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TRANSCRIPT
NNIT Introduction
2019
Share and ownership
Novo Holdings A/S33.5%Novo Nordisk A/S
17,5%
Chr. Augustinus Fabrikker Akts.
10,0%
Treasury shares1,9%
Other shareholders37,1%
2
3,007
590 649 672801
8901.016
1.165
1.396
1.5871.654
1.795
2.028
2.205
2.410
2.6002.765
2,851(1)
12% 12% 12%11%
12% 13%11% 11% 11% 11% 10% 11% 10% 10%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Revenue Mix Development Since 2005
Non-Novo Nordisk Revenue
Novo Nordisk Revenue
Operating Margin (%)
Novo Nordisk vs. non-Novo NordiskDKKm
Great Track Record of Profitable Growth while Diversifying Our Revenue Base
Per Kogut
–new CEO
10th consecutive
year with double
digit growth
New
Data
center
Opening of New Locations
and acquisitions:
Novo Nordisk IT
incorporated as a
limited liability
company (A/S)
Novo
Nordisk IT
renamed
NNIT
IPO
New
Data center
1. Numbers have been restated to include the effect of the implementation of IFRS 15 and IFRS 16.
3
Leveraging Our Compliance DNA Drives Diversification
Finance
DKK 257m
(9%)
Life Sciences
Private & Public
DKK 1,558m
(52%)
DKK 1,450m
(48%)
Int. Life
Sciences
DKK 212 m
(7%)
Public
DKK 399m
(13%)
Enterprise
DKK 794m
(26%)
Our CoreLeveraging Our Compliance
DNA
Revenue 2018
(contribution to total - %)
Note1. Selection of current NNIT customers, as of December 2018
See Note (1)See Note (1)
DKK 222m
(7%)
Life
Sciences DK
DKK 1,124m
(37%)
DK INT
Novo
Nordisk
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Grow
revenue
Optimize
cost
Grow revenue through
International life
sciences
Grow NNIT core revenue
Grow revenue through
increased level of
innovation
Grow the revenue from
international life sciences
significantly, supported by
M&A and continued execution
of go to market plan.
Grow revenue coming from
our core-NNIT offerings.
Build on and strengthen our
innovation capabilities to grow
the level of new high margin
offerings we bring to the
market significantly.
Use of Automation and AI
Leverage automation and AI to support optimization.
Cost efficient delivery, sales and support functions
Ongoing optimization though sourcing and process optimization
across all functions to remain cost efficient and competitive.
New strategy
Maintain and develop
strong Novo Nordisk
relationship
Maintain and develop strong
Novo Nordisk relationship by
staying relevant and
competitive.
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Equity Story
Business model fit for
growth
Life sciences growth
strategy
Attractive financial
results
• Full scale service offering in
Advisory, Development, Operations
and Support
• Strong innovation focus with
DKK 500m revenue from new
offerings in 2022
• Flexible global delivery model
with around 50% of employees
based in offshore and nearshore
locations
• Top 3 IT Service Provider in
Danish market measured by
revenue
• Solid track record of >20%
organic growth in international life
sciences
• Attractive market with high
margins and high entry barriers due
to level of regulation
• Strong domain knowledge based
on our life sciences legacy
• Strategic acquisitions being
pursued to accelerate growth even
further
• Maintain Novo Nordisk
relationship through state of-the-
art delivery and innovative solutions
• Historic growth above market -
market growth around 2-3%
• Historic operating profit margin
of at least 10%
• Cash generating business with
high dividend yields while investing
in future growth with pay-out ratio
objective at a minimum of 45%
• Solid back-log with high visibility
• Stable reinvestment levels with
capital expenditure of 5-7% of
revenue
6
New organization
7
High pay-out ratio while maintaining M&A firepower
Net cash Net debt/EBITDA(1) Cash to earnings
Solvency ratio Pay out ratio Dividend yield
98 131
174
(19)(1)
(135)
