Keyware Technologies NV — Earnings Release 2011

Mar 15, 2012

Keyware profitable

Profit of 83 kEUR for 2011

Brussels, Belgium - 15 March 2012 – Keyware (EURONEXT Brussels: KEYW) a leading supplier of electronic-payment solutions, loyalty systems, identity applications and related transaction management, today announced its financial results for the financial year 2011, which closed on 31 December 2011. Keyware realised a profit of 83 kEUR compared to a profit of 446 kEUR for 2010. The profit over 2010 contained a non-recurrent gain in connection with the out-ofcourt settlement received from Royal Bank of Scotland (450 kEUR), which is not the case in 2011.

2011 was an excellent year for Keyware. Keyware made significant progress in the financialeconomic area, while the company also played a more prominent role in the market segment of large companies and government services. The annual increase in the number of transactions processed resulted, in turn, in a growing base of recurrent revenues. Finally, a further optimisation of business processes resulted in adequate cost control and additional progress regarding the quality of our payment services.

Although the realised profit in 2011 of 83 kEUR is lower than the profit of 446 kEUR in 2010, Keyware qualifies this result as a positive development as the profit figure for 2010 contained a non-recurrent gain of 450 kEUR in connection with the out-of-court settlement received from RBS. Moreover, the profit over 2011 was realised in more stable market segments and increasingly based on recurrent transaction revenues. The modernisation of the payment terminal park has the additional advantage of a decrease in maintenance costs and we expect that this positive development will continue in the future.

The upgrading of its payment services places Keyware at the top in its various market segments. In addition, strong customer orientation, advanced technology and a high reliability create real added value.

Stéphane Vandervelde, CEO: "We deliver quality and we make the difference and thus we attract customers. Satisfied customers, both in the SME segment and among government services and recently also among the large distribution chains. Our innovative payment solutions not only focus on realising savings, but are also directed at ergonomics, convenience for the user, administrative simplification and risk management. We certainly plan to continue along this path in 2012."

Guido Van der Schueren, Chairman of the Management Board: "2011 was a difficult year from a macroeconomic perspective. Nevertheless, Keyware succeeded in its mission: exceeding the expectations of our stakeholders. The partnership with our customers, suppliers, financiers and personnel resulted in a healthy growth and strengthens our ambition to perform even better in 2012."

The figures

For the fiscal year 2011:

• the Group realised a turnover of 5,784 kEUR in comparison to 5,806 kEUR for the same period in 2010, which represents a decrease in turnover of 0.38%;
• the operating cash flow (EBITDA) for the fiscal year 2011 came to 774 kEUR, versus 1,050 kEUR for the fiscal year 2010, which represents a decrease of 26.28%;
• the net profit for the period amounted to 83 kEUR, compared to a net profit of 446 kEUR as at 31 December 2010. However, the profit for 2010 contained a non-recurrent gain of 450 kEUR received from RBS;
• the net cash flow amounted to 896 kEUR, compared to 1,013 kEUR as at 31 December 2010, representing a decrease of 11,55%;
• the gross profit margin increased from 80.42% to 83.07%.

	Fiscal year per
Key figures for the period	31.12.2011	31.12.2010
ending on December 31	kEUR	kEUR
	(audited)	(audited)
Turnover	5,784	5,806
Profit/(loss) for the period	83	446
EBITDA	774	1,050
Net cash flow	896	1,013

Management report on the results for 2011

The key figures for the fiscal year can be summarised as follows.

• The turnover and the gross margin can be specified as follows:

	Fiscal year per
Gross Margin	31.12.2011	31.12.2010	Change
	kEUR	kEUR
Turnover	5,784	5,806	(0.38)%
Raw materials and
consumables	(979)	(1,137)	(13.90) %
Gross Margin	4,805	4,669	2.91 %
Gross margin in percentages	83.07%	80.42%

• The consolidated turnover for the fiscal year 2011 amounts to 5,784 kEUR compared to 5,806 kEUR for the same period in 2010, which represents a decrease of 0.38%. The decrease in turnover is manifesting itself in the payment terminals division. Due to a stronger focus on the long-term profitability of its customer base, Keyware is shifting towards qualitatively stronger customers within its different market segments. Initially, on the one hand, this strategy led to a slight decrease in turnover; however, on the other hand, it has also resulted in a better and more sustainable return.

The turnover in the authorisation division increased by 110 kEUR.

