DIBS Annual Report

Summary

DIBS (DIBS.ST)

Cash cow with rapid growth • DIBS is the market leader in the Nordics within

internet payment solutions.

• The company is active on a structurally growing market, which has continued to grow despite weaker economic climate. E-commerce is expected to keep growing at a rate above 10 percent over the next three years.

• DIBS generates strong cash flows, since the investment phase is mainly completed. The business model offers clear economies of scale and the company grows with increasing profitability. Despite a strong development in 2009, the share is not yet fully valued.

Redeye, Mäster Samuelsgatan 42, 10th floor, Box 7141, 103 87 Stockholm. Tel +46 8-545 013 30. E-mail: [email protected]

• ISIN: SE0001038092 ID: 800

List: First North Market cap: 555 MSEK Sector: IT CEO: Eric Wallin Chairman: Mats Sundström

Company Report September 8, 2009

Redeye Rating (0-10 points)

Key Ratios

2007 2008 2009e 2010e 2011e Revenue, MSEK 81 104 130 156 187 Growth 30% 29% 25% 20% 20%

EBITDA 21 29 44 53 64 EBITDA-margin 26% 28% 34% 34% 34%

EBIT 18 25 39 47 58 EBIT-margin 22% 24% 30% 30% 31%

Pre-tax earnings 18 25 39 47 58 Net earnings 20 27 28 33 41 Net-margin 25% 26% 21% 21% 22%

EPS 2.16 2.90 2.96 3.56 4.37 EPS adj. 2.37 2.90 2.96 3.56 4.37 P/E adj. 24.9 20.3 19.9 16.6 13.5 P/S 6.8 5.3 4.3 3.6 3.0 EV/S 6.5 4.8 3.7 3.1 2.6 EV/EBITDA adj. 23.0 17.1 11.0 9.1 7.5

Management

8.0 points

Growth potential

9.0 points

Profitability

10.0 points

Secure investment

8.5 points

Investment opportunity

6.0 points

Share information Share price (SEK) 59.0 No of shares (m) 9.4 Market cap (MSEK) 555 Net debt (MSEK) -74 Free float (%) 50.0 Daily turnover. (’000) 10 Analyst: Hjalmar Ahlberg [email protected]

Important information: All information regarding limitation of liability and potential conflict of interest can be found in the end of this report.

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Share performance DIBS

DIBS OMX

DIBS

Company Report 2

Redeye Rating aims to provide a good view of a share’s potential vis-à-vis risk. The rating consists of five valuation keys with each valuation key constituting an overall assessment of several factors that are rated from a scale of zero to 2 points (2 points: Good/Excellent, 1 point: Satisfactory, zero: Poor/Inadequate).

Redeye’s internal research handbook specifies in a standard way what is required for each rating factor. In certain cases, a factor could weigh more or less than the other factors depending on whether it is considered essential or insignificant. The maximum point for a valuation key is 10 points (full circle=red circle). The lowest point is zero (empty circle=gray circle). In short, it is the total rating that lays the ground for Redeye’s evaluation of the share, and not the individual rating factors. Management

The following factors are used to assess management: 1) historical performance; 2) industry experience; 3) market communication and 4) motivation. Historical performance is weighed twice as much because it is considered a critical factor. Growth Potential

The following factors are used to evaluate growth potential: 1) market size; 2) market growth; 3) partnerships; 4) product differentiation and 5) competitive situation. The above mentioned criteria are weighed equally in the overall assessment of growth potential as a valuation key. Profitability

The following factors are used to evaluate profitability: 1) stable profit growth; 2) gross margin; 3) EBIT margin and 4) return on equity (ROE). Stable profit growth is weighed twice as much as it is considered a crucial factor. Secure investment

The following factors are used to appraise if the investment is secure: 1) event independent (independent of specific events); 2) financial situation; 3) ownership structure; 4) sensitivity to business cycles and 5) share liquidity. The event independent and financial situation factors are multiplied by 1.5x as they are deemed very important. The weight of importance of sensitivity to business cycles as factor is multiplied by 0.5x. Investment opportunity

The factors that comprise assessment of the investment opportunity are: 1) fundamental valuation; 2) relative valuation; 3) market expectations 4) news flow/triggers and 5) undiscovered share. The fundamental valuation factor is weighed twice as much because it is considered extremely important, the news flow and undiscovered share factors are multiplied by 0.5x.

Redeye Rating: Background and definition

DIBS

Company Report 3

Content

Investment summary ................................................................. 4 Company description .................................................................. 5

Merger background ..................................................................................... 6 Business model ............................................................................................ 7

Costs and economies of scale .................................................................. 9 Geographical markets ........................................................................... 10

Products and technology ........................................................... 12 Security ...................................................................................................... 13

E-commerce market ................................................................. 14 Market size and product segments ............................................................ 14 Competitors ............................................................................................... 15

Financial estimates ................................................................... 17 Revenue and profitability .......................................................................... 17 Financial position ...................................................................................... 19

Valuation .................................................................................. 21 DCF and peer valuation ............................................................................. 21 Capital structure ........................................................................................ 23 Market consolidation ................................................................................. 24

SWOT ....................................................................................... 25 Summary Redeye Rating ........................................................... 26 Income statement and balance sheet ......................................... 27

DIBS

Company Report 4

Investment Summary

DIBS is a quickly growing company offering payment solutions for e-commerce. The company’s market cap is approximately SEK 500 million and in 2008 its total sales amounted to SEK 104.2 million and its operating result amounted to SEK 24.6 million. Redeye believes that the company will increase its sales with 20 percent per year during the next three years and show even faster increase in profits during the period. The underlying driver is the fast growth in e-commerce due to the migration from traditional commerce to online shopping. Therefore the growth is expected to be strong regardless of the weaker economic climate.

In addition, the company has potential to expand geographically, via existing clients but also to neighbouring markets. DIBS is today active on the Swedish, Danish and Norwegian markets. The largest share of revenue is generated in Sweden and Denmark, while Norway constitutes a smaller share. DIBS has also a minor presence in Finland.

DIBS has a very scalable business model and reached critical volume back in 2004. Since then profitability has gradually increased and the company is now generating an operating margin of approximately 25 percent. We see potential for further profit growth as economies of scale are kicking in. A broadened product portfolio that can be offered at a low marginal cost further increases the potential. At the same time, overall business risks are limited by the fact that the company takes no financial risk but rely on pure data processing of transactions. In addition, DIBS could expand down or upstream its value chain. The company has not released any such plans, maybe since it would entail a larger risk in the business and potentially could mean a departure from its independent position.

The risks for the company include a lower pace in the structural growth of e-commerce, where expectations are high. There are yet no negative signs, and a stable inflow of 500 new customers is achieved every quarter. An increased competition from the global players is also a threat to margins across the industry. At the same time, DIBS is an M&A target for global companies.

The company is traded at a P/E-ratio of 20x our estimated profit 2009. This is high, but motivated for a company expected to deliver plus 20 percent growth per year over the next couple of years. Compared to peers, the company is traded at a discount. The company holds a large cash position that could be used for acquisitions or paid out as dividend to its owners. Our DCF-valuation indicates a value per share of SEK 66, that is 15 percent above current share price.

