TIDMWISE
RNS Number : 8466H
Wise PLC
29 November 2022
29 November 2022
Wise plc
Unaudited results for the six months ended 30 September 2022
"Our goal today remains unchanged to make moving and managing
money faster, easier, cheaper and more transparent for people and
businesses around the world.
"In the first half of this financial year, our payments got
faster, hitting a key milestone with 50 percent of all transfers
now instant. And while we had to increase prices on some routes, we
were able to decrease fees on others, enabling us to limit the
impact of more volatile markets. As a result, our average fee today
is 0.64%, and we consistently remain one of the cheapest and
fastest options for moving money around the world. Our customers
agree: 5.5 million customers trusted us with their money in Q2
alone, up 40% from last year, and in total, we helped move GBP51.3
billion for people and businesses in these six months, an increase
of 49%.
"But we are still solving only a fraction of the problem, and
the fight for transparency must go on. In the past months we also
joined the European Commission in calling on all providers to
commit to full disclosure on all fees, including exchange rate
markups, on all transfers to Ukraine - a significant step forward
in the right direction for transparency in the industry."
Kristo Käärmann, Co-founder and Chief Executive Officer
Highlights for the six months ended 30 September 2022 (1)
Great progress on our mission of solving a massive problem for
customers in a large, underserved market
-- More customers than ever moved money with us. In Q2 FY23 we
supported 5.5 million active customers, a 40% increase on the 3.9
million in Q2 FY22;
-- We moved over GBP51 billion for customers globally in H1
FY23, 49% more than in H1 FY22. This led to a 55% increase in
revenues to GBP397 million.
Our infrastructure got better and our speeds got faster
-- More than half of all transactions were completed instantly,
compared with 39% in Q2 FY22; new partnerships led to faster
pay-out speeds in Hong Kong, Chile and Japan;
-- Despite higher costs, including those related to unusually
high levels of volatility in global currencies, we were able to
keep prices low and our average customer price for Q2 FY23 was
0.64%, compared with 0.62% in Q2 FY22.
Momentum supported by higher adoption of Wise Account
-- Wise Account launches in this period include an integration
with Plaid's Core Exchange in the US enabling US customers to
connect their Wise accounts to over 6,000 finance apps, and the
launch of INTERAC e-transfer requests in Canada;
-- Wise Business improvements include the launch of "payment
request" links enabling businesses to get paid directly, and a
redesigned dashboard for businesses globally. Additionally, we
expanded the rollout of digital cards for businesses in the US;
-- A higher proportion of our customers are using multiple
features of our Wise Account, typically sending twice as much money
cross-border.
We're growing quickly and profitably, whilst investing
significantly in our growth
-- Total income for the first six months increased 63% to GBP416
million reflecting strong growth in active customers and an
increase in total volumes;
-- Adjusted EBITDA increased 52% to GBP92 million, representing a margin of 22%;
-- Profit before tax increased 173% to GBP51.3 million;
-- We continue to invest in our teams and our growth as our
profitable, cash generating model enables us to remain focused on
the long term opportunity.
Forward looking financial guidance
-- Total income to increase by between 55% and 60% for FY23,
compared with FY22, and for total income to grow by more than 20%
CAGR over the medium-term;
-- Adjusted EBITDA margin at or above 20% over the medium-term.
(1) All comparisons are against the six months ending 30
September 2021, unless otherwise stated.
Financial information
Selected financial Information:
Half-year ended 30 September YoY
2022 2021 Movements
%
Revenue (GBP million) 397.4 256.3 55%
Net interest income on customer
balances (GBP million) 18.7 (1.2) -
Total income (GBP million) 416.1 255.1 63%
Gross profit (GBP million) 262.4 172.6 52%
Gross profit margin 63.1% 67.6% -4.6 pps
Profit before tax (GBP million) 51.3 18.8 173%
Adjusted EBITDA (GBP million) 91.9 60.6 52%
Adjusted EBITDA Margin(1) 22.1% 23.8% -1.7 pps
Free cash flow (FCF) (GBP million)(2) 78.3 59.0 33%
FCF conversion (FCF as a % of
Adjusted EBITDA) 85.2% 97.4% -12.2 pps
====================================== ============== ============== =========
(1)Adjusted EBITDA as a proportion
of total income.
(2)FCF as a proportion of Adjusted
EBITDA.
Growth metrics:
FY23 FY22 YoY Movement (%)
Q1 Q2 H1* Q1 Q2 H1 Q1 Q2 H1
Customers (million)(1) 5.0 5.5 - 3.7 3.9 - 36% 40% -
Personal (million) 4.7 5.2 - 3.4 3.7 - 37% 40% -
Business (million) 0.29 0.30 - 0.22 0.23 - 33% 31% -
Volume Per Customer
(GBP thousand)(2) 4.9 4.9 - 4.5 4.6 - 9% 7% -
Personal (GBP thousand) 3.8 3.9 - 3.6 3.7 - 7% 6% -
Business (GBP thousand) 22.2 22.9 - 18.6 19.4 - 19% 18% -
Volume (GBP billion)(3) 24.4 27.0 51.3 16.4 18.0 34.4 49% 50% 49%
Personal (GBP billion) 18.0 20.1 38.1 12.4 13.5 25.9 46% 49% 47%
Business (GBP billion) 6.3 6.9 13.2 4.0 4.5 8.5 58% 55% 56%
Revenue (GBP million) 185.9 211.5 397.4 123.5 132.8 256.3 51% 59% 55%
Personal (GBP million) 144.4 164.7 309.1 96.9 103.4 200.3 49% 59% 54%
Business (GBP million) 41.5 46.8 88.3 26.6 29.4 56.0 56% 59% 58%
Net interest income
on customer balances
(GBP million) 1.2 17.5 18.7 (0.6) (0.6) (1.2)
Personal (GBP million) 0.6 9.1 9.7 (0.3) (0.3) (0.6)
Business (GBP million) 0.6 8.4 9.0 (0.3) (0.3) (0.6)
Total income (GBP
million) 187.1 229.0 416.1 122.9 132.2 255.1 52% 73% 63%
Personal (GBP million) 145.0 173.8 318.8 96.6 103.1 199.7 50% 69% 60%
Business (GBP million) 42.1 55.2 97.3 26.3 29.1 55.4 60% 90% 76%
Cross-currency revenue
take rate (%) 0.61% 0.63% 0.62% 0.66% 0.64% 0.65% -5 bps -1 bps -3 bps
Revenue take rate
(%) 0.76% 0.78% 0.77% 0.75% 0.74% 0.75% 1 bps 4 bps 2 bps
Total income take
rate (%) 0.77% 0.85% 0.81% 0.75% 0.74% 0.74% 2 bps 11 bps 7 bps
======================== ===== ===== ===== ===== ===== ===== ====== ====== ======
Note: Differences between 'total' rows and the sum of the
constituent components of personal and business are due to
rounding.
*We do not report the number of customers or volume per customer
on a half-yearly basis.
(1) Total number of unique customers who have completed at least
one cross currency transaction in the given quarter.
(2) Average volume per each active customer, calculated as total
volume divided by total active customers in the period.
(3) Cross-border volume only.
(4) Includes revenue and net interest income on customer
balances.
(5) Total fees on cross currency transfers as a % of volume.
(6) Revenue as a % of volume.
(7) Total Income as a % of volume.
An update from Kristo, our Co-founder and CEO
Our mission: Money without borders - instant, convenient,
transparent and eventually free. Wise is building the best way to
move and manage money around the world.
