KPS : Half-Year Report 2023-2024

KPS GROUP

HALF-YEAR-REPORT

CONTENT

TO THE SHAREHOLDERS	Page 3
KPS in the capital market 2023/2024	Page 5
INTERIM MANAGEMENT REPORT	Page 9
Economic report	Page 10
Opportunities and risk report	Page 18
Forecast report	Page 18
INTERIM FINANCIAL STATEMENTS	Page 20
Income Statement	Page 21
Group Balance Sheet	Page 23
Consolidated Cash Flow Statement	Page 25
Statement of Changes in Shareholders` Equity	Page 27
SELECTED EXPLANATORY NOTES	Page 28
Segment Reporting for the First Half-year 2023/2024	Page 31
RESPONSIBILITY STATEMENT BY THE LEGAL REPRESENTATIVES	Page 34
Development of the fixed assets	Page 35

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KPS GROUP

TO THE SHAREHOLDERS

Ladies and Gentlemen, dear Shareholders,

The first half of financial year 2023/2024 can be characterised by several factors that we had already predicted yet have still hit us hard. In particular, non-recurring effects, such as unscheduled bad debt allowances for the insolvent clients KaDeWe and The Body Shop, as well as restructuring expenses, pose additional challenges in a tense market environment.

The demand situation in some of our key markets remained subdued. On the one hand, a number of new customers have been won and demand for new projects is increasing. On the other hand, several current projects have reached their planned maturity phase and are therefore having a negative impact on sales development, as sales typically decline during the maturity phase of a project.

Despite these challenging conditions, we are determined and committed drive the business forward. Capacities have been adjusted to reflect current project demand, we will take further steps to win new customers and improve efficiency to get revenues and earnings back on track, and I would like to thank the entire team and all stakeholders for their tireless efforts.

Unterföhring, in May 2024 The Executive Board

Leonardo Musso

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KPS IN THE CAPITAL MARKET

KPS IN THE CAPITAL MARKET IN THE FIRST HALF OF BUSINESS YEAR 2023/2024

Share price development in the reporting period (1 October 2023 to 31 March 2024)

The KPS AG share recorded an overall decrease of 19.7 % in the first half of financial year 2023/2024. On 21 February 2024, the share reached its absolute low for the period under review at EUR 1.02. The share reached its high for the observation period of EUR 1.51 on 27 Januar 2024. The closing price on 31 March 2024 was EUR 1.20.

The average daily trading volume of the KPS share on all German trading venues was around 23,363 shares in the reporting period (previous year: 12,346 shares). The market capitalisation of KPS AG on 31 March 2024 was EUR 49.4 million based on 41,153,300 shares in circulation.

KPS AG resolved a capital increase of EUR 3,741,200.00 to EUR 41,153,300.00, the implementation of which was entered in the Commercial Register on 18 March 2024. For detailed information on the capital increase, please refer to the "Net assets and capital structure" section in the interim management report.

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Key data for the share

Sector	Software (IT-Dienstleister)
ISIN	DE000A1A6V48
Securities Identification	A1A6V4
Number (WKN)
Ticker symbol	KSC
First listing	14. July 1999
Number and rype of	41,153,300 registered no-par value ordinary
shares	shares (no-par shares)
Capital stock	41,153,300.00 Euro
Stock exchanges	Frankfurt, Stuttgart, Hamburg, Berlin-Bremen,
Düsseldorf and Munich, and XETRA
Market segment	Regulated market
Transparency level	Prime Standard
Designated Sponsor	Hauck & Aufhäuser Privatbankiers

Overview of the share

Opening price	1.50 Euro
(1 October 2023)
High	1.51 Euro
(27 January 2024)
low	1.03 Euro
(21 February 2024)
Closing price	1.20 Euro
(31 March 2024)
Trading volume (01 October 2023 bis 31	23.363
March 2024, average trading volume)
Market capitalization	49,4 million Euro
(31 March 2024)

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KPS IN THE CAPITAL MARKET

Shareholder structure

Information based on voting rights notifications received in accordance with the German Securities Trading Act (WpHG) (as of 28 January 2018) and company information; free float as defined by Deutsche Börse with shares of less than 5 % of the share capital.

As at 31 March 2024, the shareholder structure of KPS AG was as follows: Michael Tsifidaris, Chairman of the Supervisory Board, holds 29.11 % of the shares in the company, while Leonardo Musso, CEO of KPS AG, holds 10.30 % of the shares. Supervisory Board member Uwe Grünewald holds 9.85 % of the voting share capital. This means that 49.26 % of the voting shares are held by the current management of KPS AG. They will remain closely associated with KPS AG in the future as anchor shareholders and members of the governance bodies.

