Keyware Technologies NV — Earnings Release 2012

Mar 14, 2013

REGULATED INFORMATION PRESS RELEASE 14 March 2013

Keyware realises a 43% growth in turnover

Brussels, Belgium - 14 March 2013 – Keyware (EURONEXT Brussels: KEYW) a leading supplier of electronic-payment solutions and related transaction management, today announced its financial results for the financial year 2012, which closed on 31 December 2012.

Keyware realised a 43.15% growth in turnover to 8,280 kEUR and a 514.46% increase in profit to 510 kEUR. These results can be attributed to an increase in Keyware's turnover in the middle segment with average orders of 20 to 50 terminals and an increase in turnover among government institutions, the conscious choice made by Keyware's customers for long-term contracts and the continued growth of recurring transaction revenues.

In the product range field, Keyware introduced various new types of payments terminals in 2012. Each of these terminals is the leading product in its market segment. For example, together with Ingenico, Keyware was the first supplier to introduce a contact-free payment solution on the Belgian market, a payment solution based on the Apple iPhone was launched and already a large section of the installed based is equipped with high quality and personalised colour screens.

In the field of providing services to its customers, results were also booked that exceeded the management's expectations. The targets regarding contract handling, installation and after-sales service are focus areas for providing high quality services. The ongoing growth of the installed base confirms the direct influence of Keyware's high quality services.

In 2013, Keyware will continue to focus on vertical business segments that are less sensitive to economic upswings and downturns so that the company, as was the case in the previous fiscal year 2012, can continue to record a further decrease in the termination of businesses and bankruptcies. The market clearly experiences the advantages of Keyware's long-term contracts, not only economically but, above all, also because we offer retailers the possibility to switch to other types of payment terminals free of charge.

The figures

For the fiscal year 2012:

• the Group realised a turnover of 8,280 kEUR in comparison to 5,784 kEUR for the same period in 2011, which represents an increase in turnover of 43.15%;
• the operating cash flow (EBITDA) for the fiscal year 2012 came to 1.408 kEUR, versus 774 kEUR for the fiscal year 2011, which represents an increase of 81.91%;
• the net profit for the period amounted to 510 kEUR, compared to a net profit of 83 kEUR as at 31 December 2011;
• the net cash flow amounted to 1.532 kEUR, compared to 896 kEUR as at 31 December 2011, representing an increase of 70,98%;
• the gross profit margin decreased from 83.07% to 77.09%.

	Fiscal year per
Key figures for the period	31.12.2012	31.12.2011
ending on December 31	kEUR	kEUR
	(audited)	(audited)
Turnover	8,280	5,784
Profit/(loss) for the period	510	83
EBITDA	1,408	774
Net cash flow	1,532	896

Management report on the results for 2012

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	31.12.2012 31.12.2011		Change
	kEUR	kEUR
Turnover	8,280	5,784	43.15 %
Raw materials and consumables	(1,897)	(979)	93.77 %
Gross Margin	6,383	4,805	32.84 %
Gross margin in percentages	77.09%	83.07%

• The consolidated turnover for the fiscal year 2012 amounts to 8,280 kEUR compared to 5,784 kEUR for the same period in 2011, which represents an increase of 43.15%.

The increase in turnover occurred in both the payment terminals division and the authorisation division. The turnover growth was the result of, on the one hand, an increase in the number of newly concluded contracts for payment terminals and, on the other hand, maintaining the existing customer base whereby older terminals at existing customers were replaced by new terminals whereby a new contract was concluded for a longer period.

The increase in the purchases of goods for resale is due to an increase in the purchases of terminals. This is also due to the replacement of older terminals by new terminals at existing customers, the increase in the costs in connection with RMA (Return Merchandise Authorization) and higher communication expenses due to a strong growth of the PayMobile payment terminal (GPRS charges).

• Personnel expenses increased by 1.04%.
• The net impairment of current assets declined from 1,218 kEUR to 1,177 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 increased by 27.60 %, due to a decrease in fees, interim expenses and the valuation of warrants.
• Net profit for the fiscal year amounted to 510 kEUR in comparison to a net profit of 83 kEUR as at 31 December 2011. The increase of the result can be explained by an increase of the gross margin partly compensated by an increase of the other operating expenses and a decrease of other profit and losses.
• Net cash flow amounted to 1,532 kEUR in comparison to 896 kEUR as at 31 December 2011. This increase can be explained by that which is mentioned above.

