-Consumer & Mobility.
The Group’s e-Consumer &
●
Mobility business line offers a large range of services.
Consumer cloud services are typically priced based on the
number of end users and the average usage per user.
Contract Renewal Cycles
9.1.2.4
generally range from three to five years in length, with some
Although the Group’s business is spread across a large number
terms of a contract renewal, or failure to renew a contract, can
have, depending on the relative size of the agreement in
question, a significant impact on the revenue and profitability of
the Group or a global business line in any given period.
private sector contracts in Latin America having a length of up
to ten years. When an agreement reaches the end of its term, a
client may seek to renew it or renegotiate the terms of the
agreement or may decide not to renew the agreement. The
The Group’s revenue and profitability can be significantly
affected by contract renewal cycles. The Group’s contracts
of agreements and no single client represented more than c.5%
of the Group’s revenue in 2016, the relative weighting of a
Radar Contract (Automated traffic offence management
system) in France. These two contracts are terminated, at the
end of the third quarter of 2015 for the VOSA contract and in the
course of June
2016 for the RADAR contract.
particular contract can be higher within a business division or
global business line. In this respect, about 50% of e-Government
Collection revenue in 2015 derived from two significant
contracts, the VOSA contract in the United Kingdom and the
General Economic Conditions
9.1.2.5
issuers often reduce credit limits and tighten their card issuance
rates, which can have a negative effect on the overall value of
transactions generated by consumers and number of cards
The Group generates the majority of its revenue from the
processing of payment transactions on either a per transaction
or percentage of transaction value basis. During economic
downturns, consumers typically reduce spending, and card
further insulates the Group from the full effect of economic
downturns.
groceries or fuel, the sales of which are less volatile, which
managed. Although this effect exists, it has been far outweighed
in recent years by the secular shift from cash to non-cash
payments. Also, while consumers reduce spending during
downturns, many consumers may make smaller but more
Merchant Services & Terminals business is earned from retailers
that are in non-discretionary spending categories such as
frequent transactions. Because a majority of the Group’s
revenue is generated on the basis of the number of transactions
that take place, this helps reduce the effect of overall spending
declines. In addition, a significant portion of the Group’s
Services Mix
9.1.2.6
transaction fees and the Group’s success in building scalable
platforms to process these volumes profitably.
“build” phase, the most profitable stage of such contracts is
The Group’s revenue and profitability are also affected by the
mix and stage of maturity of the services it sells. As noted in
Section
9.1.2.2 “Contract Structure,” while the highest revenue
under a build to run contract is typically earned during the
margin of 13.9% in 2016). Similarly, the Group earns higher
average fees on credit card transactions than it does on debit,
OBeP and certain electronic wallet transactions. To the extent
that these categories of non-cash payments experience
Services division tends to generate a proportionately higher
portion of its revenue from projects in the build and ramp phase,
it achieves higher revenue growth but lower margins (OMDA
significant growth in future periods, the Group’s profitability
would be affected by the extent to which the new volumes
generated by these payment methods outweigh the lower per
that have reached scale and others that are still in the build or
ramp up phase. From a global business line profitability
perspective, the Group’s Financial Services global business line
and Merchant Services & Terminals global business line have a
typically the “maturity” phase of the “run” period. Each of the
Group’s three global business lines has a mix of some services
higher proportion of services that have reached full scale,
allowing it to generate OMDA margins of 26.1% and 22.6%
respectively for these two global business lines in 2016.
Conversely, because the Group’s Mobility & e-Transactional