Annual Report 2022
Nets A/S
CVR no. 37 427 497
Adopted at the Annual General Meeting
on 24 March 2023
Chair of the meeting
Nets A/S Financial statements
Financial Summary*
EURm *
Income statement
Revenue, net . . . . .
EBITDA before special items . . . . .
EBITDA . . . . .
Special items (.) (.) (.) (.) (.)
Special items - costs related to
takeover offer and delisting - - - - (.)
Adjusted EBIT . . . . .
EBIT . . (.) . .
Result from continuing operations . (.) . (.) (.)
Result from discontinuing
operations - ,. . . .
Financial position
Total assets ,. ,. ,. ,. ,.
Goodwill ,. ,. ,. ,. ,.
Clearing-related balances, net (.) (.) (.) (.) .
Own cash . . . . .
Net interest-bearing debt . ,. ,. . .
Equity
,. ,.
,. ,. ,.
Cash flow
Net cash from operating activities
excl. clearing related balances . (.) . . .
Change in clearing related balances . . . . (.)
Net cash from investing activities (.) ,. (.) (.) (.)
Net cash from financing activities (.) (,.) . (.) (.)
Net cash flow for the year . . . . (.)
Net change in own cash . . . (.) .
Operating free cash flow . . . . .
EURm *
Growth in revenue, net
Reported .% .% (.%) .% (.%)
Underlying .% .% .% N/A N/A
Capital structure
Net interest-bearing debt/EBITDA
before special items .x .x .x .x .x
Net interest-bearing debt/EBITDA .x .x .x .x .x
Other ratios
EBITDA before special items margin . .% .% .% .%
Capital expenditure/Revenue . .% .% .% .%
Capitalised development costs
(EBITDA before special items
impact)/Revenue) .% .% .% .% .%
Cash conversion ratio .% .% % % %
Equity ratio .% .% .% .% .%
Year-end number of employees, full
time equivalant , , , , ,
* For 2018 income statement numbers have been re-stated as the Group´s account-to-account payment business
is presented as discontinuing operations. In the income statement result after tax from discontinuing operations
is presented in a separate line with comparison numbers. In 2019 and 2020 also assets and liabilities related to
discontinuing operations are presented in separate lines as held-for-sale. Net cash flow from discontinuing operations is
presented in a Note to the Financial statements.
2/77
Nets A/S Performance highlights 2022
Nets Group continued to seek growth oppor-
tunities through acquiring strategic asssets
and Nets acquired Team4U which will further
strengthen Nets’ precense in Poland.
Our Issuer & eSecurity sercice continued its
track record of success in winning new cus-
tomers, including Germany’s Commerzbank.,
Commerzbank has chosen Nets, part of the
European PayTech Nexi Group, to develop a
stream-lined and scalable solution for process-
ing credit, debit, and prepaid card which will be
managed by Nets going forward. Being trusted
by Commerzbank to offering our modular,
flexible, and customer-focused services is a key
milestone for our issuing solutions business
in Germany and the ambition is to continue to
consistently expand our market presence also
offering innovative issuing end-to-end servic-
es with modularity, short time-to-market and
scaling at its core.
In the Nordics, Danske Bank succeeded in
bringing Nets’ domestic card scheme, Dankort,
to Apple Pay, and prolonged Nets’ long-term
partnership with Nordea in both Denmark and
Finland. Also in Denmark BOKIS, a Danish pay-
ment and card company, and Nets, part of the
Nexi Group, entered into a new agreement that
runs until 31 December 2029. BOKIS member
banks will continue to issue and process the
Danish domestic card, Dankort, and international
payment cards through Nets. BOKIS represent
approx. 45% of the Danish card payment market.
Throughout 2022 Nets has continued to drive
the migration from NemID to MitID which will
be finalised in 2023. Nets has been the principal
developer of MitID, under contract to the Danish
government’s Agency for Digitisation and the
Danish Banking Association. In September 2022
Nets announced its decision to seek a suitable
new owner for our eID business, who better
than us, can develop our eID business, and who
simultaneously understands and respects the
responsibility to customers and society this en-
tails. We are very aware of the critical role that
our solutions play in the Nordic societies, and
we will of course only consider an owner that
meets the same high standards and require-
ments of reliability, quality and security that we,
our customers, and authorities require of Nets.
All of this progress took place against the back-
drop of an industry that continues to evolve,
and the three-way merger of Nets with Nexi and
SIA is just one example of the pace and scale
of this change. If there is one clear conclusion
to be drawn from 2022, it is that Nets – as a
part of Nexi Group – is better placed than ever
to succeed in becoming the leading European
PayTtech in Europe.
2022 reinforced the mergers be-
tween Nexi, Nets and SIA to Nexi
Group and continued our journey
in becoming the European PayTech
leader.
The strength of the combined Nexi Group was
further boosted and a new long-term strategy
was announced in September at our Capi-
tal Markets Day that reinforced the ongoing
achievement of synergies with a clear focus on
accelerated growth in SME, eCommerce and
Advanced Digital Issuing. This new strategy also
triggered the appointment of Torsten Hagen
Jørgensen as Group Head of Issuing and Jeppe
Juul-Andersen as new Country General Manag-
er Denmark.
With a total annual revenue of approximately
€3.3 billion and around €1.6 billion in EBITDA
*, the combined group brings together a unique
array of capabilities, as well as a wider distri-
bution network and a broader product offering
than any of the constituent companies alone.
This positions the group well to drive growth not
least least in the fast-growing and underpene-
trated regions of Europe where Nets Group has
a significant presence – for example, Germany,
Austria, Switzerland, Poland and central-south-
ern eastern Europe.
Performance highlights
The impact of COVID-19 on society, which
affected Nets’ business by supressing overall
volumes abated in 2022. The general trend
of accelerating digital payment solutions was
reinforced under COVID-19 and continued still in
2022. This year stores that sell physical prod-
ucts enjoyed better times, with year-on-year
growth for Nordic countries in 2022. Webshops,
are currently facing headwinds. While the travel
and service sectors, which suffered tremen-
dously during the pandemic, is making a huge
comeback, webshops selling products have it
tougher. This is natural following the very strong
growth in recent years, and also due to the
past couple of years when the pandemic forced
many merchants to quickly embrace online
sales. Thus, as consumers return to physical
sales locations, many webshops are seeing
decreased sales.
2022 was also sadly a year where war returned
on European soil. The war and the ensuing
sanctions enforced by the European and Inter-
national community also created a need for a
swift and strict adherence to the various sanc-
tion regimes also within the payment industry.
This year was also characterized by rising in-
flation due in part to energy prices soaring. The
combination of high energy costs, inflation and
interest rate hikes, have somewhat dampened
the overall gains we achieved from the lifting of
COVID-19 restrictions.
* Pro-forma aggregated figures for 2022
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Nets A/S Performance highlights 2022
Nets had 3,188 FTEs (full-time equivalent) by the
end of 2022, which is 205 more than in 2021.
EBITDA B.S.I.
In 2022, EBITDA b.s.i. increased by 5.3% to EUR
346.7 million, compared to EUR 329.3 million
in 2021. The increase in EBITDA b.s.i. reflects a
2022 with a strong revenue growth, however
impacted by increases in costs, following pri-
marely energy crises and inflation.
SPECIAL ITEMS
In 2022, special items amounted to EUR 83.5
million, a decrease of EUR 7.6 million compared
to 2021. In 2022, investment in transformation
programs continued and amounted to EUR 42.4
million (2021: EUR 35.5 million). Costs asso-
ciated with business setups, acquisitions and
disposals amounted to EUR 7.7 million (2021:
EUR 2.6 million) and costs related to reorgan-
ization, restructuring and refurbishment was
EUR 10.7 million (2021: EUR 12.6 million). Cost
arising from Share based payments, retention
programmes, one-off losses, etc. amounted to
EUR 22.7 million (in 2021: EUR 40.4 million) and
primarily included Nets Group costs of share
based payments and other retention based
bonus schemes..
EBITDA
In 2022 EBITDA amounted to EUR 263.2 million,
compared to EUR 238.2 million in 2021. The
increase in EBITDA was driven by increase in
EBITDA B.S.I. and less special items costs, com-
pared to 2021.
DEPRECIATION AND AMORTISATION
In 2022, underlying depreciation and amortisa-
tion were EUR 141.5 million, up from EUR 117.4
million in 2021. The increase of EUR 24.1 million
was primarily due to completed software devel-
opment and investments in tangibles.
ADJUSTED EBIT
Adjusted EBIT calculated as EBITDA b.s.i. minus
underlying depreciation and amortisation was
EUR 205.2 million, compared to EUR 211.9
million in 2021.
NET FINANCIALS
Net financials were an income of EUR 10.7
million, compared to an expense of EUR 131.3
million in 2021. Net financials were positively
impacted by foreign exchange gain of EUR 50.2
million driven by intercompany debt positions in
NOK. In 2021 foreign exchange adjustment was
a loss of EUR 60.7 million.
Interest expenses decreased to EUR 4.7 million
compared to 2021, EUR 18.8 million following
2021 refinancing of of debt, upon merger with
Nexi Group.
REVENUE
In 2022, net revenue was EUR 856.7 million, up
7.1% compared to 2021.
Merchant Services delivered reported Net
revenue underlying growth of 13% driven by a
strong growth across segments and countries.
Net revenue in the large clients group grew
as volumes recovered from lifted COVID-19
restrictions. Overall volumes grew especial-
ly within verticals of travel, transport and
hospitality, which had been heavily impacted
by COVID-19 restrictions. Revenue in the SME
area also showed a strong growth across the
geographies. Finally, eCommerce business
continued with high growth, driven by a strong
product offering in the Nordics and leverage of
integration in Poland.
Issuer & eSecurity Services underlying growth
was -0.1% due to price/churn effects within the
Issuing business, which was slightly offset by
positive volume growth. The digital business
area saw a marginal decrease as it was also
impacted by churn and ramp down of legacy
products with new solutions offsetting most of
the negative effects.
The Group will continue to strengthen the com-
mercialization of the business with a clearcut
focus on driving commercial and product
excellence to create an easier tomorrow for our
customers and their customers.
OPERATING EXPENSES
Total operating expenses were EUR 510.0 mil-
lion compared to EUR 470.9 million in 2021, an
increase of 8.3%. The total cost to net revenue
levelled with last year, comparing 2022 of
59.5% with 58.8% in 2021.
Cost of sales was EUR 55.6 million (6.5% of
net revenue), compared to EUR 53.9 million in
2021. The increase was mainly driven by higher
activity in the Merchant Sercives POS and eCom
business, slightly offset by decrease in Issuer
& eSecurity Services business, following the
divestment of subsidiary Edigaard AS.
External expenses amounted to EUR 215.3
million (25.1% of net revenue) compared to EUR
185.6 million in 2021 (23.2% of net revenue).
The increase compared to 2021, was driven
partly by higher activity following COVID-19
restrictions release and partly from energy cost
and inflation, impacting 2022.
Staff costs amounted to EUR 239.1 million
(28.9% of net revenue) compared to EUR 231.4
million (28.9% of net revenue). The increase in
staff costs was primarily driven by impact of
more FTE’s in 2022, which increased by 205
compared to 2021. Recruitment cost and bonus
also normalised in 2022 compared to 2021,
further driving the increase year over year.
Performance highlights (continued)
4/77
Nets A/S Performance highlights 2022
CASH FLOW
In 2022, net cash flow from operating activities,
excluding clearing working capital, was positive
by EUR 220.1 million, compared to EUR -39.4
million prior year. The operating cash flow was
positively impacted by stronger EBITDA than
2021, positive development In working capital,
less interests paid and tax payments was EUR
169.4 million lower than in 2021.
Cash flow investments was negative by EUR
129.2 million compared to positive EUR 2,276.5
million in 2021. In 2022, the intangibles invest-
ments amounting to EUR 159.3 million (2021:
EUR 134.7 million). Investment activity was
positively impacted by proceeds received, from
the sale of the subsidiary Edigard AS, EUR 71.3
million, compared to 2021, where proceeds from
sale of the Account-to-Account business was
EUR 2,790.4 million.
Investments of EUR 6.0 million was mainly
including acquisition of Polish company Team4U
Sp.z.oo and shares in EPI.
Net cash outflow from financing activities in
2022, excluding clearing-related balances,
amounted to EUR 23.7 million, and primarily
included payments of lease liabilities of EUR
15.5 million (2021: EUR 16.9 million), and Net
intercompany payments of EUR 8.2 million.
Cash and cash equivalents as 31 December
2022 was 438.7 million compared to EUR 358.4
million in 2021.
OUTLOOK 2023
2023 outlook presenting uncertainties due
to macroeconomic scenario (mix between
recession and inflation impact) and increasing
competitive challenges. Banks remain under
pressure, often looking to reduce costs on
processing and outsourced platforms, while
continuing their product and IT digital transfor-
mation journeys; payments represents a source
of differentiation and an asset for monetization
opportunities but speed and effectiveness of
commercial execution remains a challenge.
Nets, as part of the Nexi Group, will continue
to streamline operations and processes and
invest in innovative solutions with an ambition
to create value for our customers, partners and
shareholders, and deliver on stability, security
and integrity to build the future. The result for
2023, is expected to be in line with 2022.
EVENTS AFTER THE BALANCE SHEET
DATE
No significant events affecting the Annual Re-
port for 2022 have occurred subsequently to 31
December 2022.
TAX
In 2022, taxes amounted to an expense of EUR
15.1 million compared to an expense of EUR
2.2 million equivalent to an effective tax rate
of 20.5% in 2022 (3.1% in 2021)., impacted by
non-deductable currency gain which more than
offset the non-deductable interests.
GAIN FROM SALE OF SUBSIDIARIES
Gain from sale of subsidiaries was related to
Nets sale of the Norwegian subsidiary Edigard
AS, which amounted to an accounting gain of
EUR 68.0 million.
RESULT FOR THE YEAR
Result for the year was EUR 127.3 millions
compared to result for 2021 EUR 1,665.7 million.
2021 was significantly influenced by the gain
from sale of accounts-to-accounts business to
Mastercard.
BALANCE SHEET AND CASH FLOW
Total assets at 31 December 2022, amounted to
EUR 4,005.3 million, compared to EUR 3,487.0
million at year-end 2021.
Total non-current assets amounted to EUR
2,402.6 million compared to EUR 2,413.6 million
at year-end 2021, impacted by decrease in
Goodwill and Other intangibles, related to cur-
rency development.
Total current assets amounted to EUR 1,602.7
million, compared to EUR 1,073.4 million at
year-end 2021, impacted by the development in
clearing working capital assets, driven by timing.
CLEARING WORKING CAPITAL
At 31 December 2022, clearing-related assets
(clearing debtors) amounted to EUR 869.6 mil-
lion (2021: 485.2 million) and clearing-related
liabilities amounted to EUR 1,132.4 million (2021:
728.7 million), leading to a clearing working
capital (CWC) of negative EUR 262.8 million
(positive funding).
EQUITY
Total equity was EUR 1,563.6 million compared
to EUR 1,035.3 million at the beginning of the
year. Equity was positively impacted by the
profit for the year, of EUR 127.3 EUR, as well as
contribution in kind from shareholder, in con-
nection to debt conversion of loan from Parent
Company, EUR 457.3 million.
BORROWINGS & INTEREST-BEARING
LOANS TO SHAREHOLDERS
As of 31 December 2022, borrowings amounted
to EUR 647.1 million, compared to EUR 1,127.7
million end-2021. Borrowings decreased pri-
marily following conversion of debt, EUR 457.3
million.
Performance highlights (continued)
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Nets A/S Management Review
6/77
We have centred our activities around two
distinct business units – Merchant Services and
Issuer & eSecurity Services – and, thanks to
becoming a part of the Nexi Group, we now have
access to more European countries than ever
before, with an enhanced exposure to the high
growth segments of e-commerce and merchant
services for small-to-medium-sized enterprises
(SMEs). We are also present in the high growth
areas of Poland and German-speaking Europe,
where digital means of payments are rapidly
replacing cash.
MERCHANT SERVICES
Merchant Services provides our merchant
customers with payment acceptance solutions
across channels (in-store, online and mo-
bile) and with the broadest range of payment
methods and brands in Europe, including Visa,
MasterCard, JCB, Diners, Discover, American
Express, Union Pay, AliPay, Apple Pay, Google
Pay, Samsung Pay and local payment brands.
In recent years, Merchant Services has pre-
sented strong growth based on solid organic
growth rates and targeted acquisitions in the
under-penetrated German-speaking region of
Europe, and Poland, with a particular focus on
the high growth e-commerce space and the
SME segment.
Merchant Services manages and simplifies mer-
chants’ payment flows. We enable merchants
to accept payments easily and without friction,
regardless of channel, to receive the settle-
ment in their bank account, and to get detailed
reconciliation information and statistics, all in
different currencies and frequencies depending
on the merchants’ needs and their customers’
preferences. In Poland we enable merchants to
accept local payment methods such as ‘pay-by-
link’ bank payments and BLIK mobile payments.
In the Nordic countries, Nets 360 offers a
smooth omnichannel shopping experience by
connecting all touchpoints, centred around the
customer’s preferred payment methods, while
NetsPay 2.0 provides the SME segment with a
flexible solution combining core and individually
selected, value-added services.
We also offer merchants value-added services
for electronic receipts and loyalty solutions,
all with a simple and fast setup. Furthermore,
in Denmark, we own and operate Dankort, the
domestic debit card system. Acquiring revenue
is primarily driven by transaction fees. Terminal
revenues are primarily monthly subscription
fees for POS terminals or revenues from sold
POS devices. Our e-commerce business gen-
erates both transaction fees and monthly fees,
while the revenue model for Dankort is primarily
transaction-based.