2014 2015 2016 2017 2018
0,7
0,8
0,9
2016 2017 2018
72,9%99,2%
87,3%
-6,3%
49,3%
80.0%
2014 2015 2016 2017 2018
Adj. for DC2 Adj. for leasing & acquisitions
91.1%
94.9%
53,4% 55,5% 53,2%
41.9%(1) 42,6%
2014 2015 2016 2017 2018
46%
47%
48% 48%
2015 2016 2017 2018
2,1% 2,0%
2,4% 2,5%
2015 2016 2017 2018
1. Numbers have been restated to include the effect of the implementation of IFRS 15 and IFRS 16.
8
Rolling 12-months revenue development, Novo Nordisk and Other customers
Revenue development, Novo NordiskRevenue development, other customers
1.302 1.238 1.249
1.215 1.196 1.185 1.121 1.132 1.120 1.124 1.127
1.084 1.040
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Q32018
Q42018
Q12019
Q22019
Q32019
CAGR: -9.5%
-14.7%CAGR: +0.6%1.417
1.526 1.568
1.639 1.645 1.666 1.714
1.760
1.844 1.883
1.932 1.966
2.039
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Q32018
Q42018
Q12019
Q22019
Q32019
CAGR: 11.9%
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…things we do
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NNIT, a full stack ERP house
• Create a full stack offering for Dynamics AX from advisory, to implementation and operations
• Will create an unmatched ERP power house in Denmark with a full stack value proposition for the two market leading
platforms - Microsoft and SAP - for larger organizations.
• Supports Microsoft focused customers and their move into the cloud as part of their digital transformation
Strong existing Microsoft portfolioOffice 365, Azure, SharePoint, Skype for Business, Power BI, BizTalk, Exchange Servers, SQL Server,
Windows Server, Windows Client OS, .Net
AX Advisory Services
AX Implementation
AX Application outsourcing
AX Infrastructure outsourcing
In
teg
rati
on
to
ad
jacen
t syste
ms
SAP Advisory Services
SAP Implementation
SAP Application outsourcing
SAP Infrastructure outsourcing
Off
sh
ore d
elivery
NNITSCALES
11
SCALES - leading Dynamics AX 365 implementer
• Founded in 2011
• One of the largest Dynamics AX consultancies in Denmark – a recognized Microsoft partner
• The leading Dynamics 365 consultancy in the Nordic region
• 126 AX consultants in Denmark and Norway
• Strong profitable growth track record
• Strong cultural fit to NNIT
• NNIT partner on Widex, PANDORA, and Sund&Bælt deliveries
• Support for Dynamics AX 2009 and 2012 ended in 2018.
• Security hotfixes continue until 2021
• Acquired as of June 1, 2017
Business overview Financials
Prizes
94,4
115,7
144,5
182,3
0%
10%
20%
30%
40%
50%
0
50
100
150
200
2017 2018
+26%
+25%
+23%
20162015
Revenue (mDKK) Operating profit margin (%)
mDKK
12
Valiance - Software-as-a-Service provider
• Headquarter in Baskin Ridge, NJ with an office in Dublin, Ireland
• Employs approximately 60+ staff and contractors
• Developed the automated TRUseries suite of software products for data migrations
• Performed 500+ migrations for 100+ clients
• Strong profitable growth track record and recognized as one of Americas fastest growing companies
• Acquired as of November 1, 2018
Business overview Financials*
Partners
4,86,2
12,4
0%
10%
20%
30%
40%
50%
0
2
4
6
8
10
12
14
20162015
9.8
2017 2018
+30%
+58%
+27%
Revenue Operating profit margin (%)
*Normalized for compensation for management, owner’s personal expenses, professional fees and ramp-up costs
mUSD
13
HGP – consultancy specialized in life sciences
• Swiss-based consultancy business, Halfmann Goetsch Partner established in 2008
• Employs 70+ experts with extensive experience in the life sciences industry
• Highly specialized offerings include Information Risk Management, Computer System Validation (CSV), Manufacturing Execution Systems (MES), Data Privacy (GDPR), Data Integrity, Good Manufacturing Practices, Track & Trace and Audit Readiness
• Flexible and scalable consultancy base including top subject matter experts from across the international life sciences IT arena
• Will be fully merged into NNIT in 2019
Business overview Financials*
