Financial results for Q2 2017 August 2017 Powering Digital Payments - - PowerPoint PPT Presentation

Powering Digital Payments

August 2017

Financial results for Q2 2017

Disclaimer

This presentation contains forward-looking statements. Forward-looking statements are statements (other than statements of historical fact) relating to future events and Nets’ anticipated or planned financial and operational performance. The words ‘may’, ‘will’, ‘will continue’, ‘should’, ‘expect’, ‘foresee’, ‘anticipate’, ‘believe’, ‘estimate’, ‘plan’, ‘predict’, ‘intend’ or variations of these words, including negatives thereof, as well as other statements regarding matters that are not historical facts or regarding future events or prospects, constitute forward-looking statements. Nets has based these forward-looking statements on its current views with respect to future events and financial performance. These views involve a number of risks and uncertainties, which could cause actual results to differ materially from those predicted in the forward-looking statements and from the past performance of

• Nets. Although Nets believes that the estimates and projections reflected in the forward-looking statements are reasonable, they

may prove materially incorrect, and actual results may materially differ, e.g. as the result of risks related to the industry in general

• r Nets in particular.

Factors that may affect future results include, but are not limited to, global and economic conditions, including currency exchange rate and interest rate fluctuations, delay or failure of projects related to research and/or development, unexpected contract breaches or terminations, unplanned loss of patents, government-mandated or market-driven price decreases for Nets’ products, introduction of competing products, reliance on information technology, Nets’ ability to successfully market current and new products, exposure to product liability, litigation and investigations, regulatory developments, actual or perceived failure to adhere to ethical marketing practices, unexpected growth in costs and expenses, failure to recruit and retain the right employees, and failure to maintain a culture of compliance.

Forward-looking statements

2

A solid Q2 2017 performance

Financial highlights Q2 2017

3

*Before special items

5%

Revenues of DKK 1,919m, up 4.1% compared to Q2 2016, driven by strong

• rganic growth in Merchant Services and

Corporate Services

Organic revenue growth

36.0%

EBITDA b.s.i. of DKK 690m, up 6.8% compared to Q2 2016 equivalent to a margin improvement of 100 basis points

EBITDA b.s.i. margin*

10.7%

Capital expenditure of DKK 205m, up from a ratio of 8.7% Y/Y, driven by investments in development projects, software and data centre in Norway

Capital expenditure/ revenues ratio

389

Adjusted net profit up 84.4% compared to Q2 2016

Adjusted net profit (in DKKm)

3.1x

At the same level as Q1 2017 negatively impacted by the acquisition on OP’s merchant acquiring business and share- buyback programme

Net interest-bearing debt/LTM EBITDA b.s.i.

73%

Down from 75% in Q2 2016 due to higher CAPEX and a negative change in narrow working capital compared to a positive in the same period of 2016 driven by IPO- related accrual build-up last year

LTM Cash conversion

d

Business highlights

Merchant Services

Organic revenue growth of 10% 6.5% growth in value of transactions driven especially by merchant acquiring and e- commerce Still some positive effects from new interchange regulation in Norway, but increased scheme fees impacts negatively e-commerce continues to develop strongly

DIBS Easy launched in Sweden, which improves check-out process Save My Card reached two million saved cards First customers from the Finnish State Treasury in pilot testing Several customer wins within the transport sector in Norway; Ruter, NSB and Flytoget

Acquisition of OP’s merchant acquiring business completed Organic revenue growth of 2% 8.1% growth in number of transactions – especially driven by international cards Lower implementation revenue negatively impacted organic growth in Q2. Adjusting for this growth would have been approx. 5 ppts higher Fraud and dispute continues to show strong growth rates and is positively impacted by volumes from Finnish banks onboarded in 2017 Dankort App and Bokis wallets updated for both iPhones and Android phones so they work from a locked screen and using fingerprint acceptance instead of the four-digit code Organic revenue growth of 3% 3.6% growth in e-bill transactions driven by strong growth in Norwegian e-bill solution and solid growth in Betalingsservice transactions Agreement on instant-clearing with Danish Banks prolonged until 2022 Instant-clearing solution delivered to ICBPI in Italy Nets and the banks in Denmark have agreed to develop a mobile solution to NemID