We create value for our evolving
customer needs by delivering
digital payments and related ser-
vices that are used by more than
700,000 merchant outlets and
more than 250 banks and other
issuers of payment cards in Europe,
allowing our customers to service
millions of European consumers.
We see easy, secure and stable
products and solu¬tions as the
foundation for growth and progress
– both in commerce and in society.
Whether it’s for buying groceries, shopping
safely on mobiles, or dealing with public
author¬ities, online services offer greater
convenience and free up time for everyone who
uses them.
Nets’ products and services are integrated parts
of everyday life for many European banks,
businesses and consumers. We provide a secure
and frictionless payment experience, among
other facilities, to our customers and their end
users. Yet the reality behind this seemingly
simple exchange of services is a complex web of
processes initiated by a digital transaction such
as a payment or an authentication.
Business model:
For an easier tomorrow
This means that we invest in, maintain and op-
erate a considerable number of payment plat¬-
forms in Europe, domestic debit card schemes in
Denmark and Norway, and e-identity solutions.
Security, stability and high performance are
thus top priorities for our business.
As one of the largest digital payment service
providers in Europe, Nets operates a deeply
interconnected network which links mer-
chants, financial institutions, public services
and con-sumers, enabling them to make and
receive pay¬ments, identify themselves, and
use value-add¬ed services based on data and
analytics.
Nets offers several digital payment services. We
enable digital payments across major channels
– in brick-and-mortar stores, e-commerce and
via mobile devices. We offer merchant ac-
quir¬ing solutions, point-of-sale (POS) terminals
and e-commerce directly to merchants across
Europe, while other services such as payments
processing are offered in close co-operation
with financial institutions, while the Danish
na¬tional e-identity scheme NemID and its
succes¬sor MitID are offered in close co-op-
eration with public authorities and the banking
community. In Denmark, we own the national
debit card system, Dankort, while in Norway, we
process BankAxept card services on behalf of,
and in close co-operation with, our customers.
Nets A/S Management Review
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Risk management is an integral part
of the way we work and helps us
understand and manage the uncer-
tainties inherent in our strategy and
in the day-to-day business opera-
tions
Nets operates in the payments industry, which
is characterised by constant technological
advances, evolving customer behaviour and
altering regulatory requirements, and where
prudent risk management is vital to support the
achievement of business objectives. At Nets,
risk management is anchored throughout the
organisation to support management awareness
and oversight, enabling risk-based decisions.
Nets maintains an enterprise risk landscape
that is discussed with business units and group
functions, in order to provide risk insights to
executive management.
Risk management
This section describes Nets’ key risks in relation
to achieving business objectives. Financial risks
are described under Financial Statements, sec-
tions 2, 3 and 5.
RISK GOVERNANCE
The Board of Directors is responsible for the
overall governance, defining guidelines for the
risk management governance and system, as
well as approving strategies and policies. The
Board of Directors also oversees the enterprise
risk landscape and compliance with board
approved policy objectives.
The organisation adopts a ‘three lines of de-
fence’ governance model. It is used to structure
roles, responsibilities and accountabilities
concerning risk and internal controls.
ISSUER & ESECURITY SERVICES
Issuer & eSecurity Services provides payment
processing services and value-added services
for issuers of payment cards (primarily banks)
as well as e-security and digitisation services
for the private and public sectors.
The Issuer Services include a complete end-to-
end service and the full life-cycle management
of cards from both international and domestic
card schemes. Besides being a card proces-
sor for issuers in Europe, Issuer & eSecurity
Services offers complementary services such
as Account Management Services (AMS), Risk
Management Services (Fraud & Dispute Solu-
tions) and Data & Analytics. The business also
processes the domestic debit card systems in
Denmark and Norway, Dankort and BankAxept,
respectively.
Business model:
For an easier tomorrow (continued)
The e-security and digitisation services include
delivery of e-security solutions, mainly through
Denmark’s NemID system, and its recently
launched successor MitID, as well as digitisa-
tion services that enable customers to simplify
workflows and processes, thereby supporting
customers in their digital transformation.
The revenue model for Issuer & eSecurity Ser-
vices is primarily transaction-based, combined
with additional volume-related fees for addition-
al services.
Nets A/S Management Review
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Governance model
of defence of defence of defence
1
st
line 2
nd
line 3
rd
line
Business Units and
Group Functions
Group Risk Management
and Group Compliance
& Regulatory Affairs
Group Internal Audit
Customers & External Stakeholders
Audit Committee / Risk Committee
Excutive Management
Coordinating
External Audit
Reporting
Business Reporting Risk Reporting Audit Reporting
Board of Directors
FIRST LINE OF DEFENCE
–Identify, assess and manage risks
The business units and Nets Ggroup functions form the first line
of defence and perform the day to-day risk-bearing activities.
They are responsible for identifying, evaluating, mitigating,
monitoring and reporting the risks within those activities in
accordance with the risk management processes and applicable
internal procedures.
SECOND LINE OF DEFENCE
– Oversight, control and compliance
Nets Group Risk Management, Nets Group Security, IT Risk &
Compliance and Nets Group Compliance & Regulatory constitute
the second line of defence and act independently of the activities
they control. They provide oversight and compliance by setting
requirements through policies, and support the implementation
and monitoring hereof through frameworks, tools, processes and
control activities, enabling risk and compliance management.
THIRD LINE OF DEFENCE
– Independent assurance
Nets Group Internal Audit and external auditors form the third
line of defence. The third line provides independent assurance
concerning the risk and control functions performed by the first
and second lines of defence.
Nets A/S Management Review
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Executive management reviews,
discusses, challenges and provides
feedback on the enterprise risk
landscape and, when necessary,
direct risk mitigating actions. List-
ed below is a high-level summary
of risks across Nets. The risks are
not listed in any particular order of
priority and only contain example
mitigations.
INDUSTRY AND MARKET
TRANSFORMATION
Description
The market transformation from cash to digital
payments is impacting consumer behaviour.
The underlying market development is driven
by technological evolution, regulatory changes
and new market participants, such as innovative
independent software vendors. This trend is
accelerated by the Covid-19 pandemic where
digital payments are preferred over cash. The
payments eco-system is, as a result, developing
at a high pace and market participants must
evolve with it if they want to claim part of the
underlying market growth.
Potential impact
Failing to adapt to the changing industry and
market dynamics can lead to loss of business
and may have an impact on our reputation.
Examples of main mitigants
• Strengthening our ability to understand
changing customer needs and proactively
address demand for new products and ser
vices.
• Strengthening of the European value propo
sition to better serve merchants and banks.
• Consolidating our technological landscape
to increase customer experience, scalability
and cost efficiency.
INFORMATION SECURITY AND
OPERATIONAL STABILITY
Description
Every day, Nets processes and stores large
amounts of data related to the processing of
financial transactions and digital authentication
schemes, connecting merchants, financial insti-
tutions, corporate customers, and consumers,
and enabling them to make and receive digital
payments and verify identities. Due to the high
value and sensitive nature of such information
assets, and the systemic importance to several
national financial infrastructures, Nets faces a
range of threats from different threat agents
such as hacktivists, organised crime, and nation
states. Relevant security threats include social
engineering such as phishing and spear-phish-
ing, hacking, distributed denial-of-service
(DDoS) or supply chain attacks, as well as
system malware or ransomware attacks.
Equally important is the stability of those plat-
forms as they are critical for broader society as
well as for our customers, government organ-
isations and authorities. Potential risk causes
include insufficient application deployment and
testing processes, incident management issues,
failing infrastructure components or data centre
transitions.
Potential impact
At worst, the above-mentioned threats could
impact the availability of services and lead
to system downtimes, compromise of critical
IT systems, potential breach of confidential
information, or misuse of payment information.
Similarly, the loss or otherwise unauthorised
or accidental disclosure of personal customer
information or other sensitive information could
result in regulatory or legal sanctions and/or
fines, remediation costs, loss of revenue, and
reputational impact, weakening our corporate
brand.
Examples of main mitigants
• Strong security culture and continuous
awareness campaigns towards all employ-
ees and contractors, including regular iLearn
portal training covering aspects of security,
intranet articles, the Nets Security Academy
and simulated phishing e-mail campaigns.
• Protection measures, such as a multi-layered
security architecture, including intrusion pre-
vention and detection, advanced end-point
protection, privileged identity management,
network segmentation, encryption of data,
etc.
• Comprehensive detection capabilities
through security logging, monitoring, alerting
and dashboards.
• Service risk assessments and business im-
pact analyses, ensuring service maturity and
resilience.
• Business continuity and disaster-recovery
governance, and regular testing of core
components (crisis management, platform
disaster recovery plans, physical security,
etc.).
• Well established handling of prioritised
security incidents at Nets, including data
breach management and communication
processes.
MERCHANT ACQUIRING CREDIT RISK
Description
Nets is selling acquiring services to merchants,
who receive immediate payment as well as
pre-payments for their goods and services.
In case the merchant is not able or willing to
deliver the prepaid goods or services to their
customers due to, e.g., insolvency or fraud, the
customer’s bank will charge-back the amount
from Nets who will claim the amount from the
merchant. If this proves unsuccessful, Nets will
bear the loss.
Key risks
Nets A/S Management Review
10/77
Potential impact
Financial losses from charge-backs that cannot
be transferred to a merchant due to merchant
bankruptcy.
Examples of main mitigants
• Strong contractual terms and conditions that
provide deferral, collateral information, and
termination rights.
• Pre-funding of refunds, bank guarantees,
deposits in pledged bank accounts.
• Continuous credit risk monitoring and
established escalation triggers towards top
management.
UKRAINE WAR
Description
The Ukraine War has had an immediate impact
on energy prices that affect are overall oper-
ating costs. Furthermore, the European and
International Community have imposed financial
and economic sanctions on Russia that Nets
– as a part of Nexi Group – has to implement
and adhere to. At the onset of the war Nets also
managed employee concerns and requests per-
taining to the war from employees throughout
the Nets perimeter.
Revenue – The sanctions regime has only had
a negligible effect on Nets’ revenues as there
were relatively small transactions from Russian
issued cards after the schemes unilaterally de-
cided to cease operations in Russia and Belarus.
Business continuity – While inflationary pres-
sure and increased energy costs have had an
affect on consumer confidence the overall level
of payment transactions have weathered these
conditions.
IT security & cyber resilience: The Ukraine War
has heightened the threat of cybersecurity
and various malicious attacks. While the threat
levels have increased, Nets has managed all
attacks satisfactory, and the overall number and
extent of threats has been less than expected.
Potential impact
Regional and national restrictions can lead to
decreasing transaction volumes, thus lowering
revenues. Furthermore, it may burden mer-
chants which ultimately may lead to merchant
insolvencies resulting in financial losses.
Examples of main mitigants
• Crisis management via a cross-functional
task force (CMT) monitoring and managing
Nets’ responses to the Ukraine War, first
through daily and later weekly meetings.
The CMT continuously monitors and reports
on the situation and assesses the need for
further mitigations, regularly updating and
advising Executive Management on mitiga-
tion initiatives.
• All vendors and suppliers have been con-
tacted to ensure strict compliance with the
sanctions.
• For all major IT services and IT systems,
measures are in place to ensure robust and
stable operations, including for all critical
activities and associated teams.
REGULATORY ENVIRONMENT
Description
Nets is subject to laws and regulations in the
different jurisdictions in which it operates. The
European Payment Services Directive (PSD2),
Interchange Fee Regulation, Instant Payment
Regulation, Digital Euro development, General
Data Protection Regulation (GDPR), Anti-Money
Laundering/Counter Terrorism Financing (AML/
CTF) and Outsourcing legislation are examples
of requirements where Nets is investing time
and resources to maintain its adherence across
the company.
Potential impact
A lack of regulatory compliance may potentially
result in recommendations and fines from local
regulators or central banks. In addition, Nets
may suffer reputational damage in the case of
data breaches, facilitation of money laundering,
late implementation of new regulatory require-
ments, etc.
Examples of main mitigants
• Policies and frameworks in key regulatory ar-
eas PSD2, GDPR, AML/CTF and Outsourcing.
• Data Protection Officer (DPO) function to
support and coordinate the GDPR sec-
ond-line responsibilities and the DPOs
across Nets.
• Compliance reporting to Executive Manage-
ment and continuous monitoring of AML/CTF,
PSD2 and GDPR.
Key risks (continued)
Nets A/S Management Review
11/77
Nets A/S Management Review
12/77
Corporate Social Responsibility (continued)
Nets A/S Management Review
13/77
Corporate Social Responsibility (continued)
Nets A/S Management Review
14/77
Corporate Social Responsibility (continued)
Nets A/S Management Review
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Corporate Social Responsibility (continued)
Nets A/S Management Review
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Corporate Social Responsibility (continued)
Nets A/S Management Review
17/77
Statement by the Board of Directors and Executive Management
Executive Management
Board of Directors
Nets A/S Management Review
18/77
Independent auditor’s report
Nets A/S Management Review
19/77
Independent auditor’s report (continued)
• Conclude on the appropriateness of Man-
• Evaluate the overall presentation, structure
• Obtain sufficient appropriate audit evidence
CVR No 33 77 12 31
Nets A/S Financial statements Consolidated
Consolidated income statement
EURm Note
Continuing operations
Revenue, gross . 1,380.6 1,212.2
Interchange fees and processing fees (523.9 ) (412.0 )
Revenue, net of interchange fees and processing fees . 856.7 800.2
Cost of sales (55.6 ) (53.9 )
External expenses (215.3 ) (185.6 )
Staff costs . (239.1 ) (231.4 )
Operating result before depreciation and amortisation before
special items (EBITDA B.S.I.) 346.7 329.3
Special items .
(83.5 ) (91.1 )
Operating result before depreciation and amortisation (EBITDA) 263.2 238.2
Amortisation of business combination intangibles, customer
agreements & impairment losses . & . (58.0 ) (61.0 )
Underlying depreciation and amortisation . & . (141.5 ) (117.4 )
Operating result (EBIT) 63.7 59.8
Result from associates after tax . 1.0 3.1
Fair value adjustment on liability related to Visa shares - 0.3
Fair value adjustment of Visa shares related to Nets Branch
Norway and proceeds (shares) related to Nets Branch Sweden 3.7 -
Financial income and expenses, net . 6.0 (134.7 )
Net financials 10.7 (131.3 )
Result before tax 74.4 (71.5 )
Income taxes . (15.1 ) (2.2 )
Result from continuing operations 59.3 (73.7 )
Result from discontinuing operations . - 1,739.4
Gain on sale of subsidiaries 68.0 -
Result for the year 127.3 1,665.7
EURm Note
The result is attributable to:
Owners of Nets A/S, continuing operations 127.3 1,654.3
Owners of Nets A/S, discontinuing operations - 6.8
Non-controlling interests, continuing operations - 4.6
Non-GAAP performance measures, continuing
operations
Operating result before depreciation and amortisation (EBITDA)
before special items . .
Underlying depreciation and amortisation
(.) (.)
Adjusted EBIT . .
20/77
Nets A/S Financial statements Consolidated
Consolidated statement of other comprehensive income
EURm Note
Result for the year
Other comprehensive income:
Items that will not be reclassified subsequently to the consolidated
income statement:
Actuarial gains/(loss) on defined benefit pension plans - (0.1 )
Total items never reclassified to the consolidated income statement - (0.1 )
Items that will be reclassified subsequently to the consolidated
income statement, when specific conditions are met:
Currency translation adjustments, foreign enterprises
(57.4 ) 14.0
Reclassification of currency swap to the consolidated income statement
Net gains/(loss) on cash flow hedges
Tax on fair value adjustments
Total items that may be reclassified to the consolidated income
statement subsequently (57.4 ) 19.3
Other comprehensive income for the year, net of tax (57.4 ) 19.2
Total comprehensive income for the year, net of tax 69.9 1,684.9
Total comprehensive income for the year is attributable to:
Owners of Nets A/S, continuing operations
Owners of Nets A/S, discontinuing operations
Non-controlling interests, continuing operations - 4.6
21/77
Nets A/S Financial statements Consolidated
EURm Note
Assets
Non-current assets
Goodwill . 1,690.8 1,714.2
Other intangible assets . 489.6 496.6
Plant and equipment . 147.7 136.9
Investment in associates . 38.0 40.4
Deferred tax assets . 36.5 25.5
Total non-current assets 2,402.6 2,413.6
Current assets
Inventories .. 11.3 5.0
Trade and other receivables .. 167.4 153.7
Contract assets . 25.3 17.2
Clearing-related assets . 869.6 485.2
Prepayments 48.6 42.0
Receivables from Group enterprises 27.2 -
Other financial assets 14.6 11.9
Cash and cash equivalents . 438.7 358.4
Total current assets 1,602.7 1,073.4
Total assets 4,005.3 3,487.0
EURm Note
Equity and liabilities
Equity
Share capital . 26.9 26.9
Reserves 1,536.7 1,008.4
Equity, owners of Nets A/S 1,563.6 1,035.3
Non-controlling interests - -
Total equity 1,563.6 1,035.3
Non-current liabilities
Borrowings . 218.8 218.7
Liabilities to Group enterprises . 428.3 909.0
Other liabilities . 6.6 3.8
Lease liabilities . 55.8 57.9
Deferred tax liabilities . 42.6 53.8
Total non-current liabilities 752.1 1,243.2
Current liabilities
Trade and other payables .. 286.8 264.2
Contract liabilities . 7.4 8.0
Clearing-related liabilities . 1,132.4 728.7
Liabilities to Group enterprises 213.5 162.9
Other liabilities . 14.7 21.8
Lease liabilities . 13.5 10.1
Other financial liabilities 1.1 2.1
Current tax liabilities . 20.2 10.7
Total current liabilities 1,689.6 1,208.5
Total liabilities 2,441.7 2,451.7
Total equity and liabilities 4,005.3 3,487.0
Consolidated balance sheet as at 31 December
22/77
Nets A/S Financial statements Consolidated
Consolidated statement of cash flows for the year ended 31 December
EURm Note
EBITDA before Special items from continuing operations 346.7 329.3
Special items from continuing operations (83.5 ) (91.1 )
EBITDA from discontinued operations . - 8.1
Other non-cash items . 5.3 6.1
Change in narrow working capital 16.6 (43.9 )
Interest and similar items, net (42.1 ) (55.6 )
Taxes paid . (22.9 ) (192.3 )
Net cash flow from operating activities excluding
clearing-related balances 220.1 (39.4 )
Change in clearing-related balances 19.3 127.8
Net cash from operating activities 239.4 88.4
Purchase of intangible assets . (159.3 ) (134.7 )
Purchase of plant and equipment . (38.5 ) (22.4 )
Investments and mergers . (6.0 ) (356.8 )
Proceeds from Visa shares 3.3 -
Proceeds from sale of Edigard AS 71.3 -
Proceeds from sale of Nets account-to-account activities - 2,790.4
Net cash from investing activities (129.2 ) 2,276.5
Proceeds from shareholder and intercompany loans . 18.8 580.5
Repayment of shareholder and intercompany loans . (27.0 ) (518.4 )
Repayment of borrowings . - (183.5 )
Dividends to shareholders - (2,043.8 )
Repayment of finance lease liabilities . (15.5 ) (16.9 )
Settlement of interest swap - (8.7 )
Net cash from financing activities (23.7 ) (2,190.8 )
EURm Note
Net cash flow for the year 86.5 174.1
Cash and cash equivalents as at 1 January 358.4 181.7
Exchange gain/(loss) on cash and cash equivalents
(6.2 ) 2.6
Net cash and cash equivalents as at 31 December 438.7 358.4
Bank overdraft (clearing-related balances)
Cash and cash equivalents as at 31 December . 438.7 358.4
Non-GAAP performance measures
Net cash and cash equivalents as at 31 December . .
