Investor Presentation - November, 2017 - EG A/S

 
Investor Presentation - November, 2017 - EG A/S
Investor Presentation

November, 2017
Investor Presentation - November, 2017 - EG A/S
Agenda

                                              Page

 Transaction summary                             2

 Introduction                                   5

 Key credit highlights and company overview      9

 Financial information                          19

 Summary                                        23

 Risk factors                                   25

                                                     5
Investor Presentation - November, 2017 - EG A/S
Today’s presenters

                    Mikkel Bardram
                    CEO, EG

                       Joined EG as CEO in November 2016
                       Mikkel comes from a position as CEO for Satair Group SAS. He previously held other executive positions at Satair A/S
                       Solid background in IT from the likes of McKinsey & Company, Novozymes and MAS/IBM
                       MSc in International Marketing Management (cand.merc.), Copenhagen Business School, including a term at Texas MBA (Austin)

                    Christian Bamberger Bro
                    Partner, Axcel

                       Joined Axcel in 2014
                       Previously worked for Permira both in London and Stockholm (2006-2014), McKinsey in Copenhagen and Nordea Corporate
                        finance in Copenhagen
                       Deputy Chairman at EG, Conscia and Lessor
                       Cand. oecon. from the University of Aarhus

Source: EG, Axcel
                                                                                                                                                     6
Investor Presentation - November, 2017 - EG A/S
EG is a leading Scandinavian technology company
EG focuses on selected industries in the Scandinavian technology market where EG has in-
depth industry and value chain insight
                                                                       In brief

                                                                          EG is among Scandinavia's leading technology companies with a strong market position within
                                                                           the SME segment
                                                                          Position based on close relationships with customers, deep industry insight and value adding
                                                                           technology solutions
                                                                          27 acquisitions in selected verticals since 2009
                                                                          Axcel acquired EG in 2013

  Strong presence in Scandinavia                            Product offering¹                                            Financial development, DKKm

     Local presence with 25 offices throughout
      Scandinavia                                           Software and subscription based
      Strong footprint securing proximity and flexibility   revenue                                                        2,500                                          20.0%
                                                                                                        55%
      towards customers                                       Solutions are based on EG's own                                                                 2,013
                                                               software for the public and for the                                                            15.9%
     Group management located in Ballerup, Denmark                                                                        2,000
                                                               private sector                                                                     1,611                   15.0%
                                                              Subscription based services are focused                                           12.1%
                                                               on application and infrastructure                           1,500
                                                               managed services                                                      9.4%
                                                                                                                                                                          10.0%
                                                                                                                           1,000      924
                                                    78%     Consultancy & programming
                                                             Management consultancy,                                                                                     5.0%
                                                              Implementation and Programming of IT       41%                 500
                                                              solutions
                                                    12%                                                                        0                                          0.0%
                                                            Hardware                                                                 2009        2013      LTM Q3 2017
                                                             Sale of infrastructure hardware (e.g.
                                                              servers) and industry specific hardware     4%
                                                    10%       (e.g. POS and hand terminals) from
                                                                                                                                     Revenue excl. KY, reported
                                                              external providers
                                                                                                                                     EBITDA margin excl. KY, normalized

                                   Offices

1) Per LTM Q3 2017 excl. KY
                                                                                                                                                                                  7
Investor Presentation - November, 2017 - EG A/S
Market drivers and trends in the Scandinavian IT and
Enterprise Applications market

Five primary market drivers expected to impact IT spending

  Scandinavian IT market growth1                                                                                                                          Market drivers
 EURbn
                                                                                                                    Productivity enhancements
                                          +2.9%                                                                      Almost 50% of companies and organizations have productivity as a top business priority
                                                                        38.6
                                                                                                                     This fuel process optimization both in the business and in the IT department
                                                          2.2
               34.5                         0.9                                                                      Especially mobility spending is driven by productivity
                              1.0
                                                                        11.3
                                                                                                                    Digital business transformation
 Denmark       10.3
                                                                                                                     Digital transformation is on the agenda for 25%-30% of companies and organizations in
                                                                                                                      the Nordic, and is rapidly becoming more important
                                                                        9.2                                          Most transformation initiatives have an internal focus to optimize and automate processes
      Norway    8.3                                                                                                   and improve the usability for internal users
                                                                                                                     Transformation drives spending in infrastructure and application modernization (including
                                                                                                                      ERM and cloud) as more agility and flexibility is needed

                                                                                                                    Customer experience
                                                                        18.1                                         One in four Nordic companies or organizations focuses on customer experience. If
   Sweden      15.9                                                                                               
                                                                                                                     including the companies focusing on improving customer support and service, the number
                                                                                                                     is even higher
                                                                                                                    The customer focus drives spending in dedicated customer experience solutions and CRM,
               2015        Denmark        Norway        Sweden          2019                                         but also business intelligence and social technologies

                                                                                                                    Data explosion and leverage
                                                                                                                    Virtually all companies and organizations acknowledge that the growth in data volumes
  Scandinavian IT market
                                                                                                                     and formats have an impact on their business
      The Scandinavian IT market is expected to grow with a                                                        Dealing with the growing amounts of data propel infrastructure investments and process
       CAGR of 2.9% from 2015 to 2019                                                                                re-assessment, but leveraging the data to bring value to the business requires analytics
      The market growth is expected to vane, as hardware                                                            tool including big data
       spending will plateau and especially the outsourcing                                                         Internet of Things is also emerging as a related driver
       market being squeezed by the adoption of cloud and the
       need for increased flexibility                                                                               IT operations efficiency
                                                                                                                     Although companies/organizations increasingly are expected to drive business
      The Swedish market has shown the strongest growth in
                                                                                                                      development and transformation, efficient IT operations remains essential
       recent years. This is expected to continue towards 2019
                                                                                                                     Ensuring efficiency – and often even reducing cost – calls for process automation and
       although the gap to Denmark and Norway will diminish.
                                                                                                                      user self-service, and drive spending in cloud, and hosting services rather than hardware
       All in all, the Danish market will be most stable
                                                                                                                     An essential part of the IT operations, is security

1) IT market excl. feature phones, smartphones, and consumer IT spending. Source: IDC, Public Cloud Service Tracker, May 2016 & IDC Software Survey 2016 & IDC Nordic CxO Survey 2016
                                                                                                                                                                                                                  8
Investor Presentation - November, 2017 - EG A/S
Agenda

                                              Page

 Transaction summary                             2

 Introduction                                    5

 Key credit highlights and company overview     9

 Financial information                          19

 Summary                                        23

 Risk factors                                   25

                                                     9
Investor Presentation - November, 2017 - EG A/S
Key credit highlights

                             6                    1
                                                          Leading
                                  Strong and
                                                       Scandinavian
                                  supportive
                                                        technology
                                  ownership
                                                         company