Financial & Network Services Corporate Services

4

121 129 Q2 '16 Q2 '17 1,324 1,432 Q2 '16 Q2 '17 215 223 Q2 '16 Q2 '17

Value of transactions (DKKbn)

+6.5%

Number of transactions (million)

+8.1%

Number of e-bill transactions (million)

+3.6%

Increased activity within mobile payments

5

Full version of the Mobile Dankort launched in Q2

Launched for iPhone in June and Android phones in July and for both Dankort app and wallet for Bokis Banks Full version enables locked-screen payments and use of fingerprint verification instead of four-digit code Continued roll-out of in-store acceptance technology Installation of BLE* pads on existing terminals Updated terminals account for around 40% of all transactions in Denmark

Multiple mobile wallets to launch in 2017

SamsungPay launched in Sweden and Apple confirmed their intention to launch ApplePay in Denmark, Sweden and Finland later in 2017 Nets open infrastructure can technically support wallets like ApplePay and SamsungPay Nets is already today the service provider for several mobile wallets based on both domestic and international card schemes in the Nordic countries

*Bluetooth Low Energy

With EASY Nets will benefit from collecting on the total e-commerce volume, which will increase take rates compared to gateway-only solutions

Launch of EASY

6

EASY checkout

 Fast checkout regardless of payment method and across all devices  Two million cards already stored  One-click payment for returning consumers

EASY signup

 Fully digital and automated sign-up  One agreement including all payment types  Accept payments within 24 hours

EASY integration

 Can handle payments from partner system with API  Modern and logical platform build for easy integration  It is created to be designed to be easily embedded in merchants’ websites

EASY administration

 One agreement, one reconciliation - saves substantial administration time  User friendly administration portal  Clear and detailed view of payments and payouts New e-commerce value proposition launched in Sweden Will be rolled out in Denmark and Norway after full launch in Sweden Driver of future growth in Merchant Services Collection on the total e- commerce volume Will lead to improved conversion and increase in take rates compared to gateway-only solutions

d

207 241 198 174 225 35.5% 39.7% 32.5% 29.7% 35.7%

Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17

Merchant Services

7

DKKm DKKm

Organic growth Y/Y

Strong organic growth of 10% in net revenue

• Driven by strong growth in financial acquiring supported by

underlying growth in value of transactions of 6.5% compared to last year

• Growth was particularly strong in Denmark and Finland
• Strong growth in e-commerce and solid growth from point-of-

sales solutions

• Positive impact from interchange regulation in Norway where

the new regulation was implemented on 1 September 2016

• The underlying organic growth, adjusted for the temporary

positive effect from the lower interchange fees and effect of increased scheme fees, was 9%

Net revenue EBITDA b.s.i. 583 607 609 585 631

10% 11% 17% 12% 10% Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 +8.7%

Further margin expansion

• EBITDA b.s.i. up by 8.7% Y/Y leading to a 20 basis points

margin expansion

• Improved profitability is primarily driven by operating leverage

partly offset by

• Higher cost related to outbound sales activities
• Investments into mobile acceptance technology related

to Mobile Dankort

+8.2%

d

Financial & Network Services

8

Net revenue EBITDA b.s.i. 575 588 594 550 583 11% 10% 11% 5% 2%

Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17

DKKm

Organic growth Y/Y

Organic growth of 2% in net revenue

• Strong underlying structural growth in number of transactions of

8.1% driven by strong growth in international cards

• Strong growth in fraud and dispute services and in issuer

processing services

• Growth negatively impacted by lower implementation revenue,

especially related to the development of mobile services and new prices on processing of VISA/Dankort