IMPORTANT EVENTS IN 2012

PARFIP

In 2012, the Group was also able to call on the credit line made available by Parfip Benelux, in the form of an assignment of contracts. At the end of December 2012, contracts were assigned to Parfip Benelux NV for an amount of 305 kEUR. As of May 2012, this form of financing has no longer been used.

FINANCING

In September 2011, the Group concluded a loan agreement for an amount of 1.5 million EUR with Belfius Bank. The Group drew down the first portion of the loan amounting to 500 EUR k during January 2012. An amount of 250 kEUR was taken up in April 2012 and an additional 575 kEUR was taken up on May 2012. The remaining balance was drawn down during the month of June 2012.

The Group was able to expand the existing loan agreement with the same financial institution on 9 February 2012 by concluding a straight loan for an amount of 250 kEUR .

The Group was able to expand the existing loan agreement on 22 June 2012 by concluding an additional investment loan for an amount of 200 kEUR .

As of 25 September 2012, , the Group was able to expand the existing loan agreement by concluding an additional investment loan for an amount of 380 kEUR .

Finally, the Group concluded a loan agreement on 25 September 2012 with Parana Management BVBA for an amount of 250 kEUR .

ISSUE OF WARRANTS

At the Extraordinary General Assembly of 12 June 2012 of Keyware Technologies NV, the decision was taken to issue 1,240,000 naked "2012 warrants" each conveying the right to subscribe to one share of the Company, which, pursuant to the global warrant plan 2012, were allocated to the following persons or legal entities :

• each for a maximum amount of 400,000 "2012 warrants" : Parana Management BVBA and Big Friend NV;
• each for a maximum amount of 15,000 "2012 warrants" : Pardel NV, Drupafina NV, Sofia BVBA, Mr Bruno Kusters and Mr Luc Pintens;
• each for a maximum amount of 100,000 "2012 warrants" : JH Consulting BVBA, IQuess BVBA and JM Services Comm. V.;
• each for a maximum amount of 25,000 "2012 warrants" : Checkpoint X BVBA and MV Services BVBA;
• each for a maximum amount of 15,000 "2012 warrants" to each of Umami BVBA.

The term of validity of a "2012-warrant" is five years as from the date of issue, being 12 June 2012.

CAPITAL INCREASE VIA AUTHORISED CAPITAL

On 13 July 2012, a meeting of the Board of Directors was held in the presence of Notary De Wulf whereby the resolution was carried out to increase the Company's capital by an amount of 1,500,000 EUR by means of the issue of 2,225,514 new shares of the Company. The issue price was 0.674 EUR and corresponds with the average of the closing prices during thirty (30) calendar days before the date of issue (in accordance with the daily official list of NYSE Euronext Brussels).

In this case, the preferential rights of the Company's existing shareholders were withdrawn in favour of specific persons, being:

• Parana Management Corp BVBA, represented by Mr Guido Van der Schueren
• Big Friend NV, represented by Mr Stéphane Vandervelde
• IQuess Consulting BVBA, represented by Mr Wim Verfaille
• Mr Johan Hellinckx
• Mr Joris Maes
• Checkpoint X, BVBA, represented by Mr Giovanni Verborg
• Mr Marc Vandebergen

As a consequence of this capital increase, the total number of shares was increased to 19,033,793.

EVENTS AFTER THE BALANCE SHEET DATE

FINANCING

In January 2013, the Group was able to expand its existing credit agreement with Belfius Bank by means of an additional straight loan for an amount of 440 kEUR.

In February 2013, the Group concluded two additional investment loans with Belfius Bank for an amount of 145 kEUR.

Apart from that which is stated below, the Group does not have any important events to report after the balance sheet date, which would have an impact on the presentation of the present financial statements.

Auditor's Report

"The auditor of Keyware Technologies NV, BDO Bedrijfsrevisoren Burg. Ven. CVBA 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 2012, 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	31.12.2012	31.12.2011
	kEUR	kEUR
	(audited)	(audited)
Continued operations
Turnover	8,280	5,784
Other profits and losses	171	582
Raw materials and consumables	(1,897)	(979)
Salaries and employee benefits	(1,269)	(1,256)
Depreciation	(196)	(176)
Net impairment losses of current assets	(1,177)	(1,218)
Other operating expenses	(3,504)	(2,746)
Operating profit/(operating loss)	408	(9)
Financial income	812	793
Financial expenses	(710)	(701)
Result before taxes	510	83
Taxes on the result	-	-
Profit/(loss) for the period from continued operations	510	83
Profit/(loss) for the period from discontinued operations	-	-
Profit/(loss) for the period	510	83
Weighted average number of issued ordinary shares	17,850,917	16,794,758
Weighted average number of shares for the diluted result per
share	20,052,028	18,583,258
Profit/(loss) per share from the continued and discontinued operations
Profit/ (loss) per share	0.0286	0.0049
Profit/ (loss) per diluted share	0.0254	0.0045