Clearing-related assets as at 31 December . .
Clearing-related liabilities as at 31 December (,.) (.)
Adjustment for Visa proceeds - -
Own cash as at 31 December . . .
Own cash as at 1 January . .
Net cash from operating activities excluding clearing-related
balances . (.)
Net cash from investing activities in the year (.) ,.
Net cash from financing activities excluding clearing-related
activities (.) (,.)
Own cash aquired from takeover - .
Net cash from pass-through Visa proceeds - .
Exchange gain/(loss) on cash and cash equivalents (.) .
Own cash as at 31 December . .
23/77
Nets A/S Financial statements Consolidated
Consolidated statement of changes in equity as at 31 December
EURm
Share
capital
Hedge
reserves
Currency
translation
reserves
Retained
earnings
Equity,
owners of
Nets A/S
Non-
controlling
interests
Total
equity
Equity as at 1 January 26.9 - (71.2 ) 1,079.6 1,035.3 - 1,035.3
Result for the year 127.3 127.3 - 127.3
Other comprehensive income for the year
Currency translation adjustments, foreign enterprises (57.4 ) - (57.4 ) - (57.4 )
Other comprehensive income for the year - - (57.4 ) - (57.4 ) - (57.4 )
Total comprehensive income for the year - - (57.4 ) 127.3 69.9 - 69.9
Share based payments - 5.3 5.3 - 5.3
Contribution in kind - 457.3 457.3 - 457.3
Group Contribution, net - (4.2 ) (4.2 ) - (4.2 )
Total changes in equity (57.4 ) 585.7 528.3 - 528.3
Equity as at 31 December 26.9 - (128.6 ) 1,665.3 1,563.6 - 1,563.6
24/77
Nets A/S Financial statements Consolidated
EURm
Share
capital
Hedge
reserves
Currency
translation
reserves
Retained
earnings
Equity,
owners of
Nets A/S
Non-
controlling
interests
Total
equity
Equity as at 1 January 26.9 (5.3 ) (85.2 ) 1,316.3 1,252.7 133.4 1,386.1
Result for the year - - - 1,661.1 1,661.1 4.6 1,665.7
Other comprehensive income for the year
Actuarial gains/(loss) related to defined benefit pension plans - - - (0.1 ) (0.1 ) - (0.1 )
Currency translation adjustments, foreign enterprises - - 14.0 - 14.0 - 14.0
Net gain/(loss) on cash flow hedges - (0.9 ) - - (0.9 ) - (0.9 )
Reclassification of interest swap to the consolidated
income statement - 8.8 - - 8.8 - 8.8
Tax on fair value adjustments
Other comprehensive income for the year - 5.3 14.0 (0.1 ) 19.2 - 19.2
Total comprehensive income for the year - 5.3 14.0 1,661.0 1,680.3 4.6 1,684.9
Share based payments - - - 8.1 8.1 - 8.1
Acquisition of non-controlling interests - - - 138.0 138.0 (138.0 ) 0.0
Interim dividends distributed - - - (2,043.8 ) (2,043.8 ) - (2,043.8 )
Total changes in equity - 5.3 14.0 (236.7 ) (217.4 ) (133.4 ) (350.8 )
Equity as at 31 December 26.9 - (71.2 ) 1,079.6 1,035.3 - 1,035.3
Consolidated statement of changes in equity as at 31 December
25/77
Nets A/S Financial statements Contents
Contents
With the aim of providing enhanced
information and a better understand-
ing of the Group’s financial results,
position and cash flows, the notes to
the consolidated financial statements
have been structured into key themes.
Further, to provide additional context to
the IFRS financial statements and disclo-
sures, narrative comments have been
placed adjacent to the disclosures in the
relevant theme section. The notes are
presented in the following themes:
• Basis of preparation
• Earnings
• Working capital
• Strategic investment and divestment
• Funding and capital structure
• Tax and Governance
• Other disclosures
For ease of reference, an overview of
how the financial statement disclosure
notes have been allocated to each of the
respective themes is set out below.
Basis of preparation
. Basis of preparation
. Changes in accounting policies
and disclosures
. Summary of key accounting
estimates and judgements
.
Basis for consolidation
.
Foreign currency translation
Earnings
. Revenue
.
Cost and Special items
.
Staff costs
.
Foreign currency exposure
Working capital
..
Inventories
..
Trade and other receivables
..
Trade and other payables
.
Clearing-related balances
.
Cash and cash equivalents
.
Financial risk management
Strategic investment
and divestment
. Business combinations and
asset acquisitions
.
Intangible assets
.
Plant and equipment
.
Impairment tests
.
Investment in associates
.
Discontinued operations
Funding and capital
structure
. Share capital
.
Borrowings and related risks
.
Leases
.
Net financials
.
Interest risk management
.
Other liabilities
. Commitments, contingencies
and collaterals
Tax and Governance
. Income and deferred income
taxes
.
Related party transactions
.
Share-based Payment
.
Fee to statutory auditors
Other disclosures
. Classification of financial assets
and financial liabilities
. Standards issued but not yet
effective
. Events after the balance sheet
date
.
Companies in the Group
.
Financial definitions
26/77
Nets A/S Financial statements Section 1
Basis of preparation
Section 1
Basis of preparation
In this section
. Basis of preparation
. Changes in accounting policies
and disclosures
. Summary of key accounting estimates
and judgements
.
Basis for consolidation
.
Foreign currency translation
Note 1.1
BASIS OF PREPARATION
The basis of preparation relates to the account-
ing framework which Executive Management
has applied in the preparation of the consol-
idated financial statements of Nets A/S. The
consolidated financial statements are prepared
on going concern.
International Financial Reporting Standards
(IFRS) and interpretations (IFRIC), as adopted by
the European Union, and further requirements
in the Danish Financial Statements Act for
entities in reporting class C have been applied in
the preparation of these consolidated financial
statements.
Included within these financial statements are
the following financial measures which are
non-IFRS:
• Adjusted EBIT
• Special Items
• EBITDA
• Own cash
The non-GAAP performance measures are
defined in Note 7.5.
The Company is incorporated and registered in
Denmark. All figures in the financial statements
are, except when otherwise indicated, presented
rounded in million Euro with one decimal point.
The accounting policies described in the finan-
cial statements have been applied consistently
in each of the periods presented.
The consolidated financial statements have
been prepared on a historical cost basis, except
for certain financial assets and liabilities (in-
cluding derivative instruments) measured at fair
value as disclosed in Note 7.1.
Section 1:
27/77
Nets A/S Financial statements Section 1
Basis of preparation (continued)
Section 1
Note 1.2
CHANGES IN ACCOUNTING POLICIES
AND DISCLOSURES AND NEW AND
AMENDED STANDARDS AND
INTERPRETATIONS
A summary of IFRS Standards issued but not
yet effective is included in Note 7.2.
Note 1.3
SUMMARY OF KEY ACCOUNTING
ESTIMATES AND JUDGEMENTS
The preparation of the Group’s consolidated
financial statements requires Management
to make assumptions that affect the reported
amount of assets and liabilities at the balance
sheet date and the reported amounts of revenue
and expenses during the financial period.
Estimates and judgements used in the determi-
nation of reported results are continuously eval-
uated and are based on historical experience
and on various other factors that are believed to
be reasonable under the circumstances. Actual
results may differ from these estimates under
different assumptions or conditions.
Management considers the following estimates
and related judgements material to the assets
and liabilities recognised in the consolidated
financial statements; these are described in
further detail adjacent to the disclosure Note.
• Use of special items (Note 2.2) (judgements)
• Business combinations and asset acquisi-
tions (Note 4.1) (judgment and estimate)
• Useful life of intangible assets (Note 4.2)
(estimate)
• Recoverable amount of capitalised develop-
ment projects (Note 4.4) (estimate)
• Goodwill and other intangible assets allo-
cated to Discontinued operations (Note 4.6)
(estimate)
• Incremental borrowing rate and expected
lease term for lease agreements (Note 5.3)
(estimate)
• Recognition of deferred tax assets and un-
certain tax positions (Note 6.1) (judgment)
Note 1.4
BASIS FOR CONSOLIDATION
The consolidated financial statements incorpo-
rates the financial information of Nets A/S (the
"Parent Company") and its subsidiaries (together,
"the Group" or "Nets"). Control is achieved where
the Group is exposed, or has rights, to variable
returns from its involvement with an entity and
has the ability to affect those returns through
its power over the entity. Potential voting rights
are included in the assessment of whether the
Group has power over an entity.
Income and expenses of subsidiaries acquired
or disposed of during the year are included
in the consolidated statement of comprehen-
sive income from the date on which the Group
obtains control or up to the date on which the
Group ceases to have control, as appropriate.
Total comprehensive income of subsidiaries is
attributed to the owners of the Group and to the
non-controlling interests, even if this results in
the non-controlling interests having a deficit
balance.
When necessary, adjustments are made to the
financial information of subsidiaries to bring
their accounting policies into line with those
used by the Group.
All intra-group transactions, balances, income
and expenses are eliminated in full on consoli-
dation for continuing operations.
28/77
Nets A/S Financial statements Section 1
Note 1.5
FOREIGN CURRENCY TRANSLATION
Functional and presentational currency items
included in the financial information of each
of the Group’s entities are measured using the
currency of the primary economic environment
in which the entity operates (functional cur-
rency). The consolidated financial information
is presented in Euro (EUR), which is also the
functional and presentational currency of the
Parent Company.
On recognition of foreign branches, monetary
items are translated at the exchange rates at
the balance sheet date. Non-monetary items are
translated at the exchange rates at the acquisi-
tion date or at the date of any subsequent reval-
uation or impairment of the asset. Items in the
consolidated income statements are translated
at the exchange rates at the transaction date, al-
though items derived from non-monetary items
are translated at the historical exchange rates
applying to the non-monetary items.
TRANSLATION OF TRANSACTIONS AND
BALANCES
Foreign currency transactions are translated
into the functional currency using the exchange
rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting
from the settlement of such transactions and
from the translation at year-end exchange rates
of monetary assets and liabilities denominat-
ed in foreign currencies are recognised in the
consolidated income statement.
TRANSLATION OF GROUP COMPANIES
Financial information of foreign subsidiaries
is translated into Euro at the exchange rates
prevailing at the end of the reporting period for
assets and liabilities, and at average exchange
rates for consolidated income statement and
other comprehensive income items.
All effects of exchange rate adjustment are
recognised in the consolidated income state-
ment, except for exchange rate adjustments of
investments in subsidiaries arising from:
• the translation of foreign subsidiaries’ net
assets including goodwill recognised at
acquisition date, at the beginning of the
year at the exchange rates at the end of the
reporting period;
• the translation of foreign subsidiaries’
income statements using average exchange
rates, whereas balance sheet items are
translated using the exchange rates prevail-
ing at the end of the reporting period.
The above exchange rate adjustments are
recognised in other comprehensive income.
29/77
Nets A/S Financial statements Section 2
Revenue
Significant accounting policies
REVENUE RECOGNITION
The Group earns revenue from its customers on
a transactional basis and on a non-transactional
basis:
Transaction based revenue – includes revenue
generated through a combination of (a) a fee per
transaction processed (which represents the
primary revenue model in the Issuer & eSecurity
Services business areas) and (b) an ad valorem
fee based on the value of transactions acquired
(which represents the primary revenue model of
the Merchant Services business area).
Non-transaction based revenue – includes rev-
enue generated through provision of subscrip-
tion-based fees related to the sale and rental of
point-of-sale (POS) and related solutions, fees
related to the sale of value-added services and
revenue from development projects across the
two business areas.
Revenue from transaction service charges,
transaction processing and similar services
is recognised as revenue when services are
rendered.
Revenue from the sale of products is recognised
when the buyer obtains control of the goods,
usually on delivery of the goods. Revenue from
the sale of products is measured at the fair val-
ue of the consideration received or receivable,
net of returns.
Rental income arising from leases of terminals
is accounted for on a straight-line basis over the
lease terms and is included in revenue due to its
operating nature.
Revenues from services obligations to be pro-
vided over a period of time are initially recog-
nised as a contract liability and then recognised
on a straight-line basis over the period during
which the services are rendered.
Revenue is recognised as the gross amount
excluding VAT, taxes and duties and discounts
in relation to the sale. Revenue is measured at
the fair value of the consideration received or
receivable. Payment terms vary between 0-45
days.
Interchange fees and processing fees
Interchange fees and processing fees are the
accumulated total of all fees directly related to
creating a transaction service charge and sales
of other services. This represents interchange
fees, processing fees, sales commission, net-
work fees and handling fees.
Note 2.1
Earnings
This section contains disclosure information related
to revenue and costs. The section also discloses
information regarding foreign currency exposure.
Section 2:
Revenue
857
EBITDA b.s.i.
347
In this section
. Revenue
.
Costs and Special items
.
Staff costs
.
Foreign currency exposure
30/77
Nets A/S Financial statements Section 2
Revenue (continued)
Note 2.1
EURm
Gross revenue per transaction type
Transaction services ,. ,.
Non-transaction services . .
Total ,. ,.
Gross revenue per business area
Merchant Services ,. .
Issuer & eSecurity Services . .
Total ,. ,.
Net revenue per business area
Merchant Services . .
Issuer & eSecurity Services . .
Total . .
CONTRACT ASSETS AND LIABILITIES
A contract asset is recognised for the Group’s
transferring of goods or services, if the cus-
tomer has either not paid consideration or if the
payment is not due. The contract assets primarily
relate to development projects in progress.
A contract liability is recognised if the customer
pays consideration or the Group has a right to
an amount of consideration that is uncondition-
al, before the Group transfers goods or services
to the customer. The contract liabilities primarily
relate to prepayments received from customers
in relation to development contracts and other
non-transaction-based revenue.
BUSINESS AREAS
The Executive Management evaluates the activ-
ities from a business unit perspective. Related to
the announced sale of the account-to-account
business to Mastercard the remaining business
activities have been reorganised under two
business areas Merchant Services and Issuer &
eSecurity Services:
Merchant Services provide in-store, online
and mobile payment acceptance solutions
to merchants across the Nordic and central
European regions, from large corporate chains
to small and medium-sized enterprises and
micro-merchants. We serve our merchants
through a broad set of distribution channels,
including indirect partnership relations such as
bank referrals, value-added resellers and web
developers as well as through our direct sales
force. Our breadth of service, payment type and
geographic coverage allows us to be a one-stop
shop for merchants in the countries in which we
operate.
Issuer & eSecurity Services provide outsourced
processing services to issuers of payment cards,
primarily banks as well as complementary
services including Card Management Systems
(CMS), fraud and dispute solutions and mobile
wallet technology. This business area is also
operating and processing the national debit
card schemes in Denmark and Norway, branded
Dankort and BankAxept, respectively.
31/77
Nets A/S Financial statements Section 2
EURm
Gross revenue per geographical area
Denmark . .
Finland . .
Norway . .
Sweden . .
Poland . .
Baltics . .
Total ,. ,.
Net revenue per geographical area
Denmark . .
Finland . .
Norway . .
Sweden . .
Poland . .
Baltics . .
Total . .
The geagraphical breakdown of the revenue is based on the location of the legal entities and branches in the Group.
Revenue (continued)
Note 2.1
EURm
Assets and liabilities related to contracts with customers
Contract assets relating to projects and consultancy services . .
Total contract assets . .
Other prepayments from customers . .
Total contract liabilities . .
No amounts are overdue for contract assets relating to projects and consultancy services.
Contract assets mainly relates to contracts with the Danish Government (MitID and NemLogin)
32/77
Nets A/S Financial statements Section 2
Special items in the year amounted to EUR 83.5 million (2021: EUR 91.1 million) and included the following costs:
Costs and Special items
Significant accounting policies
COST OF SALES
Cost of sales comprises all costs related to
products and services which have been sold.
