Western Asset Diversified Income Fund Price & Performance (WDI)

Yes. Good afternoon. Welcome to our presentation of the 9 months results, Q3 results of Wirecard AG November 2019. CEO, Markus Braun, will start to present the highlights of the current business year and the outlook, followed by the CFO, Alexander von Knopf, to guide you through the financials. We then have time for a Q and A session. But now, Markus, please hand over to you.

Hello, ladies and gentlemen. I think we can present a very strong update on our 9 months numbers. Revenue is up by nearly 37%. EBITDA is up 38.4%. As we emphasize, organic growth in the 3rd quarter is again up in relation to the first half year. On revenue basis, we had an organic growth of nearly 35%. On EBITDA basis, it was over 40%. I can strongly confirm our guidance for 2019. And yes, we are looking forward into a very strong Q4. So that's perhaps a general update for full year. There is one annual organic effect still in there. That's mainly the Citi portfolio where we had last year some final closings. Therefore, we have still here a portion of unorganic growth. Let me give you an update on the migration process of Citi. We said we will finalize that by next year, and we are totally in plan to execute that. So we expect the finalization of the migration of the City portfolio to Biakar platform by first half year twenty twenty. I would like to give you a little bit insight into the development of the core industries, digital goods, consumer goods and travel mobility.

Digital goods and consumer goods showed very strong performance. Travel was in the Q3 a little bit underperforming due to seasonal effect. Overall, I think we see strong growth in all three industries. The growth in digital goods was also very much driven by a very strong performance of our new fintech practice. And let me give you the numbers there. Fintech was on 9 month basis, contributing SEK 11,000,000,000 and is up from the last year by 130%. Generally, I can say we had an extremely strong new sales in the 1st 9 months, especially also at large clients. I would estimate that on full year basis, we will have signed more multi billion deals than we signed in all the years accumulated before. So we had last year about 16 merchants on the platform that were generating volume of above €1,000,000,000 I would say we can achieve this year's standalone new sales in this area of 116. So 16. So especially at large merchants, we had a tremendous year. And this is, of course, also a trend that is here to stay. We were launching as planned in October Boom Planet. Boom Planet is basically the extension of Boom from payments to the full financial service stack, including a full bank account, including wire transfer services, including finance management.

Of course, it will not stop there. We will extend the boond stack by mobile insurance. We will come up with a very innovative issuerdrivenloyaltyconcept in the near future. We will integrate ride sharing and ticketing services into the app. It has been launched now in Germany on basis of Android and iOS, and it will be rolled out to all of Europe. And we will also start in the next year also to roll out or perhaps to come up with 1st countries outside Europe. Generally spoken, our strategy there is we have to boom brand, of course, but additionally, we will provide this service on a co branded and white label basis. So we think that this digital neo banking payment and value added service back could be very interesting interesting for many of our very large consumer facing merchants. And this will be our approach that we will provide the service directly and we will provide interoperability to many big initiatives also in the B2B2C segment. And you know that's our approach to go to the customer mainly over B2B. And BUNT VANET will be the strategic product for that globally. We yesterday announced our market entry in China.

We have been working on that for some time. We are acquiring there a small company that has the full license stack that we need for a strong expansion into China, including and that's very unique, a cross border license. So we can now address international Chinese merchants that want to have a partner also for outside China, including China and we can perfect address international non Chinese merchants that need international services and additionally want to expand into domestic China. So we think that this is a very strong additional strategic asset. This kind of license only 17 or 18 companies have in China and outside China, we are in Europe the only one. And globally, there is only a second one outside China that has such a license in combination with our platform service, our ability to provide a lot of dedicated services to these merchants. We think that this is a very unique and outstanding offering. We already have in the pipe about 7 to 8 very large global merchants, partly from China and partly international merchants from outside China that we very quickly will be able to sign up. We expect here on conservative basis after an integration phase, so we anticipate the closing to be somewhere around the Q1.