          5                                                           2
                High recurring
              business with low                                           Unique EG owned
              capex needs going                                               software
                   forward

                              4                   3
                                    Diversified         Full life cycle
                                  customer base       service solutions

                                                                                            10
Investor Presentation - November, 2017 - EG A/S
X.
1 Leading Scandinavian technology company

EG’s strong market position is based on deep industry knowledge and a growing scope of
technologies and services for over 40 years
Deep industry/customer knowledge (examples)                                 Strong technology, products and expertise

                                                                                                                          CUSTOMER ENGAGEMENT
                                                                                                 MANAGEMENT
                                                                                                 CONSULTANCY              MANAGEMENT &
                                                                                                                          BUSINESS ANALYTICS
  Manufacturing          Retail             Fashion           Transport

                                                                                                                           BUSINESS
                                                                                                            BUSINESS
                                                                                                                           DECISION
                                                                                                            STRATEGY
                                                                                                                           MAKING
                                                                                     BUSINESS
                                                                                    SOLUTIONS                                                      COLLABORATION
                                                                                                    DAILY
                                                                                                  BUSINESS         INDUSTRY       PRODUCTIVITY
                                                                                                 OPERATIONS         INSIGHT

   Healthcare         Construction    Public Pay-roll & HR    Utilities
                                                                                                   INSTANT
                                                                                                   WORK &                               ROI &
                                                                                                  FLEXIBILITY                         EFFICIENCY

                                                                                                                          RELIABILITY
                                                                                                           SCALABILITY      & RISK
                                                                                     MOBILITY               FLEXIBILITY   REDUCTION                  BUSINESS
                                                                                                                                                     SERVICES

 Finance for public   Social sector    Local authorities        Media

                                                                                                 IT OPERATIONS                    SERVICE &
                                                                                                INFRASTRUCTURE                    SUPPORT

   Cemeteries         Housing &         Legal Solutions      Hairdressers    1977    1985       1990            1995       2000             2005      2010         2017
                       Property
                                                                                                                Built over time

                                                                                                                                                                          11
Investor Presentation - November, 2017 - EG A/S
x.
1 EG supplies its solutions through two business models

EG has built strong capabilities both as a software and as a service company

                                                                               12
Investor Presentation - November, 2017 - EG A/S
x.
2 Unique EG owned software

EG have a strong base of unique EG owned software solutions targeted at specific verticals

 100+ unique EG owned software solutions                                          Example: EG Brandsoft
 Examples
                                                                                     EG Brandsoft is a full suite software as a service for
  Private sector verticals                                                            churches, cemeteries and funeral homes
  Manufacturing & construction              Retail, media & fashion
   Process Industry solution for D365       Aspect 4                               8 in 10 tombs in Denmark are registered in the platform
   Project industry solution for D365       NAV Media
   Aspect 4                                 NAV Fashion                            More than 15 different modules for various administrative
   Dynaway                                  Fackta POST                             tasks
   NAV Construction
   EG Byg                                  Transportation & services
                                              Aspect 4 ERP
                                                                                          Brandsoft calendar for activities in the
  Utilities
                                                                                          Parish in App Store & Google Play
   Xellent
   Zynergy

  Private sector micro verticals
  Rental & housing             Churches & cemeteries         Hairdressers
   EG Bolig                    EG Brandsoft                 Hairtools

  Car repair shops             Doctors & practitioners       Lawyers & agencies
   Xena                        EG Healthcare                EG Legal

  Public sector verticals
  Municipalities                            Hospitals
   SD Løn                                   KommuneInformation
   SD Tjenestetid                           EG Healthcare
   KommuneInformation
   Team Online
   EG Brandsoft

                                                                                                                                                  13
3    Full life cycle service solutions
Services business driven by customized solutions for specific industry areas across the
entire customer life cycle. This drives repeatability and reduces project risk
 Comments                        Retail solution map (example)
 1.
 1 EG has predefined
    business process models      3                                                                                                                                                    4
                                                                                                                                                                                          Services
    for each of our focus                         Assortment mgmt.                       Invoicing                          CRM                             Business Intelligence
    verticals
                                     Concepts    Web shop & internet               Channel mgmt.                      Campaign mgmt.                             Purchasing                                       Support

 2.
 2 Different platform                              Loyalty & clubs               Document mgmt.                          Data mgmt.
    options exist to fit with                                                                                                                                                              Hosting & maintenance
    customer size and                                Cash handling
                                                                                       Self service &
                                                                                                                      Customer counting                     Handheld terminals
    business context                                                                     scanning
                                     POS                                                                                                                                                     Hardware & on-site
                                                Electronic shelf fronts                Staff planning                  Fraud detection
                                                                                                                                                                                                  delivery
 3.
 3 Numerous proven and           2
    tested modules are
    combined to provide the          Platform                                                                                                                                                         Field service
    customers with a
    competitive edge             1
                                     EG Retail                             Category                      Sourcing &
                                                                                                                                                                            OMNI
                                                                                                                                                                                               Store operations

                                     process model
                                                                                                                                         Retail logistics                  channels
                                                                          management                    procurement                                                                               & support

 4.
 4 Services exist for each
    vertical which ensures EG
    takes care of the
    customer’s full life cycle

                                     Process models and solution maps exists for 8 verticals; Process industry, Project Manufacturing, Utility,
                                                          Retail, Fashion, Financial Services and Professional Services

                                                                                                                                                                                                                            14
4       Diversified customer base with high customer satisfaction
Low dependency on single customers with more than 12,500 customers across three
countries and a high customer satisfaction
  Comments                                                Largest customer share of revenue¹
      EG has a diversified
                                                        DKKm          1,950                      549                       397                        116                 159          460          270
       customer base covering                                                                                                                                                                                   100%
       more than 12,500                                                13%                                                                                                                         18%
                                                                                                21%
                                                                        5%                                                28%
       customers across three                                                                                                                                            48%
                                                                                                                                                                                      38%           5%
                                                                                                 8%                                                   50%
       countries
                                                                                                                          12%
                                                                                                                                                                                      12%
      There is low customer                                                                                                                                             13%
                                                                       82%                                                                            21%                                          77%
       concentration and top 10                                                                 72%
                                                                                                                          59%
       customers account for 13%                                                                                                                                                      50%
                                                                                                                                                                         40%
       of revenue per LTM August                                                                                                                      29%
       2017
                                                                       Total              Manufacturing              Retail, media                   Utility         Transportation   Public   Microverticals
                                                                                          & Construction              & fashion                                        & services
      Narrow verticals such as
       Utility, Transportation &                                                                                        Top 10 largest               Top 11-20 largest     Others
       Services and Public will
       naturally have higher
       customer concentration as                          Customer satisfaction²
       there are fewer companies
       to service in these verticals

       Customer satisfaction is
                                                                                                                      66                                                    70
  
       generally increasing
                                                                                                                                                      +4

