Annual Report 2023
Nets A/S
CVR no. 37 427 497
Adopted at the Annual General Meeting
on 8
th
May 2024
Chair of the meeting
Nets A/S Financial statements
Financial Summary
*
EURm
Income statement
Revenue, net . . . . .
EBITDA before special items . . . . .
EBITDA . . . . .
Special items (.) (.) (.) (.) (.)
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 . . . . .
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) n/a .% .% .% .%
Cash conversion ratio .% .% .% % %
Equity ratio .% .% .% .% .%
Year-end number of employees, full
time equivalant , , , , ,
* For 2023 income statement, 2023 and 2022 numbers have been restated as the Group's Digital Banking Services
Business is presented as asset held for sale
2/77
Nets A/S Performance highlights 2022
and future operator of Nets’ e-ID-solutions. IN
Groupe have demonstrated a willingness and
understanding to live up to the same high
standards we have applied over the last decade
and acknowledge and accept the sensitive
nature of our products. The completion of the
transaction is subject to customary closing
conditions and the authorisation of the Danish
government on the suitability and capabilities of
IN Groupe as their continued eID solution
provider.
Our Issuer and Digital Banking Solutions
business BankAxept signed a seven-year
extension with BankID BankAxept, the Norwe-
gian domestic scheme. Nets has managed the
processing of BankAxept transactions for thirty
years since the scheme went live in 1993. With
this extended agreement, Nets will continue its
key role in processing payments for the
domestic scheme, providing a secure and
convenient payment solution for Norwegian
consumers and merchants, and further
developing the functionality and relevance of
the domestic scheme and reinforces our
strategy of maintaining deep local expertise
and market proximity.
2023 was a busy year in the field of payments
regulations and the EU tabled a number of
payment relevant proposals that will reshape
the payments market in the coming years. It was
also the year where development accelerated
on a potential Digital Euro. We are therefore
proud to have been chosen by the European
Central Bank to develop a prototype front-end
solution to test Digital Euro payments to
physical merchants and represents our
European scale and expertise that we offer.
All of this progress took place against the
backdrop of an industry that continues to evolve
rapidly in all Nets’ markets and a European
economy facing pressures on purchasing power
caused by high levels of inflation, and on the
other the reduction of excess liquidity inherited
from the pandemic period. However, continued
synergies arising from the mergers of Nets, SIA
and Nexi coupled with the new operating model
and strategy places Nets, a part of Nexi, well
suited to achieve the ambitious growth targets
within payments.
You can read more about overall Nexi Group
performance and highlights in the Nexi Group’s
Annual Report, which can be found on the Nexi
Group’s website.
2023 reinforced the synergies of
the mergers between Nexi, SIA and
Nets to deliver on our strategic goal
to drive strong profitable growth
through European scale and market
and customer proximity.
2023 continued our journey in becoming the
European Paytech leader with deep local
capabilities and close proximity to our custom-
ers, combined with our market leading scale and
efficiencies.
We have continued to work on modernising our
infrastructure and continually reinforcing the
monitoring and security of the increasing
number of transactions handled in order to be
the gold standard for digital payments in
Europe. Additionally, the Nordic management
team was strengthened with the appointment of
Lars-Erik Tellmann as Head of the Nordics.
In 2023, we finally left the COVID-19 pandemic
and the associated restrictions behind us. Even
though soaring inflation and interest rates have
affected the economy in the post-pandemic
period, we can see that consumers’ buying
habits have started to return to normal. Online
shopping has become natural for many and is
Performance highlights
likely something most consumers will continue
with. However, it is clear that consumers
continue to want to shop in physical stores now
that society is fully open again.
Payment cards still dominate as the preferred
payment method, but we see a gradual decrease
in usage. This decline is due to the significant
increase in the use of mobile payments. Across
the markets we operate in we are seeing mobile
payments rapidly overtaking or gaining ground
on cash as the second most preferred payment
method, behind card payments. Contactless
capabilities are the major driving force behind
this transformation, with consumers favouring
their convenience and security over alternatives
such as cash or QR based mobile payment
solutions.
In Denmark, in 2023 we saw the final closure of
NemID and the full implementation of MitID.
Nets has been the principal developer of MitID,
under contract to the Danish government’s
Agency for Digitisation and the Danish Banking
Association.
In November 2023, Nets announced an
agreement with French IN Groupe to acquire its
eiD business. IN Groupe, a global leader in
trustworthy digital services, is the ideal owner
3/77
Nets A/S Performance highlights 2022
acquisitions and disposals amounted to EUR 42.1
million (2022: EUR 7.7 million) and costs related
to reorganization, restructuring and refurbish-
ment was EUR 5.0 million (2022: EUR 10.7
million). Cost arising from Share based
payments, retention programmes, one-off
losses, etc. amounted to EUR 23.5 million (in
2022: EUR 22.7 million) and primarily included
Nets Group costs of share-based payments and
other retention based bonus schemes.
EBITDA
In 2023 EBITDA amounted to EUR 180.6 million,
compared to EUR 214.9 million in 2022. The
decrease in EBITDA was driven by increase in
external costs and higher special items in 2023.
DEPRECIATION AND AMORTISATION
In 2023, underlying depreciation and amortisa-
tion were EUR 201 million, compared to EUR
199.3 million in 2022.
ADJUSTED EBIT
Adjusted EBIT calculated as EBITDA b.s.i. minus
underlying depreciation and amortisation was
EUR 235.0 million, compared to EUR 156.9
million in 2022.