Since we set out, our transfers have become much faster and
cheaper, our products better and easier to use. More people and
businesses have access to transparent pricing through us and we
continue to promote and lobby for price transparency with
regulators around the world. In the first six months of this year
we have continued to make good progress against our mission.
We made great progress on our mission of solving a massive
problem for customers in a large, underserved market
Moving money internationally is still broken. For too many
people it remains expensive, slow, inconvenient and opaque. And
this problem exists in a massive market. We estimate there are
close to 300 million international migrants and the global
cross-border payments market for consumers and small and
medium-sized businesses (SMBs) is currently around GBP11 trillion.
Currently we have approximately a 4% share of the personal market
and less than 1% share of the SMB market, so there is a huge
opportunity for us to help more people.
We're helping more people than ever move and manage their money.
We now have 5.5 million active customers and our customers moved
more than GBP51 billion with us in the first six months. The growth
in active customers and volumes was driven by growth in new
customers, more than two-thirds of which are recommended to us by
existing Wise users, and increased adoption of the Wise Account
across both new and existing customers. It's great to know that
more people than ever are getting transparent, low prices with
us.
We're excited about the courage policymakers around the world
have shown to help make transparent pricing the norm. For example,
the European Commission introduced a "mark-up rule" for all
transfers to Ukraine, urging providers to disclose all fees,
including the exchange rate mark-up. While participation is
voluntary for now, this means more providers will price like Wise
and expensive providers will have their high fees exposed.
Our infrastructure got better and we reached a milestone for
payment speed
We've built a replacement infrastructure for correspondent
banking. This infrastructure powers our products and allows us to
offer faster and cheaper payments to our customers.
We reached a milestone achievement this year, with half of all
transfers completed instantly (in less than 20 seconds). In fact in
Q2 FY23, 90% of transfers were completed within 24 hours. This
compares to Q2 FY22 where 39% of transfers were completed instantly
and 86% were completed within 24 hours.
We made a number of improvements in the last six months, and
ongoing improvements will help speed up more payments. New
partnerships have led to noticeably faster payments in Hong Kong
and Chile, and we can now make payments out of Japan 24/7, instead
of previously only between 9am and 9pm on business days.
The price our customers pay reflects the cost to deliver the
service, plus a margin that allows us to do this sustainably. When
we find ways to lower costs, we pass this through as price
reductions, and when costs increase, prices increase. In the second
quarter, the average price our customers paid was 0.64%, 2 bps
higher than the same period last year. This is largely a result of
higher FX volatility and servicing costs. We're pleased that we
were able to limit price increases and as a team we are working
hard to keep bringing prices down over time. In fact, as we share
the benefit of higher interest rates (on the balances that
customers hold with us), this will support pricing.
In August, the Abu Dhabi Global Market (ADGM)'s Financial
Services Regulatory Authority (FSRA) found that our UAE subsidiary
Wise Nuqud's Anti-money Laundering (AML) controls were not fully in
line with the requirements of the jurisdiction and therefore issued
a financial penalty of US$360,000. No instances of money laundering
were identified by Wise or by the FSRA. Wise has paid the penalty
and has addressed all concerns identified by the regulator.
Our recent growth means we now onboard more than one million
customers per quarter, in countries all over the world. This
requires a huge effort from our operations teams who aim to keep
delivering the high standard of customer experience that we set for
ourselves. To cater to this demand, we've scaled our operations
team by approximately 1,000 people in the last 12 months.
We offer our customers a superior product
Our customers do more than just send money with Wise. Our
customers also receive, hold, spend and invest their money.
Businesses manage their cash flow, pay and receive their invoices
and pay their employees around the world, while other customers use
us through their own bank. We serve our customers with three core
products: Wise Account, Wise Business and Wise Platform.
Wise Account and Wise Business are international accounts
designed to make moving and managing money around the world easy.
Wise Platform takes the power of Wise and integrates it into banks
and enterprises. Product improvements in the last six months have
made our product more convenient to use and more secure.
Getting verified and set up with a Wise Account is now quicker
and easier for more of our personal customers, and we've made it
easier for them to move money as well. For example, in the US,
customers can not only link to bank accounts, but can also link
their Wise account to over 6,000 finance apps such as Venmo,
Truebill and Chime, making pay-ins and pay-outs simpler, whilst
having more methods for sending USD. We've also made sending money
to China via Alipay easier. And when our customers spend with Wise,
they now have a more transparent and detailed transaction history
to help track and stay on top of their spending. Customers want
security when they use Wise, and we've introduced new features,
including unique communication codes and improved scam prevention
and scam reporting tools.
We've made life more convenient for our business customers too.
We've re-designed the Business dashboard, making it much easier to
find the features that matter most to businesses. In the U.S. we've
expanded the roll-out of digital cards, so now more businesses can
offer digital cards to their employees, and with greater in-app
employee spending controls and 2-step payment approvals, our
business customers can feel more in control of their money. It's
also now easier for businesses to get paid - by sharing new
'payment request' links, they can have their customers pay them
directly into their Wise account.
We're helping more people and businesses move and manage their
money internationally, and they now hold GBP9.2bn in balances with
us, a GBP2.5bn increase in the last six months and GBP4.3bn
increase in the last 12 months. We've seen interest rates increase
across many of our largest markets in recent months and this has
led to us earning higher levels of interest income associated with
these balances. As we head into the second half of the year and
into FY24, we will begin to share much of this benefit back to our
customers, including more product and service improvements, and
through pricing.
Increasing numbers of customers value the convenience of the
features we've built. In the last 6 months 30% of active personal
customers used the Wise Account for more than just sending money
cross-border, an increase from 20% in FY22. For businesses, this
adoption rate is above 50%. In completing more of their
cross-border needs with us, we saw this group of customers transact
three times as much in Q2 FY23 and move twice as much cross-border
- compared with customers that use the 'Send' money feature
only.
In terms of our Platform product, we built our new
'International Receive' feature for our partners. This allows
financial institutions not connected to the SWIFT network to now
receive payments from all over the world via SWIFT using their
existing customer account details. The feature also enables
financial institutions with an existing SWIFT setup to process
these incoming SWIFT transfers faster, cheaper and more
conveniently.
We went live with new Platform partners, including Firstbase,
Onfolk and Wagestream and expanded our partnerships with neo-banks
Monzo and Yapeal. Customers using Wise through our Platform
partners get the same commitment to transparent pricing as Wise
customers.
Also, thanks to Wise Platform, we're able to accelerate the
number of people that get access to price transparency. In the last
six months, 6 million more people and businesses can now know
exactly how much their international transfers cost.
Looking forward, we remain focused on rolling out more features
to more people around the world. This means not only adding new
features and improving convenience, but taking some of the features
currently only available in our more established markets and making
them available more broadly across the other countries we operate
in across the world. We recently received our investment licence in
Estonia that will allow us to introduce the Assets product across
Europe, and this adds to the licence we recently had granted in
Singapore where we are currently extending the roll-out of
Assets.
We're growing at scale whilst remaining profitable and highly
cash generative
With a disciplined financial model, we continue to invest and
grow at scale whilst remaining profitable and cash generative. As
of Q2 FY23, active customers had grown by 40% compared with last
year, leading to c.50%, more volumes. At the same time we continued
to make significant investment in the business, including a c.1,400
increase in the number of Wisers to help us on our mission. Our
adjusted EBITDA for the six months was GBP92 million, a 52%
increase on last year. This is equivalent to a 22% margin,
consistent with our medium-term guidance. We generated GBP78
million of free cash flow in the period, up from GBP59m last year.
