YEAR-END REPORT 2011

(The figures in brackets refer to the same period of 2010 unless otherwise specified.)

FOURTH QUARTER 2011

• The transaction volume for the fourth quarter was Sek 1,085,922 thousand (1,030,109), an increase of 5 per cent compared to the same period of last year.
• Transaction-based revenue for the fourth quarter was Sek 7,806 thousand (7,914), down by 1 percent compared to the fourth quarter of 2010. Profit before amortization/depreciation was Sek 1,719 thousand (5,541). Profit for Q4 2010 included a positive earnings effect of Sek 5,469 related to Vat.
• Profit after tax was Sek 6,303 thousand (3,484) and includes a positive earnings effect of Sek 6,353 thousand arising on the sale of shares in the associated company Chinova.
• Earnings per share were Sek 0.07 (0.04).

2011 IN SUMMARY

• The transaction volume for the full year 2011 was Sek 4,205,310 thousand (4,084,969), an increase of 3 per cent compared to the previous year.
• Transaction-based revenue for 2011 was Sek 30,632 thousand (30,567), equal to an improvement of 0.2 per cent compared to 2010.
• Profit before amortization/depreciation was Sek 4,276 thousand (7,423). Profit for 2010 included a positive earnings effect of Sek 5,469 thousand attributable to Vat.
• Profit after tax was Sek 3,389 thousand (306) and includes a positive earnings effect of Sek 6,353 thousand arising on the sale of shares in the associated company Chinova.
• Earnings per share were Sek 0.04 (0.00).

SIGNIFICANT EVENTS IN 2011

First Quarter

• Paynova’s Board of Directors decided on a directed share issue for Sek 10 million in accordance with an authorization granted by the 2010 AGM.
• The proceeds of the new share issue, together with external borrowings of Sek 4.3 million, were used to pay the Vat liability to the Swedish Tax Agency and redeem the loan to Centum Select Fund.

Second Quarter

• Paynova and its partner Lison Technology Ltd each transferred 2.5 per cent of the shares in the associated company Chinova Asia Development to the new partner Juno Capital Asia Ltd.

• CUP eMall, developed by Paynova’s associated company Chinova, progressed from the test stage to operating mode with merchants, consumers and transactions.

Third Quarter

• Paynova has obtained permission from the Swedish Financial Supervisory Authority to provide payment services in accordance with the Payment Services Act.

• In the yearly certification process, Paynova has been given renewed approval for the PCI Data Security Standard.

Fourth Quarter

• Paynova’s Board of Directors decided to accept a bid from Great Union Investment Ltd (GUI) for part of Paynova’s holding in the associated company Chinova Asia Development Ltd. Aside from a binding purchase agreement, the transaction also includes a company purchase option. As a first step, Paynova will sell 50 per cent of the existing holding of 4,650 shares for a price of Sek 7.5 million. The option gives GUI the right to acquire an additional 1,162 shares for Sek 3.75 million by 15 October 2012 at the latest.

• An agreement was signed with Sofort Bank through which Paynova can offer its customers access to direct bank transfers in the majority of Eurozone countries as well as Poland, Switzerland and England.

COMMENTS FROM THE CEO

In the fourth quarter of 2011, the transaction volume increased by 5 per cent compared to the same quarter of last year. Our positive earnings for the quarter are a result of higher sales, a controlled cost level and the sale of parts of Paynova’s shareholding in the Chinese associated company Chinova. Cash flow from Paynova’s operating activities remains positive and strengthened compared to the previous year.

Paynova’s sales activities during the quarter were targeted mainly towards online retailers and travel companies. Thanks to recent years’ improvements in Paynova’s financial position, we can now also take part in major procurements to a greater extent that before. This is due to a stronger balance sheet, a control point that is often one of the mandatory requirements in requests for tender. In the next few years, large-scale procurements in both the private and public sectors will be critical for Paynova since our offering meet the needs of sizeable players to a large degree.

The sale of parts of Paynova’s shareholding in Chinova has now been completed. As previously communicated, our assessment is that the buyer has better scope to realize the necessary financing and marketing investments, and thereby secure Paynova’s contractual license revenue from Chinova. Revenue from Chinova continued to grow during the fourth quarter and amounted to Sek 1,048 thousand for the full year.

Paynova has shown a sustained upward trend in both fixed customer revenue, i.e. non transaction based revenue, and the number of customers. On the whole, we are seeing clear growth throughout out operations. In 2012 we will also intensify monitoring of both customer satisfaction and internal efficiency.

After the end of the quarter we have integrated a widely used European payment method. The method is called Sofort, and provides access to direct bank transfers in several European markets. By adding this payment method to our platform, Paynova will provide even higher satisfaction for e-merchants wanting to reach consumers across Europe. Together with Chinova, Paynova has also participated in the international partner Intertek’s European road show. The goal was to attract and promote several key brand suppliers’ e-commerce ventures outside their home countries and the initiative resulted in a number of interesting ongoing business opportunities, among other things in the UK and Italy. Paynova’s role in these cross-border projects is to continue serving as a supplier of payment technology to Chinova and to assist the merchants in question with local payment methods in the Nordic region.

One key focus area in 2012 will be to ensure maximum system availability for all e-merchants, something that has become a growing competitive advantage in the increasingly business-critical e-commerce market. We are also further deepening our collaboration with partners that widen Paynova’s offering, including Payzone (physical payments) and Retain 24 (gift cards).

Simon Thaning

Stockholm, 16 February 2012

(For full report, see attached file)