DIBS is a quickly growing company offering payment solutions for e-commerce

DIBS grows with existing clients and through new clients intake as well as through geographical expansion and broadened product portfolio

The business model offers a clear scalability and we believe in rising profits

The risks consist of declining growth and increased competition

The valuation is high, but motivated and our DCF valuation indicates an upside of 15 percent above current level

DIBS

Company Report 5

The leading Internet PSP in the Nordics

DIBS is a Payment Service Provider (PSP) within payment solutions on Internet and the market leader in the Nordics. The company is listed at First North since June 2007 and was created in 2006 through a merger between Debitech of Sweden and the Danish company DIBS A/S. The two companies were both founded back in 1998 and at the time of the merger they were the market leaders in Sweden and Denmark respectively. The merger created the dominating player in the Nordics and an independent provider of Internet payment solutions.

The management consists of CEO Eric Wallin with a background in banking and co-founder of the Internet recruitment company Wideyes Sweden AB. Lars Friis is Executive Vice President (Vice VD) and CFO with a career in auditing. The Chief Technology Officer is Johan Nilsson, previously CEO for Swedish DebiTech and Head of Sales at DIBS. The chairman of the board is Mats Sundström, previously within the Kinnevik Group and founder of a venture capital company. Other members of the board include Mikael Konnerup with a large ownership stake in the company, Eva Ogestadh from SEB Strategic Investments, Henrik Aspén from Verdane Capital, Hennings Jensen who is partner at PlusCon (a consultancy within payment services) and Sven Matsson.

The business offering is to be the gateway between e-merchants and their financial partners. The product is a software platform for the transaction of payment data via Internet, but also at point of sales, sales over telephone and micro payments. DIBS offers several payment methods, mainly payments via cards or Internet but also through invoice.

DIBS has two streams of revenue; non-recurring revenues from new clients and recurring revenues through subscriptions and transaction revenues. The latter is variable revenue that grows as new clients come in but also as existing clients increase their e-commerce, as transaction revenues are based on the sales of the e-merchants. The costs are relatively fixed, as the major part, approx 50 percent, is personnel costs. Thereby the business has clear economies of scale, which it has successfully exploited the last two years as both sales and profitability have increased.

In 2008, net sales amounted to SEK 104.2 million, corresponding to an increase of 29 percent compared to 2007. The operating profit increased from SEK 18 million to SEK 24.6 million, thus the operating margin hiked from 22.3 percent to 23.6 percent. During the first half of 2009 the positive development has continued and the company reported net sales of SEK 62.5 million (growth of 26 percent) and an operating profit of SEK 18.5 million (growth of 68 percent) for the period.

DIBS is the leading Nordic provider of Internet payment solutions

Management includes CEO Eric Wallin, CFO Lars Friis and CTO Johan Nilsson

DIBS product is a payment solution linking e-merchants and their financial counterparts

A large chunk of the revenues are recurring and the costs are partly fixed giving a business model with great scalability

The company has historically achieved good growth, which continued into 2009 in a weaker macro environment

DIBS

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Merger background

The merger between DIBS and Debitech was completed in August 2006 as a merger of equals where the shareholders of the two companies obtained 50 percent each of the new entity. The two companies were of similar size and the rational was to create a larger entity to take advantage of the economies of scale that the PSP business model offers. The companies had also run into each other on respective home markets and a merger became a logical step. New security demands from banks that could require additional investments were hovering in the background, but through a merger these costs could be shared.

In 2005, DIBS A/S reported net sales of SEK 25.5 million and a profit before tax of SEK 7.1 million. During the same period, DebiTech´s net sales amounted to SEK 23.1 million and its profit before tax to SEK 6.5 million. Both companies had a profit margin before tax of approximately 28 percent.

In 2006, the merged company achieved net sales of SEK 62.3 million and a profit before tax of SEK 9.5 million, affected by non-recurring costs following the merger of SEK 6.4 million. Adjusted for this, the profit amounted to SEK 15.9 million, corresponding to an operating margin of approximately 25 percent. Hence, initially the profitability was hampered, partly due to the expansion in Norway, which by 2006 yet had to reach profitability.

An increased presence in Norway was achieved towards the end of 2007, with the acquisition of the Norwegian competitor Cardia AS. DIBS paid approximately SEK 23 million for the company, which had net sales of SEK 5.2 million during the first half of 2007. Growth during the last couple of years has been said to be around 30 percent per annum. Cardia was integrated during 2007 and 2008 and it generated benefits from end of 2008. Thereby the company could increase its profitability further from the beginning of 2009.

The Norwegian business has reported sales of between SEK 3 to 4 million during the last four quarters, with an increase during the last two quarters. That the increase did not happened until the last quarters is a reflection of DIBS strategy to first discontinue service to non-profitable customer accounts.

It was recently announced that DIBS has acquired Danish customers from a competitor. The number of customers or the acquisition price was not disclosed, but some guidance on the topic will be provided as the interim report for the third quarter is released clarifying the effects on the income statement.

DIBS was created through the merger of Swedish Debitech and Danish DIBS A/S

DIBS acquisitions following the listing consist of Cardia in Norway and recently acquired customer bases

DIBS

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Business Model

The value chain in e-commerce can practically be divided into three components; the consumers, the merchant and acquirer/bank. DIBS is the connection between the merchant and the acquirer/bank as illustrated in the picture below.

DIBS position in the value chain of e-commerce

DIBSPayment Solution

ShopConsumer Aquirer /

Bank

Source: DIBS

DIBS product is a payment gateway that transfers the consumer’s transaction data from the store to the bank. DIBS charges in two ways; one time charges for new clients and continuously for subscription fees and transaction fees dependent on the e-merchants’ volume. A minor share of sales constitutes consultancy services.

The payment gateway consists of a technological platform that enables the transfer between the store and the acquiring bank. DIBS takes no financial risk in its part of the value chain, the acquirer/bank carry the risk. DIBS manages the transaction data, but takes no part in the actual transfer of money. DIBS makes sure that transaction is carried out securely and that reporting and settlement is done.

Since DIBS takes no financial risk, they only get a minor share of the potential revenue created by a payment process. In relation to the total transaction value in DIBS systems, DIBS charges about 0.2 percent. An acquiring bank takes a larger part of the transaction value, around 2 percent, but takes also on a financial risk.

In 2008, DIBS processed a transaction volume of nearly SEK 53 billion, corresponding to a growth of 32 percent since 2007. The transaction volume has nearly doubled since 2006, when it amounted to SEK 29 billion. During the same period, the number of customers increased from 4 370 at the year-end 2006 to 9 154 at the year-end 2008, that is an annual growth of 44.7 percent. The transaction volume per customers amounts to approx. SEK 1.5 million, following continuous decline since the beginning of 2006. This is probably explained by DIBS increasing propensity to take on smaller

DIBS payment solution enables the merchant to connect the consumer with the bank

DIBS takes no financial risk in the transaction and handles only the transaction data

In 2008 DIBS managed nearly SEK 53 billion in transaction volume

DIBS

Company Report 8

clients that give lower transaction revenue but stable subscription fees. The table below shows the development of the transaction volume and the number of clients.