Selected clients
5,9
7,6
8,3
8,6
9,6% 16,6%13,7% 13,7%
0%
10%
20%
30%
40%
0
2
4
6
8
100.7
20162015 2017 2018
9.0+14%
Passthrough revenue Revenue Operating profit margin (%)
*Normalized for compensation for management and selected provisions
mCHF
14
Data center Capacity
Data center setup Current State
• DC1: Owned 1,200m2 and tier III certified data center in Denmark
• DC2: Owned 4,000m2 and tier III certified data center in Denmark
• Rented capacity in secondary datacenter Denmark
• Operating datacenters in affiliates in US and China
DC1Tier III
External
leased
DC2Tier III
15
Markets
Denmark – all segments
17
Space to Grow Further As The Leading Local Provider –As Seen In Other European Countries
Source: Gartner (2018) and company financial reports
France
1st
10%
Spain
1st
9%
Denmark
7%
3rd
Norway
23%
1st Finland
1st
15%
Germany
8%
1st
Switzerland
11%
1st
Sweden
8%
1st
% market share and ranking
2017 Market Share of Leading Local IT Services Providers in Their Country of Origin
18
4.418
2.629
2.092 2.017 1.802
1.543 1.371
1.130 856 824
-
500
1.000
1.500
2.000
2.500
3.000
3.500
4.000
4.500
5.000
Leading Market Share in Danish IT Services Market
Danish IT Services Market Development vs. NNIT
Danish IT Services Market (2018 Revenue (1))DKKm +x% 2018 Growth
Source: Gartner IT Services Vendor market shares (April, 2019) and company financial reports
Note1. Based on Gartner’s estimates of Danish operations for these 10 competitors, may differ from reported numbers in companies’ filings
Danish IT service market 2018
▪ Growth 2013-2016 was 2-3 %
▪ Market size: 36.9 bn DKK
▪ NNIT market share was 7.2% (2015: 6.9%)
+16%
+3%
-20%+6%
0%
-10%
-2%
+5%
+4%
+27%
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Market size
2018E:
Market size
2022E:
CAGR: NNIT est. market share
NNIT revenue growth:
Comments:
2.2bnUncertainty
14.2bn 16.0bn 3.0%
See further opportunities for larger
outsourcing contracts, following Danish
clients internationally as well as Scales growth
7.3bn 8.6bn 4.1%
Regulatory driven access,
opportunities to grow accounts
12.2bn 13.9bn 3.2%
Rigid T&C, highly competitive pricing
environment. NNIT will act with caution
1.0bn 1.3bn 6.8%
Stable market situation, increased focus on
SaaS IT and business transformation
70.4bn 87.6bn 5.6%Focused offerings, differentiate on tier 1 and
tier 2 pharma companies, geographical focus
Source: Gartner (Q3 2018), Novo Nordisk data is from IPO (2014), NNIT estimatesAll numbers in DKK
Market situation for our customers groups
International
DK
INT
~50%
5.6%
3.5%
3.3%
22%
0.6%
20
Source: Gartner (2018), 2018 NNIT revenue All numbers in DKK
Enterprise
Market situation for our Private & Public clients
▪ Still a significant portion of larger companies run IT
in-house▪ Opportunities to follow Danish clients internationally▪ Security and future digital workplace▪ Large customers with complex needs ▪ SaaS implementation with SCALES
Market size
2018E: 14.2bn
2022E: 16.0bn
CAGR: 3.0%
NNIT estimated market share
Share of non-NNG revenue
▪ NNIT targeting Regions and Central Government
▪ Rigorous contract regime and T&C
▪ Public tenders are regulated by law
▪ Replacement of legacy systems
Public
Market size
2018E: 12.2bn
2022E: 13.9bn
CAGR: 3.2%
Finance
Market size
2018E: 7.3bn
2022E: 8.6bn
CAGR: 4.1%
▪ Strong regulation and compliance requirements fit well with our life sciences DNA
▪ High security demands
▪ On-premise data center demands ▪ Market is being disrupted▪ Mainframe is still significant part of the IT landscape
5.6%
42%
3.3%
21%
NNIT estimated market share
Share of non-NNG revenue
14%
3.5%
NNIT estimated market share
Share of non-NNG revenue
21
▪ Stable market situation with stable vendor situation
▪ NNIT strong at the Danish market and keeping position
▪ IT cost to move towards SAAS IT and business transformation
Market situation for our Life Sciences clients
Life Sciences DenmarkNNIT estimated market share
