SL Bidco B.V. Interim financial report for the period 1 January 30 June 2018 Table of contents 1. Consolidated profit and loss account 2. Consolidated balance sheet 3. Consolidated condensed cash flow statement 4. Notes to the consolidated interim financial report 5. Management comments on results All information is unaudited. Amounts are presented in thousands of euro unless stated otherwise. SL Bidco B.V. - Trapezium 224, 3364DL Sliedrecht - The Netherlands P 1
1. Consolidated profit and loss account Notes Period ended 30 June 2018 2017 Revenue... 4b 118 240 113 885 Cost of sales of goods and providing services... 4c (87 906) (90 461) Gross profit... 30 334 23 424 Selling expenses... (13 228) (11 405) General administrative expenses... 4d (25 904) (27 026) Other income... 30 123 Operating result... (8 768) (14 884) Finance income... 22 17 Finance costs... (10 133) (5 989) Finance cost - net... (10 111) (5 972) Result before income tax and share in result of associated companies... (18 879) (20 856) Income tax... (421) 535 Share in result of associated companies... (36) Result after income taxes... (19 336) (20 321) Attributable to: Owners... (19 329) (20 333) Non-controlling interests... (7) 12 SL Bidco B.V. - Trapezium 224, 3364DL Sliedrecht - The Netherlands P 2
2. Consolidated balance sheet After appropriation of result Notes Period ended 30/06/2018 31/12/2017 ASSETS Non-current assets Intangible assets... 283 542 305 400 Property, plant and equipment... 3 693 4 396 Financial fixed assets... 17 047 17 181 304 282 326 977 Current assets Inventories... 1 666 1 490 Derivative Financial instruments... 172 19 Trade and other receivables... 77 706 111 004 Cash... 20 253 23 775 99 797 136 288 TOTAL ASSETS... 404 079 463 265 EQUITY AND LIABILITIES Capital and reserves attributable to shareholders of the Parent Share capital... 2 2 Share premium... 142 144 142 144 Other reserves... (91 545) (71 988) Legal reserves... (4 447) 543 46 154 70 701 Non-controlling interest... 137 144 TOTAL GROUP EQUITY... 46 291 70 845 Provisions... 13 135 14 622 Long term loans... 4e 214 858 183 870 Current liabilities Trade and other payables... 48 774 76 365 Current tax liabilities... 721 578 Short term loans... 6 167 37 951 Derivative financial instruments... 24 215 Deferred revenue... 4f 74 109 78 819 129 795 193 928 TOTAL LIABILITIES... 357 788 392 420 TOTAL GROUP EQUITY AND LIABILITIES... 404 079 463 265 SL Bidco B.V. - Trapezium 224, 3364DL Sliedrecht - The Netherlands P 3
3. Consolidated condensed cash flow statement Period ended 30 June According to the indirect method 2018 2017 Operating result including depreciation and amortization charge (8 768) (14 884) Adjustments for depreciation and amortization... 17 834 21 615 Operating Result 9 066 6 731 Changes in operating assets and liabilities... (1 561) (2 565) Cash generated from business activities 7 505 4 166 Income tax paid/received... 567 (469) Net cash generated from operating activities 8 072 3 697 Cash flows from investing activities Payment for acquisition of subsidiary, net of cash acquired... (21 310) Payment for intangible assets other than goodwill, customer relations and tradenames... (434) (1 465) Purchase of property, plant & equipment, net of proceeds from disposals (325) (712) Net cash (used in) investing activities... (759) (23 487) Cash flows generated from financing activities... (10 564) 11 082 Net increase in cash and cash equivalents... (3 251) (8 708) Cash and cash equivalents at beginning of period... 23 775 20 234 Effect of foreign exchange rate changes on cash and cash equivalents (271) (80) Cash and cash equivalents at end of period... 20 253 11 446 SL Bidco B.V. - Trapezium 224, 3364DL Sliedrecht - The Netherlands P 4
4. Notes to the consolidated interim financial statements a. Basis of preparation of the Interim Financial report as per 30 June 2018 The basis of preparation of the Interim financial report including the significant accounting policies, the accounting framework and the principles of valuation of assets and liabilities is the same as the basis of preparation of the Report on the annual accounts of SL Bidco B.V. for the period 1 January 2017 until 31 December 2017. b. Revenue segment reporting Revenue is allocated based on the country in which the customer is located. There are no inter-segment revenues. Period ended 30 June 2018 2017 Belgium... 25 019 23 073 The Netherlands... 21 348 21 651 Sweden... 31 377 36 096 United Kingdom... 13 898 14 865 Germany... 15 514 7 906 Denmark... 6 843 6 378 Others... 4 241 3 916 118 240 113 885 The revenue comprises the following categories: Period ended 30 June 2018 2017 Products... 54 298 55 279 Maintenance and Managed Security Services (MSS) 46 500 43 084 Consultancy services... 16 307 14 468 Other revenue... 1 135 1 054 Total revenue... 118 240 113 885 SL Bidco B.V. - Trapezium 224, 3364DL Sliedrecht - The Netherlands P 5
c. Cost of sales of goods and providing services Cost of sales of goods and providing services includes an amount of 4 193 (2017: 7 595) amortization and depreciation charges. d. General administrative expenses General administrative expenses include an amount of 13 641 (2017: 14 020) amortization and depreciation charges and 1 396 (2017: 2 082) of non-recurring expenses. e. Long term loans Long term loans include an amount of shareholder loans of 67 757 (2017: 87 335). f. Deferred revenue Non-current portion of deferred revenue amounts to 19 980 (2017: 21 250) SL Bidco B.V. - Trapezium 224, 3364DL Sliedrecht - The Netherlands P 6