Development transaction volume and number of customers

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2006 2007 2008 Senaste 12m

Transaction Volume Customers

Source: DIBS, Redeye Research

DIBS has today more than 10 000 customers, avoiding dependency on individual accounts. In 2006, the 10 largest customers generated 12 percent of sales. According to DIBS, no single customer accounts for more than 2 percent of its total sales as of today. The picture below shows a selected number of DIBS customers.

Example of DIBS customers

Source: DIBS

As mentioned above, DIBS revenues are not only generated by the transaction flow but also of subscription fees. They constitute the largest

Both number of customers and transaction volume increases rapidly

Its 10 000 customers decreases the risk for volatility in revenue

90 percent of DIBS sales s recurring, whereof subscription fees account for the largest share

DIBS

Company Report 9

chunk of DIBS revenues. In 2008, subscription fees amounted to SEK 55.2 million, corresponding to 53 percent of total revenues of SEK 104.2 million. Their share has continuously increased over the years and amounted to 54 percent last quarter. If we look back some years to 2006, the subscription fees amounted to 42 percent of total sales. The increase has been made possible through a broadened product offering, such as security services, possibilities to pay in several currencies, training and 24 hours support.

DIBS executes its sales directly to the customers but also indirectly via partners including banks, card acquirers, and providers of business software such as CRM, e-shops platforms and hosting services. DIBS is one of very few independent PSP-providers that is not owned by banks or card acquirers. Other independent players are much smaller. The guiding principles for DIBS offering are to create services that are functional, simple and standardized.

Costs and economies of scale

DIBS has 56 employees, whereof 30 employees work with sales, support and marketing and 17 work with operation and technology development. Management consists of nine individuals. In addition, the company has access to seven resources in development that is not included in the head count. Operating cost is mostly related to personnel. As a ratio to sales personnel costs have been stable in 2006 and 2007. From the end of 2008 and throughout first half of 2009, the ratio personnel costs to sales have decreased. The graph shows the costs development since 2004.

Development of personnel costs compared to net sales

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55,0%

60,0%

2004 2005 2006 2007 Q1 Q2 Q3 Q4 Q1 Q2

2008 2009

Personnel costs in relation to sales

Source: DIBS, Redeye

The graph indicates that DIBS is getting full advantage of the economies of scale in the business model. One reason this is kicking in now and not before, is that the acquisition of Cardia initially resulted in a certain cost increase in 2007. The merger of DIBS and Debitech was completed quite

A large part of DIBS costs are fixed, enabling economies of scale

DIBS

Company Report 10

recently (August 2006) and the cost development indicates that they now are reaping the fruits of the merger.

In addition to personnel costs, the operating costs include other operating costs (administration, office space, hosting and platform related costs) and depreciation. Other costs have varied between SEK 6 and 9 million per quarter during the last two years. DIBS investments in fixed assets are limited, resulting in minor depreciations. All development costs are accounted for in the income statement as they occur, and no activation of development costs is done. However, the company makes depreciations of the goodwill from the acquisition of Cardia. In total, depreciation amounts to about SEK 4 million per year, whereof around half is deprecation of goodwill and the remaining is depreciation of fixed assets.

The development above has resulted in improved profitability for DIBS during the last two years. The profitability decreased somewhat in 2007 due to non-recurring costs in connection with the acquisition of Cardia. The operating margin is negatively affected by the company’s policy to depreciate goodwill, but not its EBITDA margin or cash flow.

Geographical markets

DIBS offers currently services on the Swedish, Danish and Norwegian markets. Prior to the acquisition of Cardia in the end of 2007, DIBS presence in Norway was limited. The graph below shows sales in 2006-2009 as well as for the last rolling 12 months.

Sales development per geographical market

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2006 2007 2008 Last 12m

Sweden Denmark Norway

Source: DIBS, Redeye

The distribution between the geographical markets has been relatively stable. The Swedish and Danish operations are of similar size, where Denmark has grown faster due to the strong Danish currency, contributing to 16 percent growth in the last two quarters. The currency effect will decrease in the third quarter as the Swedish krona has increased in value

DIBS has limited CAPEX and depreciation and takes all development costs in the income statement as they occur

DIBS offers services on the Swedish, Danish and Norwegian markets

Denmark has been the fastest growing market during the last quarters, partly boosted by currency effects

DIBS

Company Report 11

vis-à-vis the Danish krone last months. Growth has been somewhat stronger in Denmark even if adjusted for the currency effects. There are no obvious reasons for this difference, but it is yet another indication that the growth in the sector defies the weak economic climate.

Growth has picked up on the Norwegian market during the last two quarters and a positive currency effect has also given a substantially smaller but positive effect. The growth in Norway was 20.2 percent in Q1 and 13.2 percent in Q2, whereof the currency effect contributed with 3.3 and 3.6 percent respectively. Thus, DIBS has been able to achieve growth on the Norwegian market. One reason for this is that DIBS has achieved its ambition to discontinue non-profit generating customer following the acquisition. The Norwegian market is still fairly small and offers probably opportunities for increased profitability as economies of scale are utilized. To a large degree such economies of scale are already exploited as the same technological platform is used in Norway.

Norway is the smallest market for DIBS and growth has kicked in during the last quarters

DIBS

Company Report 12

Products and technology

DIBS product offering consists of its Internet based payment solution and related added value services. The technology is relatively straight forward, but complex enough to be a barrier preventing customers to switch system provider. The product is a standardized solution that is hosted as a platform, but the service is differentiated by three levels of service depending on customer needs; Start, Basic and Premium. The price varies with a sign-on fee of SEK 3 000 for the Start Package compared to SEK 10 000 for Premium. Thereafter a subscription fee is charged between SEK 400 and 1000. The transaction charge begins at 1 percent for the Start Package and can be given for the other levels upon request for proposal.

DIBS offers also a solution for payment via telephone, with the product packages Single and Multi for SEK 1 995 and SEK 3 995 respectively in sign-on fee and thereafter SEK 250 and SEK 490 respectively per month. Typical customers for these offerings include travel agencies that often take on orders via the phone. The system is web based and no installation is needed at the customers’ premises. DIBS also offer value added services such as telephone support, extended hosting, subscription and extended security packages.

DIBS Defender and DIBS Failover are two examples of the extra value services the company offers. DIBS Defender gives extended security to fight identity theft by a stricter control of the IP address and the cards’ country of origin. DIBS Failover is a service enabling you to have two card acquirers to create extra capacity in the system. The service monitors the connection to the card acquirer and should it be down the system automatically divert the transaction to the back-up acquirer.

Continued development of added value services as the ones mentioned above, enables the company to increase revenue on top of the underlying structural growth of e-commerce. They also generate low marginal costs, with increased profitability as sales grow. It is interesting to see that only 10 percent of the e-merchants in the Nordics use anti-fraud system according to DIBS e-commerce index.

DIBS’s basic offering is fairly similar to its competitors on the Swedish market. Just like DIBS, the larger companies have a strong focus on extra services to diversify its offerings. Some providers offer products combining payment gateways and acquiring for one fee. This means that they can charge a higher price since acquiring is included. Such a model results in a higher financial risk for the company.