This mainly represents the cost of terminals
sold and cost related to the pay-later solution.
EXTERNAL EXPENSES
External expenses mainly comprise IT opera-
tion, software, maintenance and development
costs that do not qualify for capitalisation, lease
expenses and other marketing, sales and distri-
bution costs, losses and card fraud.
Immaterial other gains and losses of a nature
secondary to the main activities of the Group are
recognised within external expenses.
SPECIAL ITEMS
Special items comprise costs or income that
cannot be attributed directly to the Group’s
ordinary activities. They are therefore separate-
ly disclosed to allow a more comparable view of
underlying business performance.
Key accounting estimates and judgements
The use of special items entails Management
judgement in the separation from other items
in the income statement. Management careful-
ly considers such changes in order to ensure
the correct distinction between the operating
activities and restructuring of the Group carried
out to enhance the future earnings potential.
All costs presented under Special items are
directly derived from the books and records
and carefully monitored by Management on a
monthly basis to ensure that only cost meeting
the criteria are included.
EURm
External
expenses Staff costs Total
External
expenses Staff costs Total
Special items
Reorganisation, restructuring and refurbishment (.) (.) (.) (.) (.) (.)
Business set-ups, acquisitions and disposals (.) (.) (.) (.) (.) (.)
Transformation programme (.) (.) (.) (.) (.) (.)
Share based payment, other retention and One-off losses, etc. (.) (.) (.) (.) (.) (.)
Total special items (.) (.) (.) (.) (.) (.)
Note 2.2
33/77
Nets A/S Financial statements Section 2
Financial comments
REORGANISATION, RESTRUCTURING
AND REFURBISHMENT
Costs of reorganisation, restructuring and
refurbishment amounted to EUR 10.7 million and
mainly include costs related to termination of
employees as part of making Nets more cost-ef-
ficient and competitive in meeting the strategy
of being operationally excellent.
BUSINESS SET-UPS, ACQUISITIONS
AND DISPOSALS
Costs associated with business set-ups, acquisi-
tions and disposals amounted to EUR 7.7 million
and include costs related to external advisors
in connection with acquisitions and other M&A
related activities.
TRANSFORMATION PROGRAMME
Costs related to the transformation programme
amounted to EUR 42.4 million.
Costs and Special items (continued) Staff costs
Significant accounting policies
STAFF COSTS
Wages, salaries, pension contributions, social
security contributions, annual leave, sick leave
EURm Note
Staff costs
Wages and salaries (.) (.)
Share-based payment cost . (.) (.)
Pensions – defined contribution plans (.) (.)
Pensions – defined benefit obligations - (.)
Other social security contributions (.) (.)
Other employee costs (.) (.)
Total employee costs for the year (.) (.)
Employee costs included in development projects . .
Total employee costs expensed in the income statement (.) (.)
Employee costs included in special items . . .
Total employee costs included in EBITDA before special items (.) (.)
Actuarial gain (loss) recognised in other comprehensive income - (.)
Average number of employees, full time equivalant 3,098 2,938
Year-end number of employees, full time equivalant , ,
Information about remuneration to the Board of Managers and Key Personnel is disclosed in Note 6.2.
Note 2.2 Note 2.3
These costs related to the further development
of a target operating model, and continued in-
vestments in security and stability programs as
well as the implementation of cost optimisation
programmes related to technology, opera-
tions and procurement. The cost of third-party
consultants represents the majority of the costs
relating to the transformation programme.
SHARE BASED PAYMENTS, OTHER
RETENTION AND ONE-OFF LOSSES, ETC.
Share based payment, other retention and One-off
losses etc. amounted to EUR 22.7 million and
primarily included Nets Group costs of share
based payments and other retention based
bonus schemes and losses related to one imple-
mentation project.
etc. and bonuses are recognised in the year in
which the associated services are rendered by
employees of the Group.
34/77
Nets A/S Financial statements Section 2
Foreign currency exposure
EURm
Probable
change in
currency Net revenue EBITDA Net revenue EBITDA
NOK +% . . . .
SEK +% . . . .
DKK % . . . .
PLN +% . . . .
EUR +% . . . (.)
Exchange rate
EUR per
Key currencies NOK SEK HRK DKK PLN
Average . . . . .
End of year . . . . .
Year-end change (.%) (.%) (.%) .% (.%)
Financial comments
TRANSACTION RISK
The Group operates predominantly in Northern
Europe and Central Europe. Hence, it is primarily
exposed to exchange-rate risks from NOK, SEK,
PLN and EUR, and to a minor degree USD and
GBP. The DKK-based exposure is considered
low, given the de facto fixed-rate policy that
Denmark maintains against the Euro. The Group
has only minor exposure to currencies other
than those mentioned above.
Foreign currency risk is managed at Group level,
focusing on two distinct areas: business activi-
ties and Group financial assets and liabilities.
BUSINESS ACTIVITIES
There is exchange-rate exposure associated
with settlement assets and settlement obli-
gations; however, the exposure is limited, as
card transactions are generally executed and
settled in the same currency and in the same
timeframe. Discrepancies in outflow and inflow
of clearing funds result in the Group trading
currencies on an ongoing basis to settle these.
GROUP FINANCIAL ASSETS AND
LIABILITIES
The Group holds assets and liabilities in foreign
currency, mainly in two different classes, which
are as follows:
• Cash at bank – the Group has cash at bank
which is in different currencies relevant to
underlying card-clearing structure. This and
the Group’s own cash are not being hedged.
FOREIGN EXCHANGE SENSITIVITY
ANALYSIS
The Group’s exposure to foreign currency fluc-
tuations is summarised in the following tables.
A probable change in the following curren-
cies would hypothetically impact the Group’s
revenue and operating profit before depreciation
and amortisation for the year as outlined in the
following table:
Note 2.4
Exchange rate
EUR per
Key currencies NOK SEK HRK DKK PLN
Average . . . . .
End of year . . . . .
Year-end change .% (.%) .% .% (.%)
35/77
Nets A/S Financial statements Section 2
Foreign currency exposure (continued)
Financial comments
A probable change in the following currencies
against the currencies as at the balance sheet
date would have the following hypothetical im-
pact on profit before tax and the Group’s equity
based on the exposure of balances in foreign
currency. Development in the hypothetical
impact on profit before tax is given by a changed
capital structure (refer to Note 5.5).
EURm
Cash and
cash equiv-
alents Goodwill
Recei-
vables
Borrowings Liabilities
Net assets
Probable
change in
currency
Hypothet-
ical impact
on result
before tax
Hypothet-
ical impact
on equity
Exposure of balance
in foreign currency
NOK . . . - (.) . % . .
SEK . . . - (.) . % . .
EUR . . . (.) (.) (.) % . (.)
PLN
. . . - (.) . % . .
Total . . ,. (.) (,.) .
1
Receivables include settlement assets.
2
Liabilities include merchant creditors and settlement obligations.
3
A large part of the balances in foreign currency is naturally hedged by the underlying business activities.
Note 2.4
EURm
Cash and
cash equiv-
alents Goodwill
Recei-
vables
Borrowings Liabilities
Net assets
Probable
change in
currency
Hypothet-
ical impact
on result
before tax
Hypothet-
ical impact
on equity
Exposure of balance
in foreign currency
NOK . . . (.) (,.) (,.) % (.) (.)
SEK . . . - (.) . % . .
EUR . . . (.) (.) (.) % . (.)
PLN
. . . - (.) . % . .
Total . . . (,.) (,.) (.)
36/77
Nets A/S Financial statements Section 3
Significant accounting policies
FINANCIAL ASSETS
Financial assets are classified, at initial recogni-
tion, as financial assets at fair value through the
income statement, financial assets at amortised
cost, or as derivatives designated as hedging in-
struments in an effective hedge, as appropriate.
All financial assets except for trade receivables
are recognised initially at fair value plus, in the
case of financial assets not recorded at fair
value through the income statement, transaction
costs that are directly attributable to the acqui-
sition of the financial asset.
Trade receivables including contract assets that
do not contain a significant financing component
are recognised at the transaction price.
SUBSEQUENT MEASUREMENT
Financial assets at amortised cost
This category is the most relevant to the Group
and applies to trade and other receivables and
clearing-related assets.
Financial assets at amortised cost are subsequently
measured at amortised cost using the effective
interest rate (EIR) method, less impairment.
Interest income arising under the EIR method
is recognised in financial income in the income
statement. Losses arising from impairment
are recognised in the income statement under
external expenses.
FINANCIAL ASSETS AT FAIR VALUE
THROUGH THE INCOME STATEMENT
Listed securities are classified as held for trad-
ing and are measured at fair value through the
income statement.
IMPAIRMENT OF FINANCIAL ASSETS
Disclosures relating to impairment of financial
assets are provided in the following notes:
• Trade and other receivables – Note 3.1.2
• Clearing-related balances – Note 3.2
INVENTORIES
Inventories are measured at cost in accordance
with the FIFO method. Where the expected net
realisable value is lower than cost, inventories
are written down to this lower value.
TRADE AND OTHER PAYABLES
Trade and other payables are initially recog-
nised at fair value. Subsequently, these items
are measured at amortised cost.
TRADE AND OTHER RECEIVABLES
Trade and other receivables are initially recog-
nised at fair value and subsequently measured
at amortised cost, less allowances for doubtful
trade receivables. The allowances are deducted
from the carrying amount of trade receivables
and receivables from the pay-later solution
and the amount of the loss is recognised in the
income statement under External expenses. The
Group applies the IFRS 9 simplified approach to
measuring expected credit losses which uses
a lifetime expected loss allowance for all trade
receivables and contract assets.
In this section
..
Inventories
..
Trade and other receivables
..
Trade and other payables
.
Clearing-related balances
.
Cash and cash equivalents
.
Financial risk management
Working capital
Section 3:
The working capital of the Group
comprises narrow working capital
and clearing-related balances.
Narrow working capital compris-
es inventory (primarily terminals,
spare parts, etc.), trade receivables,
pay-later solution, prepayments and
other receivables and trade and oth-
er payables. Management actively
focuses on optimising the narrow
working capital requirements of the
Group’s operations.
Clearing-related balances comprise the
aggregate of settlement assets less the
aggregate of merchant creditors and
settlement obligations, as these balanc-
es tend to offset each other.
However, Management has limited
ability to improve the working
capital of clearing-related balances
on a day-to-day basis, as these are
driven by the volume of transactions
and the time elapsed since the last
clearing of financial issuers/card
schemes, which is why these bal-
ances fluctuate from reporting date
to reporting date. A description of
the components in the clearing-re-
lated balances and the key drivers
behind their respective amounts is
provided in Note 3.2.
Separate credit lines have been
established to cover day-to-day
fluctuations – see Note 5.2.
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Nets A/S Financial statements Section 3
EURm
Inventories
Finished goods and merchandise . .
Total inventories (gross) . .
Inventory write-downs at year-end (.) (.)
Total inventories (net) . .
Movements in the inventory write-downs
Inventory write-downs as at 1 January (.) (.)
Inventory write-downs during the year (.) (.)
Provisions utilized . .
Inventory write-downs as at 31 December (.) (.)
Write-downs of inventories to net realisable value amounted to EUR 0.1 million net (2021: EUR 0.1 million) and are
included in cost of sales.
Inventories
Note 3.1.1
EURm
Trade receivables
Trade receivables . .
Allowances for doubtful debts (.) (.)
Trade receivables, net . .
Deposits . .
Other receivables . .
Total . .
RELATED CREDIT RISK
The Group is exposed to credit risks related
to the trade receivables. The base consists of
a large number of customers, both banks and
merchants, spread across multiple industries
and geographical areas, which minimises the
credit risk.
Trade and other receivables (continued)
Trade and other receivables
Note 3.1.2
Note 3.1.2
EURm Current
Less than
months
past due
Past
due -
months
Past
due -
months
Past due
-
months
Past due
more than
months Total
Expected loss rate .% .% .% .% .% .%
Trade receivables . . . . . . .
Allowance for doubtful
debts as at
31 December (.) (.) (.) (.) (.) (.) (.)
Trade receivables, net .
EURm Current
Less than
months
past due
Past
due -
months
Past
due -
months
Past due
-
months
Past due
more than
months Total
Expected loss rate .% .% .% .% .% .%
Trade receivables . . . . . . .
Allowance for doubtful
debts as at
31 December - - (.) (.) (.) (.) (.)
Trade receivables, net .
38/77
Nets A/S Financial statements Section 3
EURm
Trade and other payables
Trade payables . .
Other liabilities . .
Total . .
Other liabilities
Employee costs payable . .
Other payables . .
Interest payable . .
VAT and duties payable . .
Total . .
Trade and other payables
Note 3.1.3
EURm
Clearing-related assets
Settlement assets . .
Total . .
Clearing-related liabilities
Merchant creditors . .
Settlement obligations . .
Total ,. .
The carrying amount of clearing-related balances is, in general, driven by a combination of card turnover, average
settlement days and timing of settlement.
Settlement assets consist primarily of the
Group’s receivables from the card schemes/
networks/banks for transactions processed on
behalf of merchants or card issuing banks.
Merchant creditors consist primarily of the
Group’s liability to merchants for transactions
that have been processed but not yet settled.
Certain settlement terms towards merchants
exceed settlement terms towards the remittance
from card scheme/banks, thus creating negative
working capital.
Settlement obligations consist primarily of
the Group’s obligations to the card schemes/
networks for transactions made by cardholders
who are customers in issuing banks for whom
the Group processes transactions. The settle-
ment assets and settlement obligations are
primarily clearing transactions and fees that are
cleared at the beginning of the following month
with card issuers and card acquirers respec-
tively.
Clearing-related balances
Note 3.2
39/77
Nets A/S Financial statements Section 3
CREDIT RISK MANAGEMENT
Credit risk refers to the risk that a counterparty
will default on its contractual obligations, result-
ing in financial loss to the Group. The Group has
adopted a policy of dealing with creditworthy
counterparties and obtaining sufficient collater-
al, where appropriate, as a means of mitigating
the risk of financial loss from defaults.
The Group is exposed to the risk of unpaid mer-
chant service charges where a customer ceases
to trade. To manage this risk, the Group main-
tains credit risk exposure in line with approved
appetite for risk whilst achieving appropriate
risk versus reward performance and ensur-
ing that customers will be able to meet their
obligations to the Group. In addition, the Group
is exposed to chargebacks that arise where
customers may not have received the goods
or services for which they have paid and seek
recompense from the card issuer. Whilst the
financial responsibility for a charge-back lies
with the merchant, in the event that the mer-
chant is no longer in business, the Group has a
liability to re-compensate the card scheme or
the issuing bank.
Nets Group continues the work, to further
strengthen the credit risk exposure including
continued legal review of contracts, rene-
gotiation of merchant credit risk insurance
programmes, improved risk assesment for new
merchants and improved monitoring of existing
merchants.
Clearing-related balances (continued)
EURm
Cash at bank and on hand . .
Cash and cash equivalents as at 31 December . .
Bank overdrafts - -
Cash and cash equivalents as at 31 December, net - -
Restricted cash included in cash at bank and on hand . .
Cash and cash equivalents
Significant accounting policies
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash at
bank and on hand and short-term highly liquid
investments that are readily convertible to
known amounts of cash and therefore subject to
insignificant risk of change in value.
The credit rating of the banks to which the
Group has the largest exposure is monitored
on a continuous basis. The Group has entered
into cash pool arrangements covering all Group
entities.
Note 3.2 Note 3.3
EURm
Cash and cash equivalants as at 31 December, net . .
Clearing-related assets as at 31 December . .
Clearing-related liabiliteis as at 31 December (,.) (.)
Own cash as at 31 December . .
40/77
Nets A/S Financial statements Section 3
The maturity analysis is based on undiscounted cash flows, including estimated interest. Interest is included based on current rates.
A more detailed maturity analysis of the Group loans is disclosed in Note 5.2.
Financial risk management
Financial comments
LIQUIDITY AND FINANCING RISK
MANAGEMENT
Liquidity management is executed on an ongoing
daily basis, ensuring availability of required liquid-
ity of the Group by appropriate cash manage-
ment, and maintaining adequate liquidity reserves
at any time through a combination of readily
available cash, liquid investment portfolios and
uncommitted as well as committed credit facilities.
The Group has established cash pooling arrange-
ments to ensure cost-efficient and secure cash
management. The Group continuously monitors
actual and future cash flows to match the maturi-
ty profiles of financial assets and liabilities.
A part of the Group’s liquidity position relates to
its settlement activities (settlement cash). The
Group ensures that it has sufficient liquidity
at any time to meet its settlement payment
obligations as they fall due. This is achieved by
holding significant cash balances and maintain-
ing sufficient credit lines.
Settlement cash
The Group’s acquiring business has a short-term
settlement cycle where card schemes (predomi-
nantly Visa/Mastercard) remit cash and the Group
pays merchants from these remittances.
The settlement activities can result in a signif-
icant increase in cash balances or a significant
decrease in cash balances. Liquidity is needed
only when merchants are remitted prior to funds
being received; however, the settlements are
normally performed within a few days.
The Group’s issuing business also has a short-
term settlement cycle where the network (local
banks) remits cash and the Group pays the card
acquirer or card schemes. The settlements can
result in a significant increase in cash balanc-
es or a significant decrease in cash balances.
Liquidity risks occur when card acquirers are
paid prior to funds being received from the
network (local banks); however, settlements are
normally performed within a few days.
MATURITY ANALYSIS
The following table details the Group’s remain-
ing contractual maturity for its non-derivative
financial assets and liabilities, with agreed
payment periods:
EURm Note < month
-
months
-
months
>
year Total < month
-
months
-
months
>
year Total
Trade and other receivables including contract assets . . . - . . . . . .