NET FINANCIALS
Net financials were an income of EUR 36.8
million, compared to an income of EUR 10.8
million in 2022. Net financials were positively
impacted by foreign exchange gains driven by
intercompany debt positions in.
Interest expenses decreased to EUR 0.0 million
compared to 2022, EUR 4.7 million following
2021 refinancing of of debt, upon merger with
Nexi Group.
TAX
In 2023, taxes amounted to an income of EUR
0.4 million compared to an expense of EUR 15.1
million.
RESULT FOR THE YEAR
Result for the year was EUR 13.3 millions
compared to a result for of 2022 EUR 127.3
million. The result in 2022 was positive impacted
by one-offs from divestments of activities, while
2023 was negatively impacted from higher
external expensesand non-recurring items and
impairments of investments.
REVENUE
In 2023, net revenue was EUR 767,6 million, an
increase of 1,2% compared to 2022.
MS-business delivered solid growth of 6,2%
driven by continued volume recovery from prior
years, and strong performance in the eCom-
merce business driven by a strong product
offering in the Nordics and leverage of
integration in Poland.
Issuer & eSecurity Services declined by 11.1%
mainly from prior years divestments and
re-negotiations. The digital business area saw a
marginal decrease from ramp down of legacy
products with new solutions offsetting most of
the negative effects.
The Group will continue to strengthen the
commercialization 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 482.9
million compared to EUR 460.2 million in 2022,
an increase of 4.9%.
Cost of sales was EUR 42.6 million (5.5% of net
revenue), compared to EUR 55.6 million in 2022.
External expenses amounted to EUR 218.2
million (32.2% of net revenue) compared to EUR
215.3 million in 2022 (25.1% of net revenue). The
increase compared to 2022, was mainly driven
by higher operating expenses related to
platforms and inflations and implementation of
new operating model.
Staff costs amounted to EUR 223.9 million
(29.2% of net revenue) compared to EUR 224.8
million (29.6% of net revenue). The slight
decrease was mainly driven by lower salary
costs on projects.
Nets had 3,188 FTEs (full-time equivalent) by
the end of 2023, which is 205 more than in
2022.
EBITDA B.S.I.
In 2023, EBITDA b.s.i. decreased by 4.6% to EUR
284.7 million, compared to EUR 298.4 million in
2022. The decrease in EBITDA b.s.i. was
primarily a result of increased costs in 2023.
SPECIAL ITEMS
In 2023, special items amounted to EUR 104.1
million, an increase of EUR 20.6 million
compared to 2022. In 2023, investment in
transformation programs continued and
amounted to EUR 33.5 million (2022: EUR 42.4
million). Costs associated with business setups,
Performance highlights (continued)
4/77
Nets A/S Performance highlights 2022
Net cash outflow from financing activities in
2023, excluding clearing-related balances,
amounted to EUR 32.8 million. Payments of
lease liabilities accounted for EUR 18.5 million
(2022: EUR 15.5 million), and Net intercompany
proceeds of EUR 5.9 million which in 2022 was
payments of EUR 8.2 million.
Cash and cash equivalents as 31 December
2023 was 478.2 million compared to EUR 438.7
million in 2022.
OUTLOOK 2024
In 2024, we expect a year with soft outlook for
GDP growth and consuming spending with
single mid-digit revenue growth and improved
operating result. As part of the Nexi Group, we
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 of the company.
EVENTS AFTER THE
BALANCE SHEET DATE
No significant events affecting the Annual
Report for 2023 have occurred subsequently to
31 December 2023.
BALANCE SHEET AND CASH FLOW
Total assets at 31 December 2023, amounted to
EUR 4,494.8 million, compared to EUR 4,005.3
million at year-end 2022.
Total non-current assets amounted to EUR
2,335.3 million compared to EUR 2,402.6 million
at year-end 2022.
Total current assets amounted to EUR 2,159.5
million, compared to EUR 1,602.7 million at
year-end 2022, impacted by the development in
clearing working capital assets, driven by timing.
CLEARING WORKING CAPITAL
At 31 December 2023, clearing-related assets
(clearing debtors) amounted to EUR 1,350.6
million (2022: 869.6 million) and clearing-relat-
ed liabilities amounted to EUR 1,626. 2 million
(2022: 1,132.4 million), leading to a clearing
working capital (CWC) of negative EUR 275.6
million (positive funding)
EQUITY
Total equity was EUR 1,551.4 million compared
to EUR 1,563.6 million at the beginning of the
year. Equity was negatively impacted by the
loss for the year.
BORROWINGS & INTEREST-BEARING
LOANS TO SHAREHOLDERS
As of 31 December 2023, borrowings amounted
to EUR 640.7 million, compared to EUR 647.1
million end of 2022.
CASH FLOW
In 2023, net cash flow from operating activities,
excluding clearing working capital, was EUR
184.4 million, compared to EUR 220.1 million
prior year. The operating cash flow was
positively impacted by working capital move-
ments less interests paid and tax payments.
Cash flow investments was negative by EUR
175.7 million compared to negative EUR 129.2
million in 2022. In 2022, the intangibles
investments amounting to EUR 168.6 million
(2022: EUR 159.3 million). Investment activity
was positively impacted by proceeds received
from VISA repaying an old collateral agreement,
EUR 11.5 million
Performance highlights (continued)
5/77
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 mobile)
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 presented
strong growth based on solid organic growth
rates and targeted acquisitions in the un-
der-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
merchants’ payment flows. We enable mer-
chants to accept payments easily and without
friction, regardless of channel, to receive the
settlement 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
generates 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 solutions as the foun-
dation for growth and progress –
both in commerce and in society.