DIBS product platform is a payment solution, diversified in three service levels

The company’s value added services create opportunities for high profitability, as marginal costs are limited

DIBS

Company Report 13

Security

It is a prerequisite for DIBS to offer a secure environment, both for customer data and for system reliability and uptime. DIBS is PCI-certified which today is a requirement for companies that manages card data. DIBS was among the first companies to get a PCI-certificate.

PCI (Payment Card Industry) Certificate accreditation is given by the PCI Security Standards Council founded by American Express, Discover Financial Services, JCB International, MasterCard Worldwide and Visa. PCI-approval is obtained annually and DIBS most recent accreditation was made in May 2009. The PCI approval is an extensive programme with security requirements for security management, policies, procedures, network infrastructure and software. The guiding principles include maintaining a secure network, protect customers’ card data, keep operations in secure premises, constantly monitor and test the network and have an explicit policy for information management.

The security demands have been getting stricter. Last year, Swedish card companies did for instance implement tighter rules for e-merchants handling card data. Now they need to be PCI accredited or use a PCI approved payment gateway. This will decrease the number of stores with in-house solutions, since accreditation is expensive for an individual store and consequently these stores are becoming potential customers to DIBS or other PSP-provider. Already back in the beginning of 2008, DIBS initiated cooperation with security company Trustwave that enabled DIBS to offer its customers four different level of validation according to PCI DSS standards.

DIBS guarantees a system uptime of 99.5 percent, which historically has been achieved with a good margin. The risk is that other parts of the payment system, such as card acquirers, are affected by system hitches out of DIBS control. To deal with that situation, DIBS has designed the solution DIBS Failover described in the product chapter. DIBS Failover enables a customer to have several acquiring banks and transactions are automatically rerouted in case of technical disturbances.

DIBS is PCI approved, which is compulsory for all companies handling card data

Increased demand on security means more potential customers to DIBS

DIBS

Company Report 14

E-Commerce Market

DIBS estimates the Nordic e-commerce market to be worth EURO 16.5 billion, around SEK 165 billion. DIBS transaction volume amounted to SEK 52.6 billion in 2008 giving a market share of 32 percent. Distributed by the Nordic countries, Sweden is the largest market with a turnover of SEK 51 billion, thereafter Denmark (41 billion), Norway (40 billion) and Finland (30 billion). Forrester estimated the European market to be worth EURO 116 billion in 2008, meaning that the Nordic constitute around 14 percent of the total European market.

According to DIBS e-commerce index, about 14 million out of 25 million Nordic consumers online actually make online purchases. The main advantages for online shopping are convenience, opening hours and the possibility for price and product comparisons. The major part of online purchases is travel arrangements and electronics. On average a consumer does online shopping for SEK 12 000 per year. Young people with limited education do most of the purchases, whereas the big spenders are found in the age category 35 to 54 years old.

E-commerce per sector

Travel

Electronics

Media/Entertainment

Clothing and shoes

Home

Other

Services

Personal careHousehold products

Source: DIBS

The growth in e-commerce took off when it became an alternative to traditional shopping around the turn of the millenium. According to Eurostat, e-commerce accounted for 1 percent of total commerce in Europe in 2002 and grew to 4 percent in 2006. In 2008, The Swedish retail industry amounted to SEK 580 billion according to HUI. DIBS estimate of e-commerce leads us to conclude that about 9 percent of the commerce is online. However, HUIs figures do not include travel arrangements, which is one of the largest categories online. Adjusted for this, e-commerce has a lower share of total commerce. The long-term ratio of e-commerce to total

The Nordic e-commerce market is worth SEK 165 billion

More than half of Nordic consumers do online shopping

Growth in e-commerce took off following year 2000

DIBS

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commerce is difficult to predict, but since young people are more accustomed to online shopping the demographic changes will probably result in a larger ratio over time.

When DIBS e-commerce index was updated in March 2009 it was revealed that 40 percent of the respondents anticipated that they would increase their online shopping during the year. The optimism was shared by the e-merchants, whereof 80 percent expected their e-commerce activities to grow during the coming year. This differs from HUIs finding that 77 percent of the consumers expect to engage in online shopping during the next six month. A remarkable difference is that the optimism of the participating companies is weaker in HUIs survey, where 38 percent believe that their online sales will increase during the next six months. The corresponding figure a year ago was 70 percent.

Forrester recently published a report on expectations on the growth of e-commerce in Europe. According to their estimate, the growth rate will be 8.4 percent on average from 2008 to 2013 with a growth of 9.6 percent 2009 and 11.2 percent 2010. This is only turnover in e-commerce, and DIBS should be able to grow faster than so, partly through growth via customer’s sales, but also through new customer inflow and expanded product portfolio with value added services. Support for this argument is provided by the interim report for the first half 2009 from the European company Wirecard, showing a growth of 17.4 percent which is almost twice the growth rate predicted by Forrester for growth for the full year 2009. All potential clients such as public authorities are probably not included in their predictions, which might have lead them to underestimate the growth of e-commerce.

Competition

The Nordic countries differ when it comes to competitive pressure and price structure. In Finland, where DIBS has a minor share of its sales, Internet payments are mainly done via bank payments. DIBS e-commerce index shows that the Finnish customers consume less online than consumers from Denmark, Sweden and Norway. One obstacle for a successful market entry in Finland is the market structure that is dominated by banks that offer free payment services as they are bundle it with the bank’s acquirer service.

DIBS competitors on the Nordic scene include among others Auriga (formerly Strålfors), Netgiro (now owned by Digital River), Payex and Paynova (listed on NGM). Netgiro and Payex are the largest among these; still they are substantially smaller than DIBS. In its information memorandum, DIBS indicated that its market share was 25 percent; while Netgiro and Payex were estimated to hold a 20 and 10 percent share respectively. Since then DIBS has acquired Cardia and based on the transaction value, DIBS market share is above 30 percent.

Surveys of e-commerce 2009 show that it grows despite weaker economic climate

The analyst company Forrester believes in an annual growth rate of 9 and 11 percent in 2009 and 2010 in Europe

The Nordic markets differs with regards to products, prices and competition

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Non-Nordic listed competitors are Wirecard, CyberSource, DataCash, and Neovia. Competitors that are not listed include Bibit/Worldpay (owned by Royal Bank of Scotland), Globalcollect and Ogone. All larger global companies have some presence in the Nordics. However, in the annual report of 2008 DIBS wrote that their presence has not increased lately.

DataCash and Wirecard have the most resemblance to DIBS. DataCash is a British company founded in 1997. In 2008 the company had sales of 28 million British pounds corresponding to SEK 320 million. The company is listed on the British AIM-market and has around 1000 customers. Datacash recently announced that they are expanding in Europe from its base in Germany to France, Italy, Spain and Holland.

Wirecard has its base in Germany and had sales of EURO 197 million in 2008 with over 10 000 customers. Contrary to DIBS, Wirecard offers banking services and is not fully independent.

CyberSource is mainly active on the American market with 273 000 customer and a turnover of USD 229 million in 2008. As DIBS they report that 90 percent of revenues are recurring and they have a strong cash flow. At their interim report for the second quarter they announced record growth in June in the US. This confirms that e-commerce is enjoying structural growth and can expand even as the economy contradicts. The company has many federal customers, which is a segment where also DIBS is expanding. CyberSource believes that e-commerce is in its early stage and that the world market is USD 800 billion, whereof the company processes USD 109 billion.