So 2021 will be the 1st full year. We expect there on conservative basis a revenue contribution to give you an indication there of above €100,000,000 and an EBITDA contribution of above 35 €1,000,000 for 2022. We anticipate here a revenue contribution of above 150 and an EBITDA contribution of above 50. Let me generally address some questions concerning Wirecard's operational model. You'll find here on Page 12 our core hubs in the area of operating merchant contracts. Let me generally say Wirecard is a global platform. So globally, this platform can be addressed by merchant and consumers in real time. That's the big asset. We have on the sales side a vertical organization. So sales is globally aligned around airline travel, consumer goods and digital goods. On the product and platform side, we have a product organization. We do not focus on regional aspects, but we see the platform as a global platform and locally in the local hubs in relation to various, let's say, value chains that certain core competencies are taking over. And one of these core competencies is operating contracts. And here, we have 3 core hubs. This is Germany with Munich. These are the 3 core hubs.

Let me also give you details here on basis of the 9 month numbers. In Germany, probably or in Germany around a little bit about 1 third of contracts have been operated, so exactly around 35%. In Dubai, around 30% of contracts have been operated. In Dublin, around 7% of contracts have been operated. So in these 3 core hubs, 75% of contracts have been operated and the remaining 25% are then operated in certain local hubs. We're currently building up such regional hubs in North America, in South America and Singapore is already seen some time the local hub, the local operating hub for parts of Asia Pacific. I would also like to address in detail our 3rd party license business. Let me first explain Wirecard again is a global platform in our back end to be able to operate in over 100 countries. And this is a very unique selling proposition for us that we can today provide our services on 5 continents in over 100 countries. We have established a license network, where we can combine total licenses with local licenses. This we have done for card based products in the area of acquiring issuing, and we have done that also for alternative payment products, which, let's say, if I speak into the global market, probably 35% to 40% of the market are alternative payment solutions and about 50% to 60% of the market are card based products.

With our direct licenses, we today cover 33 countries, of which 27 are European and in 6 countries outside Europe, we have already our own licenses. Over partnerships, we are covering currently around 100 countries. Let me say, here we have some redundancies. So we have also partnerships with local acquirers in Europe and alternative payment solution providers in Europe that we consider here to be in the area of partnerships. Why are there redundancies? The main goal of this license network is raising the convergence rate from merchants. We do this by, let's say, 2 core elements. 1st of all, our algorithmical services, our risk management, So the merchant spends a lot of money to bring the merchant to the checkout. And then it is very important that the convergence rate is permanently optimized. And of course, one main element for that is our global risk management. The second element for that is providing an EDL and tuned network of payment solutions and also the best combination of where you, let's say, accept locally and where you accept perhaps also internationally. So by the combination of our risk management service and our global license network, we can today optimize the convergence rate in over 100 countries.

These services or partners basically are in concrete structures provided by 3 kinds of merchant types or 3 kinds of partnership types. One types are bin sponsorships. We have around 8 to 10 partners in this area that provide us services globally. And we have additionally about 15 to 20 partnerships in the area of referral or we call these routing partners, where over one interface, we get access to multiple alternative payment solutions or multiple third party borrowers. Over this combination, we can today achieve this global service of 100 over 100 countries. On the 9 month numbers basis, exactly 50.2% of transactions have been running over our own licenses and a little bit under 50% to 49.8% have been running over 3rd party licenses. For the merchant, this is normally transparent in our this is normally just in our back end. So the merchant connects technically to Wirecard, and it's exactly one of our big value adds that the merchant doesn't have to care. We provide the right licenses per country, the right set up per country. And we solve here a very complex global problem for the merchant. And that's definitely one of our biggest added values beside of our data driven services in the area of risk management.

