Financial results for Q3 2017 November 2017 Powering Digital - - PowerPoint PPT Presentation

Powering Digital Payments

November 2017

Financial results for Q3 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

Financial highlights Q3 2017

3

*Before special items

5%

Revenues of DKK 1,962m, up 3.9% compared to Q3 2016, driven by solid growth in Merchant Services and strong growth in Corporate Services

Organic revenue growth

39.5%

EBITDA b.s.i. of DKK 775m, up 3.9% compared to Q3 2016. The EBITDA b.s.i. margin was unchanged compared to Q3 2016

EBITDA b.s.i. margin*

8.2%

Capital expenditure of DKK 160m, down from a ratio of 8.5% Y/Y, driven by investments in development projects and software

Capital expenditure/ revenues ratio

442

Adjusted net profit up 66.8% compared to Q3 2016

Adjusted net profit (in DKKm)

2.9x

Down by 0.2x compared to Q2 2017. Net interest-bearing debt was reduced by DKK 359m in Q3 2017 compared to Q2 2017

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

65%

Down from 75% in Q3 2016 due to negative change in narrow working capital compared to a positive in Q3 2016, driven by IPO-related accrual build-up last year

LTM Cash conversion

Merchant Services

• Organic net revenue growth of 9%
• 15.9% growth in value of transactions, driven by the acquisition of OP’s

merchant acquiring business in Finland, which closed 28 June 2017

• 6.5% growth adjusted for OP
• In Sweden, Nets continues to see good growth in value of transactions in

the SME segment, but price competition has led to increased churn in the large and key account segment

• Contactless payments in Denmark reached 37.7% of all in-store

payments in September. Denmark is now one of the countries in the world with the highest penetration of contactless payments

• The market for mobile based payments continues to evolve
• Danske Bank decided to stop MobilePay in Norway and together with

Nordea they decided to support Vipps instead of MobilePay

• ApplePay launched in Denmark, Sweden and Finland in October
• AliPay launched in Denmark and Norway to service Chinese

travelers

• Terminals accounting for approx. 45% of all transactions have been

upgraded to take payments using BLE

126 146 Q3 '16 Q3 '17

Value of transactions (DKKbn)

+15.9%

4

Financial & Network Services

• Organic net revenue growth of 2%
• 8.1% growth in number of transactions, especially driven by

international cards

• Solid growth in number of accounts on file on the CMS platform,

partly due to on-boarding of new customers

• Implementation of Finnish banks on the fraud prevention solution

contributed to the growth in the quarter

• Vipps, which is the widest used wallet in Norway, and Nets entered

into a new agreement, which will enable users of Vipps to make instant P2P payments using "straksbetaling". The solution will be available before year-end 2017

• Nets established Smart Payments, which will strengthen Nets’

innovation and business development efforts by developing and commercialising sustainable proof of concepts, and by identifying the most attractive fintech partnerships for the future

• Susanne Brønnum will take on the position as CEO of Smart
• Payments. Nets has hired Thomas Jul as Group Executive Vice

President for Financial & Network Services

1,356 1,466 Q3 '16 Q3 '17

Number of transactions (million)

+8.1%

5

Corporate Services

• Organic net revenue growth of 3%
• Strong growth of 4.1% in e-bill transactions, driven by both

Betalingsservice in Denmark and the Norwegian e-bill solutions

• Nets experience interest from new parties to participate in the

pilot test that Nets is currently running on the new PSD2- compliant open platform, hereunder from Fintech companies

• In August, Nets and Bankart in Slovenia signed an agreement

for delivery of Nets’ instant clearing solution, RealTime 24/7

217 226 Q3 '16 Q3 '17

Number of e-bill transactions (million)

+4.1%

6

Nets to deliver instant payments solution to Bankart in Slovenia

• Nets will deliver its RealTime 24/7 payment solution, which will work

as a single processing engine servicing the full value chain for all types of A2A payments

• Instant payments
• Non-urgent payments
• Other related financial information, including support for PSD2
• The solution is built on an open API architecture permitting easy

customer delivery of services

• The solution is a managed service operated out of Nets’ data center

in Norway and is planned to go live in September 2018. The agreement will run for 10 years

• With this agreement Nets will run instant clearing platforms in

Denmark, Italy and Slovenia About Bankart

Bankart is the leading provider of services to financial institutions in Slovenia Bankart intend to deliver more than a basic payments infrastructure to the Slovenian banking community Bankart will develop and operate new additional services and solutions as well as utilising Bankart’s existing services and solutions to make full use of the scalable and