Neovia goes back to British NETBANX and was called Neteller until the end of last year. From its initial customer base in betting, the company has expanded to wider customer groups. The largest service is their e-wallet solution, whereas payment processing is a smaller part and mostly in Great Britain.

DIBS foreign competitors have limited presence in Europe

Cybersource announced record growth in the US in June

DIBS

Company Report 17

Financial estimates

DIBS has grown rapidly since its foundation in 1998 and wee see strong indications that it will continue to grow close to the board’s target of 25 percent per year. The underlying factor is the migration of traditional commerce to online shopping, creating a structural growth less sensitive to economic cycles. In addition a large part (90%) of DIBS revenue is recurring which decreases the risk level.

We believe that DIBS will grow with an average of 21.4 percent from 2008 to 2011. The escalating growth will give opportunities to harvest further economies of scale and the operating margin is expected to increase from 24 to 31 percent. Average growth in EBIT in the period is expected to amount to 33.0 percent.

Sales and operating profits

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32,0%

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2004 2005 2006 2007 2008 2009e 2010e 2011e

Sales EBIT Margin


The estimate for DIBS sales growth gets support from an analysis done by Forrester, which estimates that the market for e-commerce will grow with around 8.4 percent in Europe during the next five years. The main reason why DIBS will outpace this growth is its expansion through existing clients; value added services, geographical expansion, acquisitions and outsourcing.

As the graph show, we estimate a significant boost to the operating margin in 2009. The development has been confirmed by the first two quarters and the company has achieved an operating margin of 29.0 percent for Q1 and 30.0 percent for Q2. This development was already present in Q3 and Q4 last year, but has accelerated this year. The background is as earlier stated, that the company is starting to take advantage of economies of scale. The largest fixed cost, personnel, has during the last four quarters decreased as a ratio to sales. The table shows financial key ratios since 2007 and

We expect continued strong growth for DIBS in the coming years

The margin is expected to improve due to economies of scale in the business model

DIBS

Company Report 18

estimates for 2009. We believe profit per share will decrease in Q4 2009 since the company did not pay any taxes last year due to their deferred non-capitalized loss carry forward. The company still has a non-capitalized loss carry forward and will not pay full tax 2009, however we have calculated with a tax rate of 28 percent for Q3 and Q4 2009.

Source: Redeye Research

The customer base has increased with around 500 customers per quarter since 2007. Year-end 2008 DIBS had 9 154 customers and the company recently attracted its 10 000th customer. The customer base consists of large e-commerce businesses such as OnOff, Siba and Netonnet within electronics and Apollo, Fritidsresor and Kilroy within the travel sector. With a net inflow of 500 customers per quarter it is obvious that several customers are substantially smaller companies. They are often traditional stores that have discovered that they can easily expand their reach by going online.

Number of customers and its growth rate

0%

10%

20%

30%

40%

50%

60%

70%

80%

0

2000

4000

6000

8000

10000

12000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2006 2007 2008 2009

Customers Growth


The hefty intake from Q3 2007 to Q2 2008 is affected by the acquisition of Cardia that added around 1000 customers.

DIBS increases its customer base with 500 clients per quarter

Detailed estimates

SEKm Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09E Q4'09E

Sales 18,6 20,8 23,8 24,5 25,0 26,2 28,5 30,2 32,3 33,3 34,2

EBITDA 5,6 6,3 4,4 6,4 6,9 7,8 8,1 9,9 10,7 11,3 11,7EBIT 4,8 5,5 3,1 5,2 5,7 6,7 6,9 8,8 9,7 10,1 10,5PTP 4,8 5,7 3,3 5,4 5,9 7,0 7,4 9,0 9,4 10,1 10,5EPS, SEK 0,51 0,61 0,60 0,57 0,63 0,74 1,00 0,70 0,73 0,76 0,79

Sales Growth 20% 32% 42% 38% 35% 26% 20% 23% 29% 27% 20%EBIT margin 26% 26% 13% 21% 23% 26% 24% 29% 30% 30% 31%EPS Growth (YoY) -4% 157% 155% 33% 22% 23% 66% 23% 16% 2% -21%

DIBS

Company Report 19

Revenue per customer has decreased from around SEK 16 000 per year to around SEK 13 000 per year during the last two years. Subscription fees were on average SEK 7 022 per customer in 2008. In 2007 the corresponding figure was SEK 9 421. The trend has continued into 2009 as the average subscription fee per customer has decreased to SEK 6 836 during the first six months calculated on a 12 months basis. One reason is DIBS price cuts for sign-on fees for new clients in 2008. In addition, many of the new clients are small e-merchants that buy the easiest to use and most affordable subscriptions from DIBS. This does however not translate into lower profitability as its operating margin continues to improve.

Development sales per customer

02 0004 0006 0008 000

10 00012 00014 00016 00018 000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2007 2008 2009

Sales per customer, annual basis


As the table show, there has been a stabilization of revenue per customer at around SEK 13 000. We see potential for the company to increase sales per customer via value added services. They have generally a good profitability, as they do not result in any significant costs for DIBS.

Financial position

DIBS is financially strong with a net cash position of SEK 74 million at the end of Q2 2009. Since the company was listed, DIBS has made one acquisition in Norway and it recently acquired Danish customer bases from a competitor. The company pursue an active M&A strategy, but it takes a lot of effort to integrate acquisitions and it has proven to be hard to find targets at the right price.

DIBS business model results in strong cash flow. CAPEX in fixed assets is limited and consists mainly of purchases of computers. The development costs are recognised in the income statement as they occur and the business does not require a lot of capital. The cash flow is nearly in level with its EBITDA-profits, since also the tax is low given losses carried forward. The

Sales per customers has decreased in 2008 despite profit growth

DIBS financial position is strong with a net cash of SEK 74 million

DIBS

Company Report 20

company has SEK 25 million in losses carried forward as per Q2 2009 and we estimate that the company will pay full tax from next year.

Cash flow, cash position and shareholder’s equity

0

50

100

150

200

250

2005 2006 2007 2008 2009E 2010E 2011E

Cash Flow Net Cash Equity


The table above is adjusted for the acquisition of Cardia which amounted to SEK 22.8 million. The table shows the strong cash flows generated during the last couple of years, and we expect it to continue to grow in the years to come.

With limited CAPEX we anticipate continues strong cash flows

DIBS

Company Report 21

Valuation

We estimate the value of DIBS using both a DCF-model and a relative valuation to peers.

In our explicit prognosis horizon between 2009 and 2011 we believe in annual growth in sales of 20 percent for DIBS. The operating margin is believed to stay around 30 percent as in the last two quarters. During 2012 to 2021, the valuation is based on an average growth of 9.9 percent and an operating margin of 24.5 percent. We expect CAPEX to continue to be limited, around 2.5 percent of sales as it has been during the last three years.

The company has a strong positive cash flow since the investment phase is mainly completed for the system that is the base for its offering of payment solutions. The growth is expected to be strong which gives a high valuation of the company as it already enjoys positive cash flows that are expected to increase with time.