                                                                                                                      2016                                                   2017

1) LTM per August 2017, excluding Kombit A/S, 2) Customer satisfaction measured on 0-100 scale, where 0 is the lowest and 100 largest satisfaction
                                                                                                                                                                                                                  15
x.
5 High recurring business with low capex needs going forward

Focus on integration of acquisitions and strict cost control

  Comments                                                High share of recurring revenue
      The increase in recurring
       revenue from 2015 to
       2016 is mainly driven by                                                         2015                                           2016                           Q3 2017
       the acquisition of
       Silkeborg Data                                                                                                                                                                     Recurring
                                                                                               37%
                                                                                                                                          46%                      51%         49%        Non-recurring
                                                                                                                              54%
                                                                                  63%
      EG has had several capex
       intensive Software and
       Development projects
       during 2016 and 2017
       which will soon be                                 Capex intensive software and development projects from 2016 and 2017 soon finalised
       finalised, leading to a
       strong cash generation in                              DKKm
       2018                                                   150                                                                             144                                                     8%
                                                                                                                                              7%

      With a high share of
                                                                                                                                                                                                      6%
       recurring revenue the                                                                                                                                             95
                                                              100
       lower capex spend for                                                                                                                                             5%
                                                                                                                                                                                        Capex
       2018 can provide a higher                                                                                                                                                       expected
                                                                                  4%                               4%                                                                                 4%
       cash EBITDA                                                                60                                    63                                                           around 2-3%
                                                                                                                                                                                      of revenue
                                                               50
      Cash conversion¹ is                                                                                                                                                                            2%
       estimated to
       increase from the range
       of 53% - 69% in 2014 –                                    0                                                                                                                                    0%
       2017 to more than 80%                                                     2014                             2015                        2016                     FC 2017         2018E
       in 2018                                                                                                    69%                           53%                      63%           >80%
                                                           Cash conversion         66%
                                                                                                        Capex (software & development)                Capex in % of revenue

1) Cash conversion: (reported EBITDA (excl. KY) less capex) / reported EBITDA (excl. KY). Source: EG financial reports, company data
                                                                                                                                                                                                           16
x.
6 Strong and supportive ownership

Axcel has a strong track record of value creation from more than 40 investments drawing
on +20 years of experience
  Selected investments   Axcel in brief

                            Founded in 1994, Axcel is a Nordic private equity firm investing in mid-market businesses based in the Nordics
                            Focus on industrials, business services, IT & technology, and consumer & retail
  Sector
                            Axcel has raised five funds with total committed capital of EUR 1.8bn to date from both Danish and international
  High-tech slaughter
  equipment                  investors. Axcel is currently investing out of fund V with a committed capital of EUR 550m
  Sales:                    EG sits in Axcel’s Fund IV with a committed capital of EUR 485m
  DKK 1,300m (2016)
  Investment date           Axcel currently owns ten companies with combined annual revenue of around EUR 1.2bn and some 5,800 employees
  August 2016
                            Axcel has completed 47 platform investments, more than 90 major add-on investments and 38 exits

                         First class board members

  Sector
  IT infrastructure                                                Martin Lippert                                    Klaus Holse
                                                                   • EG Board member since 2013                      • EG Chairman since 2013
  solutions                                                        • Position: CEO of Broadnet. Board                • Position: CEO of SimCorp, Chairman
  Sales:                                                             member of Halberg Holding                         of Lessor, Board member of Better
  DKK 800m (2016)            Right industry                        • Background: CEO of TDC Operations,                Collective
  Investment date                                                    Member of TDC group management,                 • Background: Corporate Vice
                             experts for EG
  May 2015                                                           Head of TDC Bedrift, CEO of Mach                  President at Microsoft with
                                                                   • MSc in Economics and PhD in                       responsibility for Western Europe
                                                                     Economics from Aarhus University                • Master’s degree in Computer Science
                                                                                                                       from University of Copenhagen

  Sector                                                                                           Investments are supported by the
  Manufacturer of                                                                                  AXCELerating Value Creation framework
  jewellery
  Sales:
  DKK 9bn (2013)
  Investment date
                                 AXCELerating Value Creation                                        Strategy
  March 2008
                                                                                                    Value levers
                                                                                                    Operational backbone

Source: Axcel
                                                                                                                                                             17
Strategic themes

Three overarching strategic themes

                  Accelerate organic growth
        1

                     Continue to develop and deepen industry solutions based on EG software, EG services and 3rd party
                      solutions
                     Maintain and improve high customer satisfaction
                     Engage more broadly with existing customers and add more customers within existing verticals

        2         Improve efficiency

                     Strengthen commercial and operational excellence
                     Strengthen nearshore/offshore capacity
                     Standardize software and service solutions to increase repeatability

        3         Expand presence

                     Continue acquisitions to strengthen position in software business
                     Utilize proprietary software solutions (EG IP) to expand EG footprint in Sweden & Norway, and
                      increase EG IP revenue through channels in rest of world

                                                                                                                          18
Agenda

                                              Page

 Transaction summary                             2

 Introduction                                    5

 Key credit highlights and company overview      9

 Financial information                         19

 Summary                                        23

 Risk factors                                   25

                                                     19
Income statement

                                                    Q3                Q3               YTD             LTM Q3             Development of key income statement items (DKKm)
 DKKm
                                                   2016              2017              2017             2017              400                                                                   20%
                                                                                                                                                                     354
 Revenue                                              459               446              1,393             1,935                                                                    320
                                                                                                                          300                          282                                      16%
 Gross profit                                         363               352              1,033             1,446                        229
                                                                                                                                                                                                12%
 EBITDA                                               102                45               -48                21           200
                                                                                                                                                                                                8%
 EBITDA, excl. KY                                     106                45               145               242           100                                                                   4%
 Normalizations:                                                                                                              0                                                                 0%
 Acquisition/sale of                                                                                                                    2014           2015          2016       LTM Q3 2017
                                                        0                 0                 0                27
 activities/companies¹
                                                                                                                                  Normalized EBITDA, excl. KY    Normalized EBITDA margin, excl. KY
 Restructuring expenses                                 6                 4                13                38
 Transaction & integration                                                                                                Comments
                                                        0                 9                12                14
 costs                                                                                                                       LTM revenue (excl. KY) is DKK 2,013m
 Normalizations, total                                  7                13                24                78              LTM reported EBITDA (excl. KY) is DKK 242m
                                                                                                                              and LTM normalised EBITDA is DKK 320m
 Normalized EBITDA                                    109                57               -24                99
                                                                                                                             Reported revenue for Q3 2017 is DKK 446m, compared to DKK 459m for
 Normalized EBITDA, excl. KY                          113                57               169               320               Q3 2016, there is a slight increase in reported revenue from Q3 2016 to
                                                                                                                              Q3 2017 if Q3 2016 is adjusted for KY
 Normalized EBITA                                      92                34               -86                18
                                                                                                                             Reported EBITDA for Q3 2017 is DKK 45m. Adjusted for one-off income in
 Normalized EBITA, excl. KY                            96                34               107               239               Q3 2016 and non-recurring costs in Q3 2017 reported EBITDA was at the
                                                                                                                              same level in Q3 2016 and Q3 2017
1) Acquired companies may not have prepared interim financial statements to the same accounting principles as EG.
Normalizations of acquired companies under “Acquisitions/sale of activities” is therefore estimated on the basis of the      Q3 2017 is not affected by KY, as the company made the projected
financial due diligence performed in connection with the acquisition.
                                                                                                                              provisions on this project in connection with Q2 2017 accounts
                                                                                                                             The company has in recent months had a good order intake which is
                                                                                                                              expected to affect the organic growth in the service business in the
                                                                                                                              future. The software business continues to develop positively, which is
                                                                                                                              also expected in the future