• When adjusting for implementation fees, growth in Financial &

Network Services would have been approx. 7%

+1.4%

221 260 235 191 217 38.4% 44.2% 39.6% 34.7% 37.2%

Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17

DKKm

• 1.8%

Further margin expansion

• EBITDA b.s.i. down by 1.8% to DKK 217m primarily driven by

lower implementation revenue and changes in the project portfolio resulting in lower capitalisation compared to last year

• EBITDA b.s.i. margin of 37.2%, down 120 basis points

d

Corporate Services

9

Net revenue EBITDA b.s.i. 686 693 707 762 705 2% 1% 4% 5% 3%

Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17

DKKm

Organic growth Y/Y

Strong organic growth of 3% in net revenue

• The number of e-bill transactions grew by 3.6% in Q2

compared to Q2 last year, driven by strong growth in number of Norwegian e-bill solutions and a solid growth in Betalingsservice

• Growth in net revenue was supported by higher implementation

revenue compared to last year related to upgrade of the NemID solution and the final implementation revenue related to instant clearing in Italy

+2.8%

218 245 243 261 248 31.8% 35.4% 34.4% 34.3% 35.2%

Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17

DKKm

+13.8%

Further margin expansion

• EBITDA b.s.i. was DKK 248m up by DKK 30m or 13.8%

compared to the same period last year equivalent to a margin expansion of 340 basis points

• The improved margin is largely attributed to operating leverage

and further digitisation of volumes. Compared to Q2 last year, the margin was also lifted by a higher level of capitalisation primarily related to development of the PSD2-platform

d

Group performance

10

DKKm DKKm

Organic growth Y/Y

Organic revenue growth

• 5% organic growth Y/Y driven by the strong growth in Merchant

Services and in Corporate Services

• Growth in Financial & Network Services was negatively impacted

by high implementation revenue in Q2 last year

• The development in Norwegian and Swedish kroner affected the

reported growth negatively in the quarter EBITDA b.s.i.

• EBITDA b.s.i. grew by 6.8% compared to Q2 2016 with

Merchant Services and Corporate Services contributing to the growth

• The margin improved by 100 basis points to 36.0% whereof the

most significant improvement came from Corporate Services

+4.1% +6.8%

Net revenue EBITDA b.s.i.

1,737 1,739 1,704 1,743 1,844 1,888 1,910 1,897 1,919 6% 7% 6% 10% 7% 5% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2015 2016 2017 596 632 558 551 646 746 676 626 690 34.3% 36.3% 32.7% 31.6% 35.0% 39.5% 35.4% 33.0% 36.0% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2015 2016 2017

Group income statement

11

Strong growth in adjusted net profit

Organic growth of 5% in net revenue. Reported growth negatively impacted by lower NOK and SEK Operating expense ratio lowered from 65.0% to 64.0% in Q2 2017 primarily due to operating leverage and optimisation of processes primarily related to the e-bill-payment area Staff costs impacted by new employee tax in Norway and increased sales activities including hiring of outbound sales personnel Special items in Q2 2017 reduced to DKK 40m from DKK 105m last year due to lower IPO-related expenses and lower expenses relating to the transformation programme Underlying depreciation lower in Q2 2017 as 2016 was impacted by revised useful lifetime on now fully amortised assets Net financials in Q2 2017 of minus DKK 40m. Net financial expenses significantly reduced compared to Q2 last year due to refinancing, reduced leverage and positive currency effects. Currency was positive with DKK 83m in Q2 2017 compared to a negative effect of DKK 28m in Q2 last year Negative effects of VISA transaction of DKK 1m compared to a positive effect of DKK 255m last year Taxes amounted to DKK 21m in Q2 corresponding to an effective tax rate of 6%. The effective tax rate was positively impacted by non-taxable currency adjustments on interest-bearing debt Adjusted Net Profit up by 84% positively impacted by both the improved EBITDA b.s.i. and significantly lower financial expenses DKKm Q2 Q2 Change 2017 2016 Net revenue 1,919 1,844 4.1% Cost of sales (236) (237)