Our DCF-value amounts to SEK 66 per share, which gives an upside to the current share price of SEK 58 of approximately 15 percent. However, the value is highly dependent on assumptions of growth and profitability. Pressure on margins are likely to occur should competition increase from global companies or from banks expanding its role in the value chain. At the same time it is possible for the company to increase its profitability. This is possible since costs increase at a lower pace than sales through economies of scale and broadened product portfolio.

The table below shows how the value of the company varies with assumptions on growth and profitability.


For a relative valuation of DIBS we have compared the company to the larger listed competitors in the same industry. In addition, we have selected a number of small to mid-size companies in the IT-sector at the NASDAQ OMX Stockholm Exchange.

DIBS listed competitors are larger, but we still see them as relevant peers. We have compared with Datacash, Neovia, Wirecard and Cybersource.

We estimate that DIBS can grow with 10 percent with profit margin of 24.5 percent until 2021

This gives a DCV value of SEK 66 per share

Sensitivity DCF value, growth and profitabilitySales growth from 2012

5% 15% 25% 30%

15% 32,8 39,4 49,0 55,3

EBIT margin 2012 25% 43,0 54,5 71,3 82,4

30% 48,1 62,0 82,5 95,9

35% 53,2 69,6 93,6 109,5

DIBS

Company Report 22

Among these, Datacash resembles DIBS the most with regards to business model. Wirecard offers also banking business and takes on a larger risk, as well as a larger part of the value chain. All compared companies are very well capitalized, just as DIBS.

Source: Bloomberg, Redeye Research

DIBS P/E valuation is lower than its competitors for the next three years. However, it is in line with CyberSource and WireCard. Datacash resembles DIBS the most but enjoys a much higher valuation than DIBS. If we look at EV/EBIT, that takes financial position into account, the valuation is in line with average.

It is also interesting to look at the expectations for the different peers. Sales growth is expected to be close to 20 percent over the next couple of years, which is in line with our prognosis for DIBS. Interestingly, the operating margin of Datacash is estimated to hike substantially during the next years, which explains its premium valuation.


DIBS has a lower P/E valuation than its larger peers

BenchmarkBolag

2008 2009 2010 2011 2008 2009 2010 2011

Cybersource 95,8% 13,9% 17,2% na Cybersource 0,3% 21,7% 21,7% naNeovia na 26,7% 9,3% -17,5% Neovia na -0,4% 4,5% 8,4%Datacash 25,6% 23,4% 18,1% 17,0% Datacash 20,8% 47,2% 49,4% 50,5%Wirecard 56,9% 13,7% 18,9% 15,0% Wirecard 24,9% 25,4% 25,7% 26,3%

Medel 59,4% 19,4% 15,9% 4,8% Medel 15,3% 23,5% 25,3% 28,4%Median 56,9% 18,7% 17,7% 15,0% Median 20,8% 23,5% 23,7% 26,3%

DIBS 28,7% 24,8% 20,0% 20,0% DIBS 23,6% 30,1% 30,4% 31,0%

Sales Growth EBIT Margin

Peers valuation

Company

[SEKm] Market Cap Net Debt 2009 2010 2011 2009 2010 2011

Cybersource 7572 -881 19,5 16,2 na 16,7 13,3 naNeovia 751 -464 na 39,1 17,0 na 6,1 2,1Datacash 2662 -226 50,7 35,0 26,4 11,5 8,7 6,7Wirecard 7523 -1632 21,5 18,3 16,0 10,0 7,7 5,9

Medel 30,6 27,2 19,8 12,7 9,0 4,9Median 21,5 26,7 17,0 11,5 8,2 5,9

DIBS 555 -74 19,9 16,6 13,5 12,0 9,2 6,8

P/E EV/EBIT

DIBS

Company Report 23

As an alternative peer group, we have also compared with other fast growing companies within the IT sector at the OMX Nordic Exchange in Stockholm. We have compared to Axis, Net Entertainment and Net Insight. These three companies are well capitalized and are expected to show steady growth in the years to come.


The spectrum of valuation is broad, as especially Net Insight affects the average positively with its very high valuation multiples. If we look at P/E-ratio for 2010 and 2011, DIBS is valued in line with this peer group. However, if we look at EV/EBIT that take DIBS cash position into account, DIBS has a lower valuation than its peers.

Capital structure

DIBS large net cash position makes its it interesting to consider how a recapitalization could effect DIBS valuation. The net cash position is today SEK 74 million, despite a very strong cash flow and limited CAPEX. The sector is in consolidation, but DIBS has since the listing only made one acquisition. This indicates that it is different to find the right target.

A recapitalization of DIBS would have a positive effect on its DCF-valuation as the return on equity would increase. The risk would also increase if the company takes on larger debt, so it is important to strike the right balance. With today’s interest rates a payout of dividend would increase its return on equity.

DIBS has currently a shareholders equity of SEK 118 million, whereof approximately SEK 115 million is unrestricted. Redeye estimates that SEK 80 to 90 million (SEK 8.5 – 9.5 per share) could be paid out next year. A more complex structure is needed if DIBS wishes to maximize the dividend given its financial capacity. In case DIBS does not use cash to pursue any large acquisitions or major expansion, we believe that DIBS could be effectively managed with a net debt of SEK 150 million. This corresponds to a net debt to EBITDA of 3x, which is not strained given the limited need for CAPEX. The matrix illustrates how the P/E ratio for profitability 2010 varies with the size of the dividends.

An optimized capital structure would display the values in DIBS-business

Redeye estimate that DIBS has room for a one time pay out of dividend of around SEK 8.50 to 9.50 per share

Peers valuationCompany[SEKm] Market Cap Net Debt 2009 2010 2011 2009 2010 2011

Axis 4407 -275 25,8 18,3 14,0 17,2 11,8 8,6Net Insight 1682 -186 48,9 37,8 NA 32,2 24,5 NANet Entertainment 2285 -149 15,8 11,9 11,4 14,8 10,1 9,5

Medel 30,2 22,7 12,7 21,4 15,5 9,1Median 25,8 18,3 12,7 17,2 11,8 9,1

DIBS 555 -74 19,9 16,6 13,5 12,0 9,2 6,8

P/E EV/EBIT

DIBS

Company Report 24


A dividend of SEK 8 per share sums up to SEK 75 million and would be possible next year without any added debt. A dividend of SEK 24 per share would require a net debt of SEK 150 million. Redeye believes that a larger recapitalization of DIBS is unlikely to occur, and the table is to be used to indicate how the value of the company is affected by a more optimal capital structure.

A more likely scenario is a dividend based on DIBS unrestricted equity, given that the company does not pursue any substantial acquisitions over the next couple of years. Thereafter the company should be able to deliver annual dividend to maintain an efficient capital structure. Among DIBS competitors, both Wirecard and Datacash make annual dividends.

Consolidation in the sector

The sector for Internet based PSP-providers undergoes consolidation. Most of the listed companies have explicit strategies to take part of the consolidation through acquisitions. Recent deal flow includes;

- Digital River acquired Swedish Netgiro in 2007. Price tag was USD 27 million.

- DIBS competitor Datacash pursued acquisitions during last year and bought ACK limited and Easydebit for pound 2,4 million and EURO 3,0 million (with a additional earn-out of EURO 5.75 million) respectively.

- The major German POS operator Easycash, owned by the private equity company Warburg Pincus, is supposed to be for sale at the moment. A price tag of EURO 300 million corresponds to a valuation of 10x EBITDA for the year 2009.