Whether it’s for buying groceries, shopping
safely on mobiles, or dealing with public
authorities, 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
operate a considerable number of payment
platforms 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 merchants,
financial institutions, public services and consum-
ers, enabling them to make and receive payments,
identify themselves, and use value-added
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 acquiring
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
national e-identity scheme MitID is offered in
close co-operation 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
7/77
Risk management is an integral
part of the way we work and
helps us understand and manage
the uncertainties inherent in our
strategy and in the day-to-day
business operations
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 aware-
ness 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,
sections 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
designed by the Nexi Group, within the areas of
risk management, security, business continuity,
GDPR, merchant acquiring credit risk, treasury
risk, anti-money laundering and competition law
compliance. The Board of Directors also
oversees the enterprise risk landscape and
compliance with board approved policy
objectives.
The organisation adopts a ‘three lines of
defence’ governance model. It is used to
structure roles, responsibilities and accountabil-
ities 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 processor for issuers in Europe, Issuer &
eSecurity Services offers complementary
services such as Account Management Services
(AMS), Risk Management Services (Fraud &
Dispute Solutions) 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 MitID, as well as digitisation services
that enable customers to simplify workflows
and processes, thereby supporting customers in
their digital transformation.
The revenue model for Issuer & eSecurity
Services is primarily transaction-based,
combined with additional volume-related fees
for additional services.
Nets A/S Management Review
8/77
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 group 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
– 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
9/77
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 was
accelerated by the Covid-19 pandemic where
digital payments were increasingly 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
services.
• Strengthening of the European value
proposition 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
institutions, corporate customers, and consum-
ers, 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-phishing, hacking, distribut-
ed denial-of-service (DDoS) or supply chain
attacks, as well as system malware or ransom-
ware attacks.
Equally important is the stability of those
platforms as they are critical for broader society
as well as for our customers, government
organisations and authorities. Potential risk
causes include insufficient application deploy-
ment and testing processes, incident manage-
ment 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-lay-
ered security architecture, including intrusion
prevention 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
impact 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 chargebacks 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.
GEOPOLITICAL RISK
Description
The Ukraine War has previously had an impact
on energy prices that affect are overall
operating costs. However, these subsided in
2023. The sanction regime towards Russia has
only had a negligible effect on Nets’ revenues
as there were small transactions from Russian
issued cards with full adherence to imposed
sanctions.
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
decided to cease operations in Russia and
Belarus.
Business continuity – While inflationary
pressure 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.
Sabotage on critical infrastructure: The Ukraine
war has highlighted vulnerabilities to infrastruc-
ture from sabotage for example submarine
cable networks which could result in considera-
ble capacity and slower services.
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.
• All vendors and suppliers have been
contacted to ensure strict compliance with
the sanctions. regime.
• 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 with
increased Firewall capabilities implemented
in 2023.
• Self sufficiency of energy supply to mitigate
sabotage of critical infrastructure mapped
and in place for certain periods of downtime.
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. The DORA framework has set new
regulatory requirements of resilience of digital
services to the financial sector and implementa-
tion in Nets is taking place throughout 2024,
being led centrally by Group Risk in Nexi Group.
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
requirements, etc.
Examples of main mitigants
• Policies and frameworks in key regulatory
areas PSD2, Digital Euro, Instant Payments,
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.
• DORA implementation is significant and
require prioritization and adequate resource
allocation to ensure its success, it applies to
all parts of our business including Issuing.
Key risks (continued)
Nets A/S Management Review
11/77
Nets A/S Management Review
12/77
Corporate Social Responsibility (continued)
1
The ratings by S&P and CDP were achieved as part of Nexi Group
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
15/77
Corporate Social Responsibility (continued)
Nets A/S Management Review
16/77
Corporate Social Responsibility (continued)
Nets A/S Management Review
17/77
Corporate Social Responsibility (continued)
Nets A/S Management Review
18/77
Corporate Social Responsibility (continued)
Nets A/S Management Review
19/77
Statement by the Board of Directors and Executive Management
th
May 2024
Executive Management
Board of Directors
Nets A/S Management Review
20/77
Independent auditor’s report
Nets A/S Management Review
21/77
Independent auditor’s report (continued)
• Conclude on the appropriateness of Manage-
• Evaluate the overall presentation, structure
th
May 2024
CVR No 33 77 12 31
Nets A/S Management Review
22/77
Consolidated
Consolidated income statement
EURm Note
Continuing operations
Revenue, gross . 1,322.8 1,282.5
Interchange fees and processing fees (555.2 ) (523.9 )
Revenue, net of interchange fees and processing fees . 767.6 758.6
Cost of sales (42.6 ) (55.6 )
External expenses (225.4 ) (179.8 )
Staff costs . (223.9 ) (224.8 )
Operating result before depreciation and amortisation before special
items (EBITDA B.S.I.) 275.7 298.4
Special items . (104.1 ) (83.5 )
Operating result before depreciation and amortisation (EBITDA) 171.6 214.9
Amortisation of business combination intangibles, customer
agreements & impairment losses . (151.3 ) (141.5 )
Profit (loss) from equity investments and disposals of investments . (15,6 ) -
Underlying depreciation and amortisation . (49.7 ) (57.8 )
Operating result (EBIT) (45.0 ) 15.6
Result from associates after tax . (1.6 ) 1.0
Fair value adjustment of Visa shares related to Nets Branch Norway
and proceeds (shares) related to Nets Branch Sweden 1.6 3.7
Financial income and expenses, net . 36.8 6.1
Net financials 36.8 10.8
Result before tax (8.2 ) 26.4
Income taxes . 0.4 (15.1 )
Result from continuing operations (7.8 ) 11.3
Result from discontinuing operations . 21.1 48.0
Gain on sale of subsidiaries - 68.0
Result for the year 13.3 127.3
EURm Note
The result is attributable to:
Owners of Nets A/S, continuing operations (7.8 ) 11.3
Owners of Nets A/S, discontinuing operations 21.1 48.0
Non-controlling interests, continuing operations
Non-GAAP performance measures, continuing
operations
Operating result before depreciation and amortisation (EBITDA) before
special items . .