• 0.4%

External expenses (467) (465) 0.4% Staff costs (526) (496) 6.0% EBITDA b.s.i. 690 646 6.8% Special items (33) (91)

• 63.7%

IPO related costs (7) (14)

• 50.0%

EBITDA 650 541 20.1% Amortisation of business combinations (160) (160) 0.0% Underlying depreciation (96) (104)

• 7.7%

EBIT 394 277 42.2% Profit from associates after tax (5)

• na.

VISA transaction to former owners

• 74

na. VISA transaction for Nets (1) 181 na. Net financial expenses (34) (296)

• 88.5%

Net financials (40) (41)

• 2.4%

Profit before tax 354 236 50.0% Tax (21) (73)

• 71.2%

Net profit 333 163 104.3% Adjusted net profit for the period 389 211 84.4%

d Lower operating free cash flow

• Negatively impacted by higher capex and changes in narrow

working capital compared to the same period last year primarily due to IPO-related accrual build-up during 2016 Capital expenditures

• Capital expenditure was equivalent to 10.7% of net revenue

compared to 8.7% last year

• Capital expenditure up by DKK 44m compared to last year,

primarily driven by investments in development projects, software and in new data centre in Norway

Cash flow and capital expenditure

12

Operating free cash flow

DKKm

Capital expenditure

DKKm

252 355 465 119 416 443 456 250 371 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2015 2016 2017 151 119 138 132 161 161 192 150 205 9.3% 6.8% 8.1% 7.6% 8.7% 8.5% 11.2% 7.9% 10.7% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2015 2016 2017 Capital expenditure Capital expenditure/net revenue

d

Leverage unchanged Q/Q

Net interest-bearing debt unchanged compared to Q1 2017; impacted 0.2x by the acquisition of OP’s merchant acquiring business and purchase of treasury shares

13

Net interest-bearing debt

DKKm

Change in net interest-bearing debt in Q2

Net interest-bearing debt Q1 2017 8,399 Net cash flow from operating activities excluding clearing-related balances 510 Capital expenditure (205) M&A (179) Purchase of treasury shares (153) Other 24 Change in net interest-bearing debt (3) Net interest-bearing debt Q1 2017 8,402

11,175 12,279 13,319 13,444 13,061 8,805 8,503 8,399 8,402 5.8x 5.5x 3.5x 3.2x 3.1x 3.1x Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2015 2016 2017 Net interest-bearing debt NIBD/EBITDA b.s.i.

Higher special items primarily relates to the evaluation of options in connection with the interest in buying Nets and higher cost related to the transformation of technology Special items, with the exception of approx. DKK 30m related to the IPO-retention programme, are still expected to be finalised by the end of 2017

Guidance 2017 9 May 2017 Guidance 2017 17 August 2017 Organic revenue growth

5-6% 5-6%

EBITDA b.s.i. margin

At or above 36.5% At or above 36.5%

Special items

DKK 150m

which of DKK 30m relates to IPO-related retention cost

DKK 200m

which of DKK 30m relates to IPO-related retention cost CAPEX (in % of net revenue)

Around 8% Around 8%

Capital Structure (NIBD/EBITDA b.s.i.)

Around 2.5x

Including acquisition of OP’s merchant acquiring business and effect of share- buyback to cover incentive programme

Around 2.5x

Including acquisition of OP’s merchant acquiring business and effect of share- buyback to cover incentive programme

Updated guidance

14

Guidance assumes no additional M&A activity

APPENDIX

In the heart of the payments ecosystem

and a leader across the Nordic region

16

Notes

• 1. Management estimate based on First Annapolis study. Ranking based on number of card payment transactions processed or acquired
• 2. Part of the 300,000+ Merchants