• pen central infrastructure

7

d

241 198 174 225 288 39.7% 32.5% 29.7% 35.7% 43.2%

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

Merchant Services

8

DKKm DKKm

Organic growth Y/Y

Solid organic growth of 9% in net revenue

• Reported growth was impacted positively by the

acquisition of OP’s acquiring business

• Organic growth was primarily driven by transactions

acquired and e-commerce

• Point-of-sale and related solutions in line with Q3 last

year, driven by the continued push towards a higher proportion of rented terminals

• The lower interchange fees, implemented on 1

September 2016 in Norway, positively impacted organic growth in July and August 2017

• The underlying organic growth was 9%, adjusted for

effects from lower interchange fees and effect of increased scheme fees

Net revenue EBITDA b.s.i. 607 609 585 631 666

11% 17% 12% 10% 9% Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 +19.5%

Further margin expansion

• EBITDA b.s.i. up by 19.5% Y/Y leading to a 350 basis

points margin expansion

• The growth in profitability is primarily driven by operating

leverage and a higher proportion of consultancy spend related to development of e-commerce solutions that are capitalised

+9.7%

d

Financial & Network Services

9

Net revenue EBITDA b.s.i. 588 594 550 583 584 10% 11% 5% 2% 2%

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

DKKm

Organic growth Y/Y

Organic growth of 2% in net revenue

• Strong underlying structural growth in number of transactions
• f 8.1%, especially related to international cards
• Solid growth in CMS due to higher number of accounts on file
• Fraud services impacted positively by on-boarding of Finnish

banks partly offset by declining volumes in dispute handling

• Growth impacted negatively due to unusually high

implementation revenue last year related to the development

• f mobile services and due to new prices on processing of

VISA/Dankort

• When adjusting for implementation fees, growth in Financial

& Network Services would have been around 2 ppts higher

(0,7)%

260 235 191 217 241 44.2% 39.6% 34.7% 37.2% 41.3%

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

DKKm

(7.3)%

Lower margin

• EBITDA b.s.i. down by 7.3% to DKK 241m, leading to an

EBITDA b.s.i. margin contraction of 290 basis points, to 41.3%

• Margin contraction primarily driven by changes to he project

portfolio leading to a lower proportion of consultancy spend being capitalised. In addition, reduced prices on Visa/Dankort transactions also impacted margin negatively

d

Corporate Services

10

Net revenue EBITDA b.s.i. 693 707 762 705 712 1% 4% 5% 3% 3%

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

DKKm

Organic growth Y/Y

Strong organic growth of 3% in net revenue

• Strong growth in the number of e-bill transactions in Q3

2017 (up by 4.1%), driven by both Norwegian e-bill solutions and by the Danish Betalingsservice solution

• Growth in net revenue was supported by higher

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

+2.7%

245 243 261 248 246 35.4% 34.4% 34.3% 35.2% 34.6%

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

DKKm

+0.4%

Lower margin due to investments

• EBITDA b.s.i. was DKK 246m, up by DKK 1m or 0.4%

compared to the same period last year equivalent to a margin contraction of 0.8 basis points

• The lower margin is largely attributed to higher

technology spend

d

Group performance

11

DKKm DKKm

Organic growth Y/Y

Organic revenue growth

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

Corporate Services and solid growth in Merchant 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 3.9% compared to Q3 2016 with

primarily Merchant Services contributing to the growth

• The margin was unchanged at 39.5%

+3.9% +3.9%

Net revenue EBITDA b.s.i.

1,739 1,704 1,743 1,844 1,888 1,910 1,897 1,919 1,962 7% 6% 10% 7% 5% 5% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2016 2017 632 558 551 646 746 676 626 690 775 36.3% 32.7% 31.6% 35.0% 39.5% 35.4% 33.0% 36.0% 39.5% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2016 2017

Group income statement

12

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 unchanged at 60.5% External expenses ratio improved by 100 basis points to 21.0% Y/Y related to higher efficiency in technology and lower marketing spend Staff costs impacted by new employee tax in Norway and increased sales activities, including hiring of outbound sales personnel Special items of DKK 57m, including expenses related the takeover offer. Q3 2016 was impacted by the IPO Underlying depreciation higher in Q3 2017, driven by higher investments in recent year and completion of development projects Net financials in Q3 2017 of minus DKK 109m impacted negatively by currency of DKK 33m compared to minus DKK 100m last year. Last year impacted by refinancing Positive effect of VISA transaction of DKK 4m compared to a negative effect of DKK 111m last year Taxes amounted to DKK 70m in Q3 (effective tax rate of 21%). The effective tax rate was impacted negatively by non-taxable currency adjustments on interest-bearing debt Adjusted Net Profit of DKK 442m for Q3

DKKm Q3 Q3 Change 2017 2016 Net revenue 1,962 1,888 3.9% Cost of sales (239) (235) 1.7% External expenses (413) (415)

• 0.5%

Staff costs (535) (492) 8.7% EBITDA b.s.i. 775 746 3.9% Special items (23) (78)