Underlying depreciation and amortisation
(.) (.)
Adjusted EBIT . .
Nets A/S Management Review
23/77
Consolidated
Consolidated statement of other comprehensive income
EURm Note
Result for the year
Other comprehensive income: - -
Total comprehensive income for the year, net of tax 13.3 127.3
Total comprehensive income for the year is attributable to:
Owners of Nets A/S, continuing operations
(7.8 ) 11.3
Owners of Nets A/S, discontinuing operations
Non-controlling interests, continuing operations - 68.0
Nets A/S Financial statements Consolidated
EURm Note
Assets
Non-current assets
Goodwill . 1,659.0 1,690.8
Other intangible assets . 518.7 489.6
Plant and equipment . 128.3 147.7
Investment in associates . 22.0 38.0
Deferred tax assets . 53.2 36.5
Total non-current assets 2,381.2 2,402.6
Current assets
Inventories .. 11.4 11.3
Trade and other receivables .. 138.6 167.4
Contract assets . 3.0 25.3
Clearing-related assets . 1,338.4 869.6
Prepayments 63.3 48.6
Receivables from Group enterprises 15.0 27.2
Other financial assets . 1.7 14.6
Cash and cash equivalents . 478.4 438.7
Assets held-for-sale . 101.4 -
Total current assets 2,151.2 1,602.7
Total assets 4,532.4 4,005.3
EURm Note
Equity and liabilities
Equity
Share capital . 26.9 26.9
Reserves 1,561.4 1,536.7
Equity, owners of Nets A/S 1,588.3 1,563.6
Non-controlling interests - -
Total equity 1,588.3 1,563.6
Non-current liabilities
Borrowings . 219.5 218.8
Liabilities to Group enterprises . 421.2 428.3
Pension liabilities, net 0.7 -
Lease liabilities . 49.5 55.8
Deferred tax liabilities . 45.5 42.6
Other liabilities . 13.5 6.6
Total non-current liabilities 749.9 752.1
Current liabilities
Trade and other payables .. 259.3 286.8
Contract liabilities . 13.2 7.4
Clearing-related liabilities . 1,614.0 1,132.4
Liabilities to Group enterprises 215.3 213.5
Other liabilities . 51.1 14.7
Lease liabilities . 16.0 13.5
Other financial liabilities . - 1.1
Current tax liabilities . 11.2 20.2
Liabilities held-for-sale . 14.1 -
Total current liabilities 2,194.2 1,689.6
Total liabilities 2,944.1 2,441.7
Total equity and liabilities 4,532.4 4,005.3
Consolidated balance sheet as at 31 December
24/77
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 275.7 298.1
Special items from continuing operations (104.1 ) (83.5 )
EBITDA from discontinued operations . 20.6 48.6
Other non-cash items . 6.9 5.3
Change in narrow working capital 31.6 16.6
Interest and similar items, net (20.3 ) (42.1 )
Taxes paid . (26.0 ) (22.9 )
Net cash flow from operating activities excluding
clearing-related balances 184.4 220.1
Change in clearing-related balances 12.9 19.3
Net cash from operating activities 197.3 239.4
Purchase of intangible assets . (168.6 ) (159.3 )
Purchase of plant and equipment . (17.4 ) (38.5 )
Investments and mergers . (1.2 ) (6.0 )
Proceeds from Visa shares 11.5 3.3
Proceeds from sale of Edigard AS - 71.3
Net cash from investing activities (175.7 ) (129.2 )
Proceeds from shareholder and intercompany loans 61.1 18.8
Repayment of shareholder and intercompany loans . (30.4 ) (27.0 )
Repayment of finance lease liabilities . (18.5 ) (15.5 )
Net cash from financing activities 12.2 (23.7 )
EURm Note
Net cash flow for the year 33.8 86.5
Cash and cash equivalents as at 1 January 438.7 358.4
Exchange gain/(loss) on cash and cash equivalents
Net cash and cash equivalents as at 31 December 478.4 438.7
Cash and cash equivalents as at 31 December . 478.4 438.7
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 (,.) (,.)
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 . (.)
Exchange gain/(loss) on cash and cash equivalents . (.)
Own cash as at 31 December . .