Let me also give you an update on the new value added service, Digital Lending. So we said strategically, we will build up strong services in the area of anticipating the next buy, churn analysis, etcetera. And the other direction is building up new services around the payments stack in the area of digital lending. We have today 3 concrete products here in pilot stage on The Street, fintech loans, digital credit, emerging cash advance. You'll find here the complete numbers. So for the end of the Q3, we had for the feedback loan and digital credit product DKK360 million out there. We made with that on aggregate for the 9 months and net interest of about $90,000,000 to give you here transparency. The merchant cash advance product was at $320,000,000 and we made on 9 month basis with this product around $32,500,000 of net interest. Strategically, we want to strongly scale up these services, but not over our own balance sheet. We are in the process of establishing 3rd party relationships there, and we already have also small amounts running in relations where we are not the principal. And this is the strategy to scale this up into the multi billing range, but not over our own balance sheet.

We gave here as guidance that we will stick to the maximum of €50,000,000 and this I can totally confirm today. Let me perhaps say finally, before I come to the outlook, let me directly address allegations that were raised in the last 2 weeks And later, our CFO will give you details on this KPMG audit. Let me say we completely analyzed these allegations. We went into all details of merchant relationships in the subsidiaries that were addressed there. And we can totally confirm today that all of these allegations are unfounded. All revenue recognition was completely in line with the reporting and was fully authentic. So we can strongly confirm all reports for that we gave out for 2016, 2017, 2018. But still, to give an additional service to the market and to bring down all of these allegations, we decided to include here a second review by KPMG. We think that's the right way to really bring all of that to an end. And yes, I strongly stick to these strategies. In this context, let me perhaps also give you an update to Singapore. I think concerns in Singapore were addressed in 2 directions. 1 direction where they're still running investigation by authorities.

The other direction was there is a new license or new regulation came out concerning financial services licenses. So you need now financial services licenses to do acquiring issuing. We have in Singapore our own acquiring issuing license. Let me first address give you an update on the running investigation. We are very optimistic that in the next month, couple of months, this can be resolved. And we're also very optimistic that what we found out in our own investigation and what was confirmed also with external investigation will also be the outcome of this running investigation. Secondly, let me address the issue of the license application. We do not see any risk for this license application by this running investigation. So we are very optimistic that we will get this required license. Now coming to the outlook. So for 2019, we fully confirm and strongly confirm our guidance with the midpoint of EUR790,000,000 And for 2020, I would like to give as a first guidance an EBITDA between $1,000,000,000 $1,120,000,000 As always, the midpoint is the most likely scenario. So $1,060,000,000 is now the first guidance. Of course, as always, we see this as an initial more conservative guidance.

And yes, we think we will have a very strong 2020. The sales pipe in 2019 was outstanding. So I can give here a very strong and robust outlook into 2020. And with this, I would like to hand over to our CFO, Alexander Zundro.

Yes. Thank you, Markus, and also welcome from my side. As Markus already mentioned, we had a very strong set of numbers through all KPIs in Q3 and the 1st 9 months of this year. So as always, I will focus on the most important items and on the items of our P and L and balance sheet with the biggest swings. To give you a maximum of transparency, I will try to explain some items in more detail, maybe with a little breakdown and where, for example, in the balance sheet, you can find products like MCA or others. So starting with our P and L. As you can see, our cost of materials increased in Q3 year on year by 32.3 percent to 387,400,000 dollars compared to an increase in revenues by 35.6%, which again shows the great sustainable scalability of our business model. The personnel expenses ratio of 12.1% sorry, of 11%, came down from 12.1 percent 1 year ago. Q3 stand alone came in with 9.9%, of course, including the strong increase in compliance related department, we will have that later in the presentation. Other operating expenses are sharply up 48% from $106,000,000 to $157,000,000 including legal and auditing costs, up €20,400,000 to €30,100,000 and consulting expenses up $13,400,000 to $34,100,000 of course, partly due to additional audits and consulting in regards to the allegations against Wirecard.

