INTERIM REPORT JANUARY-JUNE 2006

(NGM: PAY)

SUMMARY FOR THE PERIOD

· Net turnover for the second quarter increased to KSEK 3,206 (836). For the first six months of the year, net turnover amounted to KSEK 8,037 (1,360)

· Profit/loss after tax in the second quarter amounted to KSEK -15,811 (-11,521). The corresponding profit/loss for the first six months was KSEK -29,222 (-19,798)

· Profit/loss per share for the second quarter amounted to SEK -0.6 (-0.8). For the first six months of the year, profit/loss per share amounted to SEK -1.2 (-1.3)

· The transaction volume for the second quarter increased to KSEK 64,754 (23,933). For the first six months of the year, the transaction volume amounted to KSEK 153,660 (37,695)

· Comprehensive investments within operation, support, risk management and marketing ensure capacity ahead of volume increases in Europe and North America. This work will continue during the third quarter.

· The decrease in transaction volume during the second quarter compared to the first is mainly attributable to lower volumes from the North American market. Development initiatives and adaptations regarding functionality, operation, support and risk management for these volumes have required higher investments and more resources during the year than could have been foreseen. In addition, the initiatives have taken longer than previously calculated, which has had an adverse impact on the development of volumes.

· At the beginning of May, Paynova entered into an agreement concerning the acquisition of new American company Global Product Management.

· During the second quarter, shares have been subscribed via subscription options of series TO 2 and TO 7 to a value of MSEK 32.5

SIGNIFICANT EVENTS AFTER THE END OF THE PERIOD

· Paynova has signed a far-reaching management and structural agreement with India and USA-based Xponse IT Services Ltd (“Xponse”).

· The partnership partly entails streamlining and adapting Paynova’s business within the areas of development, operation and support. The agreement with Xponse is conditional upon decisions taken at an extraordinary general meeting. The agreed services and contributions will be paid for through new shares, which means that Paynova will have a strong new industrial co-owner.

· Completion of agreement to acquire Global Product Management. The acquisition took place by means of an issue of 767,644 shares and a conditional additional purchase sum of 400,000 subscription options.

· All shares subscribed via series TO 7 and TO 2 have been paid.

· Paynova CEO Lars Ekstedt has announced the company’s intention to acquire in full its share of the warrant scheme for Paynova’s employees as decided by the AGM on 11 May 2006. The acquisition will take place at the estimated market value in accordance with the Black & Scholes model and the options’ redemption price is SEK 22.50. Shares can be subscribed to from September 2007 until November 2007. The programme encompasses all employees of Paynova.

CEO’S COMMENTS

“The partnership with Xponse enables our next leap forward”

For Paynova, the second quarter of 2006, like the first, has been characterised by intensive efforts to realise Paynova’s potential volume, particularly in North America. During the year we have made major investments in development, operation, support and risk management to secure the volume increases we are planning for. The more extensive investments include preparations for securing the potential volume increase owing to the acquisition of American company Global Product Management (“GPM”), which is now complete. The agreement with GPM includes monthly volumes of around MSEK 20 guaranteed by the seller, but the total potential is far greater: additional payments provide strong incentives for the seller to add volumes of up to MSEK 110. This is not our only agreement with high potential volume: our agreements and collaborations with CCT and LDL West offer similar potential.

DELAY DESPITE INCREASED EFFORTS

As noted previously, preparations for these volume increases have required more resources than we originally planned for. Although we have devoted a very high proportion of our total resources to these preparations, implementation of the new volumes has been delayed. The total transaction volume decreased from MSEK 89 in the first quarter to MSEK 65 in the second. Quite simply, we have not had the financial and operational conditions to be able to swiftly realise the potential volume in front of us. Costs have also increased slightly during the second quarter, mainly due to one-off expenses.

THE POTENTIAL REMAINS

At the same time I would like to point out that the fundamental conditions for Paynova’s volume increases, primarily on the North American market, remain intact. We have a number of good collaborations and agreements in place, and with the market in its current condition we have excellent opportunities for decent growth in volume. It is simply a case of realising these opportunities quickly and efficiently.

XPONSE – A PERFECT PARTNERSHIP FOR PAYNOVA

It is therefore very pleasing that we can now present a far-reaching partnership with USA and India-based Xponse IT Services Ltd. (“Xponse”). The collaboration includes a development and adaptation of Paynova’s business within the areas of operation, support and development, giving us access to the resources we so badly need. Xponse will also assist Paynova with strategic development of our offering and our processes. The value of the services and other agreed contributions amounts to over MSEK 89 with a performance-based payment of a further MSEK 12 in the event of positive cash flow for the period January – June 2007. We will pay for this with new shares. Stronger resources will enable us to increase our rate of development considerably and reap far more benefit from the agreements and collaborations we have established – while at the same time we are minimising our future financing requirements.

In addition to the increase in resources, the agreement with Xponse will also bring about an immediate improvement in Paynova’s cash flow, because Xponse will give Paynova an ongoing cash injection of MSEK 1 a month. In the long term, we think the collaboration can help us achieve greater efficiency in our operation and thereby further improve our profitability.

It is also extremely valuable for Paynova to have a strong industrial co-owner and partner like Xponse. Xponse is a leading service provider for IT services focusing on business development, software development and operation, which matches Paynova’s needs exactly. Xponse is also well-established in IT solutions for the banking and finance sector. Thanks to Xponse’s international e-commerce network, we will jointly create many new business opportunities. Quite simply, this agreement will give Paynova all the power it needs to take the next leap forward!

The deal is conditional on an extraordinary general meeting’s approval of the agreement and authorisation for the Board to carry out the share issues for Xponse. A notice to attend the meeting will be issued within a week. The Board proposal of an agreement with Xponse is currently supported by a number of major shareholders representing over 50 per cent of the votes in the company. This is very good news and I hope the plan will attract broad support and that we are entrusted with carrying out this deal, which will instantly enable Paynova to harness the position and all the agreements and collaborations we have established over the past year.

Stockholm, 25 August 2006

Lars Ekstedt

CEO and Group President

FOR FURTHER INFORMATION CONTACT:

Lars Ekstedt, CEO

Phone: +46 (0)703-74 27 37

ABOUT PAYNOVA

Paynova offers an international, account-based payment service via the Internet. With Paynova as the only counterpart, e-retailers get a payment guarantee for around twenty payment options in 10 languages with 8 currencies in a security-certified interface (PCI). Consumers can open an account, a Paynova wallet, for free on the Internet to make purchases more secure and simpler, as well as look after transfers between family members, friends and acquaintances.

Paynova has agreements with around 1,000 e-retailers. Most are found in the following prioritised segments: travel, retailing and media/network games. The company has been listed on NGM Equity since February 2004. For more information: www.paynova.com