INTERIM REPORT JANUARY - MARCH 2010

(NGM: PAY)

INTERIM REPORT JANUARY - MARCH 2010

• The transaction volume for the first quarter was SEK 960,929 thousand (183,485), an increase of 424 per cent compared to the same period of last year.

• Transaction-based revenue for the first quarter was SEK 7,182 thousand (4,761), up by 51 per cent over the corresponding period of 2009.

• Compared to the same period of 2009, operating profit/loss before amortization/depreciation for the first quarter improved by SEK 6,430 thousand to SEK -537 thousand (-6,967).

SIGNIFICANT EVENTS IN THE FIRST QUARTER

• Collaboration agreements have been signed with Trippus, a leading supplier of systems among other things for online event booking, and Clickgirot, which among other things offers a free-of-charge invoicing service as a complement to the traditional payment methods.

• At the beginning of 2010 Paynova, together with its German partner Acoreus, delivered a system solution in which the customers are offered access to a range of different German payment methods.

• In the first quarter, as part of the wind-up of Paynova’s e-account service, a change of conditions

was implemented through which an annual account maintenance fee was introduced.

• The marginal decrease in the transaction volume during the first quarter compared to the fourth quarter of 2009 is consistent with the pattern from previous years. The somewhat lower transaction volume can also be attributed to lower new sales than anticipated, but also to decreased volumes from one of the company’s key customers as a result of the harsh winter.

SIGNIFICANT EVENTS AFTER THE END OF THE PERIOD

• The second quarter has begun with very satisfactory

transaction volumes due to increased sales among existing customers but also as an effect of the volumes now being generated by new customers.

• On 1 May 2010 Maria Ängarp succeeded Robert Schönbeck as the new CFO.

COMMENTS FROM THE CEO

The winter was slightly chilly from a business standpoint and sales did not go smoothly in the first months of the year. Among other things, the harsh winter had a negative effect on our customers in the travel industry and our anticipated revenue was undermined somewhat by price adjustments, a trend we have spoken of earlier.

However, the arrival of spring has brought growth in sales, and on the whole I feel confident about the previously communicated target to reach profitability on an annual basis during 2010.

The fivefold increase in Paynova’s transaction volume

compared to the first quarter of 2009 gives us every reason to continue evolving our business in the chosen direction. When Paynova started to offer traditional processing services alongside the account model in the spring of 2009, our offering became more accessible to major e-merchants, which gave further momentum to transaction volumes. After the end of the first quarter, these new services for Paynova continued to show positive development. We now also have sufficient perspective to see that the company’s total costs are being maintained at a low and even level – just as communicated in earlier reports.

The number of new customers is growing successively,

largely thanks to our close collaboration with platform partners and effective sales work. Our improved and enhanced range of services has contributed to strengthening our competitiveness. With Paynova’s new and simplified basic offering, our basic service is directly comparable to that of our competitors, which facilitates the sell-in to new customers. If we then add Paynova’s optional services on top of the basic offering, Paynova stands out among the competitors as the most complete supplier – not only in Sweden but also in many other markets.

We have introduced the much sought-after invoice payment method and in combination with other services such as mobile payments and secure tickets, we see new and exciting openings here. In the spring Paynova will hold a forward-looking event on this theme to present new services for customers like public transport and event companies.

The e-commerce market is continuing to grow and studies show that both consumers and businesses have a powerful belief in the future of e-commerce. A majority of consumers also feel that payment security has improved.

In China we are continuing our efforts to connect Western e-merchants to Chinova’s payment service to that they gain access to Chinese consumers. Parallel to this, development of China UnionPay’s e-commerce portal has been completed during the spring. Testing of the portal was carried out in May and the launch will take place during the summer. Chinova is also negotiating with international gateways in the online payment industry regarding the potential to offer their services. Interest from companies of this type – including major PSPs and e-commerce platforms – is keen. The advantage of these for Chinova is the opportunity to quickly reach a wide group of e-merchants in terms of both communication and technical connection. For Paynova, this means that the Chinese business will make a significant contribution to earnings in the second half of the year. Chinova will also host activities during the 2010 World Expo in Shanghai. The event, which will be organized together with partners and customers, is scheduled for September. We will provide more information about this during the summer.

Simon Thaning

Stockholm, May 2010