In Q3, standalone, the other operating expenses came in with €56,000,000 So with that, ending up with an EBITDA of €553,100,000 and an EBITDA margin of 28 point 5% after 28.1 percent 1 year ago. Q3 stand alone, the margin was 28.9% versus 27.4% in Q3 2018. The financial results of minus €14,800,000 includes financial expenses of €37,600,000 which are mainly interest expenses from loans and financial income of €22,700,000 mainly interest income and income from fair value measurement. Income tax expenses like in Q2, we had a very low income tax ratio. We will come to that in a moment. So our earnings after taxes resulted in 386,700,000 dollars which resulted in earnings per share of 3.13 dollars after 9 months and a €1.21 in Q3 standalone. So coming to the balance sheet. The goodwill and customer relationships are almost unchanged compared to a goodwill as per end of June of 714,000,000 dollars and customer relationships end of June, dollars 438,000,000 So both items, as you might know, are exclusively contained of acquired companies and customer relationships. So in the new and organically acquired customer relationships are not capitalized. So the change we see here in these two balance sheet items are from currency related valuations.

And of course, our customer relationships are subject to scheduled amortization. Our internally generated assets of €151,000,000 are related to software developments for the payment platform and the expansion of the payment platform and to the group's IT infrastructure of a total amount of €32,400,000 The property, plant and equipment up to €105,000,000 coming from €82,000,000 1 year ago. The main increase in this item is due to investments in the expansion of our computer centers and to the initial application of IFRS 16. We talked about that in a previous earnings call, which is a new accounting standard for leases as of January 1, 2019. The financial and other assets with DKK386 1,000,000 mainly consists of financing agreements, amongst others with base partners of DKK132.4 million and receivables from bank activities, mostly fintechs, of €126,800,000 The receivables of our acquiring business with SEK 732,800,000 are mainly against credit card fees. And of course, the corresponding item, the liabilities of the acquiring business. And as you can see, the receivables are higher than the liabilities. So one might ask how we can have higher receivables against the credit card schemes and liabilities to be paid out to the merchant. So the answer, of course, is that Wirecard paid out the merchants' transaction volumes before the funds are received from the credit card companies.

So that's exactly what we call merchant cash advance or short MCA. So our MCA, the total, which Markus already mentioned, of $320,000,000 From these $320,000,000 dollars 260,000,000 are in the item receivables of acquiring business in comparison with the liabilities of the acquiring business. So that's the case where we are simply paying out the transaction volume to the merchant and getting the money afterwards from the fees and $60,000,000 simultaneously are lowering the receivables of the acquiring business and the liabilities of the acquiring business. And that's exactly the case when we are paying out the merchant in advance, but we are also getting the money in advance from the acquiring bank. So then there is a simultaneously drop in the receivables and the liabilities of the acquiring business. The FinTech loans and digital credit, Markus mentioned the total only €360,000,000 are divided in the items of financial and other assets on the financing agreement. So that's part of the €132,400,000 And in the same item, on the receivables from bank business, so that's the $126,800,000 dollars And in trade and other receivables, under receivables from banking business, that's the 117 €900,000 So many numbers, but hopefully that makes our accounting in MCA and other loan products a little clearer.

The trade and other receivables, with $430,500,000 are receivables from banking business. I already mentioned that mainly from Fintechs, dollars 118,000,000 Other trade receivables are €131,000,000 and other receivables, for example, deposits of €97,000,000 Interest bearing securities of €552,000,000 are investments as always, and I mentioned that many times before. In fixed term deposits, in order to improve our interest income, Fixed term deposits with a term of more than 3 months are disclosed in this item. Deposits up to 3 months are included in the cash and cash equivalents ending up with almost 3 point $3,000,000,000 at the end of September. The equity and liability side, the noncurrent interest bearing liabilities of 1, almost 7,000,000,000 dollars coming from $1,600,000,000 as of end of June 2019. This item, of course, includes our public bond of €500,000,000 which we used to repay the utilization, we will have that in a minute too, of our RCF in a total amount of €530,000,000 Other non current liabilities of 100 and €45,000,000 compared to the €164,000,000 This reduction of €90,000,000 €19,000,000 is due to earn out liabilities of almost €18,000,000 which are due within 1 year and are disclosed in other liabilities on the current liabilities.