You can read more about our financial performance for the six
months below in our CFO Matt's financial update.
These results demonstrate that the investments we've been making
for the longer-term are paying off, and also that whilst we've come
a long way, there is more to do. We will continue to invest and
focus on our four mission pillars: price, speed, convenience and
transparency to build the best way for people and businesses to
move and manage their money internationally.
Kristo.
A financial update from Matt, our CFO
Our mission is to create the best way to move and manage money
around the world, and we have a relentless focus on solving the
problems facing our customers. Profitability and financial
discipline is at the heart of our model, allowing us to invest and
grow at scale, sustainably in pursuit of our mission. This ensures
that we can continue to create value for both our customers and our
shareholders.
The significant investment we've made in recent years in
creating radically better products, the Wise Account and Wise
Business, is the main reason why more customers are using us and
this is the key driver behind the strong financial performance that
we've delivered in the first six months of the year.
Continued growth in active customers and volumes
The number of customers who transacted with Wise increased by
40% from Q2 FY22 to Q2 FY23, to 5.5 million. The increase in active
customers was driven by new customer growth and greater adoption of
the Wise Account and Wise Business products. We continue to see
about two-thirds of new customers come to Wise through referrals,
or 'word of mouth'.
Greater adoption of the Wise Account and Wise Business also
drives an increase in active customers, as customers using these
products tend to transact more frequently and use a wider range of
the features.
Customers are moving more money through Wise. The average volume
per customer (VPC) in Q2 FY23 increased 7% on Q2 FY22 to GBP4.9k.
Personal customers moved GBP3.9k on average, 6% higher than last
year and business customers moved GBP22.9k, 18% more than last
year. The VPC of customers that use multiple features of the Wise
Account and Wise Business is approximately two times higher than
customers that only use us to 'send' money. Additionally, the high
levels of inflation across our key markets are likely to be
contributing to the higher VPC, particularly for our Business
customers.
As a result of the strong growth in active customers and the
increase in the amount our customers are transacting with us, total
cross-border volumes increased by 49%, to GBP51.3 billion. Personal
volumes increased 47% to GBP38.1 billion and business volumes
increased 56% to GBP13.2 billion. On a constant currency basis,
volumes grew 44%.
Volume growth is driving our total income growth
Our revenue take rate for the first six months was 2 bps higher
than the same period last year, at 0.77%. We managed to reduce our
prices on balance across the year, meaning that our cross border
take rate reduced by 3pbs at 0.62%. But other revenues, which are
driven by spending on the Wise card, same currency transactions and
the Assets product, were higher compared to the same period last
year, reflecting the increased adoption of the Wise Account and
Wise Business products. This higher "other" revenue more than
offsets the lower cross-border take rate. The lower take rate on
cross-border transactions reflects price decreases we have made to
certain currencies, and a route mix effect, partly offset by some
price increases across a number of other currencies.
The increased revenue take rate, combined with the 49% increase
in volumes led to a 55% increase in revenue for the period to
GBP397.4 million.
Higher levels of adoption of the Wise Account and Wise Business
products supported growth in the balances that customers hold with
us. Customer balances increased 88% YoY from GBP4.9 billion to
GBP9.2 billion at the end of the period. These balances, which we
safeguard for customers, are held across a variety of assets
including bank deposits, government bonds and money market funds.
The recent rise in interest rates has positively contributed to the
yield that we generate on these balances. For the first six months
of the financial year, the average yield on these balances
(including non-invested assets) was 0.5%, and was 1.1% in September
2022.
Net interest income on customer balances was GBP18.7 million in
H1 FY23, compared with the net interest expense of GBP1.2 million
in H1 FY22 which was largely driven by negative interest rates in
Europe.
As a result, total income, inclusive of revenue and net interest
income on customer balances, increased 63% to GBP416.1 million.
This represents a total income take rate of 0.81%, 7 bps higher
than H1 FY22.
We intend to share much of the benefit from higher interest
rates with our customers. We will pass this back through pricing,
rewards and investment in the business, whilst ensuring we maintain
the same sustainable level of profitability.
Gross profit for the period increased by 52% to GBP262.4 million
compared to GBP172.6 million in the same period last year. Gross
profit as a percentage of total income was 63% compared with 68%
last year. The increase in gross profit reflects the increase in
total income, partly offset by higher cost of sales. The reduction
in gross profit margin largely reflects higher FX costs associated
with the increased levels of currency volatility that we've
experienced.
Disciplined expense management; investments delivering growth
and better products
Administrative expenses of GBP214.9 million were 41% higher in
the first six months, largely driven by an increase in employee
benefit expenses and technology and development expenses. This
reflects the investment we have made in product development and
infrastructure and the increase in the size and quality of our
operations function to onboard new customers and then support the
rapidly growing customer base.
Employee benefit expenses increased 49% to GBP126.5 million. As
Kristo mentioned above, we are now onboarding more than 1 million
customers per quarter, globally, and we set ourselves a high
standard when it comes to customer service. We've scaled our
operations teams to be able to meet this demand, by around 1,000
since 30 September 2021. We have also been investing for growth, by
increasing the size of our product development and marketing teams.
As at 30 September 2022, we had 4,301 Wisers supporting our
mission, up 49% from 2,883 at 30 September 2021.
New customer growth continues to come predominantly through
referrals, or 'word of mouth', which is extremely beneficial for
overall customer acquisition cost. We have also continued to invest
in marketing, increasing spend on media by 40% to GBP18.3 million
in the first six months as we look for ways to invest more whilst
maintaining an attractive return on investment. The average payback
for paid marketing remains less than 9 months, and has actually
improved over the period, and when blended across all new customers
this is remarkably low at just 3 months.
Technology and development costs increased by 68% to GBP19.3
million as we invested in improving the security and authentication
of our products and systems. We have also increased our usage of
cloud computing, helping us to be as flexible as possible as we
continue to scale.
Expenses relating to consultancy and outsourced services
increased by 42% to GBP28.9 million. Recently we have been
increasingly using external vendors to support some of the
operational servicing activities we undertake; we do this where we
can get the appropriate service quality and often at a lower cost.
The increase also reflects the cost of advisory services relating
to regulatory and compliance requirements as we expand our
geographic coverage and broaden the features we offer to
customers.
Profitable, highly cash generative and well capitalised
We generated an Adjusted EBITDA of GBP91.9 million for the first
six months, an increase of 52% compared with the same period last
year (GBP60.6 million), and represents an adjusted EBITDA margin of
22.1%, as a percentage of total income. The higher adjusted EBITDA
was largely driven by the improvement in income for the period,
which increased by 63%, creating significant capacity for us to
invest whilst maintaining a margin consistent with our medium-term
guidance.
Stepping back, of the GBP262.4 million of gross profit we
generated, c.30% of this was invested in growth either through our
product development teams, or in marketing investments. GBP91.9m,
or 35% of gross profit, flowed through to EBITDA, and the remainder
of gross profit covered expenses for operational teams and our
corporate functions and overheads. This means that, combined, about
two thirds of our gross profit flowed to funding teams that invest
in growth or to adjusted EBITDA. This we believe demonstrates the
strength of the financial model and the commitment to both
sustainability and investment in growth, and capturing the
significant opportunity ahead.
Profit before tax of GBP51.3 million for the period increased
173% compared with GBP18.8 million in the same period last year.
Earnings per share increased to 3.78 pence per share, compared with
1.33 pence last year.