Very few valuations of actual M&A activity have been communicated, which makes it hard to estimate a value of DIBS in a potential buy out scenario. The valuation of 10x EBITDA for Easycash is in line with DIBS valuation.

P/E-ratio 2010, recapitialization scenariosDividend per share

0,0 8,0 16,0 24,0

3,0% 16,3 14,1 12,5 10,7

Interest on debt 4,0% 16,3 14,1 12,7 11,1

5,0% 16,3 14,1 13,0 11,5

6,0% 16,3 14,1 13,2 12,0

DIBS

Company Report 25

SWOT

Strengths Weaknesses

DIBS is the market leader with over 30 % of the market.

The company is independent, while most competitors are owned by banks or acquiring companies.

Strong financial position with a net cash position of SEK 74 million.

Low risk in the business model. DIBS takes no financial risk and over 90 percent of revenue is recurring. The company has over 10 000 customers.

The entry barriers are high, due to security demand and thresholds to change provider.

Small company in a global perspective.

Short history.

Young industry, uncertain profitability in the long term.

Opportunities Threats

Added value services could result in additional improvement in profits.

An expansion in the value chain could speed up growth.

Geographical expansion, directly or via existing clients.

The market is consolidating. Strong cash position opens up for acquisitions.

Slower growth for e-commerce.

Global players increase presence, potentially resulting in price pressure.

Competition from banks creating pressure on margins.

DIBS

Company Report 26

Summary Redeye Rating

The rating consists of five valuation keys, with each valuation key constituting an overall assessment of several factors that are rated from a scale of 0 to 2 points. The maximum point for a valuation key is 10 points.

Changes to the rating ion this report:

This is our first rating of DIBS.

Management 8.0p

Comment: Good track record. Has exceeded the target for growth and profitability that was set at the listing at First North. CEO holds shares directly and owns options. The board members are major owners.

Growth potential 9.0p

Comment: Strong growth in market (structural). The size of the e-market will over time stabilize at a certain share of total commerce.

Profitability 10.0p

Comment: Stable profit growth. High net margin operating margin. Somewhat overcapitalized but still generates good return on equity

Secure investment 8.5p

Comment: The large number of customers makes company less sensitive to customer losses. Significant cash holding. Low turnover in the share. Less sensitive to economic cycle.

Investment Opportunity

6.0p

Comment: Low valuation given growth potential. DCF value indicated upside of 15 percent. Low valuation compared to peers. Often limited news flow between interim reports. A limited number of institutional owners. Few analysts follow the company.

DIBS

Company Report 27

Income statement, MSEK 2007 2008 2009e 2010e 2011e Net sales 81 104 130 156 187 Total operating costs -60 -75 -86 -103 -124 EBITDA 21 29 44 53 64 Depreciation, amortization -3 -5 -5 -6 -6 EBIT 18 25 39 47 58 Share in profits 0 0 0 0 0 Interest income and similar items 0 1 0 0 0 Interest expenses and similar items 0 0 0 0 0 Earnings before tax 18 25 39 47 58 Tax 2 2 -11 -14 -17 Net earnings 20 27 28 33 41 Income statement adj, MSEK 2007 2008 2009e 2010e 2011e Items affecting comparability -2 0 0 0 0 EBITDA adj. 23 29 44 53 64 EBIT adj. 20 25 39 47 58 PTP adj. 20 25 39 47 58 Net earnings adjust 22 27 28 33 41 Balance sheet, MSEK 2007 2008 2009e 2010e 2011e Assets Current assets Cash and bank balances 43 63 92 126 167 Customer receivables 7 8 10 12 14 Finished goods 0 0 0 0 0 Other receivables 8 10 13 16 19 Total current assets 57 81 115 153 200 Fixed assets Equipment 4 4 5 6 9 Financial assets 19 24 24 24 24 Goodwill 19 17 15 14 12 Capitalized expenditure for dev. 6 5 5 4 3 Other intangible assets 0 0 0 0 0 Total fixed assets 48 50 49 48 48 Total assets 106 131 164 201 248 Liabilities Current liabilities Accounts payable 2 4 5 7 8 Other liabilities 14 13 16 20 23 Total current liabilities 16 17 22 26 31 Long-term non interest bearing liab. 2 1 1 1 1 Long-term liabilities 12 9 9 9 9 Total liabilities 30 27 32 36 41 Provisions 0 0 0 0 0 Shareholder’s equity 75 104 132 165 206 Minority 0 0 0 0 0 Minority & equity 75 104 132 165 206 Total liabilities & equity 106 131 164 201 248 Free cash flow, MSEK 2007 2008 2009e 2010e 2011e Net sales 81 104 130 156 187 Total operating costs -60 -75 -86 -103 -124 Depreciation -3 -5 -5 -6 -6 EBIT 18 25 39 47 58 Tax on EBIT 0 -2 -11 -14 -17 NOPLAT 19 25 30 35 43 Depreciation 2 3 3 4 4 Gross cash flow 21 28 33 39 47 Change in working capital -2 -2 0 0 0 Investments -36 -7 -3 -5 -6 Free cash flow -16 18 29 35 41 Capital structure 2007 2008 2009e 2010e 2011e Equity ratio 72% 79% 81% 82% 83% Debt/equity ratio 16% 8% 7% 5% 4% Net debt -31 -54 -83 -118 -159 Capital employed 87 113 141 174 215 Capital turnover rate 1.4 1.0 1.0 1.0 1.0 Growth 2007 2008 2009e 2010e 2011e Growth of sales 30% 29% 25% 20% 20% Growth of equity 146% 38% 27% 25% 25% Growth of EPS 61% 22% 2% 20% 23%