Clearing-related assets . - - - . . - - - .
Total financial assets at the end of the year by maturity ,. . . - ,. . . . . .
Borrowings . . . . . . . . . ,. ,.
Trade and other payables including contract liabilities . . . . . . . . . .
Merchant creditors . - - - . . - - - .
Clearing-related obligations . - - - . . - - - .
Other liabilities . . . . . . . . . .
Lease liabilities . . 1.5 11.7 64.7 . . 1.3 11.6 75.4 .
Total financial liabilities at the end of the year by maturity ,. . . . ,. . . . ,. ,.
Note 3.4
41/77
Nets A/S Financial statements Section 4
This section includes disclosure
information related to how the Group
executed its growth strategy related to:
- Expansion of geographical and service
offering footprint through acquisitions
- Development of innovative product
and service offerings
STRATEGIC ACQUISITIONS
The Group is actively committed to re-
newing and supplementing the portfolio
of services offered and to strengthening
our geographical footprint.
This section provides information on
the consideration paid by the Group
for acquiring these entities and shows
how these businesses have impacted
the Group’s balance sheet at their
respective acquisition dates, including
details on goodwill and other intangible
assets acquired.
INVESTMENTS IN
DEVELOPMENT PROJECTS
At Nets, we see easier payments as the
foundation for growth and progress
– both in commerce and in society.
The Group continuously innovates to
bring to market products and services
relevant to our focus areas in new
payment certificates, analytics and
authentication.
This section includes financial informa-
tion related to expenditure on develop-
ment projects.
Strategic investments
and divestments
Section 4:
In this section
. Business combinations and asset
acquisitions
.
Intangible assets
.
Plant and equipment
.
Impairment tests
.
Investment in associates
.
Discontinued operations
Business combinations and asset acquisitions
Significant accounting policies
BUSINESS COMBINATIONS
Acquisitions of businesses are accounted for using
the acquisition method. The cost of an acquisition
is measured as the aggregate of the consideration
transferred measured at acquisition date fair value
and the amount of any non-controlling interests
in the acquiree. The Group recognises any
non-controlling interest in the acquiree on an
acquisition-by-acquisition basis, at either fair value
(full goodwill) or at the non-controlling interest’s
proportionate share of the recognised amounts
of the acquiree’s identifiable assets.
Any contingent consideration to be transferred
is measured at fair value at the acquisition date.
Acquisition-related costs are expensed as and when
incurred within Special Items for external expenses
and staff costs.
At the acquisition date, the identifiable assets
acquired and the liabilities, including contingent
liabilities assumed, are recognised at their fair
value at the acquisition date. Goodwill is initially
measured at cost, being the excess of the ag-
gregate of the consideration transferred and the
amount of any non-controlling interest in the
acquiree over the fair value of the identifiable
net assets acquired.
If the initial accounting for a business combina-
tion is incomplete by the end of the reporting
Note 4.1
year in which the combination occurs, the Group
reports provisional amounts for the items for
which the accounting is incomplete.
Those provisional amounts are adjusted during
the following 12 months from the acquisi-
tion date, if additional assets or liabilities are
recognised, to reflect new information obtained
about facts and circumstances that existed at
the acquisition date which, if known, would have
affected the amounts recognised at that date.
The effect of the adjustment is recognised in the
opening balance and the comparative figures
are restated accordingly.
When the Group ceases to have control of any
retained interest in the entity, it is re-measured
to its fair value at the date when control is lost,
with the change in carrying amount recognised
in the consolidated income statement.
The fair value is the initial carrying amount for
the purposes of subsequently accounting for
the retained interest as an associate, joint ven-
ture or financial asset. In addition, any amounts
previously recognised in other comprehensive
income in respect of that entity are accounted
for as if the Group had directly disposed of
the related assets or liabilities. This may mean
that amounts previously recognised in other
comprehensive income are reclassified to the
consolidated income statement.
42/77
Nets A/S Financial statements Section 4
Key accounting estimates and judgements
The most significant assets acquired generally
comprise goodwill, customer agreements and
development projects. As no active market exists
for the majority of acquired assets, liabilities and
contingent liabilities, in particular in respect of
acquired intangible assets, Management makes
estimates of the fair value. The methods applied
are based on the present value of future cash
flows, churn rates or other expected cash flows
related to the specific asset.
The fair value of development projects and
customer contracts acquired in business
combinations is based on an evaluation of the
conditions relating to the acquired portfolio and
related customer relationships. Measurement is
based on a discounted cash flow model on key
assumptions about the estimated split of the ac-
quired and expected revenue, the related churn
rates and profitability of the revenue at the time
of the acquisition.
Team U4
Total
acquisitions
(Opening
balance)EURm
Book value on
acquisition
date
Opening
Balance
Goodwill - . .
Other intangibles - - -
Other assets . . .
Cash and cash equivalent . . .
Deferred tax liabilities - - -
Other liabilities (.) (.) (.)
Consideration transferred . .
Cash and cash equivalent in
aquisition of business (.) (.)
Total cash consideration . .
Business combinations and asset acquisitions
ACQUISITION OF BUSINESSES
In April 2021, the group acquired the company
Checkout Oy. In July 2022, the group acquired
the company Team4u Sp. z o.o. In 2021 and 2022
the acquisitions will have the following effect on
the Group’s consolidated financial statements as
at the reporting date:
Note 4.1
Team4U Sp. z o.o.
In July 2022, it was announced that an agree-
ment to acquire 75% of the shares and voting
rights in the Polish company Team4u was
closed. The combined purchase price amounted
to EUR 6 million. Total combined considera-
tion paid at closing was EUR 3.3 million and a
remaining future consideration is estimated at
EUR 2.7 million based on a number of elements,
including EBITDA in the following years. The
acquisition has further strengthened
the Group’s presence in Poland and Central
Europe. Goodwill represents the value of the
current workforce and know-how and also the
operational synergies expected from integration
within the Group.
Acquisition costs related to the combined pur-
chase amounted to EUR 0.5 million.
If the acquisition had occurred on 1 January
2022, pro-forma revenue and loss for the year
ended 31 December 2022 would have been EUR
0.5 million and EUR 0.0 million, respectively.
43/77
Nets A/S Financial statements Section 4
Checkout Finland Oy
In January 2021, Nets announced the acquisi-
tions of Finnish eCommerce company Checkout
Finland Oy. On 30 April 2021, Nets Denmark A/S
subsidiary, Paytrail Oy, acquired 100% of the
shares in the Finnish company Checkout Finland
OY. The purchase price amounted to EUR 36
million.
The acquisition has further strengthened the
Group’s presence in Finland and Europe and will
support the Merchant Services eCom business.
Goodwill represents the value of the current
workforce and know-how and also the operational
synergies and growth expected from integration
within the Group.
If the acquisition had occurred on 1 January 2021,
pro-forma revenue and loss for the year ended 31
December 2021 would have been EUR 11.6 million
and EUR 8.2 million, respectively. Acquisition
costs related to the purchase amounted to EUR
1.2 million.
In July 2021, Nets completed acquisitions of
outstanding shares from Polish P24-Dotcard
minority shareholder, for a total amount of EUR
317.4 million. The transaction was not subject to
further goodwill recognition.
Business combinations and asset acquisitions (continued)
Note 4.1
Checkout Finland OY
Total
acquisitions
(Opening
balance)EURm
Book value on
acquisition
date
Opening
Balance
Goodwill . . .
Other intangibles . . .
Other assets . . .
Cash and cash equivalent . . .
Deferred tax liabilities - (.) (.)
Other liabilities (.) (.) (.)
Consideration transferred .
Cash and cash equivalent in
aquisition of business (.)
Total cash consideration .
44/77
Nets A/S Financial statements Section 4
Intangible assets
Significant accounting policies
GOODWILL
Goodwill arising from an acquisition of a busi-
ness is carried at cost as established at the date
of acquisition of the business less accumulated
impairment losses, if any. Goodwill is not amor-
tised. The carrying amount of goodwill is tested
annually and if events or changes in circum-
stances indicate impairment.
CUSTOMER AGREEMENTS AND RIGHTS
Customer agreements and rights are carried at
historical cost less accumulated amortisation
and any impairment loss. Amortisation is calcu-
lated using the straight-line method to allocate
the cost over estimated useful life, which does
not exceed:
• Customer agreements 3–15 years
• Rights 3–10 years.
SOFTWARE
Capitalised software is amortised over the esti-
mated useful lives of 3–7 years.
DEVELOPMENT PROJECTS IN
PROGRESS
Development costs that are directly attributable
to the design and testing of identifiable and unique
projects, including software products controlled
by the Group, are recognised as intangible assets
when the following criteria are met:
• It is technically feasible to complete the
asset so that it will be available for use
• Management intends to complete the asset
and there is an ability to use or sell it
• The asset will generate probable future
economic benefits
• Expenditure attributable to the asset during
its development can be reliably measured.
Costs associated with maintaining the assets are
recognised as an expense as and when incurred.
Directly attributable costs that are capitalised as
part of the assets include employee costs.
Development projects in progress are tested for
impairment at least annually.
Key accounting estimates and judgements
CUSTOMER AGREEMENTS
The useful life of customer agreements is
determined based on periodic assessments of
customer churn or actual useful life and the
intended use for those assets. Such studies are
completed or updated when new events occur
that have the potential to impact the determi-
nation of the useful life of the asset, i.e. when
events or circumstances occur that indicate
the carrying amount of the asset may not be
recoverable and should therefore be tested for
impairment.
SOFTWARE
The useful life of software is determined based
on periodic assessments of actual useful life
and the intended use for those assets. Such
studies are completed or updated when new
events occur that have the potential to impact
the determination of the useful life of the asset,
i.e. when events or circumstances occur that in-
dicate the carrying amount of the asset may not
be recoverable and should therefore be tested
for impairment.
DEVELOPMENT PROJECTS IN
PROGRESS
For development projects in progress, Manage-
ment estimates whether each project is likely to
generate future economic benefits for the Group
in order to qualify for recognition. The develop-
ment projects are evaluated on technical as well
as commercial criteria.
Note 4.2
45/77
Nets A/S Financial statements Section 4
Intangible assets (continued)
Other intangible assets
EURm Goodwill
Customer
agree-
ments Software
Devel-
opment
projects
in progress
Other
intangible
assets
Total
intangible
assets
Accumulated cost as at
1 January ,. . . . ,. ,.
Additions from acquisitions . - - - - .
Additions - . . . . .
Transfer between asset groups - - . (.) - -
Assets disposed of (.) - (.) - (.) (.)
Currency translation
adjustment (.) (.) (.) - (.) (.)
Accumulated cost as at
31 December ,. . . . ,. ,.
Accumulated amortisation and
write-downs for impairment
as at 1 January - (.) (.) - (.) (.)
Amortisation
- (.) (.) - (.) (.)
Assets disposed of
- - . - . .
Currency translation adjustment - . . - . .
Accumulated amortisation and
write-downs for impairment
as at 31 December - (.) (.) - (.) (.)
Carrying amount as at
31 December ,. . . . . ,.
Note 4.2
Other intangible assets
EURm Goodwill
Customer
agree-
ments Software
Devel-
opment
projects
in progress
Other
intangible
assets
Total
intangible
assets
Accumulated cost as at
1 January ,. . . . ,. ,.
Additions from acquisitions . . . - . .
Additions - - . . . .
Transfer between asset groups - - . (.) - -
Assets disposed of - - (.) - (.) (.)
Currency translation
adjustment (.) (.) . - . (.)
Accumulated cost as at
31 December ,. . . . ,. ,.
Accumulated amortisation and
write-downs for impairment
as at 1 January - (.) (.) - (.) (.)
Amortisation
- (.) (.) - (.) (.)
Assets disposed of
- - . - . .
Currency translation adjustment - . (.) - (.) (.)
Accumulated amortisation and
write-downs for impairment
as at 31 December - (.) (.) - (.) (.)
Carrying amount as at
31 December ,. . . . . ,.
46/77
Nets A/S Financial statements Section 4
EURm
Leasehold
improve-
ments Terminals
Plant and
machinery Total
Leasehold
improve-
ments Terminals
Plant and
machinery Total
Accumulated cost as at 1 January . . . . . . . .
Additions from acquisitions - - - - - - - -
Additions . . . . . . . .
Assets disposed of - (.) (.) (.) - (.) (.) (.)
Currency translation adjustment (.) (.) (.) (.) . (.) . .
Accumulated cost as at 31 December . . . . . . . .
Accumulated depreciation and write-downs for
impairment as at 1 January (.) (.) (.) (.) (.) (.) (.) (.)
Depreciation (.) (.) (.) (.) (.) (.) (.) (.)
Assets disposed of - . . . - . . .
Currency translation adjustment . . . . (.) . (.) (.)
Accumulated depreciation and write-downs for
impairment as at 31 December (.) (.) (.) (.) (.) (.) (.) (.)
Carrying amount as at 31 December . . . . . . . .
Terminals are leased by the Group to third-party merchants under operating leases. These operating leases are under various agreements which terminate in 2023 and 2025. The agreements include an extension option.
Plant and equipment
Significant accounting policies
PLANT AND EQUIPMENT
Plant and equipment are stated at their pur-
chase price, including incremental expenses on
acquisition less accumulated depreciation and
any recognised impairment loss.
Depreciation is provided on a straight-line basis
over the expected useful economic life of the
assets concerned.
Note 4.3
The estimated useful life for this purpose is:
• Leasehold improvements: 10 years
• Terminals: 3-5 years
• Plant and machinery: 2–12 years
The useful life of plant and equipment is deter-
mined based on periodic assessments of actual
useful life and the intended use for those assets.
47/77
Nets A/S Financial statements Section 4
Impairment tests
Significant accounting policies
IMPAIRMENT OF GOODWILL
For the purposes of impairment testing, goodwill
is allocated to each of the Group’s cash-gener-
ating units that are expected to benefit from the
synergies of the combination.
A cash-generating unit to which goodwill has
been allocated is tested for impairment annual-
ly, or more frequently if there is any indication
that the unit may be impaired.
A cash-generating unit is the smallest iden-
tifiable group of assets that generates cash
inflows that are largely independent of the cash
inflows from other assets or groups of assets.
When determining a cash-generating unit,
various factors have to be considered, including
how Management monitors the operations and
makes decisions.
If the recoverable amount of the cash-gener-
ating unit is less than it's carrying amount, the
impairment loss is allocated first to reduce the
carrying amount of any goodwill allocated to
the unit and then to the other assets of the unit
pro rata based on the carrying amount of each
asset in the unit.
Any impairment loss for goodwill is recognised
directly in the income statement and cannot be
reversed in subsequent periods.
Key accounting estimates and judgements
Recoverable amount og goodwil and capi-
talised development projects
The assessment of whether goodwill and/or
capitalised developments projects are subject
to impairment requires significant Management
judgement in determining various assumptions,
such as cash-flow projections, discount rate and
terminal growth rates. Further, the use of differ-
ent estimates or assumptions when determin-
ing the fair value of such assets may result in
different values and could result in impairment
charges in future periods.
The recoverable amount recognised is deter-
mined based on value in use calculations, which
use cash flow projections covering a fiveyear
period incorporating the assumptions used in
financial budgets, including expected impact
from changes in the business models, approved
by Management.
On disposal of the relevant cash-generating unit,
the attributable amount of goodwill is included in
the determination of the gain or loss on disposal.
IMPAIRMENT OF OTHER INTANGIBLE
ASSETS AND PLANT AND EQUIPMENT
At each reporting date, the Group assesses
whether there is any indication that its other
intangible assets or plant and equipment are
impaired. If any such indication exists, the Group
estimates the recoverable amount of the asset
and the impairment loss (if any). If an asset does
not generate cash flows that are independent
from those of other assets or groups of assets,
the recoverable amount is determined for the
cash-generating unit to which the asset belongs.
The recoverable amount of an asset is the
higher of its fair value less cost to sell and its
value in use. If the recoverable amount of an
intangible asset or plant and equipment is less
than its carrying value, an impairment loss is
recognised immediately in the consolidated
income statement.
A reversal of an impairment loss on other intan-
gible assets or plant and equipment is recog-
nised as and when it arises only to the extent
that the carrying amount does not exceed the
recoverable amount (adjusted for depreciation
and amortisation), had no impairment loss been
recognised.
Management has at year-end assessed that
the development in key assumptions that could
impact the valuation of goodwill and other in-
tangibles, including capital expenditures, organic
growth and discount factor, in general does not
indicate any impairment.
Key factors that could trigger an impairment
test are the expected revenue streams and the
rate used to discount the cash flow, including
the following:
• New technology changing the way we
currently handle payments
• Macro economy down-scaling
• Regulatory matters.
As value in use for Merchant Services' and
Issuer & eSecurity Services' cash-generating
units is greater than it's carrying amount, no
impairment has been identified.
Note 4.4
EURm
Cash-generating unit
Merchant Services ,. ,.
Issuer & eSecurity Services . .
Total ,. ,.
The carrying amount of goodwill allocated to cash-generating units is as follows:
48/77
Nets A/S Financial statements
Impairment tests (continued)
Note 4.4
Impairment test of goodwill
The carrying amount of goodwill is tested for
impairment annually and if events or changes in
circumstances indicate impairment. Goodwill
does not generate largely independent cash
inflows on its own and is therefore allocated to
the level on which Management monitors the
operation and makes decisions. This means that
the cash-generating units are similar to the
business areas used in the internal reporting.
The tests were carried out towards the end of
2022 and did not result in any impairment
losses recognised.