5. Management comments on results Financial Results In the first half year of 2018, the company grew its revenues with 4 355 compared to first half year of 2017 which equals an organic growth rate of 3,8% (including the negative effect of denominating SEK and GBP Revenues in EUR over H1 2018 compared to H1 2017). Revenues are composed of product sales for 54 298, maintenance support services and managed security services for 46 500, professional consulting services for 16 307 and other revenues for 1 135. Maintenance and managed security services revenue and professional consulting services show the most significant organic growth of 7,9% and 12,7% respectively. Cost of sales of goods and providing services amounts to 87 906, including 4 193 amortization of intangible assets. Excluding amortization, cost of sales of goods and providing services amounts to 83 713. It includes the cost of the products sold by SecureLink, as well as the directly attributable payroll cost (both in-house and procured) for providing the maintenance support, consulting and managed security services. For H1 2018, the Company reported a negative result after income taxes of 19 336, mainly as a result of the amortization of intangible assets and the finance cost related to the refinancing transaction which took place in Q1 2018. The company measures its financial performance for management purposes on EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization). The GAAP applied for management reporting purposes is the statutory local GAAP of all SecureLink entities, applicable at the moment of acquisition by SecureLink, consistently applied in the period of ownership. This preserves the comparability of pro forma financial information over historic and current periods. SL Bidco B.V. - Trapezium 224, 3364DL Sliedrecht - The Netherlands P 7
The below table presents the breakdown of differences between NL GAAP operational result and EBITDA used by management to measure the company s financial performance over historic and current periods: EBITDA Reconciliation NL GAAP vs Management Reporting H1 2018 H1 2017 Change EUR '000 EUR '000 % Operating result (8 768) (14 884) Add back amortizations customer contracts and tradenames (NL GAAP included in COGS) 4 193 7 595 Add back other amortizations and depreciations (NL GAAP included in SG&A) 13 641 14 020 NL GAAP operating result including non-recurring items 9 066 6 731 35% Non-recurring (Exceptional) expenses 1 396 2 082 Recurring NL GAAP operating result 10 462 8 813 19% Add back differences NL GAAP / Historic GAAP (373) (655) Historic GAAP EBITDA (Management reporting EBITDA) 10 089 8 158 24% EBITDA Reconciliation NL GAAP vs Management Reporting H1 2018 FY 2017 Change EUR '000 EUR '000 % Historic GAAP EBITDA (Management Reporting EBITDA) 2017 23 044 Add back Historic GAAP EBITDA (Management Reporting EBITDA) H1 2017 (8 158) Add Historic GAAP EBITDA (Management Reporting EBITDA) H1 2018 10 089 Historic GAAP LTM EBITDA 24 975 23 044 8% Add future cost saving synergies 1 000 2 000 Historic GAAP LTM EBITDA including cost saving synergies 25 975 25 044 4% The integration of acquired companies throughout 2017 obviously created scaling opportunities. By the end of Q3 2017, the Group Leadership Team identified a synergy plan leading to annual cost savings in the range of 2 500. The plan was executed throughout Q4 2017. At period end H1 2018, the expected amount of the cost savings plan still to be realized in 2018 amounts to 1 000 (year end 2017: 2 000). The cost saving synergies identified in 2017 have already partly materialized in the actual H1 2018 EBITDA. Solvency, Cash Flow and Liquidity SL Bidco B.V. - Trapezium 224, 3364DL Sliedrecht - The Netherlands P 8
On June 30, 2018, the company s solvency ratio (shareholder equity / balance sheet total) is 28,2% (2017: 34,1%), and the current ratio (current assets incl. cash & bank / current liabilities) is 90,9% (2017: 78,9%). In this calculation, the Shareholders Loans are considered as equity and the calculation of the current ratio excludes the non-current portion of deferred revenue. The refinancing operation has resulted in the repayment of almost all short-term loans received from credit facilities and has increased the liquidity and financial flexibility of the company. For H1 2018, the Company reported a net loss, mainly as a result of the amortization of intangible assets and the finance cost related to the refinancing transaction which took place in Q1 2018. As these are non-cash items, the net cash flow from operating activities is positive as can be derived from the cash flow statement. The operating result for H1 2018 adjusted for depreciation and amortization equals 9 066 compared to 6 731 for H1 2017, an increase of 2 335 or 34,7% significantly outperforming revenue growth primarily resulting from cost saving synergies. Solid cash conversion resulted in 8 072 of net cash generated from operating activities (including non-recurring expenses). Excluding non-recurring expenses, the net cash generated from operation activities amounts to 9 468 compared to 5 779 for H1 2017. Personnel The company s main assets are its people. The company will continue to invest in the growth of its expert salesforce and its consulting teams. These investments require careful timing as the investment in the expert workforce usually takes between 6 and 12 months to start paying back. On December 31 st, 2017, the company employed 646 FTE. On June 30, 2018, the number of employees had increased to 653 FTE. SL Bidco B.V. - Trapezium 224, 3364DL Sliedrecht - The Netherlands P 9