                                                                                                                                                                                                        20
Cash flow statement

Selected items from the cash flow statement                       Comments
                                                                     The company’s cash flow from operating activities before financial items
                                                                      amount to DKK 100m. After payment of interest, cash flow from ordinary
 DKKm                                         Q3 2016   Q3 2017
                                                                      activities amount to DKK 16m. Cash flow from operating activities amount
 Cash flows from operating activities:                                to DKK 14m
 Cash flow from operating activities before     154       100        Cash flow from investing activities amount to DKK -262m, primarily
 financial items                                                      covering acquisitions, investment in product and software development
                                                                      and investment in technical equipment
 Cash flow from ordinary activities             76        16
                                                                     Cash flow from financing activities amount to DKK 204m
 Cash flow from operating activities            60        14
                                                                     Change in liquidity for the year amount to DKK -45m
                                                                     The company’s net cash amounted to DKK -42m at 30 September 2017
 Cash flow from investing activities            -138      -262

 Cash flow financing activities                  4        204

 Change in liquidity for the year               -74       -45
 Cash 1 January                                 91         3
 Cash 30 September, net                         17        -42

                                                                                                                                                 21
Balance sheet

Selected balance sheet items                       Comments
                                                       The company’s non-current assets amounts to DKK 2,036m, primarily in
 DKKm                          Q3 2016   Q3 2017        the form of goodwill and other intangible assets acquired in connection
                                                        with company acquisitions
 Non-current assets             2,132     2,036
                                                       The company reported a negative working capital of DKK -317m. The
 Inventory                        8         6           increase in reported net working capital is affected by a reversal of work
                                                        in progress, penalties to the customer and payment of costs for the
 Trade receivables               223       320          remainder of the contract term
 Contract work in progress       96        19          The company's net interest-bearing debt at the end of Q3 was
                                                        DKK 1,642m
 Prepaid rent and deposits       11        13
                                                       The company’s equity as at 30 September 2017 amounted to DKK -143m
 Other receivables               77        42
                                                        compared to DKK 128m as at 31 December 2016
 Prepayments                     41        37          In contract work in progress for Q3 2016, KY is included with DKK 60m
 Trade payables                 -103       -95         In other payables for Q3 2017, KY is included with DKK 88m
 Other payables                 -318      -513
 Accruals                       -104      -146
                                                                                              Provision
 Reported NWC                    -69      -317                                  Hedge                        Retained
                                                       Equity                                   dev.                       Total
                                                                              accounting                     earnings
                                                                                              projects
                                                       Equity as at 31
 Cash                            17        -42                                    -17            112            33          128
                                                       December 2016
 Bank loan                      -300      -500         Total income for the
                                                                                    0              0           -271         -271
                                                       year
 Bond debt                      -1,100    -1,100       Equity as at 30 Sept
                                                                                  -17            112           -237        -143
                                                       2017
 Tax payable                     -20        0
 Interest-bearing net debt     -1,403    -1,642

                                                                                                                                     22
Agenda

                                              Page

 Transaction summary                             2

 Introduction                                    5

 Key credit highlights and company overview      9

 Financial information                          19

 Summary                                       23

 Risk factors                                   25

                                                     23
Summary

         Leading Scandinavian technology company

         Full life cycle service solutions

         Unique in vertical focus and deep sector knowledge

         Broad diversification across geographical, markets, technologies and customers

         Large share of recurring business

         High cash conversion

         Experienced management team and strong and supportive ownership

                                                                                           24
Agenda

                                              Page

 Transaction summary                             2

 Introduction                                    5

 Key credit highlights and company overview      9

 Financial information                          19

 Summary                                        23

 Risk factors                                  25

                                                     25
Risk Factors

Risk factors in general
 Prospective investors should carefully consider the risks described below before making an investment decision. Since the Issuer is highly dependent on the performance of the Group, the following risk
 factors relate to the Group, rather than only to the Issuer. The risks described below are not the only risks facing the Group. Investment in the Bonds involves a high degree of risk and to the extent
 any of the risks described below have a material adverse effect on the Group’s business, Bondholders may lose all or part of their original investment.

 The Issuer believes that the factors described below represent the principal risks inherent in the Group’s business and in investing in the Bonds. The Issuer does not represent that the statements
 below regarding the risks of holding the Bonds are exhaustive. Additional risk factors not presently known, or that are currently deemed immaterial, may also render the Issuer unable to pay interest,
 principal or other amounts on or in connection with the Bonds.

 RISK FACTORS IN GENERAL
 All of these factors are contingencies which may or may not occur and the Issuer is not in a position to express a view on the likelihood of any such contingency occurring. It is not possible to quantify
 the significance of each individual risk factor, as each risk described below may materialize to a greater or lesser degree, or may have unforeseen consequences. The risk factors are not listed in any
 order of priority with regard to significance or likelihood of occurrence.

 Prospective investors should also read the detailed information regarding the Group, its business and industry in general as set out elsewhere in this Company Description, in the Issuer’s annual report,
 other financial reports, investor presentations and otherwise available to the investors in order to reach their own views prior to making any investment decision with respect to the Bonds. Prospective
 investors are recommended to seek independent advice concerning legal, accounting and tax issues relating to the specific circumstances of individual investors before deciding whether or not to invest
 in the Bonds.

 Investors should be aware that the Bonds are exposed to market conditions of a general nature. Accordingly, the market price of the Bonds may be influenced by, for example, economic factors that
 cannot be foreseen at the time of investment. Investors should be aware that the number of Bonds in circulation may fluctuate over the term of the Bonds and that the marketability of the Bonds in the
 secondary market may change over the term of the Bonds, thus limiting investors’ ability to sell the Bonds. In conducting its business activities, the Group assumes risks of a varying nature, any and all
 of which may affect the Group's performance and the value of the Bonds.

