Slide 1: First six months 2019
First six months 2019
Slide 2: The NNIT Presenting Team
The NNIT Presenting Team PER OVE KOGUT CARSTEN KROGSGAARD KLAUS HOSBOND SKOVRUP Chief Executive Officer THOMSEN Head of Investor Relations Chief Financial Officer 2
Slide 3: Agenda
Agenda 01 Challenges, initiatives & long-term targets 02 Financial performance 03 Balance sheet and cash flow 04 Outlook for 2019
Slide 4: Forward looking statements
Forward looking statements This presentation contains forward-looking statements. Words such as ‘believe’, ‘expect’, ‘may’, ‘will’, ‘plan’, ‘strategy’, ‘prospect’, ‘foresee’, ‘estimate’, ‘project’, ‘anticipate’, ‘can’, ‘intend’, ‘outlook’, ‘guidance’, ‘target’ and other words and terms of similar me
Slide 5: Current situation and challenges
Current situation and challenges • The first six months of 2019 are very disappointing and largely due to the Novo Nordisk Group with declining revenue and margins. Especially a decline in project revenue of 40% in Q2 2019 came as surprise • The large application maintenance agreement with the Novo
Slide 6: Strategic initiatives
Strategic initiatives Committed to the strategy from January which requires faster execution • Continue strong growth in international life sciences • Maintain and develop strong Novo Nordisk relationship by staying relevant and competitive • Focus on acquisitions within international life sciences
Slide 7: Cost and business restructuring plan
Cost and business restructuring plan Targeted impact of DKK 150m in 2020 and a minimum DKK 200m run-rate impact from 2021 Key levers to improve gross profit and operating profit margin: • Reduction of 250 full time positions on top of downsizing in connection with loss of key agreements with the Nov
Slide 8: Long-term financial targets update
Long-term financial targets update Long-term 6-8% organic revenue financial targets Operating profit margin of growth excluding the Novo announced in at least 10% Nordisk Group January NNIT will not publish long-term targets primarily due to the current uncertainty related to sales to the Novo Nordi
Slide 9: Major wins
Major wins Amount Length Contract Segment Client (DKK million) (years) GN Great Microsoft D365 contract Enterprise Low triple-digit 4.5 Nordic Existing Cloud operations agreement Enterprise Low double-digit 3.5 customer Danish life Existing Extension of SAP operations agreement High double-digit 6 Q
Slide 10: Financial statement Q2 and 6M 2019
Financial statement Q2 and 6M 2019 DKK million Q2 2019 Q2 2018 Change 6M 2019 6M 2018 Change Revenue 743.7 752.6 -1.2% 1,493.7 1,451.1 2.9% Cost of goods sold 643.7 617.5 4.2% 1,289.2 1,196.7 7.7% Gross profit 99.9 135.0 -26.0% 204.5 254.4 -19.6% Gross profit margin 13.4% 17.9% -4.5pp 13.7% 17.5% -3
Slide 11: Life Sciences
Life Sciences DKKm Q2 2019 Q2 2018 Change 6M 2019 6M 2018 Change Novo Nordisk Group 235.3 278.4 -15.5% 494.1 534.5 -7.6% Life sciences international 90.1 45.3 98.7% 167.5 90.2 85.8% Life sciences Denmark 55.6 56.4 -1.4% 109.4 110.8 -1.3% Revenue 381.0 380.2 0.2% 771.0 735.5 4.8% Cost of goods sold 3
Slide 12: Private & Public
Private & Public DKKm Q2 2019 Q2 2018 Change 6M 2019 6M 2018 Change Enterprise 189.5 206.2 -8.1% 387.8 393.4 -1.4% Public 96.0 103.9 -7.6% 185.5 203.3 -8.8% Finance 77.1 62.3 23.8% 149.4 118.9 25.7% Revenue 362.6 372.4 -2.6% 722.7 715.6 1.0% Cost of goods sold 335.3 339.8 -1.3% 677.0 662.0 2.3% Gros
Slide 13: Currency development and hedging
Currency development and hedging CNY/DKK CNY PHP/DKK PHP CZK/DKK CZK 1.04 0.15 0.300 1.02 0.14 0.295 USD, CHF, PHP and EUR have 1.00 0.13 0.290 appreciated versus DKK in Q2 2018, whereas CZK is fairly stable and the 0.98 0.12 0.285 0.96 0.11 0.94 0.10 0.280 CNY has depreciated slightly. 0.275 0.92 0
Slide 14: Net Financials
Net Financials Net financials Net financials for 6M 2019 were DKK 5.0m, 6M 2019 6M 2018 Change DKKm which was an improvement of DKK 9.6m Currency hedge gains 11.4 2.6 8.8 compared to 6M 2018. Currency gains (losses) 0.7 -0.4 1.1 This was due to: Total currency related items 12.1 2.2 9.9 Interest exp
Slide 15: Employee development
Employee development +3.0% Number of employees increased by 3.0% FTEs (+93) to 3,215 FTE at the end of Q2 2019. This 3,500 3,265 increase was primarily driven by Philippines 3,122 3,155 3,214 3,215 3,101 (75 FTEs) in-line with the long-term 3,000 offshoring strategy and the inclusion of 2,500 Valian
Slide 16: Balance sheet
Balance sheet Assets 30 Jun 30 Jun Equity and liabilities 30 Jun 30 Jun DKKm 2019 2018 DKKm 2019 2018 Intangible assets 1 516.4 209.3 Share capital 250.0 250.0 Tangible assets 595.6 587.5 Treasury shares -4.1 -4.7 Lease assets 340.2 337.3 Retained earnings 837.1 733.6 Contract assets 91.4 114.9 Othe
Slide 17: Cash flows
Cash flows Cash flow 6M 2019 6M 2018 Change Cash flow from operating activities was DKK 93m in DKKm Net profit for the period 74.6 102.4 -27.8 6M 2019, which was DKK 47m below 6M 2018 due to Reversal of non-cash items 167.2 170.3 -3.1 lower net profit and changes in working capital. Net interest and
Slide 18: Backlog development, current year
Backlog development, current year Beginning of quarter DKKm +1.7% 3,000 (+46) 2,846 2,682 2,728 2,487 395 2,517 32.5% 2,500 368 488 2,213 344 2,171 410 (+120) 2,000 288 319 1,067 -11.7% 1,024 904 944 871 (-120) 1,500 851 821 1,000 1,383 1,336 +3.5% 1,199 1,290 1,235 500 1,074 1,031 (+46) 0 Q1-18 Q2-
Slide 19: Outlook
Outlook 2019 Previous guidance Revenue Low single-digit Constant currencies: 3-6% growth Reported currencies: 0.7pp higher 8-9% excl. restructuring Operating Constant currencies: costs of DKK Constant currencies: 10-10.5% profit margin 15-25m Reported currencies: 0.4pp lower Reported currencies: 0.2
Slide 20: Closing remarks
Closing remarks • A revenue growth of 2.9% and an operating profit margin of 6.0% for the first six months of 2019 are very disappointing and largely due to the Novo Nordisk Group • The decrease in revenue and margins from the Novo Nordisk Group will continue to challenge us in the coming years, tog
Slide 21: Investor contact information
Investor contact information Upcoming events Investor contact August 19, 2019 • Interim dividend ex dividend date August 20, 2019 • Interim dividend record date August 21, 2019 • Interim dividend payment date October 24, 2019: KLAUS HOSBOND SKOVRUP Head of Investor Relations • Interim report for the