We generated GBP78.3 million of free cash flow in the period, a
33% increase compared to GBP59.0 million last year. Our rate of
free cash flow generated, as a percentage of adjusted EBITDA, was
85% (H1 FY22: 98%). The reduction in this rate mostly reflects the
effect of changes in working capital, which can vary over time.
Excluding the impacts of working capital, our free cash flow
generation as a percentage of adjusted EBITDA was 92%, compared
with 86% last year.
We remain well capitalised, with Group eligible capital of
GBP281.2 million, comfortably in excess of our regulatory
requirements.
Financial Guidance
-- Total income growth of between 55-60% in FY23 and greater
than 20% (CAGR) over the medium-term
-- Adjusted EBITDA margin at or above 20% over the medium-term
To summarise, our strong growth is driven by the quality of the
products and features that we've built to help our customers move
and manage money. Our discipline ensures that we will be able to
achieve our mission whilst maintaining a sustainable, profitable
and cash generative financial model.
Responsibility statement of the directors in respect of the
interim financial statements
We confirm that to the best of our knowledge:
-- the condensed set of financial statements have been prepared
in accordance with IAS 34 Interim Financial Reporting as contained
in UK-adopted IFRS;
-- the condensed set of financial statements give a true and
fair view of the assets, liabilities, financial position and profit
or loss of the Group;
-- the interim management report includes a fair review of the information required by:
a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the year;
and
b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
On behalf of the Board of directors:
Kristo Käärmann, Director
Date: 28 November 2022
Condensed consolidated statement of comprehensive income
For the half-year ended 30 September 2022 (unaudited)
Half-year ended 30 September
================================
2022 2021
Note GBPm GBPm
====================================================== ====== ============== ==============
Revenue 3 397.4 256.3
Interest income on customer balances 3 22.3 1.5
Interest expense on customer balances 3 (3.6) (2.7)
====================================================== ====== ============== ==============
Total Income 416.1 255.1
Cost of sales 4 (148.5) (81.2)
Net credit losses on financial assets 4 (5.2) (1.3)
====================================================== ====== ============== ==============
Gross profit 262.4 172.6
Administrative expenses 4 (214.9) (152.2)
Interest income from operating assets 0.3 -
Other operating income 7.2 0.9
====================================================== ====== ============== ==============
Operating profit 55.0 21.3
Finance expense (3.7) (2.5)
====================================================== ====== ============== ==============
Profit before tax 51.3 18.8
Income tax expense 6 (14.0) (6.1)
====================================================== ====== ============== ==============
Profit for the period 37.3 12.7
Other comprehensive (loss)/income
Items that may be reclassified to profit
or loss:
Fair value loss on investments, net 11 (23.8) (4.8)
Currency translation differences 6.8 0.4
====================================================== ====== ============== ==============
Total other comprehensive loss (17.0) (4.4)
Total comprehensive income for the period 20.3 8.3
Earnings per share
Basic, in pence 9 3.78 1.33
Diluted, in pence 9 3.61 1.23
====================================================== ====== ============== ==============
All results are derived from continuing operations.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
Condensed consolidated statement of financial position
As at 30 September 2022 (unaudited)
As at 30
September As at 31 March
2022 2022
Note GBPm GBPm
========================================== ===== ============ =================
Non-current assets
Deferred tax assets 115.5 113.6
Property, plant and equipment 7 21.3 22.6
Intangible assets 8 16.6 20.3
Trade and other receivables 10 22.0 14.3
========================================== ===== ============ =================
Total non-current assets 175.4 170.8
Current assets
Current tax assets 1.9 7.3
Trade and other receivables 10 223.8 137.6
Short-term financial investments 11 2,081.4 1,192.4
Cash and cash equivalents 12 7,741.5 6,056.3
========================================== ===== ============ =================
Total current assets 10,048.6 7,393.6
Total assets 10,224.0 7,564.4
Non-current liabilities
Trade and other payables 13 22.2 15.7
Provisions 2.2 2.2
Deferred tax liabilities - 0.5
Borrowings 14 167.1 90.2
========================================== ===== ============ =================
Total non-current liabilities 191.5 108.6
Current liabilities
Trade and other payables 13 9,560.7 7,034.2
Provisions 1.6 1.6
Current tax liabilities 6.1 5.3
Borrowings 14 6.7 5.5
========================================== ===== ============ =================
Total current liabilities 9,575.1 7,046.6
Total liabilities 9,766.6 7,155.2
Equity
Share capital 15 10.2 10.2
Equity merger reserve (8.0) (8.0)
Share-based payment reserves 220.3 200.5
Own shares reserve (0.4) (0.4)
Other reserves (41.6) (17.8)
Currency translation reserve 7.0 0.2
Retained earnings 269.9 224.5
========================================== ===== ============ =================
Total equity 457.4 409.2
Total liabilities and equity 10,224.0 7,564.4
========================================== ===== ============ =================
The accompanying notes are an integral part of these condensed consolidated
financial statements.
Condensed consolidated statement of changes in equity
For the half-year ended 30 September 2022 (unaudited)
Equity Share-based Own Currency
Share merger payment shares Other translation Retained Total
capital reserve reserves reserve Reserves reserve earnings equity
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============== ==== ======= ======= =========== ======= ======== =========== ======== ======
As at 1 April
2021 9.4 (8.0) 124.5 - (0.7) (2.5) 162.6 285.3
Profit for the
period - - - - - - 12.7 12.7
Fair value
loss on
investments,
net 11 - - - - (4.8) - - (4.8)
Currency
translation
differences - - - - - 0.4 - 0.4
============== ==== ======= ======= =========== ======= ======== =========== ======== ======
Total
comprehensive
income
for the
period - - - - (4.8) 0.4 12.7 8.3
Issue of share
capital 0.5 - - (0.5) - - - -
Share-based
compensation
expense - - 20.3 - - - 1.0 21.3
Tax on
share-based
compensation - - 21.5 - - - - 21.5
Employee share
schemes - - (15.6) 0.3 - 17.5 2.2
============== ==== ======= ======= =========== ======= ======== =========== ======== ======
As at 30
September
2021 9.9 (8.0) 150.7 (0.2) (5.5) (2.1) 193.8 338.6
============== ==== ======= ======= =========== ======= ======== =========== ======== ======
As at 1 April 2022 10.2 (8.0) 200.5 (0.4) (17.8) 0.2 224.5 409.2
Profit for the period - - - - - - 37.3 37.3
Fair value loss on
investments,
net 11 - - - - (23.8) - - (23.8)
Currency translation
differences - - - - - 6.8 - 6.8
============================ === ====== ======= ======= ======= ======== === ====== =======
Total comprehensive income
for the period - - - - (23.8) 6.8 37.3 20.3
Issue of share capital - - - - - - - -
Share-based compensation
expense - - 25.3 - - - - 25.3
Tax on share-based
compensation - - 2.4 - - - - 2.4
Employee share schemes - - (7.9) - - - 8.1 0.2
============================ === ====== ======= ======= ======= ======== === ====== =======
As at 30 September 2022 10.2 (8.0) 220.3 (0.4) (41.6) 7.0 269.9 457.4
============================ === ====== ======= ======= ======= ======== === ====== =======
The accompanying notes are an integral part of these condensed consolidated financial statements.