Customer deposits are at 1,700,000,000 dollars end of September coming from $1,560,000,000 at end of June. So that's the customer deposits mainly in licensed entities like Wirecard Bank, Wirecard Card Solutions and Wirecard North America. So of course, I'm always saying that that also underlines our strong organic growth group wide. Cash, We had a very strong cash flow, which ended up at $870,000,000 net cash long term, coming from €700,000,000 as per end of June of this year. After 9 months, the cash flow from operating activities resulted in a 486,800,000 and a cash conversion of 106.5 percent Q3 stand alone. Our cash flow from operating activities adjusted resulted in $202,800,000 and the operative CapEx of 30,800,000 dollars So the free cash flow was at 172,200,000 and compared to the earnings after tax and interest in the Q3 of $149,200,000 The cash conversion came in at strong 114.4%. The free cash flow conversion, so that's the free cash flow in relation to EBITDA, came in at 70 4.5% and well above the expectation in our Vision 2025 of above 65%. And Q3 stand alone, even stronger with a free cash flow conversion of 81.6%. So very, very strong cash flow.

The income tax, I already mentioned that. The income tax ratio is quite low at 11.3% and hence in line with the ratio of the 6 months. We talked about reasons in our half year call. The reasons, of course, stayed the same. That's the stronger growth in countries with lower tax rates and higher investments in Asia. Sticking to what we mentioned before that we expect our tax rate in the midterm to be stable between 16% 18%, and that's the way we are calculating. Having said that, we are done with the financial coming financials coming to the time and structure of Wirecard. So as you might know, we are having a syndicated loan in place with a total amount of SEK1.75 billion. And So to more diversify our finance structure, we issued our inaugural public benchmark bond in September. In line with the strategy of diversifying, we used the total proceeds of this public bond and we used some own cash to repay the RCF utilization in an amount of €530,000,000 So end of September, the utilization of the RCF was at SEK1.14 billion. On this slide, we also want to give an outlook of the further development in Q4 when we issued the convertible to our partners from SoftBank.

So from these proceeds of the €900,000,000 we again used €340,000,000 to reduce the utilization of the RCS and an amount to an amount of €800,000,000 so that's the group off on the right side. And we will use up to €200,000,000 for our share buyback program. So the remainder will be invested in development of new products and services. Our share buyback program on the next slide, we already disclosed that. So I think that's all clear. Continuing with a short update on compliance. Our project of strengthening and optimizing Wirecard's compliance structure worldwide, and Wirecard Group is well on track. We already talked about the details in our last earnings call. So just remembering since then, we already adjusted our global compliance structures, for example, by separating compliance from the legal department. We adjusted operational and control processes. We allocated responsibilities. We introduced direct reporting lines from international subsidiaries to the headquarter. And we, of course, highly invested in our compliance structures and staff. So just to add one number based on the feedback from our recruiting activities, we expect to reach the aspired number of 230 full time employees in compliance related departments by the end of the year.

As you know, and Markus already talked about that in the past weeks, We have been confronted with allegations regarding our business, especially our 3rd party acquiring business and our merchant cash advance product. So to answer all the raised questions and to remove all doubts, the management and the supervisory board decided to mandate KPMG with an independent review. I think it's worth the stress that we are that we, of course, fully trust in our accounting, and we fully trust in the very intensive and detailed audit already performed by our annual auditors of So this review simply shall give additional confidence to our shareholders and the capital market. So that's why the audit scope covers the accusations raised by the Financial Times, the allegations regarding 3rd party acquiring and the allegations regarding MCA. We will publish the report as soon as the audit has been completed. And of course, we will make the report available on our company website. The latest development is that KPMG already started to perform this review, and we expect to report by end of Q1 next year. So having said that, thanks for listening and back to you.

Yes. Thank you, Alexander. Thank you, Markus. We're now able to start the Q and A session, please.

Thank We will now take our first question from Sandeep Deshpande from JPMorgan. Your line is open. Please go ahead.

Yes. Hi. Thanks for letting me on. I have two short questions, if I may. Firstly, earlier this quarter, you announced a new product, which is in terms of installment based payments. How will that be accounted for? And how is the risk going to be taken by Wirecard associated with this installment based payment method that you're going to be offering to your end customers? And then secondly, regarding this audit, will the supervisory board or management team be producing the remit of the audit? Because unless the market the investor base knows what the remit of the audit is, the question remains whether all the issues have been taken care of, which the market is worried about? And otherwise, the questions will still remain after the audit, which should not happen. Thank you.

