| Company announcement |
Financial results for Q2 2017
Highlights for Q2 2017
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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%
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Transaction volumes showed strong growth across all business segments, particularly within issuer processing and e-bill payment solutions
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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
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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
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Capital expenditure ratio was 10.7% in Q2 2017 and 9.3% in H1 2017
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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
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Cash conversion of 73% down by 200 basis points compared to Q2 2016 due to higher investments
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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
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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 | Guidance 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 (including | 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 | 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