Condensed consolidated statement of cash flows
For the half-year ended 30 September 2022 (unaudited)
Half-year ended 30 September
================================
2022 2021
Note GBPm GBPm
===================================================== ===== ================ ============
Cash flows from operating activities
Cash generated from operations 16 1,993.8 1,257.3
Interest received 22.2 7.5
Interest paid (7.8) (5.1)
Corporate income tax paid (3.4) (4.9)
===================================================== ===== ================ ============
Net cash generated from operating activities 2,004.8 1,254.8
Cash flows from investing activities
Payments for property, plant and equipment (1.6) (3.2)
Payments for intangible assets (3.1) (3.1)
Payments for financial assets at FVOCI (2,569.8) (594.9)
Proceeds from sale and maturity of financial
assets at FVOCI 1,752.0 149.0
Proceeds from sublease 0.1 -
===================================================== ===== ================ ============
Net cash used in investing activities (822.4) (452.2)
Cash flows from financing activities
Proceeds from issues of shares and other
equity 0.3 2.2
Proceeds from borrowings 14 255.0 43.0
Repayments of borrowings 14 (175.0) (43.0)
Principal elements of lease payments 14 (2.4) (1.7)
Interest paid on leases 14 (0.4) (0.5)
===================================================== ===== ================ ============
Net cash (used in)/generated from financing
activities 77.5 0.0
Net increase in cash and cash equivalents 1,259.9 802.6
Cash and cash equivalents at beginning
of the period 12 6,056.3 3,358.6
Effects of exchange rate changes on cash
and cash equivalents 425.3 48.2
===================================================== ===== ================ ============
Cash and cash equivalents at end of the
period 12 7,741.5 4,209.4
===================================================== ===== ================ ============
The accompanying notes are an integral part of these condensed consolidated
financial statements.
Notes to the interim condensed consolidated financial
statements
For the half-year ended 30 September 2022 (unaudited)
Note 1. Summary of significant accounting policies
1.1 General information
Wise plc (the "Company") is a public limited company and is
incorporated and domiciled in England (Registration number
13211214). These condensed financial statements for the six months
ended 30 September 2022 comprise the Company and its subsidiaries
(the "Group"). The principal activity of the Group is the provision
of cross-border money transfer services. The address of its
registered office is 6th Floor Tea Building, 56 Shoreditch High
Street, London E1 6JJ.
1.2 Basis of preparation and accounting policies
These condensed consolidated interim financial statements of the
Group have been prepared in accordance with Accounting Standard IAS
34 Interim Financial Reporting and the Disclosure and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
The condensed consolidated interim financial statements should
be read in conjunction with the Annual Report and Accounts for the
year ended 31 March 2022 and any public announcements made by Wise
plc during the interim reporting period.
The interim report has not been audited or reviewed by auditors
pursuant to the Financial Reporting Council guidance on Review of
Interim Financial Information.
The accounting policies and presentation applied by the Group
are consistent with those in the previous financial year, except
for the adoption of new and amended accounting standards as set out
below.
1.3 New accounting standards
Adoption of new or revised standards and interpretations
The following new or revised standards and interpretations
became effective for the Group from 1 April 2022:
-- Amendments to IAS 16 - Property, Plant and Equipment: Proceeds before Intended Use
-- Amendments to IFRS 3 - Reference to the Conceptual Framework
-- Amendments to IAS 37 - Onerous Contracts: Cost of Fulfilling a Contract
-- Annual Improvements to IFRS 1, IFRS 9, IAS 41 and IFRS 16 (2018-2020 cycle)
The adoption of the above amendments did not have a material
impact on the Group. There are no other new or revised standards or
interpretations that are effective for the first time for the
financial year beginning on or after 1 April 2022 that would be
expected to have a material impact on the Group.
New standards, amendments and interpretations not yet
adopted
The following amendments have been published by the IASB and are
effective for annual periods beginning on or after 1 January 2023;
the amendments have not been early adopted by the Group. None of
the amendments are expected to have a material impact on the Group
in the current or future reporting periods or on foreseeable future
transactions:
-- IFRS 17 Insurance Contracts
-- Amendment to IAS 1 - Classification of Liabilities as Current or Non-current
-- Amendments to IAS 1 and IFRS Practise Statement 2 - Disclosure of Accounting Policies
-- Amendments to IAS 8 - Definition of Accounting Policies
-- Amendments to IAS 12 - Deferred Tax related to Assets and
Liabilities arising from a Single Transaction
-- Amendments to IFRS 10 and IAS 28 - Sale of contribution of
assets between an investor and its associate or joint venture
1.4 Changes in presentation
In preparing these financial statements, the Group has made
certain presentational changes to better align the relevant IFRS
financial statement captions and reflect the underlying nature of
the transactions and operations of Wise.
During the period the balances our customers hold with us has
continued to increase. These increasing balances, coupled with the
increase in interest rates globally, has meant that Wise has
started generating interest income on customer balances, whilst
ensuring that they remain safeguarded and available to our
customers. The net interest income associated with this activity is
GBP18.7m for the period (30 September 2021: GBP1.2m expense), and
if rates were to persist at these levels or increase further, the
interest income is expected to grow over the remainder of the
financial year.
As this interest income is now material, we have changed our
presentation in the income statement to include "total income"
which will comprise of revenue (as previously defined) and net
interest income from customer balances. The interest income from
operating assets will remain unchanged in terms of
presentation.
Comparatives for the period ended 30 September 2022 have been
represented to reflect this change in classification
for all instances. This change in presentation has no overall
impact on operating profit or profit before tax.
Half-year ended 30 September
2021
==============================================
Change in
As reported the presentation Re-presented
GBPm GBPm GBPm
====================================== =========== ================= ============
Revenue 256.3 - 256.3
Interest income on customer balances - 1.5 1.5
Interest expense on customer balances - (2.7) (2.7)
======================================== =========== ================= ============
Total Income 256.3 (1.2) 255.1
Cost of sales (81.2) - (81.2)
Net credit losses on financial assets (1.3) - (1.3)
======================================== =========== ================= ============
Gross profit 173.8 (1.2) 172.6
Administrative expenses (152.2) - (152.2)
Interest income from investments
and operating assets 1.5 (1.5) -
Interest expense from operating
assets (2.7) 2.7 -
Other operating income 0.9 - 0.9
======================================== =========== ================= ============
Operating profit 21.3 - 21.3
Finance expense (2.5) - (2.5)
======================================== =========== ================= ============
Profit before tax 18.8 - 18.8
Income tax expense (6.1) - (6.1)
======================================== =========== ================= ============
Profit for the period 12.7 - 12.7
1.5 Critical accounting areas of judgement and estimation
In preparing these interim financial statements, management has
made judgements and estimates that affect the application of
accounting policies and the reported figures. Management assessed
that there were no material changes in the current period to the
critical accounting estimates and judgements, as disclosed in the
2022 Annual Report and Accounts.
Note 2. Segment information
Description of segment
The information regularly reported to the Board of Directors, who
are considered to be the Chief Operating Decision Maker, for the
purposes of resource allocation and the assessment of performance,
is based wholly on the overall activities of the Group. Based on
the Group's business model, the Group has determined that it has
only one reportable segment under IFRS 8, which is "Cross-border
payment services provider".
The Group's revenue, assets and liabilities for this one reportable
segment can be determined by reference to the Statement of Comprehensive
Income and Statement of Financial Position. The analysis of revenue
by type of customers and geographical regions, is set out in note
3.