CONSOLIDATED BALANCE SHEET

	31.12.2012	31.12.2011
Consolidated balance sheet on	kEUR	kEUR
	(audited)	(audited)
Assets
Goodwill	5,248	5,248
Intangible, tangible and financial fixed assets	390	385
Deferred tax assets	1,685	1,685
Finance lease receivables	11,017	9,851
Current assets	4,014	3,384
Total assets	22,354	20,553
Liabilities and shareholders' equity
Equity capital that can be allocated to the owners of the parent company	13,798	11,538
Non-current liabilities	3,611	3,938
Current liabilities	4,945	5,077
Total equity and liabilities	22,354	20,553

CONSOLIDATED CASH FLOW STATEMENT

Consolidated cash flow statement for the period	Fiscal year per
ending on	31.12.2012	31.12.2011
	kEUR	kEUR
	(audited)	(audited)
Cash flows from operating activities
Result of the period	510	83
Financial income	(812)	(793)
Financial expenses	710	701
Depreciation	196	176
Impairment on financial lease receivables	554	317
Impairment on inventories	250	283
Share-based payments	272	30
Depreciation of capitalized commissions	-	6
Deferred tax assets and liabilities	-	-
Operating cash flow before changes in the working capital
components	1,680	803
Decrease/(Increase) of inventories	(70)	(231)
Decrease/(increase) of financial lease receivables	(2,789)	(1,522)
Decrease/(increase) of trade and other receivables	259	(220)
Decrease/(Increase) of prepaids	(25)	(101)
Increase/(decrease) of trade and other payables	(966)	(150)
Increase/(decrease) of other liabilities	(1,056)	1,083
Changes in the working capital components	(4,647)	(1,141)
Interest paid	(467)	(365)
Interest received	569	457
Cash flows from operating activities	(2,865)	(246)
Cash flows from investing activities
Additions to intangible and tangible fixed assets	(197)	(13)
Disposals of intangible and tangible fixed assets	1	10
(Increase)/decrease guarantees	(4)	(10)
Cash flows from investing activities	(200)	(13)
Cash flows from financial activities
Capital increase	1,500	131
(Repayments)/proceeds borrowings (current & non-current)	2,106	709
(Repayments)/proceeds leasing (current & non-current)	(544)	(611)
Cash flows from financial activities	3,062	229
Net (decrease) / increase in liquid assets	(3)	(30)
Cash and cash equivalents at the beginning of the period	118	148
Cash and cash equivalents at the end of the period	115	118

CONSOLIDATED STATEMENT OF CHANGES IN THE CONSOLIDATED SHAREHOLDERS' EQUITY

f Co l i da d s te ta te nt ns o me o ha in ity c ng es eq u	f be Nu m r o ha s re s	d Iss ue l ita ca p	S ha re ium p re m	O he t r re se rv es	ine d Re ta ing ea rn s	i bu b le At 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 0 1 Ja 2 0 1 2 Ba t ce a nu ar y	1 6, 8 0 8, 2 9 7	6, 2 0 0	4, 2 2 5	2 8 7	2 9 5	1 1, 3 8 5		1 1, 3 8 5
lt o f t he io d Re su p er					5 1 0	5 1 0		5 1 0
l o f he l d a d To ise ta t re a n l ise d r lts f he t un re a es u o io d p er		-	-	-	5 1 0	5 1 0	-	5 1 0
l Ca ita inc p re as e	2, 2 2 5, 5 1 4	1, 5 0 0				1, 5 0 0		1, 5 0 0
lua f w Va ion t nt o ar ra s	-	-		2 5 0		2 5 0		2 5 0
lan be Ba 3 1 De 2 0 1 2 t ce a ce m r	1 9, 0 3 3, 7 9 3	7, 7 0 0	4, 5 2 2	5 3 7	1, 0 3 9	1 3, 7 9 8	-	1 3, 7 9 8

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 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 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
f t lt o he io d Re 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