DCF valuation Cash flows, MSEK Risk premium (%) 7.0 NPV FCF (2009-11) 91.2Beta 1.0 NPV FCF (2012-21) 269.9Risk-free rate (%) 3.5 NPV FCF (2022-) 184.7Loan premium (%) 0.0 Non-operating assets 87.0WACC (%) 10.5 Interest-bearing debt 8.6 Motivated value 624.2Assumptions 2012-21 (%) Average sales growth 9.9 Motivated value per share 66.4EBIT-margin 24.5 Share price, SEK 59.0 Profitability 2007 2008 2009e 2010e 2011e Return on equity (ROE, %) 42% 31% 24% 23% 22%ROCE (%) 34% 25% 31% 30% 30%ROIC (%) 32% 25% 24% 23% 22%EBITDA-margin (adjust,%) 28% 28% 34% 34% 34%EBIT adjust-margin 24% 24% 30% 30% 31%Net adjust-margin 28% 26% 21% 21% 22% Data per share, SEK 2007 2008 2009e 2010e 2011e EPS 2.16 2.90 2.96 3.56 4.37EPS adj. 2.37 2.90 2.96 3.56 4.37Dividend 0.0 0.0 0.0 0.0 0.0Net debt -3.3 -5.8 -8.9 -12.5 -16.9Total shares 9.4 9.4 9.4 9.4 9.4 Valuation 2007 2008 2009e 2010e 2011e Enterprise value 524 500 481 481 481P/E 27.3 20.3 19.9 16.6 13.5P/E adj. 24.9 20.3 19.9 16.6 13.5P/S 6.8 5.3 4.3 3.6 3.0EV/S 6.5 4.8 3.7 3.1 2.6EV/EBITDA adj. 23.0 17.1 11.0 9.1 7.5EV/EBIT adj. 26.4 20.3 12.3 10.1 8.3P/BV 7.3 5.3 4.2 3.4 2.7 Share development Growth/Year 07/09E 1 month 14.3% Net sales 26.7%3 months 21.1% Operating profit, adjust 40.4%12 months 56.3% EPS, adj. 11.7%Beginning year 30.3% Equity 32.2% Share structure % Capital Votes Globework ApS 16.3 16.3SEB-Stiftelsen 14.6 14.6Lannebo Microcap 8.8 8.8MSIL IPB Client Account 6.6 6.6DNB Nor ASA 5.4 5.4Rite Internet Ventures 4.6 4.6Nordnet Pensionsförsäkring 2.9 2.9Banque Carnegie Luxembourg 2.9 2.9Svea ekonomi 2.9 2.9Övriga aktieägare 35.0 35.0 The share Reuters code DIBS.STList First NorthPrice SEK 59.0Total shares, million 9.4Market cap, MSEK 555Round lot 1 Management & board CEO Eric Wallin CFO Lars Friis IR Eric Wallin Chairman Mats Sundström Financial information Q3 2009 2009-11-03 Q4 2009 2010-02-18 Analyst Redeye AB Hjalmar Ahlberg Mäster Samuelsgatan 42, [email protected] Box 7141, 103 87 Stockholm

DIBS

Company Report 28

Turnover(MSEK) & Sales growth (%)

020406080

100120140160180200

2005 2006 2007 2008 2009e 2010e 2011e0%20%40%60%80%100%120%140%160%180%200%

EBIT (adj) & Margin (%)

0

10

20

30

40

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70

2005 2006 2007 2008 2009e 2010e 2011e0%

5%

10%

15%

20%

25%

30%

35%

EPS, EPS adj

00,5

11,5

22,5

33,5

44,5

5

20 05 2 006 2007 2008 2009 e 201 0e 201 1e

Solidity & Debt ratio (%)

-2%

0%2%4%

6%8%

10%

12%14%

16%18%

200 5 20 06 2007 2008 20 09e 2010e 2011e 60%

65%

70%

75%

80%

85%

Product areas

53%37%

10%

Abon neman gsintä kter Transaktionsintäkter Övriga i ntäkter

Geographic areas

49%

39%

12%

Sverige Danma rk Norge

Conflict of interest Hjalmar Ahlberg own share in company DIBS: No Redeye has participated in advising or corporate finance related services the last 12 months DIBS: No The report is based on Redeye's Analysis Guarantee concept.

Description

Turnover Sales growth EBIT-margin (adj.) EBIT (adj.)

Solidity Debt ratio EPS (adj.) EPS

DIBS

Company Report 29

DISCLAIMER

Important information Redeye AB ("Redeye" or "the Company") is an independent equity research company that has been under the supervision of the Swedish Financial Supervisory Authority since July 2007. The company produces and sells equity analyses and has license to accept and forward financial instruments, to offer investment advice concerning financial instruments and to prepare and distribute investment- and financial analyses as well as other types of general recommendations regarding trading in financial instruments in accordance to Chapter 2, paragraphs 1-2 of the Securities Business Act (2007:528). Redeye has no corporate finance department and does not conduct trading for its own account. However, we can cooperate with external corporate financial players, fund companies and stockbrokers.

Limitation of liability This document was prepared for information purposes for general distribution and is not intended to be advisory. The information in the analysis is based on sources deemed reliable by Redeye. However, Redeye cannot guarantee the accuracy of the information. The forward-looking information in the analysis is based on subjective assessments about the future, which constitutes a factor of uncertainty. Redeye cannot guarantee that forecasts and forward-looking statements will materialize. The investor takes every investment decision independently. This analysis is intended to be one of several tools that can be used in making an investment decision. Every investor is thus encouraged to augment this information with additional relevant data and to consult a financial advisor prior to an investment decision. Accordingly, Redeye disclaims all responsibility for any possible loss or damage that results from use of the analysis.

Potential conflict of interest Redeye's research department is regulated by organizational and administrative set of rules that were established to avoid conflicts of interest and to ensure the objectivity and independence of the analysts. The following applies:

• For companies that are the subject of Redeye's research analysis, the rules that apply include those established by the Swedish Financial Supervisory Authority pertaining to investment recommendations and the handling of conflicts of interest. Furthermore, Redeye employees are not allowed to trade in financial instruments of the company in question, effective on the day on which the decision was taken to produce a research analysis on the company and the two subsequent banking days.

• An analyst may not engage in corporate finance transactions without the express approval of management, and may not receive any remuneration that is directly linked to such transactions.

• Analysis Guarantee (AG) and Order Analysis are analysis concepts that are produced by Redeye AB. In addition, Redeye is an official Research Provider, a concept created by NasdaqOMX, which means that Redeye sells equity- and corporate analyses of companies listed on NasdaqOMX. These types of analysis are carried out on commission of, and in exchange for payment from the company that is being scrutinized in the analysis, alternatively from an underwriting institute in conjunction with a merger and acquisition (M&A) deal, new share issue or a listing. Redeye AB may perform financial advisory operations for unlisted and listed companies. The reader of these reports should assume that Redeye could have received, or will receive remuneration from the company/companies cited in the report for the performance of financial advisory services. The remuneration is a pre-determined amount and is not dependent on the content of the analysis.

Pertaining to Redeye's research coverage Redeye's research analysis is characterized by case-based analysis, which implies that the frequency of the analytical reports may vary over time. However, a case is updated with high frequency, and at least in connection with each interim report and major events (<4 times per year). The companies that are monitored with the use of the AG concept are updated at least two times a year.

Recommendation structure For its fundamental analysis, Redeye issues the following recommendations: Buy, Hold and Sell. The recommendation is based on the fundamental analysis having an investment horizon of six months, if not otherwise communicated. The technical analysis has a significantly shorter horizon. The analyses also include a presentation of company-specific risks affecting the share. The different risk levels are: Low, Medium, High and Speculative. The risk level is an appraised and subjective evaluation of the industry, the company's financial situation, anticipated news flow and other company-specific factors.

There are no investment recommendations issued for analyses that are based on the AG concept. On the other hand, Redeye has developed a proprietary analysis and rating model, Redeye Rating, in which the specific company is analyzed, assessed and scrutinized. The analysis shall provide an independent assessment of the company, including the possibilities and risks that it faces. The purpose is to provide an objective and professional set of data for the owners and investors to use in their decision making, and to support share liquidity for the long term. Recommendation distribution (2009-09-01)

Recommendation N.o. % of all % ex. AG Buy 18 21% 42% Hold 17 20% 40% Sell 8? 10% 19% AG/Analysis Guarantee 41 49% 0% Total 84 100% 100%

Duplication and distribution This document may not be duplicated, reproduced or copied for other purposes than personal use. The document may not be distributed to physical or legal entities that are citizens or domiciled in another country in which such distribution is prohibited according to applicable law or other regulations.

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DIBS Annual Report

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