The recoverable amount of goodwill recognised
is determined based on value in use calculations,
which use cash flow projections covering a five-
year period incorporating the assumptions used
in financial budgets, including expected impact
from changes in business models, approved by
Management
Cash flows beyond the five-year budget period
have been extrapolated using a steady 2.0% per
annum growth rate. Management believes that
the growth rates are reasonable based on the
services/products being developed, the continued
digital conversion of cash, and any reasonably
possible change in the key assumptions on which
the recoverable amount is based would not cause
the carrying amount to exceed its recoverable
amount. Key growth drivers per business are
described below.
In 2022, discount rates used for impairment cal-
culations post-tax were 8.5% for Merchant Ser-
vices and 8.5% for Issuer & eSecurity Services for
reflecting the business and related risk. Discount
rates have been updated compared to last year
to reflect the newest external input. Key factors
that could trigger an impairment test include the
following:
• New technology changing the way we
currently handle payments
• Macro economy down-scaling
• Regulatory matters.
The calculation of value in use is based on a
number of assumptions containing significant
estimations. To ensure that substantial changes
in the assumptions will not affect the
recoverable amount in such way that an
impairment is required a sensitivity analysis by
segment has been prepared. For both the MS
and IeS segments analysis showed the
recoverable amount being considerably higher
than the carrying values, and a reasonable
decrease in terminal growth of 1.0% will not
result in impairment of goodwill. Further, for
both the MS and IeS segments an increase in
WACC of 1.0% will also not result in impairment
of goodwill.
The sensitivity analysis was performed on the
terminal growth rate and the WACC, as these
are significant inputs in the calculation of the
recoverable amount. The analysis showed the
recoverable amount being considerably higher
than the carrying values for both Business units.
The analysis did not indicate any impairment
needs.
MERCHANT SERVICES
Merchant Services consists of goodwill recog-
nised as part of the purchase of the Nets Group
to private equity funds in 2014 and 2018, and
from acquisition of activities the following years
in Sweden (Payzone, DIBS Payment Services and
Kortaccept Nordic), Poland (DotCard, PayPro, PeP
and Team4U), Denmark (Storebox) and Finland
(Paytrail, Checkout and PoplaTek). Goodwill has
been evaluated at aggregated level as Merchant
Services is considered as one CGU. Entities are
not evaluated separately, as value-added pro-
cesses are generated across the Group, including
synergies from combining operations, economies
of scale and future growth potential.
ISSUER & ESECURITY SERVICES
Issuer & eSecurity Services consists of goodwill
recognised as part of the purchase of the Nets
Group to private equity funds in 2014 and 2018.
Goodwill has been evaluated at aggregated level
as Issuer & eSecurity Services is considered as
one CGU. Entities are not evaluated separately,
as value-added processes are generated across
the Group, including synergies from combining
operations, economies of scale and future growth
potential.
49/77
Nets A/S Financial statements Section 4
Nets’ share
Nets’ share
EURm Share Currency Revenue
Result
for the
year
Net
assets Equity
Result
for the
year Share Currency Revenue
Result
for the
year
Net
assets Equity
Result
for the
year
Company name
e-Boks A/S, Denmark 50% DKK 33.9 1.9 50.9 9.2 1.0 50% DKK 35.9 5.5 41.8 8.2 2.8
Total . . . . . . . . . .
EURm
Investment in associates
Accumulated cost as at 1 January . .
Accumulated cost as at 31 December . .
Revaluation as at 1 January . .
Dividends received (.) -
Share of result after tax . .
Currency translation adjustment
- .
Revaluation as at 31 December . .
Carrying amount as at 31 December . .
Fair value recognition from business combinations . .
Carrying amount excluding fair value recognition from business
combinations as at 31 December . .
Investment in associates
Significant accounting policies
ASSOCIATES
An associate is an entity over which the Group
has significant influence. Investments in associ-
ates are recognised under the equity method.
Investments in associates are recognised in the
balance sheet at the proportional share of the
entity’s equity value calculated in accordance
with Group accounting policies.
Associates with negative equity value are
measured at zero, and any receivables from
these enterprises are written down, if required,
based on an individual assessment. If a legal or
constructive obligation exists to cover the asso-
ciate’s negative balance, a liability is recognised.
The income statement reflects the Group’s share
of the results of operations of the associate.
Any change in other comprehensive income of
the associate is presented as part of the Group’s
other comprehensive income. In addition, when
a change has been recognised directly in the
equity of the associate, the Group recognises its
share of any changes, when applicable, in the
statement of changes in equity.
The proportionate share of the net profit/loss in
associates after tax and elimination of the pro-
portionate share of intra-group gains/losses is
recognised in the Group’s consolidated income
statement.
Note 4.5
50/77
Nets A/S Financial statements Section 4
Discontinued operations
Discontinued operations (continued)
Significant accounting policies
Divestment of activities which can be clearly
distinguished, operationally and for financial re-
porting purposes from the other business and is
expected to be carried out within twelve months
in accordance with a formal plan is reported as
discontinuing operations.
The result after tax from discontinuing opera-
tions is presented in a separate line item in the
income statement with comparative figures and
is specified in this note.
Net cash from discontinuing operations is also
presented in the note with comparative figures.
Assets and liabilities related to discontinuing
operations are presented in separate line items
as held-for-sale and are specified in the note
but are presented without comparative figures.
At the time non-current assets are classified as
held-for-sale an assessment of the fair value is
made to identify any impairment loss from the
discontinuing operations.
From the time non-current assets are held-for-
sale no further depreciation or amortisation is
made.
On 6 August 2019, it was announced that Nets
had agreed to sell the account-to-account
payment business to Mastercard for EUR 2.85
billion. On 17 August 2020, the European Com-
mission granted a conditional clearance of the
transaction, and on 5 March 2021, the transac-
tion was completed upon receipt of all regula-
tory approvals and fulfilment of all customary
closing conditions. Management assessed, that
the signing of the agreement with Mastercard
fulfilled the requirements for presenting the
Group's account-to-account payment business
as discontinuing operations. The activities sold
to Mastercard were previously included in the
business unit Corporate Services providing the
payment platform for recurrent bill payments
and credit transfer transactions. At the centre of
this business is the ability to provide seam-
less and integrated solutions for recurring bill
payments to corporations and consumers (e.g.
Leverandørservice and Betalingsservice). It also
includes solutions for real-time clearing provid-
ing instant payments.
Management has made a number of significant
estimates related to the discontinuing opera-
tions. The main estimates relate to allocation
of Goodwill and Other intangible assets in the
concolidated balance sheet.
Note 4.6
Note 4.6
EURm
Result from discontinuing operations
Revenue, gross - .
Interchange fees and processing fees
- (.)
Revenue, net of interchange fees and processing fees - .
Cost of sales - (.)
External expenses - (.)
Staff costs - (.)
Operating result before depreciation and amortisation (EBITDA) - .
Gain on sale of discontinued operation - ,.
Result before tax - ,.
Income taxes - (.)
Result from discontinuing operations - ,.
EURm
Net cash from discontinuing operations
Net cash from operating activities* - .
Net cash from investing activities - (.)
Total - .
* Net cash from operating activities does not include a share of the Groups tax payments.
External expenses and Staff cost comprises
cost directly associated with the discontinued
business and allocated indirect cost.
51/77
Nets A/S Financial statements Section 5
Significant accounting policies
EQUITY
Dividends
Dividends expected to be distributed for the
year are recognised under a separate item in
equity. Dividends and interim dividends are
recognised as a liability at the time of adoption
by the Annual General Meeting and the meeting
of the Board of Directors, respectively.
Foreign currency translation reserve
Foreign currency translation reserve com-
prises exchange rate differences arising from
translation of the functional currency of foreign
enterprises’ financial information into Euro.
Translation adjustments are recognised in the
consolidated income statements when the net
investment is realised.
Hedge reserve
The hedge reserve comprises fair value of
hedging instruments qualifying for hedge
accounting. Hedge accounting ceases when
the hedging certificates matures or is no longer
effective. When the hedged item is the cost of a
non-financial asset or non-financial liability, the
amounts recognised as other comprehensive
income are transferred to the income statement
in the same period that the non-financial asset
or liability affects the income statement.
Financial comments
CAPITAL MANAGEMENT
The Group manages its capital base to ensure
entities in the Group are able to continue as a
going concern, and seeks to maximise the return
to shareholders through adequate share of debt
and equity on its balance sheet.
Within the Group, certain subsidiaries and
branches are registered as payment institutions
in Denmark (Nets Denmark), in Finland (Nets
Denmark A/S, Finnish Branch, Checkout Finland
OY and Paytrail OY) and in Poland (eCard
S.A., PayPro S.A. and BillBird S.A.). Therefore,
such subsidiaries and branches are subject to
minimum capital requirements imposed by local
authorities.
Share capital
Note 5.1
Funding and
capital structure
Section 5:
This section includes disclosure information related
to the equity and borrowings of the Group. In addi-
tion, the section includes financial risk management
information related to the borrowings in the form of
interest rate and funding risk.
In this section
. Share capital
.
Borrowings and related risks
.
Leases
.
Net financials
.
Interest risk management
.
Other Liabilities
.
Commitments, contingencies and collaterals
52/77
Nets A/S Financial statements Section 5
Share capital (continued)
Note 5.1
Borrowings and related risks
Significant accounting policies
FINANCIAL LIABILITIES
All financial liabilities are recognised initially at
fair value and, in the case of loans and borrow-
ings and payables, net of directly attributable
transaction costs.
The Group’s financial liabilities include trade and
other payables, clearing-related liabilities, loans
and borrowings including bank overdrafts and
financial guarantee contracts.
Loans and borrowings
This is the category most relevant to the Group.
After initial recognition, interest-bearing loans
and borrowings are subsequently measured at
amortised cost using the effective interest rate
method. Gains and losses are recognised in the
income statement when the liabilities are dere-
ognised as well as through the EIR amortisation
process. This category generally applies to
interest-bearing loans and borrowings.
Derecognition
A financial liability is derecognised when the
obligation under the liability is discharged or
cancelled or expires. When an existing financial
liability is replaced by another from the same
lender on substantially different terms, or the
terms of an existing liability are substantially
modified, such an exchange or modification is
treated as the derecognition of the original lia-
bility and the recognition of a new liability. The
difference in the respective carrying amounts is
recognised in the income statement.
Note 5.2
Number of
shares
(')
Nominal
value
(EURm)
Number of
shares
(')
Nominal
value
(EURm)
Share capital
Share capital as at 1 January , . , .
Share capital as at 31 December , . , .
The share capital of Nets A/S was established on 5 February 2016. During 2016 the share capital was increases in
connection with an IPO to a total number of 200,411,094. In 2019 502,358 treasury shares were cancelled. The share
capital now consists of 199,908,736 shares each with a nominal value of DKK 1, giving a
total share capital of DKK 199,908,736.
53/77
Nets A/S Financial statements Section 5
LOANS AND BORROWINGS
The Group has a EUR 220 million Senior Notes
outstanding, with parent-guarantee and security
pro-vided by Nets A/S.
The Senior Notes (EUR 220 million) are issued
by Nassa Topco AS as an indirect subsidiary of
Nets Holdco 1 ApS.
REPAYMENT OF EXISTING DEBT IN RELATION
TO THE LEVERAGED BUY OUT FACILITIES
AND DE-LISTING
In February 2018 the shareholders Nets A/S
accepted the public takeover offer by Nets
Holdco 5 AS, which resulted in the removal of
Nets A/S’ shares from trading and official listing
on Nasdaq Copenhagen A/S. As a part of the
takeover all existing term loans in Nets A/S and
its subsidiaries were refinanced. This resulted
in repayment of all term loans in Nets A/S and
its subsidiaries, leaving only the Notes and the
RCF as external borrowings in Nets A/S and its
subsidiaries.
Adjacent to this transaction Nassa Topco AS is-
sued a tender to redeem the Senior Notes prior
to maturity. This option was exercised by 45.1%
of the noteholders, which resulted in a repay-
ment of EUR 180 million bringing the notional of
the Senior Notes down from EUR 400 million to
EUR 220 million.
MERGER WITH NEXI SPA AND REFINANCING
On 1 July 2021 Nets A/S’ ultimate parent com-
pany, at the time, Nets Topco 2 S.à.r.l. merged
with the Italian company Nexi S.p.A. As part of
the merger a euro denominated revolving credit
facility (“RCF”) expiring in 2024 of EUR 240m,
which Nets A/S previously had access to draw
on, was repaid in full and terminated.
LOANS FROM PARENT COMPANY
The Group has entered into two intra-group loan
agreements with an indirect parent company
from the wider corporate group above Nets A/S.
These agreements are a consequence of the
LBO and delisting of Nets A/S, as well as M&A
activities. The loans consist of one five-year
loan (EUR 330 million) and one two-year loan
(EUR 99 million).
Borrowings and related risks (continued)
Note 5.2
CLEARING WORKING CAPITAL FACILITIES
In addition to the Senior Notes, the Group has
separate credit lines available for clearing
working capital purposes; EUR 50 million on
a committed basis and EUR 105 million on an
uncommitted basis. In addition, a EUR 75 million
money market line is available on an un-com-
mitted basis. On 31 December 2022, the over-
draft facilities for clearing working capital were
undrawn (2021: EUR 0 million), leaving EUR
155 million undrawn (2021: EUR 155 million). In
addition, the Group has three intra-day facilities
available at relationship banks (EUR 400 million,
EUR 105 million and NOK 400 million).
54/77
Nets A/S Financial statements Section 5
Interest rate
EURm Nominal Effective
Year of
maturity Currency
Available
facility
Drawn
amount
Amount
hedged
Carrying
amount
Carrying
amount
Term and maturity of the Group's
interest-bearing loans and borrowing
Senior Notes .% .% EUR . . - . .
Credit Facility WIBOR + .% .% PLN . - - - -
IC Loan (NOK) NIBOR
1
+ .% .% NOK - - - - .
IC Loan 2 (EUR) EURIBOR
1
+ .% .% EUR . . - . .
IC Loan 5 (EUR) .% .% EUR . . - . .
IC Loan 6 (EUR) .% % EUR - - - - .
Total long term borrowings (non-current liabilities) . ,.
Overdraft Facility (clearing-related balances)
2
IBOR + .% .% Multi . - - - -
Money Market (clearing-related balances) Multi . - - - -
Total short-term borrowings (current liabilities) – Included in own cash calculation - -
Total loans and borrowings . ,.
1.
For the Revolving Credit Facility, Intercompany Loans there is a floor of 0.0% on the EURIBOR and NIBOR.
2.
Overdraft facility for clearing working capital ("CWC") with commitment of EUR 155 million in bank lines.
Borrowings and related risks (continued)
Note 5.2
EURm
Changes in total loans and Borrowings
Total loans and borrowings, as at 1 January ,, ,.
Repayment of borrowings - (.)
Proceeds from shareholderloans - .
Repayment of shareholderloans (.) (.)
Conversion of debt to equity (.) -
Repayment of overdraft facility - (.)
Capitalized interests . -
Exchange rate adjustment (.) .
Total loans and borrowings as at 31 December . ,.
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Nets A/S Financial statements Section 5
EURm
Carrying
amounts
Contractual
cash flow < year
-
years
-
years > years
Maturity
Senior Notes . . . . - -
Loan from Group enterprises . . . . . -
Total . . . . . -
EURm
Carrying
amounts
Contractual
cash flow < year
-
years
-
years > years
Maturity
Senior Notes . . . . - -
Interest-Bearing Loan from owner . ,. . . . -
Total ,. ,. . . . -
The maturity analysis is based on undiscounted cash flows, including estimated interest. Interest is included based on
current rates.
EURm
Net interest-bearing debt
Total long term borrowings exclusive of lease liabilities
(non-current liabilities) . ,.
Capitalised debt costs included in carrying amount . .
Own cash (.) (.)
Net interest-bearing debt . ,.
EURm Property Equipment
Lease assets
Lease assets as at 1 January 2022
. . .
Additions
. . .
Depreciation (.) (.) (.)
Currency translation - (.) (.)
Total lease assets as at 31 December 2022 . . .
Borrowings and related risks (continued) Leases
The Group has entered into a number of lease
agreements related to equipment. The leasing
period is 3–12 years and none of the agree-
ments include conditional payments. Some of
the agreements give the Group an option to pur-
chase the assets at a price lower than or equal
to the assets’ expected fair value at the date
the option becomes exercisable, while others
give the Group an option to extend or renew the
agreement.
Note 5.2 Note 5.3
EURm Property Equipment
Lease assets
Lease assets as at 1 January 2021 . . .
Additions . . .
Depreciation
(.) (.) (.)
Currency translation (.) (.) (.)
Total lease assets as at 31 December 2021 . . .
56/77
Nets A/S Financial statements Section 5
EURm
Lease liabilities
Commitments in relation to lease liabilities are payable as follows:
Less than 1 year . .
1-5 years . .
More than 5 years . .
Minimum lease payments . .
Future finance charges (.) (.)
Recognised as a liability . .
The present value of the lease liabilies is as follows:
Less than 1 year . .
1-5 years . .
More than 5 years
. .
Minimum lease payments . .
EURm
Lease, Other disclosures
Interest expenses, lease liabilities (.) (.)
Total Cash outflow (.) (.)
Expense of Short team leases - -
Leases (continued)
Note 5.4
EURm
Financial income
Net foreign exchange gains . -
Other income etc. - -
Total financial income, exclusive of refinancing costs . -
Financial expenses
Interest expense (.) (.)
Interest expense to Parent Company (.) (.)
Interest expense lease liabilities (.) (.)
Net foreign exchange loss - (.)
Fair value adjustment of financial liabilities - (.)
Amortisation of transaction costs (.) (.)
Other fees etc. (.) (.)
Settlement of interest swaps - (.)
Total financial expenses, exclusive of refinancing costs (.) (.)