 Each of the risks set out below applies equally to the Issuer and the Group and the occurrence of any of the following risk factors may materially and adversely affect the Group's business, results of
 operations or financial condition and consequently have a negative effect on the Issuer and its ability to meet its respective obligations under the Bond Agreement.

 Intra-group dependencies
 A significant part of the Issuer’s assets are comprised of its shareholdings in its subsidiaries. The Issuer has limited income and a significant part of the Issuer’s income derives from dividends
 distributed by its subsidiaries. The Issuer and its ability to pay interest, principal and other amounts under financial indebtedness are therefore dependent on the capacity of the Group to generate
 earnings and distribute these within the Group.

 Global Economy
 The Group operates primarily in Denmark, Norway and Sweden and to a certain extent also worldwide, particularly with Scandinavian based global companies. The Group's operations and performance
 depend on economic conditions and the effects thereof on and within the Manufacturing & Construction, Retail, Media & Fashion, Utility, Transportation & Service Public sectors and the selected
 Microverticals sectors in Division Business Ready Solutions (e.g. Healthcare, Housing & Property, Hairdressers, Cemeteries, Legal Solutions).

                                                                                                                                                                                                               26
Risk Factors - continued

Risks related to the business
 Uncertainty about global economic conditions poses a risk as consumers and businesses may postpone or reduce spending in response to tighter credit, negative financial news or declines in income or
 asset values and other macroeconomic factors, which could have a material negative effect on demand for the Group’s software, services and products. The Group's revenues and gross margins are
 dependent upon demand for the Group’s software, services and products and if this demand declines or the margins decline, it could have a material adverse effect on the Group’s business, results of
 operations or financial condition.

 The economic environment, pricing pressure and decreased employee utilization rates could negatively impact the Group’s revenues and operating results.

 The Group is unable to predict the likely duration and severity of an economic downturn and adverse global economic conditions. An economic downturn could have a material adverse effect on the
 Group’s business, results of operations or financial condition. Furthermore, if the economic downturn continues or worsens, the Group may not be able to secure short-term and long-term credit or
 leasing facilities on favorable terms or at all, which could have a material adverse effect on the Group's liquidity.

 Industry and market risks
 Technology changes
 Rising new technologies such as cloud-based solutions and mobile technologies are gaining traction. Today, a considerable amount of the Group’s revenues are derived from cloud-based solutions, but
 other unknown technologies may arise and change the foundation for the software, services and products offered by the Group. Existing ERP-players such as the Group will have to adjust their
 software, services and product offerings with the emergence of new technologies, and if the Group does not manage to adjust its software, services and products accordingly, then it may have a
 material adverse effect on the Group’s business, results of operations or financial condition.

 The Group’s financial condition is partly dependent on solutions based on large software platforms. These standardized solutions are offered in a highly competitive and specialized market. The Group is
 dependent on its ability to develop scalable best-in-class industry solutions that supplement these standardized solutions. Changes in the technical foundations of the standardized solutions and/or
 changes in customers’ preferred ERP platforms may force the Group to alter its products accordingly. The Group is forced to invest time and resources on educating employees and updating existing
 software, services and products to be competitive when updated versions of existing technologies and completely new technologies are launched. If the updated versions of existing technologies or the
 completely new technologies do not penetrate the market, these investments may prove futile. Furthermore, the updated versions of existing technologies may contain errors and flaws, which are
 outside of the Group’s control. These errors and flaws may entail difficulties for the Group to price and budget project offerings for customers. The Group’s business will suffer if the Group fails to
 anticipate and develop new services and enhance existing services in order to keep pace with rapid changes in technology, in the industries and in the standardized solutions on which the Group
 focuses. This could have a material adverse effect on the Group’s business, results of operation or financial condition.

 Com petition
 The Group may face significant competitive pressure from other participants in the market resulting in pricing pressures, lower sales and reduced margins, which could have a material adverse effect
 on the Group’s business, results of operations or financial condition.

 A significant part of the Group’s revenues are based upon customized add-on solutions to standard software supplied by platform providers, primarily Microsoft, and to a very limited degree SAP. In
 Scandinavia the platform providers do not deliver such customized solutions and the Group competes with smaller specialized companies e.g. CGI, Columbus IT, Fujitsu, KMD, Infor, iStone, NNIT,
 Netcompany, Tieto and Visma.

 A part of the Group’s activities within standardized solutions is subject to competition from competitors based in countries with a lower level of expenses. As the global market place develops with
 among other things the development of cloud technology lower market entry barriers are expected. If the Group does not meet these challenges it may have a material adverse effect on the Group’s

                                                                                                                                                                                                         27
Risk Factors - continued

Risks related to the business
 business, results of operations or financial condition.

 Industry changes
 The balance between insourcing and outsourcing is constantly changing. An increased focus on insourcing will lead to falling sales especially within service agreements, while a decreased focus on
 insourcing will lead to rising sales.

 If major platform service providers such as Microsoft seek downstream expansion in the value chain and increase their attention towards developing their own industry solutions then it may pose a risk
 which unless mitigated by the Group may have material adverse effect on the Group’s business, results of operations or financial condition.

 Changes in custom er preferences
 Changes in customer preferences or behaviour unless mitigated by the Group may have a material adverse effect on the Goup’s business, results of operations or financial condition.

 R isk related to public custom ers
 The Group works with public customers and is exposed to additional risks inherent in the public sector contracting environment.

 These risks include the following:
 such projects may be subject to a higher risk of reduction in scope or termination than other contracts due to political and economic factors such as changes in government, pending elections or the
 reduction in, or absence of, adequate funding;
 terms and conditions of public sector contracts tend to be more onerous for the Group than commercial contracts in the private sector and may include, for example, more punitive service level
 penalties and less advantageous limitations on the Group’s liability. Also, the terms of such contracts are often subject to political and economic factors;
 public sector contracts are often subject to more publicity than other contracts. Any negative publicity related to such contracts, regardless of the accuracy of such publicity, may adversely affect our
 business or reputation;
 new public procurement laws and regulations or changes in the applicability or interpretation of existing public procurement laws and regulations may adversely affect the Group’s business activities
 and may result in a risk of reduced revenues and/or increased costs; and
 such projects differ from commercial contracts in the private sector in that they are generally subject to Danish public procurement rules. Under these rules, IT-services are generally re-tendered on a
 regular basis, and, as a result, the Group is required to participate in a tender to maintain existing public contracts.

 Operational risks
 Innovation and softw are developm ent
 In order for the Group to remain competitive within its markets, it is important that the Group is able to develop and launch new software, services and products, update existing products and services
 and expand new or redesigned products and services in a timely manner. Failure by the Group to do so might result in the Group falling behind its competitors. There are risks with launching a new
 product on to the market. The Group’s software, services and products are complex and may contain errors, faults, performance problems or defects which were undetected in testing. It is important
 that both the Group’s support and research and development teams become familiar with new software, services and products so as to be able to efficiently respond to any problems that may arise.