25/77
Nets A/S Financial statements Consolidated
Consolidated statement of changes in equity as at 31 December
EURm
Share
capital
Currency
translation
reserves
Retained
earnings
Equity,
owners of
Nets A/S
Total
equity
Equity as at 1 January 26.9 (128.6 ) 1,665.3 1,563.6 1,563.6
Result for the year - - 13.3 13.3 13.3
Other comprehensive income for the year
Currency translation adjustments, foreign enterprises - 4.8 - 4.8 4.8
Other comprehensive income for the year - 4.8 - 4.8 4.8
Total comprehensive income for the year - 4.8 13.3 18.1 18.1
Share based payments - - 6.9 6.9 6.9
Group Contribution, net - - (5.3 ) (5.3 ) (5.3 )
Proposed dividends - - 5.0 5.0 5.0
Total changes in equity - 4.8 19.9 24.7 24.7
Equity as at 31 December 26.9 (123.8 ) 1,685.2 1,588.3 1,588.3
26/77
Nets A/S Financial statements Consolidated
EURm
Share
capital
Currency
translation
reserves
Retained
earnings
Equity,
owners of
Nets A/S
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
Consolidated statement of changes in equity as at 31 December
27/77
Nets A/S Financial statements Contents
Contents
With the aim of providing enhanced
information and a better understanding
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
28/77
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 consolidat-
ed 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
financial 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
(including derivative instruments) measured at
fair value as disclosed in Note 7.1.
Section 1:
29/77
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
evaluated and are based on historical experi-
ence and on various other factors that are
believed to be reasonable under the circum-
stances. 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 acquisitions
(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 allocated
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
uncertain 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 comprehensive
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.
30/77
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
currency). The consolidated financial informa-
tion 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
acquisition date or at the date of any subse-
quent revaluation or impairment of the asset.
Items in the consolidated income statements are
translated at the exchange rates at the
transaction date, although 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 denominated
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
statement, except for exchange rate adjust-
ments 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 prevailing at the end
of the reporting period.
The above exchange rate adjustments are
recognised in other comprehensive income.
31/77
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
revenue generated through provision of
subscription-based fees related to the sale and
rental of point-of-sale (POS) and related
solutions, fees related to the sale of value-add-
ed 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
value of the consideration received or receiva-
ble, 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
provided over a period of time are initially
recognised 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,
network 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
768
EBITDA b.s.i.
276
In this section
. Revenue
.
Costs and Special items
.
Staff costs
.
Foreign currency exposure
32/77
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 customer
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
activities from a business unit perspective. The
business activities have been organised 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.
33/77
Nets A/S Financial statements Section 2
EURm
Gross revenue per geographical area
Denmark . .
Norway . .
Finland . .
Sweden . .
Baltics . .
Poland . .
Total ,. ,.
Net revenue per geographical area
Denmark . .
Norway . .
Finland . .
Sweden . .
Baltics . .
Poland . .
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)
34/77
Nets A/S Financial statements Section 2
Special items in the year amounted to EUR 104.1 million (2022: EUR 83.5 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 operation,
software, maintenance and development costs
that do not qualify for capitalisation, lease
expenses and other marketing, sales and
distribution 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 carefully
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
35/77
Nets A/S Financial statements Section 2
Financial comments
REORGANISATION, RESTRUCTURING
AND REFURBISHMENT
Costs of reorganisation, restructuring and
refurbishment amounted to EUR 5.0 million and
mainly include costs related to termination of
employees as part of making Nets more
cost-efficient and competitive in meeting the
strategy of being operationally excellent.
BUSINESS SET-UPS, ACQUISITIONS
AND DISPOSALS
Costs associated with business set-ups,
acquisitions and disposals amounted to EUR 42.1
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 33.5 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 3,221 3,098
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
investments in security and stability programs
as well as the implementation of cost optimisa-
tion programmes related to technology,
operations 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 23.5 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.
36/77
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 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
activities and Group financial assets and
liabilities.
BUSINESS ACTIVITIES
There is exchange-rate exposure associated
with settlement assets and settlement obliga-
tions; however, the exposure is limited, as card
transactions are generally executed and settled
in the same currency and in the same time-
frame. 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
fluctuations is summarised in the following
tables.
A probable change in the following currencies
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 HRK NOK SEK DKK PLN
Average . . . . .
End of year . . . . .
Year-end change (.%) (.%) (.%) .% (.%)
37/77
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
impact on profit before tax and the Group’s
equity based on the exposure of balances in
foreign currency. Development in the hypotheti-
cal 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 . . ,. (.) (,.) .
38/77
Nets A/S Financial statements Section 3
Significant accounting policies
FINANCIAL ASSETS
Financial assets are classified, at initial
recognition, as financial assets at fair value
through the income statement, financial assets
at amortised cost, or as derivatives designated
as hedging instruments 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
acquisition 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
trading 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
recognised 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 comprises
inventory (primarily terminals, spare
parts, etc.), trade receivables,
pay-later solution, prepayments and
other receivables and trade and
other 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
balances 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
balances fluctuate from reporting
date to reporting date. A description
of the components in the clear-
ing-related 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.
39/77
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 0.9 million net (2022: EUR 0.1 million) and are
included in cost of sales.
Inventories
Note 3.1.1
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
Trade receivables
Trade receivables . .
Allowances for doubtful debts (.) (.)
Trade receivables, net . .
Deposits . .
Other receivables (.) .
Total . .
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
.
40/77
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 respective-
ly.
Clearing-related balances
Note 3.2
41/77
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
collateral, where appropriate, as a means of
mitigating the risk of financial loss from defaults.
The Group is exposed to the risk of unpaid
merchant service charges where a customer
ceases to trade. To manage this risk, the Group
maintains credit risk exposure in line with
approved appetite for risk whilst achieving
appropriate risk versus reward performance and
ensuring 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
merchant 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, renegotia-
tion of merchant credit risk insurance pro-
grammes, 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 enti-
ties.
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 liabilities as at 31 December (,.) (,.)
Own cash as at 31 December . .