Financial income and expenses, net . (.)
Net financials
Significant accounting policies
FINANCIAL ITEMS
Financial income and expenses comprise inter-
est income and expenses, realised and unreal-
ised gains, and dividends, losses on transactions
denominated in foreign currencies, amortisation
of loan costs and securities and subsequent
changes to contingent acquisition costs.
57/77
Nets A/S Financial statements Section 5
Commitments, contingencies and collaterals
Other Liabilities
CONTINGENCIES
The Group is engaged in certain litigation
proceedings. In the opinion of Management,
settlement or continuation of these proceedings
is not expected to have a material effect on the
Group’s financial position, operating profit or
cash flow.
put-options clauses in the various agreements
based on Management best view on key input
to estimate the discounted future cashflow
obligations.
Significant accounting policies
COMMITMENTS
The Group has entered into a number of long-
term service agreements.
Other liabilities consist of deferred considera-
tions of EUR 6.6 million and Put-option liabilities
of EUR 14.7 million related to the Groups merger
and acquisition activities. Liabilities has been
measured in accordance with the earn-outs/
Note 5.7
Note 5.6
EURm
Variable,
non-contractual
Contractual
variable rates
< month Total
Exposure to changes in
interest rates
Cash and cash equivalents . - .
Bank Loans - . .
Overdraft Facilities - - -
Net . . .
EURm
Probable
change in
interest
Hypothet-
ical impact
on result for
the year
Hypothet-
ical impact
on equity
Probable
change in
interest
Hypothet-
ical impact
on result for
the year
Hypothet-
ical impact
on equity
Borrowings 1 p.p. - - 1 p.p. 5 -
Interest risk management
The Group is exposed to interest rate risk on
loans, credits and cash balances as well as mis-
matches on maturities between loans and cash,
resulting in variable interest cash flows. The
A probable change in interest rates compared to
the interest as at the balance sheet date would
have the following hypothetical impact on profit
An increase in the interest rate of 1 p.p. would
only affect result for the year with regards to
the unhedged borrowings in EUR and NOK and
the prior years Revolving Credit Facility.
Group’s loan arrangements are based on vari-
able interest rates. Cash held at variable rates
partly offsets risk arising from changing interest
rates on the Group’s loans and credits.
An increase in the interest rate of 1 p.p. would
only affect equity with regards to float to fixed
rate hedging certificates.
Note 5.5
before tax and the Group’s equity, based on the
exposure of balances as at 31 December.
58/77
Nets A/S Financial statements Section 6
Significant accounting policies
INCOME TAXES
Tax for the year comprises current income tax,
change in deferred tax and adjustments from
prior years. Tax is recognised in the income
statement except to the extent that it relates
to items recognised in other comprehensive
income or equity.
The tax rates and tax laws used to compute the
amount are those that are enacted, or sub-
stantively enacted, as at the reporting date in
the countries where the Group operates and
generates taxable income. Deferred tax arises
due to temporary differences between the
carrying amount in the consolidated financial
statements and the tax base of assets and
liabilities as at the balance sheet date. Deferred
tax is not recognised for temporary differences
arising on the initial recognition of goodwill and
other items where amortisation for tax purposes
is disallowed.
Deferred tax assets are recognised if they can
be offset against deferred tax in other consol-
idated enterprises or if it is probable that they
can be utilised in future earnings.
Deferred tax is measured on the basis of the tax
rules and tax rates in the respective countries
that will be effective under the legislation as at
the balance sheet date when the deferred tax is
expected to be realised or the liability settled.
Changes in deferred tax as a result of changes
in tax rates are recognised in the consolidated
income statements except for the effect of items
recognised directly in Other comprehensive
income.
Deferred tax assets and liabilities are offset in
the Consolidated statement of financial position
if the Group has a legally enforceable right to
offset and the deferred tax assets and liabilities
relate to the same legal tax entity.
The companies in the Group are taxed under the
on-account tax scheme. Interest/refunds relat-
ing to the tax payment are included in interest
income and expense and similar items.
Income and deferred income taxes
Note 6.1
Tax and Governance
This section includes disclosures that relate to the
Group’s Tax and Governance policies.
Section 6:
In this section
.
Income and deferred income taxes
.
Related party transactions
.
Share-based Payment
.
Fee to statutory auditors
59/77
Nets A/S Financial statements Section 6
EURm
Income taxes expensed
Current tax on result for the year (.) (.)
Deferred tax on result for the year . .
Adjustments related to previous years – current tax
(.) .
Income taxes in the Income statement (.) (.)
EURm
Income taxes paid
Income taxes paid in Denmark (.) (.)
Income taxes paid outside Denmark (.) (.)
Total income taxes paid (.) (.)
Income and deferred income taxes (continued)
Key accounting estimates and judgements
DEFERRED TAX ASSETS
The Group recognizes deferred tax assets
including the expected tax value of tax loss
carry-forward if Management assesses that
these tax assets can be offset against positive
taxable income in the near future. This judge-
ment is made annually and is based on budgets
and business plans for coming years, including
planned commercial initiatives.
As of 31 December 2022, the carrying amount
of the deferred tax assets was EUR 36.5 million
(2021: 25.5 million) and unrecognized tax losses
amounted to EUR 7.0 million (2021: EUR 6.8
million)
EURm
Result before tax . (.)
Income tax expense calculated at domestic tax rate (.) .
Deviation in foreign subsidiaries' tax rates compared with Danish tax rate . .
Permanent differences
1
(.) (.)
Not recognised tax losses utilised or capitalised (.) (.)
Currency translation adjustment . (.)
Other taxes (.) -
Income tax expense recognised in the income statement (.) (.)
1
Permanent differences mainly include non-deductible M&A expenses and non-deductible finance cost.
EURm
Computation of effective tax rate percentage
Statutory corporate income tax rate in Denmark .% .%
Deviation in foreign subsidiaries' tax rates compared with Denmark tax rate (.%) .%
Permanent differences
1
.% (.%)
Not recognised tax losses utilised or capitalised .%) (.%)
Currency translation adjustment (.%) (.%)
Other taxes .% -%
Effective tax rate .% (.%)
The tax on the Group's result before tax differs from the theoretical amount that would arise using
the weighted average tax rate applicable to profits of the consolidated entities as follows:
Note 6.1
60/77
Nets A/S Financial statements Section 6
EURm
Intangible
assets
Plant &
equipment
Other receiv-
ables
Employee
benefits
obligation
Deferred tax
losses carried
forward Total
Development in deferred income tax assets and liabilities
Net deferred tax assets/(liabilities) as at 1 January (.) . . . . (.)
Deferred tax on result for the year . . . - - ,
Additions from aquisitions - - (.) . . (.)
Currency translation adjustment . - - - - .
Net deferred tax assets/(liabilities) as at 31 December (.) . . . . (.)
Classified as follows:
Deferred tax asset as at 31 December .
Deferred tax liability as at 31 December .
Income and deferred income taxes (continued)
Note 6.1
EURm
Intangible
assets
Plant &
equipment
Other receiv-
ables
Employee
benefits
obligation
Deferred tax
losses carried
forward Total
Development in deferred income tax assets and liabilities
Net deferred tax assets/(liabilities) as at 1 January (.) . . . . (.)
Deferred tax on result for the year . . . (.) (.) .
Adjustment to previous year tax (.) . . . (.) (.)
Currency translation adjustment . . - - (.) -
Net deferred tax assets/(liabilities) as at 31 December (.) . . . . (.)
Classified as follows:
Deferred tax asset as at 31 December .
Deferred tax liability as at 31 December .
61/77
Nets A/S Financial statements Section 6
EURm
Board of
Managers
Key
Personnel Total
Board of
Managers
Key
Personnel* Total
Fixed base salary (.) (.) (.) (.) (.) (.)
Bonus (.)** (.)** (.) - (.)*** (.)
Pensions (.) (.) (.) - (.) (.)
Benefits - (.) (.) - (.) (.)
Total remuniration (.) (.) (.) (.) (.) (.)
* Includes Key Personnel that is part of the discontinued operations.
** In 2022, the figure contains elements of retention programmes and other one off elements
*** In 2021, the figure contains elements of exit bonuses and other one off elements.
Related party transactions
RELATED PARTY TRANSACTIONS
As at 31 December 2022 the Group was 100%
owned by Nets Holdco 5 AS. The ultimate parent
of the Group is Nexi S.p.A. (Italy).
Related parties with significant influence are
the Board of Managers, Key Personnel and their
related parties. Furthermore, related parties are
companies in which the above persons have
significant interests, as well as associates of
the Group. All transactions with related parties
are made on arm's length terms except the pre-
ferred equity certificates as described in Note
5.2 and 7.1.
Transactions with associated companies, com-
prise mainly administrative services amounting
to EUR 2.2 million.
There were no transactions with members of the
Board of Managers and other Key Personnel,
other than remuneration, and furthermore, no
loans were granted to the Board of Managers or
other Key Personnel in 2022.
REMUNERATION OF THE BOARD OF
MANAGERS AND KEY PERSONNEL
Short-term benefits included fixed-base salary
and accrued cash bonuses designed to incentiv-
ise individual performance and the achievement
of a number of predefined short-term functional
and individual business targets linked to goals in
the Group’s balanced scorecard.
At year-end 2022, Key Personnel consisted of
seven members (2021: eight members).
In recent years, certain employees of the
Group participated in a management equity
programme which allowed them to acquire
shares in the previous parent company, Nets
TopCo 1 S.à r.l. The investment was made at fair
market value at the time of investment in the
programme and therefore no benefit, hence,
there is no expenditure and therefore no effect
on either the balance sheet or on the income
statement of the Group.
In connection with the closing of the merger
with the Italian based Nexi-Group the shares
were converted into shares in the listed entity,
Nexi S.p.A., with a lock-up period.
Note 6.2
62/77
Nets A/S Financial statements Section 6
Share-based payment
Accounting policies
The all Employee Share programme (2019)
is accounted for on an accrual basis over the
vesting period. Employee Share programme
has been measured at the fair value of the Nets
Group at the launch date of the programme
times the probability of vesting. Share options
issued were measured at fair value at the date
of granting times the probability of vesting. The
total amount expensed over the vesting period
is determined by reference to the value of the
shares and options granted, excluding the
impact of any non-market vesting conditions.
The value was fixed at grant date. Non-marked
vesting conditions is included in assumptions
about the number of shares and options that is
expected to vest. Any impact of adjustments to
estimates is recognised in the income statement
and in a corresponding adjustment to Equity
over the remaining vesting period. Adjustments
relating to prior years are included in the in-
come statement in the year of adjustment.
EMPLOYEE SHARE PROGRAMME
In August 2019 an all Employee share program was
announced with the purpose of giving all employ-
ees of the Nets Group the opportunity to become
co-owners of the Nets Group. Under the program
employees could invest in the Nets Group and have
their investment matched with two free shares if
participating employees are employed when the
Nets Group is either sold or if its shares are offered
in an initial Public Offering. The matching shares
were granted at 13 December 2019 and were ex-
pected to vest 36 months from grant date. The total
value of the programme at grant date amounts to
EUR 7.9 million. In connection with the Nexi trans-
action a change of control clause was triggered in
2021 and the remaing value of the programme was
recognised. The cost recognised in 2022 amounts
to EUR 0.0 million (2021: 6.3 million).
LONG TERM INCENTIVES
In 2021, following the merger with Nexi Group,
the Nets Group adopted Nexi Group’s medium/
long-term incentive Plan. The first LTI Plan is
structured with a three-year duration (2021-
2023) and envisages the assignment of rights to
receive ordinary shares in Nexi S.p.A. at vesting
(31 December 2023). In 2022 Nexi Group ap-
proved the second LTI Plan which is divided into
three annual cycles (2022-2024, 2023-2025,
2024-2026). The first tranche of this cycle has
already been assigned.
The rights are not subject to any voting rights or
dividend distribution. The rights to be assigned
in the context of the LTI plan are divided up into:
• Performance Share Rights, i.e. the rights to
receive ordinary shares in the Company,
which accrue (and therefore the attribution
of the related shares to the employee) only
upon achieving predetermined business per-
formance objectives, referring to a specific
period of time; and
Note 6.3
• Restricted Share Rights, i.e. the rights to receive
ordinary shares in the Company, which accrue
(and therefore the attribution of the related
shares to the employee) regardless of whether
or not the predetermined business perfor-
mance objectives are achieved. These rights
will accrue after the vesting period, subject to
the beneficiary remaining in the Company.
A condition for the accrual of the rights and,
therefore, the attribution of the shares for both
the types described above is that the employee
remains in service until the delivery date of the
share attribution letter. More specifically, with
reference to Performance Share Rights:
• accrual is first and foremost subject to
achieving - at the end of the Vesting Period
of each Cycle - at least 80% of the Operating
Cash Flow Target (the “Entry Gate”);
• once the Entry Gate is satisfied, accrual of Per-
formance Share Rights is also subject to achiev-
ing specific objectives at the end of the related
Vesting Period, comprising two components:
• a market-based component, linked to the
achievement of objectives related to the
performance of the market price of Nexi
shares with respect to a benchmark, during
the measurement period (weighing for 50%).
The benchmark is determined as the math-
ematical average of three market indicators
identified in the Plan regulation;
• a non-market-based component, linked to
the achievement of the Company’s perfor-
mance objectives in terms of Operating Cash
Flow (weighing for 50%)
Changes in the number of rights assigned are
reported below:
Description
No. of Performance
share rights
No. of Restricted
Share rights Total
Outstanding rights at the grant date , , ,,
Accrued rights (,) (,) (,)
Forfeited rights in 2021 and 2022 (,) (,) (,)
Outstanding rights at 31 december 2022 , , ,
The rights assigned were measured, reflecting
the financial market conditions valid as at the
grant date. Determination of the total plan value,
as established by IFRS 2, is impacted by the
number of rights that will accrue in accordance
with the rules set out by the performance and
Fair Value conditions of each right. Measure-
ment was carried out considering the two
components of the Performance Shares and Re-
stricted Shares included in the plan, separately.
63/77
Nets A/S Financial statements
EURm
Remuneration to Auditors
(PwC as elected by the Annual General Meeting)
Statutory audit (.) (.)
Non-statutory audit services:
Other assurance engagements (.) (.)
Tax advisory services - (.)
Other services - .
Total non-statutory audit services (.) (.)
Total (.) (.)
Fee to statutory auditors
Note 6.4
T the fees for services other than the statutory
audit of the financial statements provided by
PwC member firms to the Group consists of
services related to assurance services required
by local law and assurance reports according to
ISAE 3000 and ISAE 3402.
Moreover, within the Performance Share com-
ponent, consideration was given to the presence
of the aforesaid specific objectives. More
specifically, the market-based component was
estimated using the Monte Carlo Method, a sto-
chastic simulation technique which, based on a
set of starting conditions, produces a wide array
of outcomes within a specified time horizon.
Starting conditions for the simulation include an
expected dividend yield of zero for the 2019-
2021 time interval so as to also reflect the Board
of Directors’ resolutions dating February 13,
2019 concerning the distribution of dividends.
Based on market sources at the reference date,
other starting conditions include a risk-free rate
in Nexi share returns of 1% p.a. and a share price
volatility of 25% for the first tranche and 47% for
the second tranche of the first LTI Plan and 42%
and 37% for the first tranche of the second LTI
Plan (reasonable estimates based on historical
volatility as at the measurement date).
At the grant date the simulation delivered a
unit value of Euro 20.17 for shares assigned in
July 2021,and Euro 17,.63 for those assigned in
October 2021, Euro 7.41 for those assigned in
July 2022 and Euro 9.57 for those assigned in
October 2022. As for the likelihood of benefi-
ciaries leaving, the annual exit probability was
assumed to be zero. In accordance with IFRS 2,
the non-market-based component is a condition
that rather than be measured at the time of
assignment is to be updated periodically at each
reporting date, so as to take into account the
expectations in relation to the number of rights
that may accrue. For these components the unit
Fair Value is Euro 18.22 for shares assigned in
July 2021, and Euro 17.03 for those assigned in
October 2021, Euro 7.842 for those assigned in
July 2022 and Euro 8.514 for those assigned in
October 2022.
The overall cost of the plan for 2022 was about
Euro 5 million.
During 2021, Mercury UK and the other sponsor
of Nexi adopted some incentive plans based
on the shares of Nexi SpA (“Nexi”) and with a
vesting period until July 1, 2024.
These plans are reserved for selected employ-
ees (the “Beneficiaries”) of group companies.
These plans provide for additional shares as-
signable to employees depending on the market
price of Nexi shares.
On the basis of the provisions of IFRS 2, al-
though not having made any commitments to
Beneficiaries, as Nets Denmark A/S is the entity
that receives the services (the “receiving entity”),
it must recognise, in its financial statements, the
Plans in question on the basis of the account-
ing rules envisaged for the “plans settled with
equity instruments”.
Share-based payment (continued)
The fair value was determined, for base shares,
considering the forward price, discounted at the
valuation date, of Nexi shares at the expiry of
the vesting period. As for additional shares, the
Monte Carlo method was adopted in order to
simulate, for an adequate number of scenarios,
the number of additional shares and the price of
Nexi stocks. In this context, the implicit volatility
used was that obtained from info-providers as
relevant to Nexi stock options with time-to-ma-
turity set at equal to that of the plan.
The total rights (conventionally measured in
terms of number of based shares) outstanding
at 31 December 2022, relating to the aforemen-
tioned plans are 32.864 and the overall cost of
the Plans for 2022 is Euro 0,2 million
64/77
Nets A/S Financial statements Section 7
FAIR VALUE MEASUREMENT
HIERARCHY
The carrying values and fair values are identical,
except for bank loans measured at amortised cost.