 Once a product is launched, it is necessary to ensure that quality standards are maintained to ensure continuing customer satisfaction and confidence. If problems were to occur which are not
 adequately managed it could damage the Group’s reputation and prove more difficult to market the product. If these risks were to arise they may adversely impact the Group’s business, results of

                                                                                                                                                                                                              28
Risk Factors - continued

Risks related to the business
 operations or financial condition.

 Com patibility
 In order for the Group to remain competitive within its market, compatibility with other significant components and general IT standards is required. Failure by the Group’s products to be compatible
 with other components might result in the Group falling behind its competitors and in loss of customers. If the issue of compatibility is not adequately managed it could damage the Group’s reputation
 and make it more difficult for the Group to market its products. This may have an adverse effect on the Group’s business, results of operations or financial condition.

 P roject M anagem ent
 The management consultancy and programming/configuring part of the Group is project driven and requires the Group to ensure that the offer documents have high standards and that the subsequent
 management of the projects and resources is closely supervised. It is of vital importance that the projects are carried through with high quality in accordance with the agreed price and deadline. There
 are risks connected to marketing, sales, analysis and design, development, implementation and operation in the Group’s project planning. The Group has established well planned phases and has
 experience with calculating the risk of budgeting, resourcing and quality. As fixed prices become more common in the industry there is a risk that a project exceeds the anticipated number of hours
 based on a flawed estimation of the necessary resources. Furthermore there is a risk when defining and describing the software, service and/or product to be delivered as there may occur
 misunderstandings between the Group and customers on the customers’ objectives may result in re-deliverance or disputes.

 Connection w ith M icrosoft
 The Group’s business and operations are among other things based on sales of standard Microsoft licenses and individually designed solutions based on Microsoft products but the Group has not
 entered into any agreements with Microsoft that are unusual or peculiar within the industry. However, if Microsoft’s market share decreases, it may have an adverse effect on the Group’s business,
 results of operations and financial condition.

 Custom er Concentration
 The Group operates mainly in Denmark, Norway and Sweden and has a large customer base. Currently the Group has a diversified customer base with low dependency on single customers. Based on
 LTM Q3 2017, the 10 largest customers accounted for approx. 13 per cent of the Group’s revenues, while top 20 per cent accounted for approx. 18 per cent. The Group’s division Citizen Solutions is
 characterized by having relatively larger customers than the rest of the divisions. Dependency on one or more customers within Citizen Solutions may have material adverse effect on the division’s
 business and results of operations.

 Attack by IT viruses or ransom w are
 Attacks by IT viruses or ransomware are a threat, both to the Group and its customers. If the Group’s products or internal IT systems are contaminated with a virus/ransomware this could temporarily
 prevent the Group’s customers from conducting their business or the Group from providing adequate support and services to its customers. Failure to maintain sound IT infrastructure and virus
 protection could therefore result in disruptions and if they were to continue for a considerable length of time they may adversely impact the Group’s business, results of operations or financial
 condition.

 Fires and other natural catastrophic events
 The Group’s servers, systems and physical operations are vulnerable to damage or interruption from earthquakes, volcanoes, fires, floods, power losses, telecommunications failures, terrorist attacks,
 acts of war, human errors, break-ins and similar events. The Group may not have sufficient protection or recovery plans in certain circumstances and the Group’s business interruption insurance may
 be insufficient to compensate the Group for losses that may occur. As the Group relies heavily on its servers, systems, physical operations and the Internet to conduct its business such disruptions
 could negatively impact the Group’s ability to run the business, which could have an adverse affect on the Group’s business, results of operations or financial conditions.

                                                                                                                                                                                                           29
Risk Factors - continued

Risks related to the business
 Acquisitions
 The business segments within which the Group is active are subject to continuous consolidation driven by the increase in cross-border trade and the search for economies of scale. As illustrated by the
 acquisition of Silkeborg Data, the strategy of the Group is to participate actively in this consolidation process. This strategy for long-term growth, improved productivity and profitability depends in part
 on the Group's ability to make acquisitions and to realize the expected benefits from its acquisitions. While the Group expects such acquisitions to enhance its value proposition to customers and
 improve its long-term profitability, there can be no assurance that the acquisitions will meet the Group's expectations within the established time frame or at all.

 Acquisitions involve a significant number of risks, including, but not limited to, risks arising from change of control provisions in contracts of any acquired company, local law factors, pending and
 threatening lawsuits and risks associated with restructuring operations. The integration of acquired companies may result in unforeseen operational difficulties and costs, and the Group may encounter
 unforeseen difficulty in retaining customers from and key personnel in acquired businesses. The Group may not be able to realize the expected benefits from a certain acquisition or the profitability of
 the acquired company may be lower than expected or even result in a loss.

 To successfully manage the integration of acquired companies or assets, the Group will need to maintain high standards of service and manage its employees effectively. The Group's successful growth
 will furthermore depend on its ability to manage its expanding operations, as well as the operations of the networks of its local partners, including its ability to establish and maintain an adequate IT
 infrastructure, to integrate new qualified personnel and any newly acquired businesses on a timely basis, and to maintain robust financial and management control and reporting systems and
 procedures. There is a risk that the Group will not succeed in such integration.

 If the Group is unable to expand its operational, financial, and management systems in a manner that supports the expected growth, or is unable to attract, motivate and manage a skilled workforce,
 the Group may not be able to continue to satisfy customer demands. If the Group expands the business too rapidly in anticipation of increased customer demand that does not materialize, the increase
 in operating expenses could exceed revenues growth and as a result reduce net income. Thus if the Group is unable to manage its growth, it could have a material adverse effect on the Group’s
 business, results of operations or financial condition.

 The Group has built up considerable goodwill on its accounts due to acquisitions. Notwithstanding that the goodwill is impairment tested annually the rise of new “game changing” or transformational
 technology may entail that the goodwill must be immediately written off.

 Risks related to employees
 Attracting and retaining em ployees
 To a large extent the Group relies on human know-how. The employees of the Group have specific sector related know-how, which is valuable for the Group. The Group has not generally entered into
 non-competition or non-solicitation clauses. If employees with specific sector related know-how leave the Group, the Group might lose valuable knowledge and the employees might be hired by
 competitors or establish their own companies.

 The customers of the Group require deep sector knowledge including supply chain knowledge and understanding. To ensure the Group continues to offer high level advice and solutions, including
 further development of software, services and products, thereby ensuring profitability the Group depends largely upon highly skilled technology professionals and the Group’s ability to hire, attract,
 motivate, retain and train these personnel. Key employees might be attracted to opportunities in rising market. A failure to attract and retain competent key employees could have a material adverse
 effect on the Group’s business, results of operations or financial conditions.