• The other profits and losses for the fiscal year 2011 amount to 582 kEUR, as compared to 1,366 kEUR for the same period in 2010, which represents a decrease of 784 kEUR. This decrease can be explained by the fact that in 2010 non-recurring gains have been recorded, such as 450 kEUR due to the out-of-court settlement with RBS. Furthermore, in 2010 an additional amount of 120 KEUR has been recorded regarding remissions negotiated with suppliers, an additional amount of 28 kEUR regarding double payments in 2010 and 63 kEUR withdrawal of a no longer payable debt have been recorded. Finally, an additional amount of 120 kEUR regarding settlement revenue has been recorded in 2010 regarding the out-of-court settlement with a supplier of payment terminals.
• Personnel expenses declined by 19.07%, due to a lower number of sales representatives.
• The net impairment of current assets rose from 746 kEUR to 1,218 kEUR. This concerns impairments recorded on receivables from financial lease and impairments recorded on inventories. The impairments on receivables from financial lease are the consequence of bankruptcies, termination of the activities by the customer or termination of the contract by the customer.
• Other operating expenses declined by 14.35 %, due to a decrease in fees, expenses for sales and marketing and administration expenses, partly compensated by an increase of car expenses and interim expenses.
• Net profit for the fiscal year amounted to 83 kEUR in comparison to a net profit of 446 kEUR as at 31 December 2010. The lower result is due to a decrease of the other profits and losses and an increase of the net impairment of current assets, partly compensated by an increase of the gross margin and a decrease of the personnel expenses and other operating expenses.
• Net cash flow amounted to 896 kEUR in comparison to 1,013 kEUR as at 31 December 2010.

The lower net cash flow is mainly due to a deterioration of the net result, from a net profit of 446 kEUR as at 31 December 2010 to a net profit of 83 kEUR as at 31 December 2011.

IMPORTANT EVENTS IN 2011

PARFIP

In 2011, the Group was also able to make use of the credit line provided by Parfip Benelux, in the form of a cession of contracts. For the fiscal year 2011, more than 1.4 million EUR in contracts had been ceded to Parfip Benelux NV.

FINANCING

During March 2011, the Group concluded a loan agreement with Big Friend NV, the management company of the CEO, for an amount of 500 kEUR. This loan is repayable in monthly instalments over a period of 60 months.

In addition, the Group drew down the second and last portion of the bank loan (ING) amounting to 500 kEUR. This loan is repayable on a quarterly basis over a period of 16 quarters.

At the end of June 2011, advances for an amount of 1,000 kEUR were made available by Parana Management BVBA, the management company of Guido Van der Schueren, director of the Company.

Finally, during September 2011, the Group signed a credit agreement for an amount of 1,500 kEUR with a financial institution. By the end of December 2011, the last formalities regarding the warranties requested by the financial institution were finalized. In the course of January 2012, the first portion of 500 KEUR has been withdrawn.

EXERCISE OF WARRANTS

In February 2011, a warrant holder confirmed his confidence in the Group and proceeded to exercise his outstanding warrants:

• following the exercising of 105,000 Warrants 2008, the capital was increased for an amount of 131 kEUR and 105,000 new shares were issued via a notarial deed executed on 16 February 2011.

Auditor's Report

"The auditor of Keyware Technologies NV, BDO Bedrijfsrevisoren Burg. Ven. CVBA, represented by Bert Kegels, has confirmed that the audit procedures, which have been merely completed, have not revealed any significant corrections that should have been made to the abbreviated consolidated income statement, balance sheet, cash flow statement and statement of changes in the equity of the group over 2011, included in this press release."

About Keyware

Keyware (EURONEXT Brussels: KEYW) is a leading supplier of electronic payment solutions, loyalty systems, identity applications and related transaction management. Keyware is based in Zaventem, Belgium. More information is available on www.keyware.com.

For additional information, please contact:

Mr Stéphane Vandervelde President & CEO Keyware Technologies Tel: +32 (0)2 346.25.23 ir@keyware.com www.keyware.com

CONSOLIDATED INCOME STATEMENT

The consolidated income statement can be summarised as follows:

Consolidated income statement for the period	Fiscal year per
ending on	31.12.2011	31.12.2010
	kEUR	kEUR
	(audited)	(audited)
Continued operations
Turnover	5,784	5,806
Other profits and losses	582	1,366
Raw materials and consumables	(979)	(1,137)
Salaries and employee benefits	(1,256)	(1,552)
Depreciation	(176)	(253)
Net impairment losses of current assets	(1,218)	(746)
Other operating expenses	(2,746)	(3,206)
Operating profit/(operating loss)	(9)	278
Financial income	793	685
Financial expenses	(701)	(752)
Result before taxes	83	211
Taxes on the result	-	235
Profit/(loss) for the period from continued operations	83	446
Profit/(loss) for the period from discontinued operations	-	-
Profit/(loss) for the period	83	(794)
Weighted average number of issued ordinary shares Weighted average number of shares for the diluted result	16,794,758	15,408,986
per share	18,583,258	17,214,849
Profit/(loss) per share from the continued and discontinued
operations
Profit/ (loss) per share	0.0049	0.0289
Profit/ (loss) per diluted share	0.0045	0.0259

CONSOLIDATED BALANCE SHEET

	31.12.2011	31.12.2010
Consolidated balance sheet on	kEUR	kEUR
	(audited)	(audited)
Assets
Goodwill	5,248	5,248
Intangible, tangible and financial fixed assets	385	548
Deferred tax assets	1,685	1,685
Finance lease receivables	9,851	9,049
Current assets	3,384	2,778
Total assets	20,553	19,308
Liabilities and shareholders' equity
Equity capital that can be allocated to the owners of the
parent company	11,538	11,324
Non-current liabilities	3,938	4,475
Current liabilities	5,077	3,509
Total equity and liabilities	20,553	19,308