So to your first question, we say on our own balance sheet, we limit our, let's say, the loans. We take our own balance sheet with €750,000,000 This includes all new products sold to installment payments. So we will go also there for partnerships. We are really focusing on a platform approach, so providing real time algorithmical services and platform services also for this product. So in the whole range of products that feed into or that pay into the strategy of providing financial services digitally. Again, this clear message holds that we will not go above $750,000,000 but we will go our partnerships. And this will be also the case with this new product of installment payments. To your second question, again, we will completely disclose the report. You will see that the scope is exactly defined alongside the allegations. So we think that this will really bring it down and bring it to an end, and that's our ambition here. We want to address, let's say, this situation. There was this film with Bill Murray called the Groundhog Day. So the KPMG approach is now this spring and this really to an end that we're again having this Groundhog Day situation where the allegations will reject them.

And then after some time, the share price recovers. So it's really, let's say, a strategy now to with this additional audit, this additional review to bring it down, and you will see it will it has exactly the right scope. And I think it will really bring all of that to an end, and we can refocus also in the whole conversation on the very strongly running fundamental business.

So answering your question about the accounting of the installment products, Of course, that's a kind of a loan product. So we will have receivables against customers or schemes. And on the cash side, we will have a cash out in the first step. And then, of course, collecting the installments, we will have cash ins following.

Thank you.

We shall now take our next question from Stefan Hari from ODDO. Your line is open. Please go ahead.

Yes, hello. Good afternoon. I have two questions actually. The first one is on the guidance for the full year. You did not change it and it is the last quarter, so there is quite a wide range between the top and the bottom. So what is the reason behind the fact that you are not shrinking the guidance? Is there an uncertainty? And how should we look at Q4 organic growth? So that's the first question. And the second question is about the discussions that you may have with your customer. And I just want to understand if given the volatility and all the allegations, you have lost any clients? Or is there any is it more difficult to gain new contracts? And are those topics coming into consideration when you sign the contract? Thank you.

Yes. So to answer your first question, Q4, we would anticipate or to give you here on soft basis additional guidance. If you take Q4 standalone Q3 standalone, we were a little bit above 40% of EBITDA growth. We think that Q4 traditionally being our strongest quarter and of course there we have also additional positive scaling effect can in organic terms outperform slightly, Q3. The potential is there. And this then probably would land us could land us a little bit above the midpoint. So that's an indication for Q4. The second question, no, clinically spoken, we have a complete disconnect on field type currently to the volatility of the stock. So we are signing one big deal after the other. We have no problems at all in the communication with our merchants. I think again, I compared it a little bit to this Groundhog Day situation. I think all of our merchants understand this is rather market speculation. So I think we had a tremendous sales path this year, and the indication for Q4 is also extremely strong. And we this is why we can already also give the very strong outlook for the next year. So no, there are no negative implications whatsoever on the operating business.

Okay.

Thank you, Avin.

We shall now take our next question from Adam Wood from Morgan Stanley. Your line is open. Please go ahead.

Hi, thanks very much for taking the question. I've got 3, please. Just maybe first of all on the acquisition in China. Could you give us a little bit more concrete detail on which licenses the company has? And then maybe give a concrete example for a domestic Chinese merchant and international merchant, what are the benefits you're going to bring to them and what difference it would make to their business working with you with these licenses versus what they would have been doing before? Such China? Then just secondly, on the financing side, Alexander, I think you just you talked about using some of the operational cash to pay down the revolving credit facility in the Q3. Just looking at the cash flow, it looks very statistically as if you've drawn down about EUR 1,050,000,000 of debt and paid down around EUR 737,000,000. So it looks at this net actually there was an increase in the borrowing. I know there's a lot of moving parts around banking and working capital. Could you maybe just reconcile those two things in terms of what's going on? And then just strategically in future, how you think about the cash on the balance sheet and running debt, especially with the SoftBank money coming in and how you plan to run that?