 Invoicing rate
 The Group is highly dependent on its employees’ invoicing rate, which equals their billable hours. The invoicing rate depends on the composition of the staff as well as how the individual employee

                                                                                                                                                                                                                  30
Risk Factors - continued

Risks related to the business
 spends his time. In 2016, a change in the invoicing rate of 1.00 percentage point across the Group would have resulted in an increase in the gross profit and thus in EBITDA of DKK 18 million (taking
 into account fixed price contracts), and vise versa by a reduction in the invoicing rate. A decline in the employees’ invoicing rate across the Group could have a material adverse effect on the Group’s
 business, results of operations or financial condition.

 Increased w age pressure
 In certain industry sectors and countries there continues to be a significant wage pressure due to the demand for skilled employees. In a positive economic environment wage pressure and employee
 turnover will rise. This may cause heavier expenses for training of new employees. If the Group does not comply with the wage demands within these industry sectors and countries, the Group may
 lose valuable employees. Wage pressure and employee turnover may have an adverse effect on the Group’s profitability

 IPR and Legal Risks
 Contractual liability
 Typically a service agreement contains provisions requiring a high percentage of uptime as well as other service requirements. In connection with the contract negotiation phase the Group seeks to
 draft provisions that mitigate the size of potential liability claims and penalties. The Group has established internal controls to secure reasonable liability provisions when entering into agreements.
 Nevertheless, the Group is exposed to contractual liabilities, which could have a material adverse effect if such exposure materializes. Moreover, human errors in judgment may cause the Group to
 accept contractual liability provisions inadvertently or outside of internal control systems established to secure management approvals.

 Under some contracts or legal regimes the Group may have unlimited liability for losses caused by its own negligence, and such liability may not be covered by the Group’s insurance policies.

 Litigation and disputes
 The Group’s software, services and products relate to extensive, complex transactions often involving considerable sums. Customers or other parties may file claims for compensation for loss or
 damage alleged to have arisen due to reported faults or defects in the Group’s software, services, products and management or the Group may become party to judicial or administrative proceedings
 relating to the Group’s business, including, responsibility for software, services and products as well as contractual interpretation and intellectual property rights. Any such claims against the Group or
 the Group’s involvement in any judicial or administrative proceedings in respect of such claims could mean that the Group is forced to expend considerable sums and resources in defending such
 claims, whether or not they have legal merit, and this could adversely impact the Group’s business, results of operations or financial condition.

 Insurance
 The Group believes that is has a normal, market standard insurance program. The insurance program is reviewed once a year. However, the insurance program contains provisions on own risk and not
 all types of losses and liabilities are covered. If a loss occurs that the insurance does not cover, it may have a material adverse effect on the Group.

 Com petition
 The Group has entered, enters and will enter into agreements with other companies who in some aspects of the Group’s business may be assessed as competitors of the Group. The Group does not
 believe that it has entered into any agreements that contain provisions that infringe current competition law. However, the competition authorities in various jurisdictions may interpret the agreements
 otherwise. Furthermore, there cannot be given any assurance that an adoption of new competition legislation will not result in certain of the provisions of the agreements being deemed to be an
 infringement of the new competition law. If the Group fails to comply with the existing competition law this could adversely impact the Group’s business, results of operations or financial condition.

                                                                                                                                                                                                                31
Risk Factors - continued

Risks related to the business
 Intellectual property rights
 The products marketed by the Group consist mainly of computer programs developed by the Group over a long period of time. The Group relies primarily on copyright and trade secret protection, and
 not on registered rights, for the computer programs in question. It cannot be assured that the intellectual property rights relied on by the Group will afford sufficient protection of the Group’s
 technology or business and given the international market in which the Group operates, any attempt to take measures against any infringement of its intellectual property rights may be difficult and
 result in considerable costs. If the risk of infringement and the fetters on access to judicial remedies were to materialize, it may adversely impact the Group’s business, results of operations or financial
 conditions.

 In addition the Group has and may in the future enter into cooperation agreements and other contractual arrangements with third parties that allow such third party to use knowledge obtained during
 such cooperation or the right to use any source codes, which may include the third party applying such knowledge in its own products and services.

 The Group does not consider that its software, services and products infringe the rights of any third party. Nevertheless, customers or others might make claims to the contrary whether or not they
 have legal merit. If such claims were to be made the Group may be prevented from licensing the necessary technology or be unable to develop alternative software, services or products to avoid such
 claims of infringement and continue to deliver the software, services and products to its customers. The Group gives its customers certain guarantees and indemnities including, amongst others, that
 the Group holds all necessary rights to the products that are made available to the customers. If any claims were filed against customers, enforcement of the guarantee or infringement claims under
 the indemnity may result in considerable costs for the Group, which may adversely impact the Group’s business, results of operations or financial condition.

 Open Source
 The Group incorporates open source software into the Group’s platform. The Group believes that the use of open source codes has not surpassed what is deemed ordinary within the industry. It is
 within ordinary practice for Danish and Scandinavian companies, who offer and develop proprietary solutions, to use open source codes when developing proprietary solutions, including use of open
 source components. Given the nature of open source software, third parties might assert copyright and other intellectual property infringement claims against the Group based on the Group’s use of
 certain open source software programs. The Group could be required to seek licenses from third parties in order to continue offering the Group’s software, services and products, to re-develop the
 Group’s software, services and products, to discontinue sales of the Group’s software, services and products, or to release the Group’s proprietary software source code under the terms of an open
 source license, any of which could adversely affect the Group’s business. This may adversely impact the Group’s business, results of operations or financial condition.

 Legislation and regulations
 As the Group’s business activities are spread over a number of geographical markets, it is exposed to many different laws, regulations, ordinances, agreements and guidelines. New laws and
 regulations or changes in the applicability of existing laws and regulations to the Group’s business activities may result in a risk of reduced revenues and/or increased costs. If changes in laws or
 regulations, or their applicability to the Group’s activities, were to occur it may adversely impact the Group’s business, results of operations or financial condition.

 N ew accounting standards, am endm ents and interpretations
 The Group is affected by the accounting principles applicable from time to time, for example IFRS and other international accounting standards. This implies that there is a risk that the Group’s
 accounting, financial reporting and internal control in the future may be affected by and needs to be adapted to new accounting rules or changed application of the accounting rules in force. This may
 cause uncertainties in relation to the Group’s accounting, financial reporting and internal control, and may negatively affect the Group’s reported results, assets and equity, which in turn may have a
 material negative impact on the Group’s operations, earnings and financial position.

 IFRS 15 (Revenue from Contracts with Customers) will apply to the Group from 1 January 2018. The impact of the standard is currently being assessed and it could adversely impact the Group’s
 accounting and financial results.

                                                                                                                                                                                                                  32
Risk Factors - continued

Risks related to the business
 Financial Risks
 Seasonality
 The Group’s earnings and turnover may vary from period to period. If the spreading of earnings and turnover over a year surpasses expectations it may have an influence on the Group’s liquidity as a
 part of the Group’s expenses do not fluctuate with the revenues on a short term basis.

