Financial results for FY 2016 28 February 2017 Powering Digital Payments
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Financial highlights FY 2016 A strong 2016 with 7% organic growth and 260 basis points EBITDA b.s.i. margin expansion Guidance 2016 Actual 2016 9 November 2016 Revenues of DKK 7,385m up 8.0% Y/Y driven by Merchant Organic growth 6-7% 7% Services and Financial & Network Services EBITDA b.s.i. of DKK 2,619m EBITDA b.s.i. up 16.5%. Y/Y margin improvement 35-36% 35.5% margin* of 260 basis points Slightly lower special items due to Special items DKK 606m DKK 630m reversal of IPO expenses Capital expenditures of DKK 668m CAPEX 9% Around 10% driven by investments in new data (% of net revenue) centres and network segregation Higher EBITDA and cash flow, partly Capital structure At or below 3.2x due to lower investments than 3.4x (NIBD/EBITDA b.s.i.**) expected 3 *Before special items **Net interest-bearing debt / EBITDA before special items
Strong growth in 2016 – transaction growth across all segments Nordic electronic payments Transaction value (DKKbn) 475 55% growth in value of transaction Merchant Services growth forecast* • Underlying strong growth across 55% geographies 301 306 # Transactions processed (bn) • Strong growth in Sweden CAGR Overall electronic • The e-commerce business saw strong 2015 – 20 2% payments growth, especially in Finland transaction growth 14 • Growth significantly impacted by the acquisition of Nordea’s merchant acquiring 4% business in December 2015 Transaction value 2014 2015 2016 growing at 5% CAGR between 12 2015-20 Transaction processed (bn) Financial & Network Number of processed transactions grew by 5.2 4.9 6% to 5.2bn transactions 4.6 • Dankort grew by 7% to 1.3bn Cards 6% 10 Services 9% • Online transactions grew by 25% 5% • 15% of all in-store transactions were contactless • BankAxept grew by 5% to 1.55bn in 2016 8 • International cards up by 5% to 2.35bn 2014 2015 2016 6 Transaction volume (bn) Strong growth in transaction volumes 0.87 Corporate Services 0.83 • E-bill (e.g. Betalingsservice, eFaktura and 0.78 AvtaleGiro) up 5% positively impacted by Direct Debit and 5% 6% conversion from quarterly to monthly Credit Transfer 4 2% invoicing • Real-time clearing up by more than 40% compared to 2015 2 '15A '16E '17E '18E '19E '20E 2014 2015 2016 4 *Source First Annapolis report 2016
Good momentum in strategic growth areas Mobile Value Chain Expansion • Nets to launch Mobile Dankort app in spring 2017 • Strong growth in real-time clearing, including contract with ICBPI in Italy • Approx. 60 Danish banks to launch wallet for in- store payments – solution will include Mobile • Strong growth in fraud prevention and dispute Dankort services with new contracts • Nets’ Blockchain lab presenting proof of concepts • In Norway 106 banks have joined forces behind Vipps – including DNB, SB1 and Eika - Nets is a to banks and corporates provider of infrastructure to Vipps • Programme in place to deliver tangible propositions helping customers ensure compliance with PSD2* Outsourcing Nordic Growth Expanded agreement with Santander Consumer • Strong organic growth in Sweden supported by good momentum in partnership with Nordea on Bank to include Sweden merchant acquiring • Credit card portfolios in Norway and Denmark • Outbound sales channels further strengthened in have been migrated to Nets CMS Q4 addressing promising sales pipeline • Credit card programmes and operations in • Implementation of two Swedish banks on issuer Sweden to be included processing • Nets CMS solution enables Santander to achieve a scalable and uniform solution for their Nordic operations 5 * PSD2: Second Payment Service Directive
Mobile Dankort Strong support from merchants to Mobile Dankort Preparation for the Mobile Dankort • Pilot testing since Q4 with good results • Works on iPhones and Android phones • Mobile acceptance technology being installed at merchants Functionality of the Mobile Dankort app • Mirror payment experience from contactless Dankort (19% of all in-store Dankort transactions in January were contactless) • Payments below DKK 200 do not require use of pin • Works from locked screen • Initially based on Bluetooth technology (BLE) • Will be launched in spring 2017 Below 1% of in-store digital transactions in Denmark are mobile today Launch of third-party wallets in 2017 Mobile Dankort builds on existing agreements with • Approximately 60 Danish banks (collectively called BOKIS) merchants and banks launching wallets incorporating the Mobile Dankort • Other wallets anticipated to incorporate the Mobile Dankort as Open infrastructure allowing it to be incorporated in third- well party wallet solutions 6
Financial highlights Q4 2016 Organic revenue growth EBITDA b.s.i. margin* Adjusted EBIT (in DKK million) 10% 35.4% 564 Revenues of DKK 1,910 million, up 12.1% EBITDA b.s.i. of DKK 676 million, Adjusted EBIT up 14.4% compared to Q4 2015, driven by strong up by 21.1% equivalent to a margin compared to Q4 2015 organic growth in Merchant Services and improvement of 270 basis points Financial & Network Services Capital expenditure/ revenues Cash conversion ratio Special items (in DKK million) ratio 11.2% 77% 64 Capital expenditures of DKK 214 million, Down from 105% in Q4 2015, primarily Non-IPO-related special items down by up from a ratio of 8.1% Y/Y, driven by due to higher capital expenditures DKK 17 million compared to Q4 2015. investments in new data centres and Special items in Q4 include a reversal of network segregation Cash conversion for the full year 2016 expenses relating to the IPO was 78% compared to 79% in 2015 7 *Before special items
Merchant Services Development in Q4 2016 Revenue • Strong momentum with a revenue of DKK 609m, DKKm Organic growth Y/Y 607 609 representing an organic growth of 17%, positively impacted 583 by EU regulation on interchange fees 518 493 489 • 477 Sales in Sweden saw strong progress, especially within the 11% 17% 10% SME segment 407 15% • Several customer wins, e.g. Posti, the National postal service in Finland and Finnish Treasury Full year development d • Revenue in 2016 was DKK 2,317m, representing an organic growth of 13% • Organic growth positively impacted by the implementation of the EU regulation on interchange fees for card-based Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 transactions 2015 2016 • Card turnover was DKK 475bn, up 55% from DKK 306bn EBITDA b.s.i. DKKm 241 Development in Q4 2016 • Margin of 32.5%, which is 360 bps higher than Q4 2015 207 198 • Margin expansion in Q4 is driven by operating leverage and 181 improved sales efficiency, partly countered by investments 156 146 in mobile acceptance technology 39.7% 138 37.0% 35.5% 32.5% Full year development 31.6% 84 • 28.9% EBITDA b.s.i. in 2016 was DKK 792m, representing an 28.2% EBITDA b.s.i. margin of 34.2%, which is 420 bps higher than in 2015 20.6% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016 8
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