Keyware Technologies : Group records a revenue growth of 11% in 2016

9 March 2017, 22:00 CET

Keyware laid down a firm base in 2016 from which to roll out new payment technology over the coming years. Together with the increasing number of electronic transactions per payment terminal, the growing number of customers has been the main driver behind the growth of the financial year ending on 31 December 2016.

The past months Keyware made a strategic investment and performed two takeovers: the launch of Keyware Transactions & Processing in Germany, a 40% participation in the French company Magellan and the takeover of the Belgian company EasyOrder. With this, Keyware shows that it is increasing its geographical market share and that it is a key player in the future of electronic payment.

Keyware Transactions & Processing GmbH launches the payment solution of Keyware on the German market. As far as electronic payment is concerned, Germany is still a considerable way behind in relation to Belgium, the Netherlands and the Scandinavian countries. As it is the main economy in the region, it offers a significant potential for growth in the long term.

EasyOrder offers merchants, government bodies and liberal professions an m-commerce and e- commerce shop with internet interface, allowing their customers to quickly and easily order products and services and pay by App (for Apple, Microsoft and Android) for smartphones and tablets.

In this manner Keyware provides local players in the digital economy with a profitable answer to the known mega-webshops.

Participating in the FinTech company Magellan allows Keyware an access to the rapidly growing market of split consumer payments on the one hand and technologically advanced payment platforms for e.g. smartphone payments on the other hand. Split payments, where the merchant authorizes the consumer to pay in instalments by means of the consumer's payment card only, are already a great success in Scandinavia. For the merchant, this is an important administrative simplification (no need any credit file) whilst the customer benefits from simple processing at the till.

"These takeovers suit Keyware's omnichannel strategy perfectly. Keyware offers payment services on all channels, both with and without a physical bank card, online through the smartphone or at the counter or till, and consequently becomes a major player in the sizeable network of technology and service companies in the market for electronic payments."

Stéphane Vandervelde, President & CEO Keyware

At the end of 2016, Keyware recorded a net growth of 1,200 contracts since the previous year. The number of transactions per terminal also grew, which turned out to be the main driver behind Keyware's revenue growth.

"Cash as means of payment is under increasing pressure from the electronic payments. Even small amounts are paid by card more and more frequently because merchants realize that as a result of lower transaction costs electronic payments are safer, cheaper and quicker. Because of our friendly rates, we also notice a clear increase in our customer base.

Stéphane Vandervelde.

• Revenues amount to kEUR 18,721, an increase by kEUR 1,918
• EBITDA grows by kEUR 231 from kEUR 4,993 to kEUR 5,224
• Profit before tax amounts to kEUR 4,192 and increases by kEUR 164
• Net profit after taxes amounts to kEUR 3,101 and decreases by kEUR 2,190 due to deferred taxes (non-cash)
• A participation of 40% has been acquired in Magellan SAS which led to a proportional contribution to the net result of the Group of kEUR 105 (Q4-2016)

• Profit before taxes of the 2016 financial year amounts to kEUR 4,192 compared to kEUR 4,028, which represents an increase of kEUR 164.
• In 2016, the EBITDA amounts to kEUR 5,224 compared to kEUR 4,993 which means an increase of kEUR 231 in relation to the financial year 2015. Other expenses, however, include a number of exceptional costs of a non-recurring or occasional nature amounting to kEUR 350 (see infra). The normalised EBITDA of 2016 is therefore kEUR 350 higher than the reported EBITDA and amounts to kEUR 5,574. The normalised profit before taxes is also kEUR 350 higher.
• Keyware closes the financial year 2016 with a net profit of kEUR 3,101 compared to kEUR 5,291 in 2015. This decrease is triggered by the deferred taxes entry (non-cash). In 2015, deferred tax revenues were recorded amounting to 1,373 kEUR in relation to remaining tax losses. In 2016, deferred tax assets were used for kEUR 1,038, which gave rise to the same amount as a charge (non-cash). Due to the different impact of 2016 compared to 2015, these deferred taxes account for an impact of kEUR 2,411. The profit before taxes is therefore a better indicator in this case. Eliminating the non-recurring costs mentioned above, the normalised net profit after taxes is kEUR 231 higher.
• On 30 September 2016, a participation of 40% was acquired for kEUR 4,000 in Magellan SAS, a France based company. The contribution of this participation to the net result of 2016 amounts to kEUR 105 (proportional and only Q4 2016). The financing of this participation was a mixture of own equity (kEUR 1,000) and a loan from a credit institution (kEUR 3,000). The financing through own equity was realised by means of a buy-back programme of treasury shares for kEUR 1,000.