Merchants 300,000+ Online Merchants(2) 30,000+ Banks 240+ Consumers Governments Central Banks Households Digital Identities 8 million Corporates 240,000+ Distributors & Partners

• Initiated transaction from approx. 35 million cards
• 7.7+ billion transactions
• DKK 475 billion of card transaction volume

#1

Position across the Nordic region(1)

#1 #1 #1 #2

(#1 in e-Com) DKKm

3,576

DKKm

2,314

DKKm

542

DKKm

885

59% 6% 3% 9%

DKKm

68

26%

50 years of history

17

PBS was established in 1968 and drove consolidation in Denmark BBS was established in 1972 and drove consolidation in Norway

1968-2009 2010-2013 2014-2016

Build-up and in-country consolidation Creation of Nets through the merger

• f two local champions in Denmark

and Norway Strengthening position in Finland Acquisition of Nets by Advent, Bain and ATP Commercialisation of Nets and strengthening of presence in Sweden 2,400 FTEs

Sponsor Ownership Bank Ownership

2010: PBS and Nordito (parent company of BBS and Teller) become Nets 2012: Acquisition

• f Luottokunta,

local Finnish champion 2014-2015: Acquisition of Nordea Merchant Acquiring (Kortaccept), DIBS and Payzone increasing presence in Sweden

Kortaccept

Listed 2016 -

Listed on Nasdaq Copenhagen on 23 September 2016 60% free float

2016 -> Focus 1.Mobile development 2.Outsourcing 3.Value chain expansion 4.Nordic growth

Customer-centric approach

Across three Business Units

18

EBITDA 30% EBITDA 34% EBITDA 36% Revenue 31% Revenue 31% Revenue 38%

Merchant Services

Integrated payment solutions for merchants Omni-channel offering and value-added services

Competitive position

#1 in online/mobile and in-store in the Nordic countries Local scale and scope exceeds that of any

• ther player

Revenue DKK 7.4bn EBITDA bsi DKK 2.6bn

Competitive position

App.78% of Danish and app. 88% of Norwegian issued card transactions volume #1 pan-Nordic payment processor #2 in Europe

Corporate Services

Operating critical account-based payments and digital ID ecosystem primarily to corporates

Competitive position

>90% of Danish households use Nets’ recurring bill payment >80% of Norwegians access

• nline/mobile banking using Nets’

BankID platform Unmatched integrated value chain

• ffering

Financial and Network Services

Owner or operator of national debit card networks in Denmark and Norway Offers payment and processing solutions to financial institutions Value-added services

Nets investment highlights

19

The Nordic countries are among the world's most advanced payments countries and fast-growing digital societies

1

Leading provider of mission-critical services to the Nordic payments ecosystem

2

Well-positioned with an innovative and scalable platform

3

Robust and attractive financial profile

4

Multiple drivers of future growth and upside opportunities

5

The Nordic countries are an advanced digital society

20

23 29 40 45 78 95 133 147 153 153 161

Germany Italy Spain Europe UK Netherlands Norway Finland Sweden France Denmark

High adoption of cashless payments

Number of card payment transactions per card (2014)

Source First Annapolis

Further supported by political push towards digital society Most advanced digital society

Source First Annapolis

Digital economy and society index (2016, digital skills & adoption of digital services) 2.02 2.52 2.61 2.75 2.93 3.30 3.30 3.30 3.34 3.41

Italy France Spain Germany UK Finland Norway Sweden Netherlands Denmark

In the heart of the payments ecosystem

21

…combined with a broad network Nets is positioned across the value chain in the Nordic countries…

Merchant Acquiring Network Issuer Processing

Illustrative UK Card Payments Example(1) Illustrative DK / NO Card Payments Example(1) Merchants Online Merchants Banks Consumers Governments Central Banks Households Digital Identities Corporates Distributors & Partners

(3) (2)