And then maybe just finally on Vision 2025, you talked on the call about tremendous year for large merchants and that's here to stay. And we mentioned they would be coming in at somewhat lower take rates. Could you maybe just give one or two examples of the value added services that you would deliver to them? Again, I imagine some of the lending services are not as relevant for big merchants that will help you to sustain take rates through that period? Thanks very much.

So to your first question, the licenses today comprise, of course, the main local Chinese payment solutions. And here, the asset that we take over has a combination of acquiring and issuing licenses. Additionally, we think that very quickly, we can accompany that on with international open loop licenses like Visa, Mastercard. So we will have a perfect setup for merchants that need services or that want to address Chinese consumers that are international merchants, and this can be from e commerce to travel. So we can then really run also domestic acquiring transactions. Additionally, we can issue certain products to end consumers in China. For example, we could issue travel cards, also highly innovative products. All our for example, Boon is also relying on issuing products in the back end. So it's a combination of acquiring licenses and issuing licenses. We will have the full stack, so we can really cover all important payment solutions that the Chinese consumer today is focusing on. And additionally, of course, we can also, with a cross border license, repatriate the money for the merchant, so we can pay out the merchant internationally, which is a very important function. So I would say by the combination of the platform service that we can provide, the ability to internationally repatriate the money in the right way, the merchant needs that.

I think this can be a very compelling service for international Chinese merchants as well as for international merchants focusing on China. And you will very quickly see, I said in concrete terms, there are already 7 to 8 very big projects in the loop. And of course, we will update you over PR statements. And I think when the first is announced, we will quickly accretive, very quickly to our cloud platform.

So coming to your question about the cash and the debt going forward and of course, the repayment of our RCF. Yes, we reduced the utilization of our RCF in a total of €870,000,000 As I said, that was due to our strategy to more diversify the debt side of our balance sheet and to use the favorable market conditions in borrowing new money and to reduce interest costs. So that was the reason on the strategy going forward as always, and that hasn't changed in the past years is to have the operating cash for our operating activities. And of course, if there is MCA MCA, sorry, M and A, we will consider to use loans or even other financing instruments?

Vision 2025, The 2 big areas of expansion of our value added services is definitely, on the one side, additional financial services. We presented some of them, MCA, our lending product, installment payments. And the other direction are analytics services, where the logic we develop for risk management, we also further expand for the merchant to, on the one side, anticipate the next buy and on the other side, bring down consumer acquisition costs. So we think that this is a super large area of expansion. I would say already 10% to 15% of our largest larger merchants are taking first versions of these analytic services. And yes, we think that this combination, building financial services around the payments back and coming up with additional analytic services where we help the merchant to bring down customer acquisition costs. We can perhaps even strongly expand our value chain in the next years and our take rate. And this is in the Vision 2025. And I can strongly confirm the Vision 2025. And the payment portion, which we showed this in the presentation of the Vision 2025, Of course, well, let's say, the Disagio and interchange portion will be a smaller and smaller part of the value chain.

Today, already about 30, 30 shippers about 1 third is coming from value added services, and we think that this probably will double in the next year. So this is anticipated in the 2025 division.

Perfect. Thank you very much.

We will now take our next question from Mohammad Molla Wala from Morgan Stanley.

My question. Yes, thank you. Just a small housekeeping question. I know that you have been sort of taking certain exceptional charges relating to sort of acquisition integration. Could you perhaps quantify the amount in the Q3 numbers? And then secondly, Marcus, I guess, 2 follow ups. One is, I think that you obviously saw bookings decelerate into H1 because of tough comps. Any qualitative comments you can give us around new bookings and signings in Q3? I know you gave us this number at the full year, but any directional sense? And then secondly, on the sort of KPMG, can you talk us through the maybe the scope? I know you're kind of going to address some of the allegations, but will this be a sort of I know you've done some of the special audits with ENY. Will there what is going to be the kind of extensiveness or exhaustiveness of this audit? Thank you very much.