• 70.5%

IPO and costs related takeover offer (34) (220)

• 84.5%

EBITDA 718 448 60.3% Amortisation of business combinations (158) (159)

• 0.6%

Underlying depreciation (121) (109) 11.0% EBIT 439 180 143.9% Visa transaction to former owners

• (114)

na. Visa transaction for Nets 4 3 33.3% Refinancing expenses

• (738)

na. Net financial expenses (113) (393)

• 59.5%

Net financials (109) (1,242)

• 91.2%

Profit before tax 330 (1,062)

• 131.1%

Tax (70) 231

• 130.3%

Net profit 260 (831)

• 131.3%

Adjusted net profit for the period 442 265 66.8%

d

Operating free cash flow up by 10% Y/Y

• Impacted positively by operational performance partly offset

by negative change in narrow working capital compared to a positive change in narrowing working capital in Q3 2016

• The positive change in narrow working capital in Q3 2016

was primarily related to IPO accruals Capital expenditures

• Capital expenditure was equivalent to 8.2% of net revenue

compared to 8.5% last year

• Capital expenditure was primarily related to investments in

development projects and software

• YTD Capital expenditure was 8.9% of net revenue

Cash flow and capital expenditure

13

Operating free cash flow

DKKm

Capital expenditure

DKKm

355 465 119 416 443 456 250 371 489 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2016 2017

119 138 132 161 161 192 150 205 160 6.8% 8.1% 7.6% 8.7% 8.5% 11.2% 7.9% 10.7% 8.2% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2016 2017 Capital expenditure Capital expenditure/net revenue

d

Leverage further reduced Q/Q

Reduction in leverage developed as planned

14

Net interest-bearing debt

DKKm

Change in net interest-bearing debt in Q3

Net interest-bearing debt Q2 2017 8,402 Net cash flow from operating activities excluding clearing-related balances 619 Capital expenditure (160) M&A (61) Other (39) Change in net interest-bearing debt 359 Net interest-bearing debt Q3 2017 8,043

12,279 13,319 13,444 13,061 8,805 8,503 8,399 8,402 8,043 5.5x 3.5x 3.2x 3.1x 3.1x 2.9x Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2016 2017 Net interest-bearing debt NIBD/EBITDA b.s.i.

Unchanged compared to the latest guidance given on 25 September 2017

Guidance 2017 25 September 2017 Guidance 2017 9 November 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 230m

• f which DKK 30m relate to IPO-related

retention cost

DKK 230m

• f which DKK 30m relate to IPO-related

retention cost CAPEX (in % of net revenue)

Around 8% Around 8%

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

Around 2.5x Around 2.5x

Guidance for 2017

15

Guidance assumes no additional M&A activity

Takeover offer timeline

16

• Offer Period of 8 weeks runs until 18 December
• A key condition for the Offer is acceptance from > 90% of shareholders (excl. any Treasury shares)
• The process to obtain regulatory approvals is well on track, but uncertainty regarding time needed
• On 7 November 2017, the European Commission approved the acquisition
• Extension of the Offer Period might become relevant
• The Offeror anticipate that Nets will repurchase its EUR 400m 2.875% senior notes due in 2024 as a consequence of the

”Change of Control Repurchase Event” under the indenture for those notes

25 September 2017

• Takeover offer announced

23 October 2017

• Offer Document issued

22 December 2017

• Settlement of the offer

Key dates and considerations

18 December 2017

• Expiry of Offer Period

Early Q1

• If extension

Offer Period

APPENDIX

In the heart of the payments ecosystem

and a leader across the Nordic region

18

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

19

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

20

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

21

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

22

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

23

…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

24

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

25

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

26

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

27 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

28

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%

29

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

30

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

DKKbn

Structural growth in transactions

31

Strong growth in value of transactions

• Positive impact from the acquisition of OP’s acquiring business
• Excluding effect of OP, growth in value of transaction was around

6.5%

• Continued good growth in the SME segment in Sweden. In the

large and key account segment there is high level of competition and substantial price pressure

• Nets remains disciplined on pricing and has experienced

increased churn in the large account segment due to pricing

126 123 112 129 146

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

Merchant Services

+15.9%

Financial & Network Services Corproate Services 631 620 599 672 711 325 344 312 351 341 400 407 370 409 414 1,356 1,371 1,281 1,432 1,466 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '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 4.9%
• Transactions on BankAxept up by 3.5%
• Transactions on international cards up by 12.7%

217 218 239 223 226 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17

Strong growth in number of transactions

• Strong development in both Norwegian e-bill solutions and the

Danish Betailngsservice solution

+4.1%

Million

Merchant services

32

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

33

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

34

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

35

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

36

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

37

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

38

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