Company announcement
No. 24/2017 		 

Financial results for Q2 2017

Highlights for Q2 2017

  • Solid organic growth in net revenue of 5%, driven by strong growth in both Merchant Services and Corporate Services with organic growth of 10% and 3%, respectively. Organic growth in Financial & Network Services was 2% negatively impacted by high implementation revenues in Q2 last year. Organic revenue growth in H1 2017 was 6%
  • Transaction volumes showed strong growth across all business segments, particularly within issuer processing and e-bill payment solutions
  • EBITDA b.s.i. was up 6.8% compared to Q2 2016, equivalent to a margin expansion of 100 basis points to 36.0%. For H1 2017, EBITDA b.s.i. margin was 34.5%, an improvement of 110 basis points compared to the same period last year
  • Adjusted net profit amounted to DKK 389 million, equivalent to an increase of 84.4% compared to Q2 2016. In H1 2017, adjusted net profit was DKK 742 million, compared to DKK 362 million in H1 last year
  • Capital expenditure ratio was 10.7% in Q2 2017 and 9.3% in H1 2017
  • Operating free cash flow was DKK 371 million down by 11% compared to Q2 2016 due to higher investments as expected. Operating free cash flow in H1 2017 was DKK 621 million, up 16% compared to last year
  • Cash conversion of 73% down by 200 basis points compared to Q2 2016 due to higher investments
  • The capital structure was unchanged from Q1 2017 with a net interest-bearing debt / EBITDA b.s.i. of 3.1x at the end of Q2 2017, including the effect of the acquisition of OP's Merchant acquiring business and share-buyback programme
  • Guidance for 2017 is reiterated for all parameters except special items which is changed from DKK 150 million to approx. DKK 200 million. The increase 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 exception of approx. DKK 30 million related to the IPO, are still expected to be finalised by the end of 2017

Bo Nilsson, CEO of Nets, said,
"I am pleased to report a solid organic growth in Q2 of 5% driven by strong growth in transactions and volumes across all business segments. The growth was as expected lower than previous quarters due to the high implementation revenues in Financial & Network Services last year. I am furthermore pleased that our transformation of Nets continues to deliver solid margin expansion"

Financial performance

  Q2 Q2 Change   H1 H1 Change   FY
DKKm 2017 2016     2017 2016     2016
Revenue, net 1,919 1,844 4.1%   3,816 3,587 6.4%   7,385
EBITDA before special items 690 646 6.8%   1,316 1,197 9.9%   2,619
Special items (40) (105) (61.9%)   (124) (245) (49.4%)   (606)
Adjusted EBIT 594 542 9.6%   1,134 1,002 13.2%   2,203
Net profit 333 163 104.3%   535 23 2,226.1%   (584)
Adjusted net profit 389 211 84.4%   742 362 105.0%   997
Organic growth 5% 7%    6% 6%    7%
EBITDA before special items margin 36.0% 35.0% +1.0 pp   34.5% 33.4% +1.1 pp   35.5%
EBITDA margin 33.9% 29.3% +4.6 pp   31.2% 26.5% +4.7 pp   27.3%
Capital expenditure/revenue 10.7 % 8.7 % +2.0 pp   9.3 % 8.2 % +1.1 pp   9.0 %
Net interest-bearing debt / LTM EBITDA bsi         3.1x       3.2x

Outlook

Targets Guidance 9 May 2017
FY 2017 		Guidance 17 August 2017
FY 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 (including
IPO-related retention expenses) 		DKK 150 million, which of approx. DKK 30 million is IPO-related DKK 200 million, which of approx. DKK 30 million is IPO-related
Capital expenditure incurred
(% of net revenue) 		Around 8% Around 8%
Net interest-bearing debt / EBITDA b.s.i. Around 2.5x, including effect of share buyback of approx. DKK 150 million to cover long-term incentive programme and including acquisition of OP's merchant acquiring business Around 2.5x, including effect of share buyback of approx. DKK 150 million to cover long-term incentive programme and including acquisition of OP's merchant acquiring business

 

Additional information

Conference call
In connection with the publication of the results for Q2 2017, Nets will host a conference call on Thursday, 17 August 2017, from 10:00 to 11:00 am CET. The conference call can be followed live via the company's website, https://investor.nets.eu

Dial-in details for investors and analysts:

Participants, DK: +45 32 71 16 60
Participants, UK: +44(0)20 3427 1919
Participants, US: +1 646 254 3362

Confirmation code: 8978598

For further information, please contact:
For media enquiries:
Karsten Anker Petersen, Head of Communications, at +45 29 48 78 83 or kapet@nets.eu

For investor and analyst enquiries:
Lars Oestmoe, Head of M&A and IR, at +47 91 34 71 77 or lostm@nets.eu

Financial calendar

  • 9 November 2017: Interim Report for Q3 2017

Forward-looking statements
This report contains forward-looking statements, including, but not limited to, the statements and expectations contained in the outlook section. 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 fact 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 or to Nets in particular, including those described in Nets Annual Report 2016.

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.

As a result, forward-looking statements should not be relied on as a prediction for actual results. Nets undertakes no obligation to update or revise any forward-looking statements, neither because of new information, nor because of future events or otherwise, except to the extent required by law.

Information on Nets
Nets is a leading provider of digital payment services and related technology solutions across the Nordic region. Nets sits at the centre of the digital payments ecosystem and operates a deeply entrenched network, which connects merchants, corporate customers, financial institutions and consumers enabling them to make and receive payments as well as, increasingly, utilise value-added services to help them improve their respective activities.

Nets Q2 Company Announcement_FINAL


This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Nets A/S via Globenewswire