| Company announcement No. 14/2017 |
Financial results for Q1 2017
Highlights for Q1 2017
- Strong organic growth in netrevenue of 7%, driven by strong growth in both Merchant Services and Corporate Services with organic growth of 12% and 5%, respectively, and a solid growth of 5% in Financial and Network Services
- Transaction volumes showed strong growth across all business segments, particularly within merchant acquiring, issuer processing and eBilling solutions in both Denmark and Norway
- EBITDA b.s.i. was up 13.6% compared to Q1 2016, equivalent to a margin expansion of 140 basis points to 33.0%
- Adjusted net profit amounted to DKK 353 million, equivalent to an increase of 134% compared to Q1 2016
- Capital expenditures amounted to DKK 150 million, which corresponds to a capital expenditure/revenue ratio of 7.9%
- Operating free cash flow was DKK 250 million up by 110% compared to Q1 2016
- Cash conversion improved to 79% up by 50 basis points compared to Q1 2016
- The capital structure was further improved with a net interest-bearing debt / EBITDA b.s.i. of 3.1x at the end of Q1 2017
- On 5 April, Nets signed an agreement to acquire the Finnish Bank OP's merchant acquiring business, which consists of approximately 15,000 merchant contracts and underlying annual card turnover of around DKK 37 billion and includes a ten-year strategic partnership with close collaboration between OP and Nets for sales to new merchants
- Guidance for EBITDA b.s.i. margin in 2017 is lifted from above 36.0% to at or above 36.5%, based on a strong first quarter, and leverage guidance has been reiterated following the acquisition of OP's merchant acquiring business. The remaining parameters are unchanged
Bo Nilsson, CEO of Nets, said, "With an organic revenue growth of 7%, powered by transaction- and volume increases across all business segments, we once more demonstrated the strength of our growth model. Furthermore, I am pleased with the continued margin expansion, which has lead us to raise our guidance on EBITDA b.s.i. margin for the year to at or above 36.5%.The first quarter of 2017 was a strong start of the year."
Financial performance
| Q1 | Q1 | Change | FY | ||
| DKKm | 2017 | 2016 | 2016 | ||
| Revenue, net | 1,897 | 1,743 | 8.8% | 7,385 | |
| EBITDA before special items | 626 | 551 | 13.6% | 2,619 | |
| Special items | (84) | (139) | (39.6%) | (606) | |
| Adjusted EBIT | 540 | 460 | 17.4% | 2,203 | |
| Net profit | 202 | (139) | n.a. | (584) | |
| Adjusted net profit | 353 | 151 | 133.8% | 997 | |
| Organic growth | 7% | 6% | 7% | ||
| EBITDA b.s.i. margin | 33.0% | 31.6% | +1.4 pp | 35.5% | |
| EBITDA margin | 28.6% | 23.6% | +5.0 pp | 27.3% | |
| Capital expenditure/revenue | 7.9 % | 7.6 % | +0.3 pp | 9.0 % | |
| Net interest-bearing debt / EBITDA b.s.i. | 3.1x | 3.2x |
Outlook
| Targets | Guidance 28 February 2017 FY 2017 | Guidance 9 May 2017 FY 2017 |
| Organic revenue growth | 5-6% | 5-6% |
| EBITDA b.s.i. margin | Above 36.0% | At or above 36. 5 % |
| Special items (including IPO- related retention expenses) | DKK 150 million, of which approx. DKK 30 million is IPO-related | DKK 150 million, of which approx. DKK 30 million is IPO-related |
| Capital expenditure incurred (% of net revenue) | Around 8% excluding M&A activities | Around 8%, excluding M&A activities |
| 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 assuming no additional M&A activities | 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 and assuming no additional M&A activities |
Additional information
Conference call In connection with the publication of the results for Q1 2017, Nets will host a conference call on Tuesday, 9 May 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
- 17 August 2017: Interim Report for the First Half-year of 2017
- 9 November 2017: Interim Report for the Third Quarter of 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.
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