Share of non-NNG revenue
Market size
2018E: 1.0bn
2022E: 1.3bn
CAGR: 6.8%
22%
12%
▪ NNIT upcoming internationally – strong in Veeva and Quality Management
▪ IT cost to move towards SAAS IT and business transformation
▪ Strong need for dedicated LS IT business partner due to change in LS core applications
International Life SciencesNNIT estimated market share
Share of non-NNG revenue
Market size
2018E: 70.4bn
2022E: 87.6bn
CAGR: 5.6%
DK
11%
0.6%
INT
▪ More challenging and uncertain due to Novo Nordisk situation
▪ NNIT strong at HQ/corporate systems and selected regions but low market share in North America
▪ IT cost development will vary significant across areas
Source: Gartner (2018), Novo Nordisk data is from IPO (2014), NNIT estimates, 2018 NNIT revenueAll numbers in DKK
Market size
2018E: 2.5bn
NNIT estimated market share
Share of total revenue
Novo Nordisk
50%
37%
DK
22
International life sciences strategy
Pharma tier 1Big pharma
Pharma tier 2~3,000-10,000 employees
Regulatory driven focused offerings
Regulatory driven focused offerings
Advisory, Professional Services, Projects and LS Managed Services (AO/IO)
Advisory, Projects and tower based LS Managed Services (AO/IO)
Expert knowledge13 accounts
Scale fit14 accounts
Historic growth has been organic.
Strategic acquisitions can accelerate growth if the right candidates are identified.
Accounts are excl. China and Biotech
23
Near shore and Offshore Integrated Low Cost Delivery Capabilities have Grown by almost 3x
Geographical Footprint (1)
Our Global Delivery Model Serves Our Ambition of Expanding Our Geographical Footprint
Well-Integrated Global Delivery Model
% of FTEs
31st December 2010 31st December 2018
FTEs: 1,469
82%
16%
51%
46%
Other3% (3)
FTEs: 3,214
Other2% (2)
▪ The integrated delivery model allows NNIT to price its services competitively compared to offshore vendors▪ Full integration between delivery centers, with direct relationships and lines of communication between teams▪ Strategic decision to open offshore in China rather than India based on less competitive labor market and NNIT’s
existing presence in China which was anticipated to lead to lower attrition rates and shorter time to operation
Notes1. Key geographies only2. Switzerland3. Includes Switzerland, Germany, UK, Ireland, Norway and the US
24
COGS
Support Costs
…Via Continued Focus on Cost Efficiency…
33% 37% 41% 44% 46%
2014 2015 2016 2017 2018
Other Offshore / Nearshore
4,6%5,0% 4,9% 4,7%
4,2%4,3% 4,6%4,1% 4,0%
3,5%
2014 2015 2016 2017 2018
Sales and Marketing Administration
% of employees based in low cost locations (1)
◼ Continuous effort to decrease support costs
◼ Strategy is to continue to move back-office functions offshore
◼ Investment already made in ERP system and enlarged HQ enhances scalability of the business
Support costs as % of revenues (%)
Note1. Offshore/nearshore = China, Philippines, Czech Republic ; Other = Denmark, Switzerland, US, Germany, UK, Ireland, Norway
◼ NNIT has increased the number of employees in low cost geographies to meet our clients’ requirements of cost efficient, high quality and flexible delivery
◼ Continuously optimization of costs through automation and artificial intelligence
25
At NNIT Since
Relevant Experience
✓Long-term Strategic
Vision
✓Expertise of
Regulated Industries
✓Strong and
Focused Customer Approach
✓Fundamental
Transformation of the Company
✓Consistent Financial
Track Record
✓Reputation for Quality
Ricco Larsen (SVP, Life Sciences unit)
Per Kogut (President and Chief Executive Officer)
Carsten Krogsgaard Thomsen (EVP and Chief Financial Officer)
1999
2007
2014
Experienced Management Team with a Proven Track Record
Claus Middelboe Andersen (SVP, Projects & Consulting unit)2017
2010Brit Kannegaard Johannessen (SVP, People, Communication Marketing, IT &
Quality)
2009 Jacob Hahn Michelsen (SVP, Private & Public unit)
Søren Østergaard (SVP, Infrastructure & Application Services unit)2009
26