Notes

• 1. Illustrative examples for presentation purposes only. Other payment providers also operate in each of the respective countries
• 2. Nets owns and operates Dankort in Denmark. International card network operators (e.g. Visa, MasterCard) are also present in Denmark and accounted for 22% of the total number of made payments in

Denmark using debit and credit cards issued in Denmark in 2015. Nets also routes and clears Visa and MasterCard transactions

• 3. Nets operates, but does not own, the BankAxept scheme or logo in Norway. However, Nets owns the IT system and operates BankAxept on behalf of the Norwegian banking sector. International card network
• perators (e.g. Visa, MasterCard) are also present in Norway and accounted for 12% of the total card payments transactions in Norway in 2015. Nets also routes and clears Visa and MasterCard transactions

Card-related capabilities

Mobile Credit Cards Recurring Card Payments e-Wallets e-Commerce Card Not Present Debit Cards P2P Private Label Cards Contactless

Account-related capabilities

Mobile P2P Interbank Clearing B2B e-Commerce Recurring Payments Integrated e-Invoicing

$

Instant Payments Authen- tification

…with payment-agnostic capabilities…

A2A Payments

Nets covers the entire value chain

22

Request for payment Initiating transaction Validating and authorising a transaction Clearing and settlement #1 merchant services provider in the Nordic region, with an integrated

• ffering to merchants

#1 provider of issuing processing services in the Nordic region Only

• perator of

national debit card networks in Denmark and Norway(1) Only operator

• f clearing in

Denmark and Norway Over 90% of households use Nets’ integrated e-bill payments solutions in Denmark Operates de-facto e-ID platforms in Denmark and Norway

Banks

Online banking security providers and in-house bank IT departments Recurring card payments Paper bills Card- based payments Compe- titors Account- based payments Nets Compe- titors

Source Company information Notes

• 1. Nets owns and operates Dankort in Denmark. In Norway, Nets operates, but does not own, BankAxept
• 2. Owned by Verifone
• 3. Acquired by Swedbank
• 4. Owned by Worldline
• 5. Acquired by Ingenico

(2) (4) (3) (5)

Well-positioned to capture Nordic growth

23

Acquiring e-Com Network Issuing processing e-bill payments Selected Nordic Players

End-to-end value chain coverage with local scale Integrated value chain capabilities

Selected international players

Local scale Integrated payments Value chain coverage

Strong Medium None/Low Source Company estimates

Scale across the Nordic region

24

Source The Nilson Report 2015, Company data

4.2 2.0 0.4 0.2 0.0 1.5 3.0 4.5 Acquired Nordic transactions 2014 (Bn) (2)

Scale achieved – acquiring example

(3)

Significant scale advantages (illustrative) (4)

Country Position

#1 #1 #2 #1

(#1 in e-Com)

Local position(1) Denmark Norway Sweden Finland

Source Company estimates

Cost Per-Transaction Number of Transactions c.50% Volumes x 4

Merchant Acquiring Curve

Notes

• 1. All rankings are based on number of card payment transactions processed or acquired
• 2. Captive (in-house) volumes highlighted in grey
• 3. Nets volumes include processed Dankort and BankAxept transactions of 2.5bn and acquired international transactions of 1.7bn
• 4. c.50% lower cost as a result of movement from app.0.5bn to 2bn acquiring transactions

Babs

Source First Annapolis

Significant strategic opportunities

25 14% 28%

Significant potential to gain volume in Sweden from bank acquirers

3.0 5.0 7.0 9.0 11.0 13.0 15.0 2015A 2016F 2017F 2018F 2019F 2020F Number of Transactions (in billions)

Notes

• 1. Cards transaction value growth in the Nordic countries
• 2. Real-time clearing

Mobile

Source First Annapolis report

Outsourcing Value chain expansion Nordic growth

Contactless and mobile initiatives across business units and geographies Card management services Increased outsourcing of non- core banking processes Increased business scope through value-adding services (including real-time clearing and data analytics) 4.1 1.2 6.5 2015A 2020F Number of transactions (Bn) (incl. C2B, B2B, and B2G)

