Company announcement
No. 31/201 		 

Financial results for Q3 2017

Highlights for Q3 2017

  • Organic growth in net revenue was 5% in Q3, driven by a solid performance in Merchant Services with an organic growth of 9% and a strong growth in Corporate Services with organic growth of 3%. Organic growth in Financial & Network Services was 2%, negatively impacted by high implementation revenues in Q3 last year. Organic revenue growth in 9M 2017 was 5%
  • The underlying growth in transaction volumes continued to develop positively across all business segments
  • EBITDA b.s.i. was up 3.9% compared to Q3 2016. EBITDA b.s.i. margin was unchanged at 39.5% compared to Q3 2016. For 9M 2017, EBITDA b.s.i. margin was 36.2% - an improvement of 70 basis points compared to the same period last year
  • Adjusted net profit amounted to DKK 442 million, equivalent to an increase of 66.8% compared to Q3 2016. In 9M 2017, adjusted net profit was DKK 1,184 million compared to DKK 627 million in 9M last year
  • Capital expenditure ratio was 8.2% in Q3 2017 and 8.9% in 9M 2017
  • Operating free cash flow was DKK 489 million up by 10% compared to Q3 2016 due to better operational performance. Operating free cash flow in 9M 2017 was DKK 1,110 million, up 13% compared to last year
  • Cash conversion of 65% down by 10 ppts compared to Q3 2016 primarily related to IPO-related accruals last year
  • Net interest-bearing debt/EBITDA b.s.i. was 2.9x at the end of Q3 2017, an improvement of 0.2x compared to Q2 2017
  • Guidance for 2017 is reiterated for all parameters
  • On 25 September 2017, a Hellman & Friedman led consortium (Evergood 5 AS) announced a cash offer of DKK 165 per share. On 23 October 2017, the Board of Directors of Nets formally recommended the offer to the shareholders

Bo Nilsson, CEO of Nets, said,
"I am pleased with the overall development in Q3 and especially the growth in Corporate Services and Merchant Services. As expected and like in Q2, we saw lower growth in Financial & Network Services due to unusually high implementation revenues last year. Transaction volumes continued to develop positively across all business segments."

Financial performance

  Q3 Q3 Change   9M 9M Change   FY
DKKm 2017 2016     2017 2016     2016
Revenue, net 1,962 1,888 3.9%   5,778 5,475 5.5%   7,385
EBITDA before special items 775 746 3.9%   2,091 1,943 7.6%   2,619
Special items (57) (298) (80.9%)   (181) (542) (66.6%)   (606)
Adjusted EBIT 654 637 2.7%   1,788 1,639 9.1%   2,203
Net profit 260 (831) n.a.   795 (807) n.a.   (584)
Adjusted net profit 442 265 66.8%   1,184 627 88.8%   997
Organic growth 5% 6%    5% 6%    7%
EBITDA before special items margin 39.5% 39.5% 0.0 pp   36.2% 35.5% +0.7 pp   35.5%
EBITDA margin 36.6% 23.7% +12.9 pp   33.1% 25.6% +7.5 pp   27.3%
Capital expenditure/revenue 8.2 % 8.5 % -0.3 pp   8.9 % 8.3 % +0.6 pp   9.0 %
Net interest-bearing debt /LTM EBITDA b.s.i.      2.9x 3.5x     3.2x

Outlook

Targets Guidance 25 September 2017
FY 2017 		Guidance 9 November 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 230 million including costs related to the offer on Nets DKK 230 million including costs related to the offer on Nets
Capital expenditure incurred
(% of net revenue) 		Around 8% Around 8%
Net interest-bearing debt / EBITDA b.s.i. Around 2.5x Around 2.5x

Additional information

Conference call
In connection with the publication of the results for Q3 2017, Nets will host a conference call on Thursday, 9 November 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 3271 1660
Participants, UK: +44 (0) 20 3427 1918
Participants, US: +1 646 254 3367

Confirmation code: 9170988

For further information, please contact:
For media enquiries:
Pia Stoklund, Head of Communications, at +45 61 55 44 41 or pstok@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

  • 7 February 2018: Deadline for shareholders for submission of proposals for the agenda of the Annual General Meeting
  • 27 February 2018: Annual Report for the full year ending 31 December 2017
  • 22 March 2018: Annual General Meeting
  • 3 May 2018: Interim Report for the First Quarter of 2017
  • 17 August 2018: Interim Report for the Second Quarter of 2018
  • 1 November 2018: Interim Report for the Third Quarter of 2018

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 Q3 2017 Company Announcement FINAL


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Source: Nets A/S via Globenewswire