Keyware Technologies : Growth slows down due to the renting of cheaper terminals and to the launch of activities in Germany

The key figures for the first semester of 2017 can be summarized as follows:

• Profit before taxes amounts to 1,583 kEUR compared to 2,303 kEUR
• EBITDA decreases from 2,740 kEUR to 2,064 kEUR
• Revenue amounts to 9,010 kEUR compared to 9,251 kEUR
• Net profit amounts to 1,060 kEUR compared to 1,865 kEUR
• Magellan SAS and EasyOrder BVBA become 100% subsidiaries, but the impact on the results of the first semester is still negligible
• In the case of Magellan, 6,000 kEUR was paid for the remaining 60% shares, in the amount of 1,500 kEUR and 4,500 kEUR, financed by respectively own funds and bank loans
• In the case of EasyOrder, the investment is 700 kEUR, of which 200 kEUR still has to be paid
• With respect to the share buy-back programme, by 30 June 2017 47,400 treasury shares were acquired for an amount of 58 kEUR
• On 30 June 2017, the Group holds 3,028 kEUR as cash and cash equivalents compared to

• the Group has generated revenues of 9,010 kEUR compared to 9,251 kEUR for the same period in 2016, which represents a decrease in revenues of 241 kEUR or 2.6% compared to the first semester of 2016;

• revenues of the first semester of 2017 comprise respectively 4,588 kEUR of revenues from terminals (compared to 5,456 kEUR for 30 June 2016) and 4,130 kEUR of revenues from authorizations (compared to 3,795 kEUR for 30 June 2016).

• For the terminal activity, the decrease of 868 kEUR or 15.9% is explained by a lower number of new contracts signed in the first semester of 2017 compared to 2016 as well as by another product mix for the benefit of cheaper terminals;

• On the other hand, the segment of authorizations confirms the growth reflected by the increase of 335 kEUR or 8.8% due to an increase in the number of contracts which generates authorization revenues;

• The operational cashflow (EBITDA) of the first semester amounts to 2,064 kEUR compared to 2,740 kEUR for the first semester of 2016, which is a decrease of 676 kEUR or 24.7%. This decrease is due to the supply of cheaper terminals and the lower number of contracts signed (lower gross profit), the higher general expenses as well as the impact of the activities in Germany in 2017;

• The profit before taxes amounts to 1,583 kEUR compared to 2,303 kEUR for the first semester of 2016, which is a decrease of 720 kEUR or 31.3% as a result of a lower operating profit (673 kEUR lower) and a lower financial result (47 kEUR lower);

- The net profit amounts to 1,060 kEUR compared to a net profit of 1,865 kEUR for the first semester of 2016, which represents a decrease of 805 kEUR or 43.2% compared to the first semester of 2016. The difference can be accounted for by the factors mentioned above (especially decreased profitability in the payment terminals segment)

• Keyware Technologies acquired the remaining 60% of Magellan's shares, which fully consolidates this company as a 100% subsidiary as from 30 June 2017. This has impacted the various balance sheet items (see infra);

• The net equity amounts to 27,929 kEUR and represents 63.1% of liabilities. The decrease is mainly a result of the integration of Magellan, which caused to balance sheet total to inflate;

• The financial debt increases by 4.038 kEUR compared to 31 December 2016. This increase in mainly due to a short-term (4 year) bank financing of 4,500 kEUR in connection with the acquisition of the remaining 60% of Magellan's shares. We refer to the events of the first semester for more information on this matter;

• The cash and cash equivalents amount to 3,028 kEUR on 30 June 2017 compared to 1,045 kEUR, almost threefold. It should be noted here that Keyware Technologies has financed an amount of 1,500 kEUR from its own resources, allowing the bank loan to stay limited to 4,500 kEUR

- Magellan's contribution to the Group's financial position at 30 June 2017 is summarized in the table on the right.

The balance sheet as at 30 June 2017 includes among others the value of clientele and IP (6,135 kEUR under other intangible assets), trade and other receivables (1,012 kEUR), cash and cash equivalents (2,880 kEUR) and deferred taxes (1,926 kEUR).

The consolidation of Magellan resulted in a consolidation difference (goodwill) of 2,470 kEUR. This has already taken into account the 400 kEUR dividend received in the course of the first semester.

• During the second quarter of 2017, the Group has generated revenues of 4,482 kEUR compared to 5,230 kEUR for the same period in 2016, which represents a decrease in revenues of 748 kEUR or 14.3% compared to the first semester of 2016;

• Revenues of the second quarter of 2017 comprise mainly respectively 2,086 kEUR of revenues from terminals (compared to 2,567 kEUR for 30 June 2016) and 2,345 kEUR of revenues from authorizations (compared to 2,663 kEUR for 30 June 2016);

• For the terminal activity, it should be recalled that a very high number of new contracts were signed in the comparative period in 2016 compared to the second quarter of 2017. This explains why revenues from this segment in that second quarter of 2017 are about 481 kEUR lower, i.e. 18.7%;

• The segment of the authorizations saw a decrease of 318 kEUR or 11.9% compared to the second quarter of 2016;

• The operational cashflow (EBITDA) of the second quarter amounts to 805 kEUR compared to 1,560 kEUR for the second quarter of 2016, which is a decrease of 755 kEUR or 48.4%. This decrease is mainly a result of the lower gross margin, higher general expenditure and the impact of the activities in Germany in 2017;

• Profit before taxes amounts to 495 kEUR compared to 1,297 kEUR for the second quarter in 2016, which is a decrease of 802 kEUR or 61.8% mainly as a result of a lower operational profit (728 kEUR lower) and a lower financial result (74 kEUR lower);

• The net profit amounts to 338 kEUR compared to a net profit of 1,116 kEUR for the second quarter in 2016, which represents a decrease of 778 kEUR or 69.7% in comparison. The difference can be accounted for by the factors mentioned above

Compared to the numbers of the first semester of 2016, the current numbers of 2017 are impacted by the following changes in the perimeter:

• The incorporation of the subsidiary under German law Keyware Transactions & Processing GmbH in June 2016. This company is still in its start-up phase. The contribution to revenues, EBIT, EBITDA and net result respectively amounts to 17 kEUR, - 200 kEUR (loss) for EBIT, EBITDA and net result. In 2016, a loss of 102 kEUR has been incurred which was recorded in the fourth quarter of 2016;

• The acquisition of the company under Belgian law EasyOrder VOF in January 2017. This company is also in its start-up phase. The contribution to revenues, EBIT and EBITDA amounts to respectively 82 kEUR, -4 kEUR (loss) and 66 kEUR. The contribution to net profit amounts to 19 kEUR;

• The acquisition of a stake of 40% in the company under French law Magellan SAS on 30 September 2016, followed by the acquisition of the remaining 60% on 30 June 2017. This participation was valued on the basis of the equity method until 30 June 2017. The contribution to the result of the first semester of 2017 comes to a loss of 22 kEUR. The activity of this software company is rather cyclical of nature with a clear peak towards the end of the year. The contribution to the result of 2016 was positive and amounted to 105 kEUR (impact fully in the fourth quarter of 2016)