42/77
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 liquidity
of the Group by appropriate cash management, 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
arrangements to ensure cost-efficient and secure
cash management. The Group continuously
monitors actual and future cash flows to match the
maturity 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 maintaining 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 signifi-
cant 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 balances 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
remaining contractual maturity for its non-
derivative financial assets and liabilities, with
agreed payment periods:
Note 3.4
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 . - - - . . - - - .
Put option liability - - , - , - - - - -
Other liabilities - - - . . . . . . .
Lease liabilities . . 0.7 10.8 57.0 . . 1.5 11.7 64.7 .
Total financial liabilities at the end of the year by maturity ,. . . . ,. ,. . . . ,.
43/77
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
renewing 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
information related to expenditure on
development 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
aggregate of the consideration transferred and
the amount of any non-controlling interest in
the acquiree over the fair value of the identifia-
ble 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 acquisition
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
venture 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.
44/77
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
acquired and expected revenue, the related
churn rates and profitability of the revenue at
the time of the acquisition.
ACQUISITION OF BUSINESSES
No companies have been acquired in 2023
except for a minor investmade of 1,2m to Qrtag.
In July 2022, the Group acquired the company
Team4U Sp. z o.o. In 2022 the acquisition had
the following effect on the Group’s consolidated
financial statements as at the reporting date:
Business combinations and asset acquisitions (continued)
Note 4.1
Team4U
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 . .
Team4U Sp. z o.o.
In July 2022, it was announced that an
agreement 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 consideration
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
purchase 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.
45/77
Nets A/S Financial statements Section 4
Intangible assets
Significant accounting policies
GOODWILL
Goodwill arising from an acquisition of a
business is carried at cost as established at the
date of acquisition of the business less
accumulated impairment losses, if any. Goodwill
is not amortised. The carrying amount of
goodwill is tested annually and if events or
changes in circumstances indicate impairment.
CUSTOMER AGREEMENTS AND RIGHTS
Customer agreements and rights are carried at
historical cost less accumulated amortisation
and any impairment loss. Amortisation is
calculated 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
estimated 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 determina-
tion 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
indicate 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
46/77
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 ,. . . . ,. ,.
Adjustment to opening - - . - . .
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 - (.) (.) - (.) (.)
Adjustment to opening - - (.) - (.) (.)
Amortisation
- (.) (.) - (.) (.)
Reclassification to Assets held
for sale
(.) - - (.) (.) (.)
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 ,. . . . . ,.
47/77
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 . . . . . . . .
Adjustment to opening - - (.) (.) - - - -
Additions . . . . . . . .
Assets disposed of - (.) (.) (.) - (.) (.) (.)
Currency translation adjustment (.) . (.) (.) (.) (.) (.) (.)
Accumulated cost as at 31 December . . . . . . . .
Accumulated depreciation and write-downs for
impairment as at 1 January (.) (.) (.) (.) (.) (.) (.) (.)
Adjustment to opening - - . . - - - -
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
purchase 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
determined based on periodic assessments of
actual useful life and the intended use for those
assets.
48/77
Nets A/S Financial statements Section 4
Impairment tests
Significant accounting policies
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
annually, or more frequently if there is any
indication that the unit may be impaired.
A cash-generating unit is the smallest identifia-
ble 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-generat-
ing 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.
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
intangible assets or plant and equipment is
recognised 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 impair-
ment loss been recognised.
Note 4.4
EURm
Cash-generating unit
Merchant Services ,. ,.
Issuer & eSecurity Services . .
Assets held-for-sale , -
Total ,. ,.
The carrying amount of goodwill allocated to cash-generating units is as follows:
Key accounting estimates and judgements
Recoverable amount of goodwill and
capitalised 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
different estimates or assumptions when
determining 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 five-year
period incorporating the assumptions used in
financial budgets, including expected impact
from changes in the business models, approved
by Management.
Management has at year-end assessed that the
development in key assumptions that could
impact the valuation of goodwill and other
intangibles, 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.
49/77
Nets A/S Financial statements Section 4
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
2023 and did not result in any impairment
losses recognised.
The recoverable amount of goodwill recognised
is determined based on value in use calcula-
tions, 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 2.06%
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 2023, discount rates used for impairment
calculations post-tax were 9.26% for Merchant
Services and 9.26% 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 recovera-
ble 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
recognised 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 processes
are generated across the Group, including
synergies from combining operations, econo-
mies 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 consid-
ered 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.
50/77
Nets A/S Financial statements
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 % EUR . (.) . . (.) % DKK . . . . .
Total . (.) . . (.) . . . . .
EURm
Investment in associates
Accumulated cost as at 1 January . .
Currency translation adjustment . -
Accumulated cost as at 31 December . .
Revaluation as at 1 January . .
Adjustment previous year - -
Dividends received - (.)
Share of result after tax (.) .
Impairment of an associate (.) -
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
associates 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
associate’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
proportionate share of intra-group gains/losses
is recognised in the Group’s consolidated
income statement.
Note 4.5
51/77
Nets A/S Financial statements Section 4
Discontinued operations
Significant accounting policies
Divestment of activities which can be clearly
distinguished, operationally and for financial
reporting 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 operations 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.
In November 2023 Nets announced an agree-
ment with French IN Groupe to acquire its eID
business. IN Groupe, a global leader in
trustworthy digital services, is the ideal owner
and future operator of Nets’ e-ID-solutions.