CAGR 2015 – 20 2% 4% 5% Overall electronic payments transaction growth Cards Direct Debit and Credit Transfer Transaction value growing at 5% CAGR between 2015-20

33.2 63.2 2015 2020E Nordic e-/m-Payments (€ Bn) (1)

Nordic electronic payments growth Instant payments(2)

CAGR 2015 – 20 CAGR 2015 – 20 40%

Fast Mass Adoption

• f e-/m-Commerce

Resilient business model

Generating predictable growth and expanding profitability

26

Proven

• perating

leverage



2014-2016 EBITDA margin expansion of 10% pts(1)



Strong scale efficiencies with significant fixed cost base



Restructuring of cost base initiated

Stable & predictable revenue model



Entrenched provider of payments infrastructure with high recurring revenues



Long-term predictability irrespective of cycle



Diversified customer base characterized by long- term relationships

Proven Track record of growth



Organic revenue growth of 6% and 7% for 2015 and 2016 respectively



Innovation track record with strong pipeline



Successful M&A (8 acquisitions since July 2014 for total of DKK3.3Bn)

Predictable & growing cash flow



Predictable capital expenditure



Minimal working capital requirements



Resulting in strong cash conversion of 78% in 2016(2) Y/Y organic growth DKKm

Net revenue

DKKm

Reported EBITDA b.s.i.

6,727 6,546 6,836 7,385 6% 7% 2013 2014 2015 2016 1,525 1,663 2,248 2,619 22.7% 25.4% 32.9% 35.5% 2013 2014 2015 2016

Notes

• 1. EBITDA before special items shown vs. reported net revenue (not FX adjusted)
• 2. Cashflow defined as EBITDA before special items less capex less increase in working capital, divided by EBITDA before special items

Highly cash generative with a proven track record of deleveraging

Denmark 49% Norway 31% Finland 12% Sweden 7% Baltics 1%

27

3,379 2,253 809 341 54 3,576 2,314 885 542 68 Denmark Norway Finland Sweden Baltics 2015 2016 6% 3% 9% 59% 26% Distribution of revenue per country

DKKm

Nordic growth

Stable volume growth unaffected by business cycles

28

500 1,000 1,500 (10) 10

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Denmark Nominal GDP Growth YoY, % (LHS) Dankort Card Transactions Processed, MM (RHS)

Source Company information, World Bank

Growth (%) Number of Transactions (MM)

Strong growth through the crises and downturns

d

Structural growth in transactions

29

Strong growth in value of transactions

• Impacted negatively by the development in both NOK and SEK
• In Q2 2017, growth has been particularly strong in Finland and

Denmark

• Whereas Nets continues to grow in the SME segment in Sweden,

the large and key account segment continues to experience price pressure

121 126 123 112 129

Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17

Merchant Services

+6.5%

Financial & Network Services Corproate Services

DKKbn

592 631 620 599 672 335 325 344 312 351 397 400 407 370 409 1,324 1,356 1,371 1,281 1,432 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17

International branded cards Dankort BankAxept +8.1%

Million

Strong growth in number of transactions

• Especially on international branded cards
• Transactions on Dankort up by 4.8%
• Transactions on BankAxept up by 3.0%
• Transactions on international cards up by 13.5%

215 217 218 239 223 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17

Strong growth in number of transactions

• Strong development in Norwegian e-bill solutions and solid

growth in Betailngsservice

+3.6%

Million

Merchant services

30

Nets enables SMEs to large-size pan-regional merchants to accept digital payments End-to-end omni-channel solutions Extensive payments capabilities - payment method agnostic Multi-channel distribution DKK 475bn transaction value 300,000+ merchants 30,000+ e-Commerce merchants (1) Key statistics, 2016 What we enable? Strong leading positions Attractive growth fundamentals Integrated customer value proposition Key characteristics Accelerating commercialisation driving further growth Competitive advantage through scale and distribution Multiple avenues for future growth