One private investor still holds 7.58 % of the voting rights as at 31 March 2024. The free float amounts to

43.16 %. KPS AG is in constant dialogue with current and potential investors and is striving to expand its shareholder base in a targeted manner.

Financial calendar

06.05.2024

10.05.2024

27.07.2024

Publication of the figures for the half-year 2023/2024

Ordinary Annual General Meeting in Munich

Publication of the figures for the third quarter 2023/2024

Analysts' research

The performance of the KPS share is constantly analysed and evaluated by M.M.Warburg.

In its research published on 8 March 2024, Warburg issued a price target of 1.40 EUR (rating: hold) in its commentary on KPS.

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Investor Relations

In the reporting year 2022/2023 and in the first half of business year 2023/2024, KPS AG fulfilled the highest legal and stock exchange disclosure and transparency standards of the Regulated Market as part of its listing in the Prime Standard on the Frankfurt Stock Exchange. The company informed institutional investors, financial analysts and private shareholders without delay about the current development of the business and events of significance to the development of the company's share price.

In addition to publishing financial reports and company announcements in German and English, KPS's capital market communications also included conference calls for analysts to announce the quarterly, half-yearly and annual figures. In addition, the management of KPS has been and continues to be in regular personal dialogue with market participants and strives to carry out further IR activities beyond its legal obligations.

Engaging in direct exchanges with investors continues to be close to the management's heart, which is why, in addition to the conference calls on financial publications, direct discussions with investors and analysts are also held on a regular basis, either virtually or by telephone.

Hauck und Aufhäuser Privatbankiers AG acts as designated sponsor in the provision of binding bid and ask prices to ensure adequate liquidity and corresponding tradability of the KPS share.

Further information is available to interested investors in the Investor Relations section of the homepage at https://kps.com/global/en/company/investor-relations/financial-publications.html.

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KPS GROUP

INTERIM MANAGEMENT REPORT

1. ECONOMIC REPORT

1.1 Macroeconomic development1

Development of the global economy

According to the International Monetary Fund's (IMF) economic report, the global economy has shown strong resilience as employment and incomes have remained stable despite rising central bank interest rates. Major central banks raised key interest rates to counteract rising inflation and bring them down to levels considered restrictive. As a result of these interest rate increases, the cost of mortgages rose and the general availability of credit was limited. This led to challenges for companies to restructure their debts, an increase in company insolvencies and subdued investment activity in business and residential property in several economies.

While inflation is approaching target levels and central banks are gradually easing their policies, a tighter fiscal policy stance to curb high government debt threatens to hamper growth, with geopolitical tensions also contributing to the subdued growth rate2.

Development in Europe

The Kiel Institute for the World Economy (IfW) points to the phase of stagnation in the eurozone3. According to the report, economic production in the eurozone has been stagnating for over a year, with the gross domestic product remaining virtually unchanged in the fourth quarter. While it seems that private consumption increased noticeably due to improved real incomes, fixed asset investments fell significantly. There were significant differences in the economic picture between the countries in 2023, with Estonia recording the sharpest decline (-3.0 %) and Denmark the highest growth (+3.1 %). Germany recorded a slight decline of 0.2 %, while France and Italy recorded moderate growth of 0.7 % and 0.5 %, respectively.

Consumer price inflation is slowing moderately, however. Since October 2023, the year-on-year increase in prices has barely decreased, as energy prices are no longer considerably below the previous year's level. The core inflation rate in Europe fell to 3.1 % in February, but progress towards meeting the inflation target is likely to slow as prices for services continue to rise sharply, which is also due to accelerated wage increases.

Development in Germany

The German economy is currently under pressure from several factors that are having a negative impact on sentiment and economic data. Exports are suffering from a slowing global economy, while the European Central Bank's restrictive monetary policy is expected to continue into 2024. The German government's austerity measures come at an unfavourable time and further reinforce the pessimistic outlook, according to the IfW President in March 20244.

After economic output fell by 0.3 % in the fourth quarter of 2023, which was weaker than forecast by the ifW, it will continue to fall slightly in the first quarter of 2024 according to the IfW forecast5.

1In the section on overall economic development, information on a quarter refers to the calendar year and not to the financial year of KPS (1 October

- 30 September).

1. https://www.imf.org/en/Publications/WEO/Issues/2024/04/16/world-economic-outlook-april-2024
2. https://www.ifw-kiel.de/de/publikationen/weltwirtschaft-im-fruehjahr-2024-dynamik-bleibt-verhalten-32633/
3. https://www.ifw-kiel.de/de/publikationen/aktuelles/erholung-verzoegert-sich/
4. https://www.ifw-kiel.de/fileadmin/Dateiverwaltung/IfW-Publications/fis-import/854f12d1-6d4b-4257-a39a-30120582e9ee-KKB_112_2024-Q1_Deutschland_DEV3.pdf

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