IN Groupe have demonstrated a willingness
and understanding to live up to the same high
standards we have applied over the last decade
and acknowledge and accept the sensitive
nature of our products. The completion of the
transaction is subject to customary closing
conditions and the authorisation of the Danish
government on the suitability and capabilities
of IN Groupe as their continued eID solution
provider.
The note disclose the impact the sale of the eID
business would have on the Nets A/S result in
2023 and 2022 in case the eID business had
not been a part of the consolidated numbers.
Note 4.6
EURm
Result from discontinuing operations
Revenue, gross . .
Revenue, net of interchange fees and processing fees . .
Cost of sales - -
External expenses (.) (.)
Staff costs (.) (.)
Operating result before depreciation and amortisation (EBITDA) . .
Underlying depreciation and amortisation (.) (.)
Financial income and expences , ,
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.
52/77
Nets A/S Financial statements Section 4
Discontinued operations (continued)
Note 4.6
EURm
ASSETS
Other intangible assets ,
Intangible assets ,
Deferred TAX ,
Tax assets ,
Non-current assets held for sale and discontinued operations ,
Other assets ,
Total assets ,
EURm
LIABILITIES
Current TAX liabilities (,)
Tax liabilities (,)
Other liabilities (,)
Profit (Loss) for the period -
Total liabilities and equity (.)
53/77
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 comprises
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
54/77
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
(“EIR”) method. Gains and losses are recognised
in the income statement when the liabilities are
derecognised as well as through the EIR
amortisa-tion 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
can-celled 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
liability and the recogni-tion of a new liability.
The difference in the respective carrying
amounts is recognised in the income statement.
Derivative financial instruments and hedge
accounting
Realised fair value gains and losses deriving
from terminated derivative financial instruments
are recognised in the income statement as
financial items.
LOANS AND BORROWINGS
The Group has a EUR 220 million Senior Notes
outstanding, with parent-guarantee and security
provided by Nets A/S.
The Notes (EUR 220 million) are issued by
Nassa Topco AS as an indirect subsidiary of Nets
Holdco 1 ApS.
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.
55/77
Nets A/S Financial statements Section 5
REPAYMENT OF EXISTING DEBT IN
RELATION TO THE LEVERAGED BUY OUT
FACILITIES AND DELISTING
In February 2018 the shareholders of 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
issued a tender to redeem the Senior Notes
prior to maturity. This option was exercised by
45.1% of the noteholders, which resulted in a
repayment of EUR 180 million bringing the
notional of the Senior Notes down from EUR
400 million to EUR 220 million.
MERGER WITH NEXI S.P.A. AND
REFINANCING
On 1 July 2021 Nets A/S’ ultimate parent
company, 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
240 million, 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 320 million) and one
two-year loan (EUR 102 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 uncommit-
ted basis. On 31 December 2023, the overdraft
facilities for clearing working capital were
undrawn (2022: EUR 0 million), leaving EUR 155
million undrawn (2022: EUR 155 million
undrawn). In addition, the Group has three
intra-day facilities available at relationship
banks (EUR 400 million, EUR 105 million and
NOK 400 million).
56/77
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 1 (EUR) .% .% EUR . . - . .
IC Loan 2 (EUR) .% .% EUR . . - . .
Total long term borrowings (non-current liabilities) . .
Overdraft facility (clearing-related balances)
1
IBOR + .% .% Multi . - - - -
Money market (clearing-related balances) Multi . - - - -
Total short term borrowings (current liabilites) - 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 . .
57/77
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 2023
. . .
Additions - . .
Depreciation (.) (.) (.)
Currency translation (.) (.) (.)
Total lease assets as at 31 December 2023 . . .
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
purchase 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 2022 . . .
Additions . . .
Depreciation (.) (.) (.)
Currency translation - (.)
(.)
Total lease assets as at 31 December 2022 . . .
58/77
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. . -
Assets held-for-sale (.) -
Total financial income, exclusive of refinancing costs . .
Financial expenses
Interest expense - (.)
Interest expense to Parent Company (.) (.)
Interest expense lease liabilities (.) (.)
Net foreign exchange loss (.) -
Amortisation of transaction costs (.) (.)
Other fees etc. (.) (.)
Assets held-for-sale - .
Total financial expenses, exclusive of refinancing costs (.) (.)
Financial income and expenses, net . .
Net financials
Significant accounting policies
FINANCIAL ITEMS
Financial income and expenses comprise
interest income and expenses, realised and
unrealised gains, and dividends, losses on trans-
actions denominated in foreign currencies,
amortisation of loan costs and securities and
subsequent changes to contingent acquisition
costs.
59/77
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 51.5 million and Putoption liabilities
of EUR 13.5 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. - -
Interest risk management
The Group is exposed to interest rate risk on
loans, credits and cash balances as well as
mismatches on maturities between loans and
cash, resulting in variable interest cash flows.
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.
The Group’s loan arrangements are based on
variable 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.
60/77
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 substan-
tively 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 consoli-
dated 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
relating 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
61/77
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 judgement
is made annually and is based on budgets and
business plans for coming years, including
planned commercial initiatives.
As of 31 December 2023, the carrying amount of
the deferred tax assets was EUR 53.2 million
(2022: 36.5 million) and unrecognized tax losses
amounted to EUR 0 (2022: EUR 7.0 million)
As of 31 December 2023, the carrying amount of
the current tax liabilities was EUR 11.2 million
(2022: 20.2 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
62/77
Nets A/S Financial statements Section 6
EURm
Intangible
assets
Plant &
equipment
Other
receivables
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 . . . . . .
Prior year adjustment (.) (.) . . . (.)