CONSOLIDATED CASH FLOW STATEMENT

Consolidated cash flow statement for the period	Fiscal year per
ending on	31.12.2011	31.12.2010
	kEUR	kEUR
	(audited)	(audited)
Cash flows from operating activities
Result of the period	83	446
Financial income (1)	(793)	(685)
Financial expenses (1)	701	752
Depreciation	176	253
Impairment on financial lease receivables	317	503
Impairment on inventories	283	-
Share-based payments	30	198
Depreciation of capitalized commissions	6	48
Deferred tax assets and liabilities	-	(235)
Operating cash flow before changes in the working
capital components	803	1,280
Decrease/(Increase) of inventories	(231)	(101)
Decrease/(increase) of financial lease receivables	(1,522)	(1,438)
Decrease/(increase) of trade and other receivables	(220)	(484)
Decrease/(Increase) of pre-paids	(101)	117
Increase/(decrease) of trade and other payables	(150)	(768)
Increase/(decrease) of other liabilities	1,083	(92)
Changes in the working capital components	(1,141)	(2,766)
Interest paid (1)	(365)	(412)
Interest received (1)	457	345
Cash flows from operating activities	(246)	(1,553)
Cash flows from investing activities
Additions to intangible and tangible fixed assets	(13)	(164)
Disposals of intangible and tangible fixed assets	10	-
(Increase)/decrease guarantees	(10)	54
Cash flows from investing activities	(13)	(110)
Cash flows from financial activities
Capital increase	131	2,498
(Repayments)/proceeds borrowings (current & non-current)	709	(186)
(Repayments)/proceeds leasing (current & non-current)	(611)	(535)
Cash flows from financial activities	229	1,777
Net (decrease) / increase in liquid assets	(30)	114
Cash and cash equivalents at the beginning of the period	148	34
Cash and cash equivalents at the end of the period	118	148

(1)In order to compare the figures, the presentation as of 31.12.2010 was changed.

CONSOLIDATED STATEMENT OF CHANGES IN THE CONSOLIDATED SHAREHOLDERS' EQUITY

l da d s f Co i te ta te t o ns o m en ha in ity c ng es eq u	be f Nu m r o ha s re s	d Iss ue l ita ca p	ha S re ium p re m	he O t r re se rv es	d Re ine ta ing ea rn s	bu b le At i tr ta he to t o wn er s f t he t o p ar en co m p an y	No n l l ing nt co ro int ts er es	l To ta
		k E U R	k E U R	k E U R	k E U R	k E U R	k E U R	k E U R
lan Ba 0 1 Ja 2 0 1 0 t ce a nu ar y	1 5, 0 8 8, 8 7 9	1 8, 0 6 3	4, 5 2 2	1 1 9	( ) 1 4, 4 9 2	8, 2 1 2		8, 2 1 2
lt o f t he d Re io su p er l o f he l ise d a d To ta t re a n f l ise d r lts he t un re a es u o io d p er		-	-	-	4 4 6 4 4 6	4 4 6 4 4 6	-	4 4 6 4 4 6
l Ca ita inc p re as e	1, 2 6 6, 9 0 0	2, 0 6 4				2, 0 6 4		2, 0 6 4
f w Iss nt ue o ar ra s ion f los in Inc t or p or a o se s	3 4 7, 5 0 0	4 3 4		1 6 8		6 0 2		6 0 2
l ita ca p	-	( ) 1 4, 4 9 2			1 4, 4 9 2	-		-
lan be Ba 3 1 De 2 0 1 0 t ce a ce m r	1 6, 7 0 3, 2 7 9	6, 0 6 9	4, 5 2 2	2 8 7	4 4 6	1 1, 3 2 4	-	1 1, 3 2 4

l da d s f Co i te ta te nt ns o me o ha in ity c ng es eq u	be f Nu m r o ha s re s	d Iss ue l ita ca p	ha S re ium p re m	he O t r re se rv es	d Re ine ta ing ea rn s	bu b le At i tr ta to he f t o wn er s o he t t p ar en co m p an y	No n l l ing nt co ro int ts er es	l To ta
		k U E R	k U E R	k U E R	k U E R	k U E R	k U E R	k U E R
lan Ba 0 1 Ja 2 0 1 1 t ce a nu ar y	1 6, 7 0 3, 2 7 9	6, 0 6 9	4, 5 2 2	2 8 7	4 4 6	1 1, 3 2 4		1 1, 3 2 4
lt o f t he d Re io su p er					8 3	8 3		8 3
l o f he l ise d a d To ta t re a n l ise d r lts f he t un re a es u o
io d p er		-	-	-	8 3	8 3	-	8 3
f w Ex ise nt er c o ar ra s	1 0 5, 0 0 0	1 3 1				1 3 1		1 3 1
lan be Ba 3 1 De 2 0 1 1 t ce a ce m r	1 6, 8 0 8, 2 7 9	6, 2 0 0	4, 5 2 2	2 8 7	5 2 9	1 1, 5 3 8	-	1 1, 5 3 8