Notes

• 1. 30,000+ e-Commerce merchants are part of 300,000+ merchants

Financial & Network Services

31

Operator of national debit card schemes in Norway and Denmark Payments and processing solutions across all card payment methods to financial institutions #1 pan-Nordic payment processor(1) #2 in Europe(2) Comprehensive value-added services offering 5.2 billion transactions processed ~35m cards More than 40 card payment types Key statistics, 2016 What we enable? Leading position Strong underlying market growth End-to-end service offering Key characteristics Superior scale drives cost advantage Highly sticky customer relationships

Notes

• 1. Management estimate based on First Annapolis report. Ranking based on number of cards processed
• 2. Based on management estimates

Corporate Services

32

Seamless recurring payments from consumers to corporates with integrated invoicing Further value to the e-billing with adjacent digital services, as e-ID Primarily operating in Denmark and Norway 0.87bn transactions 240,000 corporates 8.3 million digital identities Key statistics, 2016 What we enable? Core to society through provision of mission-critical solutions Proven, stable and highly predictable business model Key characteristics Recurring and resilient revenues and profitability Innovative digital solutions and unique network enabling further growth

Special Items

33

Special Item

Overview Development over time

2013 2014 2015

Reorganisation and restructuring costs Cost mainly reflecting employee termination costs in relation to establishing a customer centric sales organisation and retention teams and optimising group functions 159 109 170 Other costs and income Costs in 2014 were mainly related to transaction costs 178 31 Total Special items should be considered as income / costs not attributed directly to ordinary activities Separately disclosed to allow a more comparable view of underlying trending performance 538 411 201 Transformation programme Costs related to optimisation of business, e.g. Commercialisation of Merchant Services Transformation of procurement function and processes Improving efficiency in Technology and Operations Transformation of stability and security 353 124

2016

26 6 6 113 219 13 IPO-related expenses IPO on the income statement In addition, DKK 170 was expensed directly on equity 261

Nets’ transformation supported by M&A

34

Nordic growth Creating leading e-Commerce Business Technology & capability enhancement

Purchased Nordea Merchant Acquiring Business (Kortaccept) Increased acquiring customers in the Nordic and the Baltic region Integrated acquiring services to app. 32k merchant contracts with app.70k unique outlets across the Nordic and Baltic region Leverage Nordea’s back book to cross-sell

(Dec-15)

Increased POS share in Sweden Additional solution capabilities to key accounts

(Jul-14)

Increased e-Commerce share in the Nordic countries to #1 Enhanced customer proposition through combination with Paytrail

(Dec-14)

Increased e-Commerce share in Finland Payment service provider capabilities with Nordic potential

(Dec-14)

Innovative capabilities and solutions (e-Receipt and loyalty) Strengthened position with MobilePay

(Jan-16)

Enhanced e-Security value-added services

(Jul-15)

Enhanced capabilities to benefit from digital trends

(Jul-14)

Kortaccept

Merchant Service Related Acquisitions Corporate Service Related Acquisitions Purchase of OP Financial group merchant acquiring business Strengthened position in Finland. Integrated acquiring services to app. 15k 10 year strategic partnership

(June-17)

OP Financial Group

Capital allocation principles

35

Investment into organic growth

1

Ordinary dividends

3

Excess cash distributed via share buybacks and extraordinary dividends

4

Bolt-on M&A

2

Maintain Medium-term Leverage Target at 2.0x - 2.5x

Medium-term guidance

36

Medium-term guidance Organic revenue growth

5-6% per annum

EBITDA b.s.i. margin

High 30s

Special Items

DKK 30m

• IPO-related retention cost for 2018

CAPEX (in % of net revenue)

6-8%

• Excluding M&A activities

Capital Structure (NIBD/EBITDA b.s.i.)

2.0x-2.5x

Assuming no M&A