 The Group’s biggest single expense is salary. Almost all staff are hired as salaried employees. It is therefore not possible to reduce the major part of the Group’s expenses on a short term basis. The
 Group has launched programs to minimize this risk. If the programs do not have the expected effect it may adversely impact the Group’s business, results of operations or financial condition.

 R isk of refinancing and financial covenants
 The Group has debt obligations and is required to dedicate a portion of its cash flows to service the debt, which reduces cash available to fund acquisitions and to finance operations, capital
 expenditures, working capital and other general corporate purposes. A part of the Group’s financing is short term financing, making the Group dependent on having such credit facilities renewed from
 time to time. If any of the lenders under such financing agreements are unwilling to extend such arrangements and the Group is unable to find an alternative source of funding at comparable rates,
 this may affect the Group’s liquidity adversely or increase the Group’s interest expenses substantially. Furthermore, the level of indebtedness may render the Group unable to secure new credit facilities
 when required, either on commercially attractive terms or at all.

 The Group’s ability to make payments on and to refinance its debt, and to fund planned capital expenditures and other strategic investments will depend on its ability to generate cash in the future.
 This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are outside the Group’s control.

 There can be no assurance that the Group’s business will generate sufficient cash flows from operations or that future debt and equity financing will be available in an amount sufficient to enable the
 Group to pay its debts as they fall due or to fund other liquidity needs.

 Certain of the Group’s financing arrangements are subject to various covenants, including financial covenants included in the Bond Agreement, which could limit the Group’s ability to finance its
 operations and capital needs and pursue acquisitions and other business activities. There can be no assurance that the obligations contained in the aforementioned financing arrangements will be met.

 You are advised to carefully read the covenants in the Bond Agreement, including the carve-outs and permitted actions.

 A breach of the Group’s financing agreements may trigger cross-default or cross-acceleration provisions and provide a substantial number of the Group’s lenders with a right to cancel their
 commitments to the Group and require the outstanding indebtedness to be immediately repaid. In addition, an event of default would occur under the Bonds. In such circumstances, all of the Group’s
 debt could be accelerated at the same time.

 The occurrence of either of the above could have a material adverse effect on the Group’s ability to satisfy its debt obligations as they fall due and, as a result, could have a material adverse effect on
 its business, results of operations or financial condition.

                                                                                                                                                                                                                33
Risk Factors - continued

Risks related to the business
 Currency
 The Group’s accounts are consolidated in DKK, whereas a proportion of the proceeds of sale of the Group’s products and services outside Denmark are denominated in NOK and SEK. In the twelve
 months up to 30 September 2017 revenues in NOK constituted approximately 12 per cent and revenues in SEK approximately 10 per cent of the total consolidated revenues (excluding the KOMBIT
 contract). In the twelve months up to 30 September 2017 the EBITDA in NOK constituted approximately 2 per cent and EBITDA in SEK approximately zero per cent of the total EBITDA (excluding the
 KOMBIT contract). The Group is consequently exposed to currency risks, including currency exchange control risks and other restrictions by foreign governments. To some extent the Group hedges
 currency risks but there is no standard operating procedure requiring hedging in any event. Furthermore there are risks connected to conversion of intragroup outstanding accounts. Fluctuations in
 currency exchange rates, including primarily NOK and SEK, relative to DKK could have a material adverse effect on the Group’s business, results of operations or financial condition.

 Goodw ill
 See the section “Acquisitions” for the description on the risks related to goodwill.

 Tax ation and Duties
 The Group conducts its operations through companies in a number of different jurisdictions. Applicable taxes could increase significantly in each of these countries as a result of changes in the tax laws
 or their application. Furthermore, the Group may become subject to tax audits, which could increase the amount of tax that the Group is required to pay and have a material adverse effect on its
 business, results of operations or financial condition.

 The Group has transfer pricing arrangements among subsidiaries in relation to various aspects of the Group’s business, including operations, marketing, sales and delivery functions. Transfer pricing
 regulations require that any international transaction involving associated enterprises be on arm’s-length terms. The Group considers the transactions to be on arm’s-length terms. The determination of
 the Group’s consolidated provision for income taxes and other tax liabilities requires estimation, judgment and calculations where the ultimate tax determination may not be certain. The Group’s
 determination of its tax liability is always subject to review or examination by authorities in various jurisdictions.

                                                                                                                                                                                                           34
Risk Factors - continued

Risks related to the bonds
 Risks related to the bonds
 Suitability
 The Bonds may not be a suitable investment for all investors. Each prospective investor in the Bonds must determine the suitability of that investment in light of its own circumstances. In particular,
 each prospective investor should:
 (i) have sufficient knowledge and experience to make a meaningful evaluation of the Bonds, the merits and risks of investing in the Bonds and the information contained or incorporated by reference
 in this Company Description;
 (ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Bonds and the effect the Bonds will have on its
 overall investment portfolio;
 (iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in the Bonds, including Bonds where the currency for principal or interest payments is different from the
 potential investor’s currency;
 (iv) understand thoroughly the terms of the Bonds and be familiar with the behavior of any relevant indices and financial markets; and
 (v) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the
 applicable risks.

 Credit Risks
 The Group may become unable to pay interest, principal or other amounts on or in connection with the Bonds, which may affect the value of the Bonds adversely. An increased credit risk or decrease
 in the Group’s creditworthiness may have an effect on the market price of the Bonds.

 The Group’s ability to make payments on the Bonds will depend on its ability to generate cash or refinance itself in the future. This, to a certain extent, is subject to general economic, financial,
 competitive, legislative, regulatory and other factors that are outside the Group’s control.

 Registration
 The Bonds will be registered with VP Securities A/S and payment of interest, principal or other amounts on or in connection with the Bonds will be made through VP Securities A/S. The Bondholders will
 thus rely on VP Securities A/S’ procedures for transfer, payment and communication with the Group.

 Modification, Waivers and Substitution
 The terms of the Bonds contain provisions for calling meetings of Bondholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Bondholders,
 including Bondholders who did not attend and vote at the relevant meeting and Bondholders who voted in a manner contrary to the majority. A Bondholder may be adversely affected by such
 decisions.

 Bondholders Representation
 In accordance with the Bond Agreement, the Bond Trustee represents each Bondholder in all matters relating to the Bonds and the Bond Agreement and holds and shall enforce the Bond Agreement
 on behalf of the Bondholders. The Bond Agreement contains provisions to the effect that a Bondholder is prohibited from taking actions of its own against the Issuer. This does not, however, rule out
 the possibility that the Bondholders, in certain situations, could bring their own action against the Issuer, which could negatively impact the chances of an effective enforcement of the Bond Agreement.

                                                                                                                                                                                                               35
You can also read