Additions from aquisitions (.) (.) (.) (.) - (.)
Assets held-for-sale , , , , (.) (.)
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
receivables
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 .
63/77
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 2023, the figure contains elements of exit bonuses and other one off elements.
Related party transactions
RELATED PARTY TRANSACTIONS
As at 31 December 2023 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. Transactions with
associated companies, comprise mainly
administrative services amounting to EUR 2.4
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
2023.
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. Throughout
2023 several, changes were made in the key
personnel, and disclosed figures include, in total
eight members. At year-end 2023, Key Personnel
consisted of four members (2022: four members).
Note 6.2
64/77
Nets A/S Financial statements Section 6
Share-based payment
Accounting policies
Staff share-based remuneration plans, all falling
under the “Equity settled” category, are
recognized in the Income Statement with a
corresponding increase in shareholders’ equity,
on the basis of the Fair Value of the financial
instruments attributed at the assignment date,
breaking up the expense throughout the plan
period and according to the accrual criterion of
the service provided. In particular, 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 also the
presence of any market-based condition.
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 two tranche of this
cycle has already been assigned. 2023 trances were
assigned in October 2023.
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
• 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
Note 6.3
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
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 2023 ,, ,, ,.
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.
Moreover, within the Performance Share com-
ponent, consideration was given to the presence of
the aforesaid specific objectives. More specifically,
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%)
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.
The simulations were made by assuming in the
return on the Nexi share, a rate of return on the
Company’s stock calculated using the swap curve
and a historical volatility of the Nexi shares, calculat-
ed with reference to the valuation date. In particular,
for the cycle assigned in 2023, these parameters
settle respectively at. 3.7% and about 35%.
65/77
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
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.
At the grant date the simulation delivered, for the
right assigned in 2023 a unit value of around Euro
3.8 for shares.
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 to be
measured at the time of assignment is to be
updated periodically at each reporting date, to take
into account the expectations in relation to the
number of rights that may accrue. For these
components the unit Fair Value is approximately
Euro 5.7 for shares .
The overall cost of the plan for 2023 was Euro 6.9
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.
Based on 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”.
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.
Share-based payment (continued)
66/77
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
67/77
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 through the
income statement
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
. - .
Other financial assets relating to Assets
held-for-sale - - -
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
(.) - (.)
Assets held-for-sale - - -
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 through the
income statement
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
. - .
Other financial assets relating to Assets
held-for-sale (.) - (.)
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
- - -
Assets held-for-sale - - -
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.
68/77
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
statements, 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 report
for 2023 have occurred subsequently to 31
December 2023.
Note 7.3
69/77
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 %
Nexi Digital Finland 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 %
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
70/77
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, organic
Organic growth is a measure of growth excluding the impact of
acquitions, divestments and foreign exchange adjustments
from year-on-year comparisons
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)
Adjusted net profit
Adjusted EBIT adjusted for financial income and expenses
excluding impact from foreign exchange gains and losses
and adjusted for an effective tax rate of 1.6%.
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
71/77
Nets A/S Financial statements
Income statement for the Parent Company
EURm Note
Revenue
. .
External expenses
(.) (.)
Staff costs
(.) (.)
Amortisation
(.) (.)
Operating result (EBIT) (.) (.)
Financial income
. .
Financial expenses
(.) (.)
Net financials (.) (.)
Result before tax
(.) (.)
Income taxes
. .
Result for the year (.) (.)
Proposed appropriation of result
Retained earnings
(.) (.)
Total appropriation (.) (.)
Parent Company
Financial statements
In this section
Note 1 Accounting policies 74
Note 2 Revenue 75
Note 3 Staff costs 75
Note 4 Net financials 75
Note 5 Intangible assets 75
Note 6 Investment in subsidiaries 76
Note 7 Trade and other payables 76
Note 8 Contingent liabilities 76
Note 9 Related party transactions 76
72/77
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
. .
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 ,. ,.
73/77
Nets A/S Financial statements
Statement of changes in equity
for the Parent Company
EURm Share capital
Currency
translation
reserve
Retained
earnings Total equity
2023
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 . . ,. ,.
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 . . ,. ,.
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.
74/77
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
(.) (.)
Total financial expenses (.) (.)
Other intangible assets
2023
EURm Software
Intangible
assets
Accumulated cost as at 1 January
.
.
Additions
.
.
Accumulated cost as at 31 December . .
Accumulated amortisation and write-down for impairment as at 1 January
(.)
(.)
Amortisation
(.)
(.)
Currency adjustments
(.) (.)
Carrying amount as at 31 December . .
EURm
Staff costs
Wages and salaries
(.) (.)
Bonus
(.) (.)
Share-based payment costs
. (.)
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
75/77
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.
76/77
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
exhibited 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
characteristics, such as fingerprint, iris and face
recognition 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
consumer 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 transaction of buying or selling online
eFaktura – Nets’ Norwegian e-billing service
Fintech – Nets and other providers of new
solutions which demonstrate innovative
development of applications, processes,
products or business models in the financial
services industry
Fraud & Dispute Services – card fraud
management 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
addresses 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
services’
MitID - a national next generation eID solution
offered by Nets to Danish citizens, corporates,
banks and the public sector on behalf of
Digitaliseringsstyrelsen
NemID – a national digital identity solution
offered by Nets to Danish citizens, corporates,
banks and the public sector on behalf of
Digitaliseringsstyrelsen
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
information 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
systems within areas such as fraud prevention
and customer service
Settlement – the completion of a transaction,
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
77/77