So to start with your second question, you know that we are giving a new sales update in terms of analytics on a year basis and for the full year. As an indication, I would say, we were, I think, on the half year basis, above $30,000,000,000 I think Q4 definitely will strongly outperform that. Of course, we will give the real number with the full year. I don't have the analytics number here, but I can give as an indication definitely that there is a strong outperformance of the second half year to the first half year with new sales. Some of the very large deals were signed additionally after the first half year, if you're an indication. Again, with the KPMG scope, I think we disclosed that. So everything that is in these allegations can be investigated. So they will have full access to the information and to the accounting. So we really think that this will close it down. And so there are no restrictions to that. It's simple taking the allegations, looking what is in the numbers. For example, looking whether this there were 5 merchants mentioned that have been processed in 2016 that we're not doing any business anymore.

Have they been in our books or not? That's simple. And let's say, all the other allocations that we have brought forward, you will see it's a full scope. Let me say again, already today, we can give some comfort there. So there is no risk whatsoever, yes? We, of course, know exactly what is in the books. So this is really an additional service now to address that constructively and yes, to come out of this Groundhog Day situation and to give our investors additional comfort.

So answering your first question about the integration costs of our acquiring business in Asia acquired through Citi. We already disclosed or we talked about roughly spoken €2,000,000 per quarter in Q1 and Q2. And these €2,000,000 is a realistic number in Q3 too. So year to date, there should be an amount of totally about maybe €6,000,000 to €7,000,000 Great. Thank you.

We shall now take our next question from Sanjay Sakhrani from KBW. Your line is open. Please go ahead.

Thank you. Guess my first question is, I appreciate the commentary on the transaction split between the own licenses versus 3rd party. But is that generally in terms of transactions, but I guess when we think about revenues and EBITDA, is the transaction level split the same as revenue and EBITDA? And then I guess my second question is multi questions on China. One is, it seems like you guys purchased it at a pretty attractive valuation. Is that because of those 7 to 8 partnerships that you have in the pipeline, so the synergies are pretty strong? And then secondly, as far as timing of closing, when do you expect that acquisition to close? Thank you.

So to your first question, and to give you an indication there, over our own licenses, in average, much larger merchants are processed. So the take rate, of course, is, let's say, and we disclosed this once per year, there are some significant in terms of verticals. And of course, the take rate also is driven by the size of the merchant. Generally spoken of our own licenses, mainly very large international merchants are running and midsize to small size merchants are very often running also additionally over local licenses. And then, of course, you have redundancies. So I would say, just to give you an indication, there are probably the take rates over the 3rd party licenses in average will be a little bit higher than the take rate of our own licenses. But again, mainly driven by this size factor and also, of course, by the factor that over 3rd party licenses also emerging countries are included. There is sometimes the take rate also is a little bit higher. So I would say perhaps in average, the take rate over 3rd party licenses is 25%, 30% higher than our own licenses to give an indication here. To the second question, yes, that's exactly the point.

We know exactly how well, let's say, it's about synergies with large projects we already have. It's about international merchants we already have and additional new signings that we already signed in, to some extent, in anticipation of being able to execute also in China. So we think that we have here the chance to much faster perhaps than what we anticipated now in the numbers to scale this business up because we have a lot of synergies with our today's international portfolio. And multinational merchants, at the end of the day want 1 global partner. This is not one partner per country because then they have a much better, let's say, real time view on all transactions and it's much more efficient. So we definitely think that the synergetic effects between our portfolio and now the ability to also process such merchants in China. That's, let's say, mainly what's whilst the indicator for the guidance we gave here in terms of revenue and EBITDA.

Timing of closing for the deal?

Timing of closing, I said it already, and we would say in the Q1, Q1 2020. Great.

Thank you.

So thank you all for being part of this conference call. As usual, we as our Investor Relations team with Wirecard are happy to follow-up on any additional questions. Thank you, and have a good afternoon. Bye.

Thank you. Thank you. That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.