Refer to Note 5.2 for carrying amounts and nominal
value of bank loans. Fair value of bank loans is
assumed to be similar to the nominal value.
THE METHODS AND ASSUMPTIONS ARE
AS FOLLOWS:
• the fair value of financial assets and liabilities
traded in active markets is based on quoted
market prices as at the balance sheet date
(Level 1).
• the fair value of financial assets and liabilities
is based on inputs other than quoted prices
included in Level 1 that are observable either
directly or indirectly i.e. floating rate bank
loans (Level 2).
• the fair value of financial assets and liabilities
which are highly liquid and have a short
duration is estimated to have a fair value that
is identical with the book value (Level 3).
Classification of financial assets
and financial liabilities
Note 7.1
Other disclosures
Included in this section are disclosures which are
material to the financial statements from either a
quantitative or a qualitative perspective, but which
do not directly relate to a specific theme section.
Section 7:
In this section
. Classification of financial assets and financial
liabilities
.
Standards issued but not yet effective
.
Events after the balance sheet date
.
Companies in the Group
.
Financial definitions
65/77
Nets A/S Financial statements Section 7
Classification of financial assets and financial liabilities (continued)
Note 7.1
EURm
Financial assets and
liabilities measured at
fair value
Financial assets
and liabilities
measured at
amortised cost Total
Financial assets and liabilities
Trade and other receivables - . .
Contract assets - . .
Settlement assets - . .
Receivables from Group enterprises - . .
Cash at bank and on hand - . .
Other financial assets
3
. - .
Total financial assets . ,. ,.
Borrowings - (.) (.)
Liabilities to Group enterprises - (.) (.)
Bank overdraft - - -
Trade and other payables - (.) (.)
Contract liabilities - (.) (.)
Merchant creditors - (.) (.)
Settlement obligations - (.) (.)
Other liabilities
2, 4
(.) - (.)
Lease liabilities - (.) (.)
Other financial liabilities
1
(.) - (.)
Total financial liabilities (.) (,.) (,.)
Total net financial assets/(liabilities) (.) (.) (.)
1
Level 1 in the fair value hierarchy.
2
Level 3 in the fair value hierarchy. The valuation is based on expected future cash flows discounted to its present value.
3
Level 3 in the fair value hierarchy. Ownership in VN Norge AS is considered to be a financial asset in line with shares and
other securities. The valuation is based on input from VN Norge AS.
4
Level 2 in the fair value hierarchy.
EURm
Financial assets and
liabilities measured at
fair value
Financial assets
and liabilities
measured at
amortised cost Total
Financial assets and liabilities
Trade and other receivables - . .
Contract assets - . ,
Settlement assets - . .
Receivables from Group enterprises - - -
Cash at bank and on hand - . .
Other financial assets
3
. - .
Total financial assets . . ,.
Borrowings - (.) (.)
Liabilities to Group enterprises - (,.) (,.)
Bank overdraft - - -
Trade and other payables - (.) (.)
Contract liabilities - (.) (.)
Merchant creditors - (.) (.)
Settlement obligations - (.) (.)
Other liabilities
2, 4
(.) - (.)
Lease liabilities - (.) (.)
Other financial liabilities
1
(.) - (.)
Total financial liabilities (.) (,.) (,.)
Total net financial assets/(liabilities) (.) (,.) (,.)
1
Level 1 in the fair value hierarchy.
2
Level 3 in the fair value hierarchy. The valuation is based on expected future cash flows discounted to its present value.
3
Level 3 in the fair value hierarchy. Ownership in VN Norge AS is considered to be a financial asset in line with shares and
other securities. The valuation is based on input from VN Norge AS.
4
Level 2 in the fair value hierarchy.
66/77
Nets A/S Financial statements Section 7
Standards issued but not yet effective
The standards and interpretations which have
been issued, but are not yet effective, up to the
date of issuance of the Group’s financial state-
ments, and which are considered to have an
effect on the Group, are disclosed below.
New standards and amendments which are not
yet effective and which are not considered to
have an impact on the Group are not disclosed.
The Group intends to adopt these standards, if
applicable, when they become effective.
Currently there are no new standards, amend-
ments and interpretations which have been
adopted by the IASB and adopted by the EU,
which are relevant to Nets.
Note 7.2
Events after the balance sheet date
No significant events affecting the Annual Re-
port for 2022 have occurred subsequently to 31
December 2022.
Note 7.3
67/77
Nets A/S Financial statements Section 7
Company Structure Currency Ownership
Finland
Paytrail Oyj Subsidiary EUR %
Paytrail Technology Oy Subsidiary EUR %
Checkout Finland Oy Subsidiary EUR %
Poplatek Oy Subsidiary EUR %
Poplatek Payments Oy Subsidiary EUR %
Poland
P24 Dotcard Sp. z o.o. Subsidiary PLN %
PayPro S.A. Subsidiary PLN %
eCard S.A. Subsidiary PLN %
Rementi Investments S.A. Subsidiary PLN %
Centrum Rozliczen Elektronicznych Polskie ePlatnosci S.A. Subsidiary PLN %
Polskie ePlatnosci Sp. z o.o. Subsidiary PLN %
BillBird S.A. Subsidiary PLN %
TopCard Sp. z o.o. Subsidiary PLN %
Team4U Sp. z o.o Subsidiary PLN %
Estonia
Nets Estonia AS Subsidiary EUR %
Company Structure Currency Ownership
Parent company
Nets A/S
Denmark
Nets Denmark A/S Subsidiary DKK %
Nets DanID A/S Subsidiary DKK %
Nets Cards Processing A/S Subsidiary DKK %
Signaturgruppen A/S Subsidiary DKK %
Storebox ApS Subsidiary DKK %
e-Boks A/S Associate DKK %
Norway
Nassa Topco AS Subsidiary NOK %
Sweden
Nets Sweden AB Subsidiary SEK %
Companies in the Group
Note 7.4
68/77
Nets A/S Financial statements Section 7
Key figures and financial ratios stated in the consolidated financial statements have been calculated
as follows:
Growth in revenue, reported Absolute revenue growth / Revenue in comparative period
Growth in revenue, underlying
Organic growth is a measure of growth adjusting for
commercial rebasing of issuer contracts and non-recurring
eID revenue
EBITDA b.s.i. * EBITDA before special items
EBITDA before special items margin, % * EBITDA before special items / Net revenue
Special items * As defined in Note 2.2
EBITDA *
Earnings before interest, tax, depreciation, amortisation and
impairment losses
Underlying depreciation and amortisation
Depreciation & amortisation adjusted for amortisation of
business combination intangibles & impairment losses
Adjusted EBIT *
EBITDA before special items and adjusted for underlying
depreciation and amortisation
EBIT Earnings before interest and tax (operating profit)
Capital expenditure (CAPEX)
Purchase of intangible assets and plant & equipment and
capitalised development projects for the year, excluding
acquisition of subsidiaries
Cash flow from operating activities
excl. clearing-related balances Operating cash flow excluding clearing-related cash flow
Narrow working capital As defined in Section 3
Operating free cash flow
Cash flow from EBITDA adjusted for change in narrow working
capital and CAPEX
Own cash
Cash and cash equivalents excluding clearing-related balances
and other proceeds received in cash to be passed through
Net interest bearing debt (NIBD)
Interest bearing debt net of own cash and clearing-related
borrowings
Cash conversion ratio
Operating free cash flow adjusted for special items / EBITDA
before special items
Clearing-related balances As defined in Section 3
Equity ratio Equity of the Group / Total assets
Financial definitions
Note 7.5
*This key figure, ratio or element thereof is a non-IFRS financial measure.
69/77
Nets A/S Financial statements
Income statement for the Parent Company
EURm Note
Revenue
. .
External expenses
(.) (.)
Staff costs
(.) (.)
Amortisation
(.) (.)
Operating result (EBIT) (.) (.)
Dividend from subsidiaries
- ,.
Financial income
. .
Financial expenses
(.) (.)
Net financials (.) ,.
Result before tax
(.) ,.
Income taxes
. .
Result for the year (.) ,.
Proposed appropriation of result
Dividend
- ,.
Retained earnings
(.) (.)
Total appropriation (.) ,.
Parent Company
Financial statements
In this section
Note 1 Accounting policies 72
Note 2 Revenue 73
Note 3 Staff costs 73
Note 4 Net financials 73
Note 5 Intangible assets 73
Note 6 Investment in subsidiaries 74
Note 7 Trade and other payables 74
Note 8 Contingent liabilities 74
Note 9 Related party transactions 74
70/77
Nets A/S Financial statements
Balance sheet for the Parent Company
EURm Note
Assets
Non-current assets
Intangible assets
. .
Deferred tax assets
. -
Investment in subsidiaries ,. ,.
Total non-current assets
,. ,.
Current assets
Prepayments
. -
Receivables from Group enterprises
. .
Other financial assets
- .
Current tax receivables
. .
Cash and cash equivalents
. .
Total current assets . .
Total assets ,. ,.
EURm Note
Equity and liabilities
Equity
Share capital
. .
Reserves ,. ,.
Total equity
,. ,.
Non-current liabilities
Deferred tax liabilities . .
Total non-current liabilities
. .
Current liabilities
Trade and other payables
. .
Payables to Group enterprises
. .
Total current liabilities . .
Total liabilities . .
Total equity and liabilities ,. ,.
71/77
Nets A/S Financial statements
Statement of changes in equity
for the Parent Company
EURm Share capital
Currency
translation
reserve
Retained
earnings Total equity
2022
Equity as at 1 January
. . ,. ,.
Net result for the year
- - (.) (.)
Contribution in kind
- - . .
Share based payment
- - . .
Total changes in equity - - . .
Equity as at 31 December . . ,. ,.
2021
Equity as at 1 January
. . ,. ,.
Net result for the year
- - ,. ,.
Currency translation adjustment
- . - .
Dividend
- - (,.) (,.)
Share based payment
- - . .
Total changes in equity - . (.) (.)
Equity as at 31 December . . ,. ,.
Accounting policies
The financial statements of the Parent Company
have been prepared in accordance with the
Danish Financial Statements Act (Class
medium-sized C).
The accounting policies for the financial
statements of the Parent Company are the same
as for the consolidated financial statements with
the additions described below. For a description
of the accounting policies of the Group, please
refer to Section 1 in the consolidated financial
statements.
SUPPLEMENTARY ACCOUNTING
POLICIES FOR THE PARENT COMPANY
Financial assets
In the financial statements of the Parent
Company, investment in subsidiaries and
associated companies are recorded at their
acquisition cost. The recognised value is
adjusted only if the recognised value of the
investment exceeds the recoverable amount.
Dividend or other direct payments received from
subsidiaries or associates are recognised as
income from financing and investing activities
and presented in the income statement.
Note 1
Fair value of share options issued to employees
of the subsidiaries of Nets A/S is accounted for
as a capital contribution over the vesting period,
whereby it is recorded as an addition during the
year. Payments received from subsidiaries to
compensate Nets A/S upon an employee’s
exercise of share options are, conversely,
deducted from the accumulated cost of
investments in subsidiaries.
TAX
For Danish tax purposes, all Danish entities are
assessed jointly. The Danish jointly taxed
companies are included in a Danish on-account
tax payment scheme for Danish corporate
income tax. All current taxes under the scheme
are recorded in the individual companies.
STATEMENT OF CASH FLOWS
No separate statement of cash flows has been
prepared for the Parent Company; please refer
to the consolidated statement of cash flows.
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Nets A/S Financial statements
EURm
Financial income
Net foreign exchange gains
(.) .
Interest income from Group enterprises
. .
Total financial income . .
Financial expenses
Interest expenses to Group enterprises
(.) (.)
Other fees etc.
- (.)
Total financial expenses (.) (.)
Other intangible assets
2022
EURm Software
Intangible
assets
Accumulated cost as at 1 January
.
.
Additions
.
.
Currency translation adjustment
.
.
Accumulated cost as at 31 December . .
Accumulated amortisation and write-down for impairment as at 1 January
(.)
(.)
Amortisation
(.)
(.)
Accumulated amortisation and write-down for impairment as at 31 December
(.) (.)
Carrying amount as at 31 December . .
EURm
Staff costs
Wages and salaries
(.) (.)
Bonus
(.) (.)
Share-based payment costs
(.) (.)
Pensions - defined contribution plans
- (.)
Other employee costs (.) (.)
Total employee costs for the year
(.) (.)
Average number of full-time employees
Year-end number of full-time employees
For information regarding remuneration of the Board of Directors and the Executive Management, please refer to Note
6.2 in the consolidated financial statements.
For information regarding share-based payment, please refer to Note 6.3 in the consolidated financial statements.
EURm
Group services (Wages and salaries etc)
. .
Total . .
Revenue Net financials
Intangible assets
Staff costs
Note 2 Note 4
Note 5
Note 3
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Nets A/S Financial statements
Investment in subsidiaries
Contingent liabilities
Trade and other payables
Related party transactions
Note 6
Note 8
Note 7
Note 9
EURm
Investment in subsidiaries
Accumulated cost as at 1 January ,. ,.
Addition during the year . -
Accumulated cost as at 31 December ,. ,.
Revaluation as at 1 January . .
Currency translation adjustment . .
Revaluation as at 31 December . .
Carrying amount at 31 December ,. ,.
EURm
Employee cost payable . .
Trade payables . .
Total . .
EURm
Company name Share Currency
Annual
report Equity
Profit for
the year
Nassa Topco AS % DKK ,. ,.
Total ,. ,.
Nets A/S and its Danish subsidiaries are jointly
taxed with the Danish companies in the Nets
A/S Group. The joint taxation also covers
withholding taxes in the form of dividend tax,
royalty tax and interest tax. The Danish
companies are jointly and individually liable for
the joint taxation. Any subsequent adjustments
to income taxes and withholding taxes may lead
to a larger liability. The taxes for the individual
companies are allocated in full on the basis of
the expected taxable income.
For information on pending litigation and other
contingencies, please refer to Note 5.7 in the
consolidated financial statements.
For information on transactions with related
parties, please refer to Note 6.2 in the
consolidated financial statements.
74/77
Nets A/S Financial statements Glossary
Glossary
*
Acceptance – a service that allows merchants
to accept card payments
Acquiring services (merchant acquiring) – the
act of handling credit or debit card payments on
behalf of a merchant
Artificial intelligence (AI) – intelligence exhibit-
ed by machines
Authentication – the process of recognising a
user’s identity
Avtalegiro – a service offered by Nets in
Norway for automatic invoicing and payment of
recurring bills
BankAxept – a domestic payment scheme
owned by Norwegian banks. Nets operates the
common operating infrastructure for BankAx-
ept’s debit card
BankID – a digital identity solution in Norway
operated by Nets on behalf of banks
Betalingsservice – a direct debit solution
offered by Nets to Danish corporates and their
customers
Biometrics – metrics related to human charac-
teristics, such as fingerprint, iris and face rec-
ognition or behavioural patterns such as typing
patterns, used a.o. for access control
Blockchain – a distributed ledger technology /
decentral database
Clearing – the process of reconciliation of
orders between transacting parties
CMS – Consumer Management Services
Contactless transactions – payment card trans-
actions carried out in-store without the consum-
er having to insert their card into a terminal or
enter their PIN
Dankort – the Danish domestic debit card
owned and operated by Nets
Digital identity – information on an entity used
by computer systems to represent an external
agent. That agent may be a person, organisation,
application, or device
Digital login – login details to log on to a digital
mailbox or similar
Direct debit payment – (Betalingsservice) an
instruction from a consumer to their bank,
authorising the receiver, usually a corporate, to
collect varying amounts from the consumer’s
account, provided the account holder has been
given advanced notice of the amount and date
of collection
e-commerce (electronic commerce) – a trans-
action of buying or selling online
eFaktura – Nets’ Norwegian e-billing service
Fintech – Nets and other providers of new
solutions which demonstrate innovative devel-
opment of applications, processes, products
or business models in the financial services
industry
Fraud & Dispute Services – card fraud manage-
ment and dispute handling
General Data Protection Regulation (GDPR)
(Regulation (EU) 2016/679) – a regulation
intended to strengthen and unify data protection
for individuals within the EU and which also ad-
dresses export of personal data outside the EU
Instant payments – refer to ‘real-time clearing’
Internet of Things (IoT) – machine-to-machine
communication. Payment IoT enables automatic
payment when objects are linked to the internet
Issuer processing (front-end processing) –
processing of card-based transactions on behalf
of issuing banks
Malware – short for ‘malicious software’.
Software used to disrupt computer or mobile
operations, gather sensitive information or gain
access to private computer systems
Merchant acquiring – refer to ‘acquiring ser-
vices’
MitID - a national next generation eID solution
offered by Nets to Danish citizens, corporates,
banks and the public sector on behalf of Digital-
iseringsstyrelsen
NemID – a national digital identity solution
offered by Nets to Danish citizens, corporates,
banks and the public sector on behalf of Digital-
iseringsstyrelsen
Payment processor – a company appointed by
a merchant to handle transactions from various
channels such as credit cards and debit cards,
front-end and/or back-end
PCI DSS (The Payment Card Industry Data
Security Standard) – a proprietary information
security standard for organisations that handle
branded credit cards
Phishing – the attempt to obtain sensitive infor-
mation such as usernames, password, and credit
card details by posing as a trustworthy entity in
an electronic communication
Point-of-sale (POS) – the check-out at a store
Real-time clearing (RealTime24/7) – a Nets
product allowing instant clearing and settle-
ment of payments
Robotics – the use of intelligent computer sys-
tems within areas such as fraud prevention and
customer service
Settlement – the completion of a transac-
tion, wherein the seller transfers securities or
financial certificates to the buyer and the buyer
transfers money to the seller
* Terms are explained in the context of this report
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