At the end of each period, the majority of the non-current assets
were carried by Wise Payments Ltd in the UK. Based on the location
of the non-current asset, the following geographical breakdown of
non-current assets is prepared:
As at 30
September As at 31 March
2022 2022
GBPm GBPm
================================================ =========== ===============
Non-current assets by geographical region
United Kingdom 148.4 146.5
Rest of the world 27.0 24.3
================================================== =========== ===============
Total non-current assets 175.4 170.8
================================================== =========== ===============
Note 3. Total Income
Half-year ended 30 September
================================
2022 2021
GBPm GBPm
====================================== ============== ==============
Revenue by customer type
Personal 309.1 200.3
Business 88.3 56.0
======================================== ============== ==============
Total revenue 397.4 256.3
Interest income/(expense) on customer
balances, net 18.7 (1.2)
======================================== ============== ==============
Total Income 416.1 255.1
======================================== ============== ==============
Disaggregation of revenues
In the following table revenue from contracts with customers is
disaggregated by major geographical market based on customer address:
Half-year ended 30 September
================================
2022 2021
GBPm GBPm
========================================================= ============== ==============
Revenue by geographical regions
Europe (excluding UK) 128.4 84.4
North America 85.5 54.2
United Kingdom 81.0 57.9
Asia-Pacific 73.3 46.1
Rest of the world 29.2 13.7
=========================================================== ============== ==============
Total revenue 397.4 256.3
Interest income/(expense) on customer
balances, net 18.7 (1.2)
=========================================================== ============== ==============
Total Income 416.1 255.1
=========================================================== ============== ==============
No individual customer contributed more than 10% to the total revenue.
Note 4. Cost of sales and administrative expenses
Breakdown of expenses by nature:
Half-year ended 30 September
================================
2022 2021
GBPm GBPm
=========================================================== ================ ============
Cost of sales
Bank and partner fees 103.3 66.6
Net foreign exchange loss and other product
costs 45.2 14.6
============================================================= ================ ============
Total cost of sales 148.5 81.2
Net credit losses on financial assets
Amounts charged to credit losses on financial
assets 5.2 1.3
============================================================= ================ ============
Total net credit losses 5.2 1.3
============================================================= ================ ============
Expected credit losses are presented as net credit losses within
gross profit and subsequent recoveries of amounts previously written
off are credited against the same line item. Subsequent recoveries
of amounts previously written off are negligible in both current
and prior reporting period.
Half-year ended 30 September
================================
2022 2021
Note GBPm GBPm
==================================== ==== ============== ==============
Administrative expenses
Employee benefit expenses 5 126.5 84.8
Marketing 18.3 13.1
Technology and development 19.3 11.5
Consultancy and outsourced services 28.9 20.4
Other administrative expenses 13.8 13.3
Depreciation and amortisation 10.8 11.6
Less: Capitalisation of staff costs 8 (2.7) (2.5)
==================================== ==== ============== ==============
Total administrative expenses 214.9 152.2
==================================== ==== ============== ==============
Note 5. Employee benefit expense
Half-year ended 30 September
================================
2022 2021
GBPm GBPm
======================================================== ================ ============
Salaries and wages 82.9 52.4
Share based payment compensation expense 26.1 20.6
Social security costs 12.4 8.8
Pension costs 2.7 1.6
Other employment taxes and insurance cost 2.4 1.4
========================================================== ================ ============
Total employee benefit expense 126.5 84.8
========================================================== ================ ============
The monthly average number of employees during the half-year ended
30 September 2022 was 3,825 (half-year ended 30 September 2021:
2,683 employees)
Note 6. Tax
Half-year ended 30 September
================================
2022 2021
GBPm GBPm
=========================================================== ================ ============
Current income tax for the period 18.0 9.9
Deferred deferred tax credit for the period
* (4.0) (3.8)
============================================================= ================ ============
Total tax expense for the period 14.0 6.1
============================================================= ================ ============
* The deferred tax credit for the period predominately relates to
share based payments.
Income tax expense for the current half-year period is calculated
representing the best estimate of the annual effective tax rate
expected for the full year by geographical unit applied to the pre-tax
income of the six month period, which is then adjusted for tax on
exceptional items.
The effective tax rate for the half-year ended 30 September 2022
is 27% (half-year ended 30 September 2021: 32%). The rate for this
half-year period has reduced from the prior period due to the absence
of the net impact of one off listing costs and UK rate change, but
remains above the UK rate due to overseas profits taxed at higher
overseas tax rates. After removing one off items and prior year
adjustments the underlying effective tax rate for the half-year
ended 30 September 2022 is 26% remaining consistent with the prior
period (half-year ended 30 September 2021: 27%).
On 24 May 2021, an increase in the UK corporation tax rate from
19% to 25% from 1 April 2023 was substantively enacted. Therefore,
the UK deferred tax assets and liabilities, which are expected to
unwind after 1 April 2023, were re-measured in the prior financial
year and adjusted accordingly in the current reporting period based
on the increased UK corporation tax rate and reflected in the statement
of profit and loss and equity.
Note 7. Property, plant and equipment
Right-of-use Leased office Assets under
assets improvements Office equipment construction Total
GBPm GBPm GBPm GBPm GBPm
============================= ============ ============= ================ ============= ======
As at 31 March 2022
Cost 25.8 10.5 4.9 0.2 41.4
Accumulated depreciation (11.6) (4.8) (2.4) - (18.8)
============================= ============ ============= ================ ============= ======
Net book value 14.2 5.7 2.5 0.2 22.6
Additions 0.8 - 0.1 1.7 2.6
Reclassifications - 0.2 0.4 (0.6) -
Depreciation charge (2.6) (1.1) (0.7) - (4.4)
Foreign currency translation
differences 0.4 0.1 0.2 (0.1) 0.6
As at 30 September
2022
Cost 27.4 11.0 5.4 1.2 45.0
Accumulated depreciation (14.6) (6.0) (3.1) - (23.7)
============================= ============ ============= ================ ============= ======
Net book value 12.8 5.0 2.3 1.2 21.3
============================= ============ ============= ================ ============= ======
Note 8. Intangible assets
Other intangible
Software assets Total
GBPm GBPm GBPm
================================ ========== ==================== =======
As at 31 March 2022
Cost 39.0 4.9 43.9
Accumulated amortisation (23.0) (0.6) (23.6)
==================================== ========== ==================== =======
Net book value 16.0 4.3 20.3
Additions 2.7 - 2.7
Amortisation charge (6.2) (0.2) (6.4)
As at 30 September
2022
Cost 41.7 4.9 46.6
Accumulated amortisation (29.2) (0.8) (30.0)
==================================== ========== ==================== =======
Net book value 12.5 4.1 16.6
==================================== ========== ==================== =======
Software is an internally generated intangible asset which consists
of capitalised development costs. Other intangible assets primarily
include licences and domain purchases.
Note 9. Earnings per share
The following table reflects the income and share data used in the
basic and diluted earnings per share (EPS) calculations:
Half-year ended 30 September
================================
2022 2021
================================================== =============== =============
Profit for the period (GBPm) 37.3 12.7
Weighted average number of ordinary
shares for basic EPS (in millions
of shares) 986.2 954.7
Plus the effect of dilution from
Share options (in millions of shares) 46.5 75.8
Weighted average number of ordinary
shares adjusted for the effect of
dilution (in millions of shares) 1,032.7 1,030.5
Basic EPS, in pence 3.78 1.33
Diluted EPS, in pence 3.61 1.23
==================================================== =============== =============
Note 10. Trade and other receivables
As at 30
September As at 31 March
2022 2022
GBPm GBPm
=============================================== ========== ==============
Non-current trade and other receivables
Office lease deposits 1.2 0.7
Other non-current receivables 20.8 13.6
================================================= ========== ==============
Total non-current trade and other receivables 22.0 14.3
Current trade and other receivables
Receivables from payment processors 109.7 69.5
Collateral deposits 49.6 33.6
Prepayments 12.8 8.3
Other receivables * 51.7 26.2
================================================= ========== ==============
Total current trade and other receivables 223.8 137.6
================================================= ========== ==============
* Net of expected credit loss provision of GBP29.0m as at 30 September
2022 (31 March 2022: GBP19.8m).
