The importance of underlying numbers – WorldPay FY15 as an example

(In this post, Worldpay is used as an example simply due to the author’s interest in the payments segment).

The following demonstrates what an analyst might be looking to pull out from a company results’ statement, primarily not interested in reported figures, but in underlying/adjusted figures, which we define as excluding currency movements, acquisitions/disposals, and significant and genuine – e.g. not ongoing staff remuneration in shares – one-offs. (For clarity, our usage of underlying differs from the company’s usage in its results statement: the company does not adjust for currency and acquisitions in its definition, but does so separately).

The below is not in-depth, just a quick pull-out of numbers, the way that an analyst might do when first trawling through figures. We have focused on revenues and EBITDA, and have not looked at the make-up of EBITDA, or whether it is the appropriate metric.

In the below context specifically, notice also the probable benefit in the UK from pricing, which the analyst will be trying to place in the context of sustainability in this sector in particular, given intense competition. Note finally the highlighted concluding sentence, which, we would argue, if indeed it does relate to the whole, would be better placed right at the start. Analysts having to pull out negatives from deeper in statements is counter-productive for companies, in our experience.

Due to the speed of clawing out the numbers, there might easily be errors below (the speed/accuracy problem that always faces analysts when results come out – lesson for companies: put all relevant and important information upfront, and remember that underlying numbers are what analysts are looking for).

As regards earnings adjustments, not really addressed below, analysts will take their own view on whether they agree with specific adjustments made by companies, and managements need to be objective/unemotional/develop a thick skin in this regard.

Also note that hitting forecasts in terms of reported (non-underlying) revenues etc. is somewhat arbitrary for companies with significant overseas revenues, as actual currency mixes and hedges almost inevitably will differ from analysts assumptions).

We have added little commentary – clearly an analyst/fund-manager would go on from here to make forecasts/recommendations/judgement calls against their preceding expectations.

This is merely meant as a very quick demonstration exercise, and by no means talks to the company per se.

[For any company, of course, the way the statement is presented and handled, ditto analyst presentations etc. will also talk not just directly, but indirectly to valuation, indirectly not least of all because it talks to ‘risk’].


Revenue [Reported pro-forma revenue +9%]

Excluding the impact of acquisitions and foreign currency translation, overall revenue growth was 5%

+23% Global eCom

+6% WPUS

-8% WPUK

Net revenue

[Reported pro-forma net revenue increased by 14% year-on-year]

Excluding the impact of acquisitions and foreign currency translation, overall net revenue growth was 10%:

+ 16% increase in Global eCom business

+ 3% increase in WPUS

+ 11% increase in WPUK


[Reported pro-forma EBITDA increased by 8% year-on-year]

Excluding the impact of acquisitions and foreign currency translation, overall EBITDA growth was 8%:

+15% Global eCom

+15% WPUK

-17% WPUS

7% increase in corporate costs

Note the significant difference between the UK overall and net revenue growth. Behind this would appear to lie price increases/not passing on interchange reductions (and possibly passing on interchange increases where applicable?):

‘Net acquiring income grew by 18% reflecting the impact of higher transaction volumes and effective management of pricing on new business and renewals, as well as a net positive impact of lower interchange costs on the acquiring margin which funded the enhancement of our propositions for customers. ‘

Final sentence of statement

‘The Directors believe strongly that we have the right strategy and people in place to deliver sustainable growth in the future but it will take longer than previously anticipated to achieve and we will incur additional costs as a result.’ (Note: as this is the concluding sentence, and paragraph, of the company’s narrative, it is to be assumed that this relates to the overall business, but it comes at the end of the US segment and is not separated out under a different heading).

Mark Hawkes

Sources: Worldpay, RNS. 

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