-The revenues and the gross profit can be presented as follows:

• The consolidated revenues for the 2016 financial year amounts to kEUR 18,721 in relation to kEUR 16,803 for 2015, or an increase by 11.4%

  The authorisations segment explains the increase of the revenues. The revenue growth of kEUR 1,918 can be fully contributed to the higher income from the authorisations. Beside a higher number of contracts generating commissions and a higher volume of transactions, better conditions from the acquirers in 2016 have also contributed to this.

  The decrease in revenues from the payment terminals segment is triggered by the lower number of signed contracts in 2016 compared to 2015. In comparison to the previous financial year 2015, the GlobalPay asset deal contribution does need to be mentioned as part of the revenue of the payment terminals. This amounted to kEUR 850 in 2015.

• The gross profit for financial year 2016 amounts to kEUR 10,887 compared to kEUR 10,178 for 2015, or an increase of kEUR 709 or 7.0% The increase in the gross profit of kEUR 709 is realised by the increase of the authorisations of kEUR 786 (+84.5%), whilst the payment terminals present a decrease in gross profit of kEUR 77 (-0.8%)

• The other operating expenses increase by kEUR 868 from kEUR 3,712 to kEUR 4,580, largely because of the costs involved with the launch of the operations in Germany (kEUR 80) and because of a number of costs with a non-recurring or one-off nature (settlement to finalise a dispute, due diligence costs and costs associated with 20-year Keyware for a total of kEUR 350). These have negatively impacted operating income (EBIT), EBITDA and profit before taxes for an amount of kEUR 350 and net profit for kEUR 216 respectively

• The allowances on current assets increase by kEUR 112 from kEUR 1,785 to kEUR 1,897. This mainly relates to allowances on receivables from finance leases (kEUR 1,565) as well as allowances on inventories (kEUR 332). The increase of kEUR 112 is largely due to the higher allowances on finance lease receivables

• The operating profit (EBIT) amounts to kEUR 3,174 compared to kEUR 3,236, which is a decrease of kEUR 62 compared to 2015. This decrease is mainly due to the fact that the increase of the gross margin of kEUR 709 is offset by a higher increase in other expenses (kEUR 868) and by higher allowances on current assets (kEUR 112)

• The financial results amount to kEUR 1,018 compared to kEUR 792 in 2015. This improvement of kEUR 226 is mainly attributable to the lower financial costs (kEUR 160) associated with refinancing the shareholder loans by bank loans and by refinancing some loans. The increase in the installed base of payment terminals accounts for the increase in financial income by kEUR 66 as this caption comprises the discounts on the contracts recognised and taken into result over the duration of the contracts

• The profit before taxes amounts to kEUR 4,192 compared to kEUR 4,028 in 2015. This improvement of kEUR 164 (+4.1%) comes from a better financial result of kEUR 226 compensating for the lower operating income (EBIT) of kEUR 62

• The net profit for the financial year 2016 amounts to kEUR 3,101 compared to a net profit of kEUR 5,291 in 2015, in other words a decrease of kEUR 2,190 (41.4%) This decrease can be contributed to deferred taxes. In 2015, deferred tax revenues amounting to 1,373 kEUR were recorded in relation to tax losses, triggering a net profit that is higher than the profit before taxes. In 2016, deferred tax assets were utilised in the amount of kEUR 1,038, which is reflected as a charge in the result of 2016, resulting in a lower net profit than the profit before taxes. Hence, deferred taxes account for a portion of kEUR 2,411 in the decrease of kEUR 2,190

• The net profit for the financial year 2016 includes the share in Magellan SAS for kEUR 105. This is the 40% stake in the result of the fourth quarter of 2016, which is the time span during which Keyware owns this participation.

• The EBITDA amounts to kEUR 5,224, which therefore represents an increase of kEUR 231 compared to 2015. Given the decrease in the operating profit (EBIT) of kEUR 62, the increase of EBITDA in 2016 is attributed to the higher non-cash costs (mainly higher allowances on receivables)