The carrying values of current trade receivables approximate their
fair values because these balances are expected to be cash settled
in the near future unless a provision is made.
Note 11. Financial assets at fair value through other comprehensive
income
Short-term financial investments are recognised as debt investments
at FVOCI and comprise the following investments in listed bonds:
As at 30
September As at 31 March
2022 2022
GBPm GBPm
=========================================== =========== ==============
Short-term financial investments - level
1
Listed bonds 2,081.4 1,192.4
============================================= =========== ==============
Total short-term financial investments 2,081.4 1,192.4
============================================= =========== ==============
During the period, the following (losses)/gains were recognised
in other comprehensive income:
As at 30
September As at 31 March
2022 2022
GBPm GBPm
=============================================== ========== ==============
Debt investments at FVOCI
Fair value losses recognised in other
comprehensive income (27.1) (22.6)
Recognition of deferred tax asset on listed
bonds 3.3 5.4
================================================= ========== ==============
Total fair value losses in other comprehensive
income (23.8) (17.2)
================================================= ========== ==============
Note 12. Cash and cash equivalents
As at 30
September As at 31 March
2022 2022
GBPm GBPm
================================================ ============ =================
Cash and cash equivalents
Cash at banks, in hand and in transit
between Group bank accounts 5,366.4 5,618.8
Cash in transit to customers * 193.8 154.6
Investment into money market funds 2,181.3 282.9
================================================== ============ =================
Total cash and cash equivalents 7,741.5 6,056.3
================================================== ============ =================
* Cash in transit to customers represents cash that has been paid
out from the Group bank accounts but has not been delivered to the
bank account of the beneficiary.
Of the GBP7,741.5m (31 March 2022: GBP6,056.3m) of cash and cash
equivalents at the period end, GBP467.3m (31 March 2022: GBP357.8m)
is considered the corporate cash balance and is not related to customer
funds that are held in Wise Accounts or collected from customers
for Wise Transfers. Refer to Alternative performance measures on
page 26 for further details.
Customer funds are subject to various regulatory safeguarding compliance
requirements. Such requirements may vary across the different jurisdictions
in which the Group operates.
Wise invests a proportion of its customers' funds into high-quality
and liquid assets, which includes sovereign debt and money market
funds. These instruments are used by the Group as a tool to mitigate
concentration and credit risk from depositories. During the period
the investment into money market funds has increased, in line with
the growth in Wise Account balances.
As at 30 September 2022, in addition to other highly liquid assets,
such as money market funds and investment grade bonds, the Group
held GBP4,604.1m (31 March 2022: GBP4,930.2m) of cash at bank in
segregated, safeguarded bank accounts to secure customer deposits.
Note 13. Trade and other payables
As at 30
September As at 31 March
2022 2022
GBPm GBPm
=========================================== ========== ==============
Non-current trade and other payables
Non-current accruals 22.2 15.7
============================================= ========== ==============
Total non-current trade and other payables 22.2 15.7
Current trade and other payables
Outstanding money transmission liabilities
* 205.1 170.6
Wise accounts 9,233.8 6,783.2
Accounts payable 10.3 10.4
Accrued expenses 40.7 26.5
Deferred revenue 11.1 5.6
Other payables 59.7 37.9
============================================= ========== ==============
Total current trade and other payables 9,560.7 7,034.2
============================================= ========== ==============
* Money transmission liabilities represent transfers that have not
yet been paid out or delivered to a recipient
Trade and other payables are unsecured unless otherwise indicated;
due to the short-term nature of current payables, their carrying
values approximate their fair value.
Note 14. Borrowings
As at 30 As at 31
September March
2022 2022
GBPm GBPm
============================= ========== ========
Current
Revolving credit facility 0.3 -
Lease liabilities 6.4 5.5
=============================== ========== ========
Total current borrowings 6.7 5.5
Non-current
Revolving credit facility 157.4 78.5
Lease liabilities 9.7 11.7
=============================== ========== ========
Total non-current borrowings 167.1 90.2
Total borrowings 173.8 95.7
=============================== ========== ========
Debt movement reconciliation:
Revolving
credit facility Lease liabilities Total
GBPm GBPm GBPm
======================================= ================ ================= =======
As at 1 April 2022 78.5 17.2 95.7
Cash flows:
Proceeds 255.0 - 255.0
Transaction costs related to revolving
credit facility (1.3) - (1.3)
Repayments (175.0) (2.4) (177.4)
Interest expense paid (2.6) (0.4) (3.0)
Non-cash flows:
New leases - 0.8 0.8
Interest expense 3.1 0.4 3.5
Other lease movements - 0.5 0.5
======================================= ================ ================= =======
As at 30 September 2022 157.7 16.1 173.8
======================================= ================ ================= =======
In August 2022, the Group increased and extended the duration of
the current Revolving credit facility (RCF). An additional GBP88m
was secured from all existing lenders to bring the facility to GBP300m,
with three years maturity from the new closing date and two, one
year, extension options. The currency denomination, maturity date,
interest rate, covenant and security terms of the RCF remain consistent
with that disclosed in the Annual Report and Accounts 2022. The
Group has complied with the financial covenants throughout the reporting
period. The undrawn amount of the facility as at 30 September 2022
was GBP140.0m (31 March 2022: GBP132.0m).
Note 15. Share capital
As at 31 September 2022 As at 31 March 2022
========================================== ============================================
Nominal Number of Share capital, Nominal Number of Share capital,
Class value, GBP shares GBP value, GBP shares GBP
================ =========== ============= ============== =========== ============= ==============
Class A Ordinary 0.01 1,024,589,856 10,245,899 0.01 1,024,589,856 10,245,899
Class B Ordinary 0.000000001 398,889,814 0.4 0.000000001 398,889,814 0.4
================ =========== ============= ============== =========== ============= ==============
Total 1,423,479,670 10,245,899 0 1,423,479,670 10,245,899
================ =========== ============= ============== =========== ============= ==============
Note 16. Cash generated from operating activities
Half-year ended 30 September
================================
2022 2021
Note GBPm GBPm
============================================= ===== ============== ==============
Cash generated from operations
Profit for the period 37.3 12.7
Adjustments for:
4, 7,
Depreciation and amortisation 8 10.8 11.6
Non-cash share-based payments expense 26.1 21.7
Foreign currency exchange differences (76.6) 12.3
Current tax expense 6 14.0 6.1
Effect of other non-monetary transactions (15.3) 3.8
Changes in operating assets and liabilities:
(Increase)/decrease in prepayments and
receivables (46.6) (12.5)
Increase in trade and other payables 18.1 33.2
(Increase)/decrease in receivables from
customers and payment processors (31.7) (24.0)
Increase in liabilities to customers,
payment processors and deferred revenue 48.8 24.1
Increase in Wise accounts 2,008.9 1,168.3
============================================= ===== ============== ==============
Cash generated from operations 1,993.8 1,257.3
============================================= ===== ============== ==============
Note 17. Commitments and contingencies
The Group does not have any material contingencies as at 30 September
2022 and 31 March 2022.
Note 18. Transaction with related parties
There have been no material changes to the nature or size of related
party transactions since 31 March 2022.
Note 19. Events occurring after the reporting period
In late October the Group signed a new office lease in Estonia with
an effective date of 2024. The payments will be approximately GBP60
million over the course of the lease term of 10 years and a detailed
analysis and measurement of the lease under IFRS 16 will be undertaken
as part of year end reporting.
Alternative performance measures
With the exception of the change from revenue to total income, as
a result of the change in presentation disclosed in note 1.4, the
alternative performance measures ("APMs") used by the Group remain
consistent with those disclosed in the Annual Report and Accounts
2022 of the Group and should be viewed as supplemental to, but not
as a substitute for, measures presented in the financial statements
which are prepared in accordance with IFRS.
Adjusted EBITDA and free cash flow ("FCF") reconciles to profit
for the period as follows:
Half-year ended 30 September
================================
2022 2021
GBPm GBPm
======================================================= ============= ===============
Profit for the period 37.3 12.7
Adjusted for:
Income tax expense 14.0 6.1
Finance expense 3.7 2.5
Depreciation and amortisation 10.8 11.6
Share-based payment compensation expense 26.1 20.6
Exceptional items - 7.1
========================================================= ============= ===============
Adjusted EBITDA 91.9 60.6
Total income 416.1 255.1
========================================================= ============= ===============
Adjusted EBITDA margin 22.1% 23.8%
Corporate cash working capital change
excl. collaterals (4.8) 22.7
Adjustment for exceptional and pass-through
items in the working capital (1.3) (15.8)
Payments for lease liabilities (2.8) (2.2)
Capitalised expenditure - Property, plan
and equipment (1.6) (3.2)
Capitalised expenditure - Intangible assets (3.1) (3.1)
========================================================= ============= ===============
Free cash flow (FCF) 78.3 59.0
========================================================= ============= ===============
FCF conversion (FCF as a % of Adjusted
EBITDA) 85.2% 97.4%
========================================================= ============= ===============
Exceptional items: Exceptional items are the items of income or
expense that the Group considers to be material, one-off in nature
and of such significance that they merit separate presentation in
order to aid the reader's understanding of the Group's financial
performance. Such items include costs associated with the changes
in the Group's organisational structure and direct listing.
Corporate cash
In addition, the tables below show a non-IFRS view of the "Corporate
cash" metric that is used by the Group management as a Key Performance
Indicator in assessment of the Group's ability to generate cash
and maintain liquidity. Corporate cash represents cash and cash
equivalents that are not considered customer related balances.
Information presented in the tables below is based on the Group's
internal reporting principles and might differ from the similar
information provided in IFRS disclosures:
Half-year ended 30 September
================================
2022 2021
GBPm GBPm
====================================================== ================= ===========
Cash flows from operating activities
Profit for the period 37.3 12.7
Adjustments (7.2) 37.9
Change in corporate working capital (24.5) 21.5
Receipt of interest 13.7 0.2
Payment of income tax and interest charges (11.1) (9.9)
======================================================== ================= ===========
Net cash generated from operating activities 8.2 62.4
Net cash used in investing activities (4.6) (6.8)
Net cash used in financing activities 77.5 -
Net increase in corporate cash 81.1 55.6
Corporate cash at beginning of the period 357.8 286.1
Effects of exchange rate changes on corporate
cash 28.4 2.9
======================================================== ================= ===========
Corporate cash at end of the period 467.3 344.6
======================================================== ================= ===========
Breakdown of corporate and customer cash:
Half-year ended 30 September
================================
2022 2021
Note GBPm GBPm
============================================== ======= ============== ==============
Cash and cash equivalents and short-term
financial investments 11, 12 9,823.0 5,391.0
Receivables from customers and payment
processors 127.6 72.5
Adjustments for:
Outstanding money transmission liabilities
and other customer payables (249.5) (169.7)
Wise Accounts 13 (9,233.8) (4,949.2)
============================================== ======= ============== ==============
Corporate cash at end of the period 467.3 344.6
============================================== ======= ============== ==============
Corporate cash includes the 'Receivables from payments processors'
as disclosed in note 10, as well as receivables from customers and
partners. Those balances are reported under 'Other receivables'
in note 10, but exclude those elements which are considered customer
related balances.
Similarly, corporate cash includes the 'Outstanding money transmission
liabilities' and the payables reported under 'Deferred revenue'
and 'Other payables' in note 13, which are not considered customer
related balances.
Principal risks and uncertainties
The principal risks and uncertainties that the Group faces for
the rest of the financial year are consistent with those previously
reported in the Annual Report and Accounts 2022 and are summarised
below:
-- Regulatory compliance risk
-- Financial crime risk
-- IT system control failure risk
-- Market risk
-- Fraud risk
-- Third-party risk
-- Security risk
-- Data privacy risk
-- Risk of disruptive competition
-- Economic uncertainty
A summary of our current policies and practices regarding the
management of risk and our principal risks analysis is set out in
the 'Risk management' section on pages 41 to 49 of the Annual
Report and Accounts 2022.
Our risk taxonomy has not been significantly impacted from the
Russian invasion of Ukraine and we continue to actively monitor its
financial impact and manage the related risks.
Results presentation
A presentation of the half-year results will be held at 9.30am
GMT Tuesday, 29 November 2022 at Wise's London offices in
Shoreditch. Participants can register for the event here or can
view the webcast via this link . A replay of the webcast will be
made available after on the Wise website:
https://wise.com/owners/
Enquiries
Martyn Adlam - Head of Owner Relations
martyn.adlam@wise.com
Sana Rahman - Global Head of Communications
press@wise.com
Brunswick Group
Charles Pretzlik / Sarah West / Nick Beswick
Wise@brunswickgroup.com
+44 (0) 20 7404 5959
About Wise
Wise is a global technology company, building the best way to
move money around the world. With Wise Account and Wise Business,
people and businesses can hold over 50 currencies, move money
between countries and spend money abroad. Large companies and banks
use Wise technology too; an entirely new cross-border payments
network that will one day power money without borders for everyone,
everywhere. However you use the platform, Wise is on a mission to
make your life easier and save you money.
Co-founded by Kristo Käärmann and Taavet Hinrikus, Wise launched
in 2011 under its original name TransferWise. It is one of the
world's fastest growing tech companies and is listed on the London
Stock Exchange under the ticker WISE.
Over 15 million people and businesses use Wise. Today we process
on average over GBP9 billion in cross-border transactions every
month, saving customers over GBP1 billion a year.
FORWARD LOOKING DISCLOSURE DISCLAIMER
This report may include forward-looking statements, which are
based on current expectations and projections about future events.
These statements may include, without limitation, any statements
preceded by, followed by or including words such as "target",
"believe", "expect", "aim", "intend", "may", "anticipate",
"estimate", "forecast," "plan", "project", "will", "can have",
"likely", "should", "would", "could" and any other words and terms
of similar meaning or the negative thereof. These forward-looking
statements are subject to risks, uncertainties and assumptions
about Wise and its subsidiaries. In light of these risks,
uncertainties and assumptions, the events in the forward-looking
statements may not occur.
Past performance cannot be relied upon as a guide to future
performance and should not be taken as a representation that trends
or activities underlying past performance will continue in the
future, and the statements in this report speak only as at the date
of this report. No representation or warranty is made or will be
made that any forward-looking statement will come to pass and there
can be no assurance that actual results will not differ materially
from those expressed in the forward-looking statements.
Wise expressly disclaims any obligation or undertaking to
update, review or revise any forward-looking statements contained
in this report and disclaims any obligation to update its view of
any risks or uncertainties described herein or to publicly announce
the results of any revisions to the forward-looking statements made
in this report, whether as a result of new information, future
developments or otherwise, except as required by law.
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