KPS half-year-report 2017-2018

HALF-YEAR REPORT 2017/2018

KPS in the capital market 6

Price performance of the KPS share 6

Shareholder structure 6

Investor relations 6

Financial calendar 7

Analysts' research 7

Share information 7

1. Economic Report 10

   1. Macroeconomic development 10

   2. Sector-specific framework conditions 10

   3. Business performance 11

   4. Financial position, asset situation, and results of operations 11

      1. Results of operations for the KPS Group 11

      2. Asset situation and capital structure 13

      3. Alternative Performance Measures (APM) 15

   5. Employees 15

   6. Follow-up report 16

2. Opportunities and risk report 16

3. Outlook report 17

Group Income Statement 20

Group Balance Sheet 22

Group Cash Flow Statement 24

Group Statement of Changes in Shareholders' Equity 26

Segment Reporting 28

Development of the fixed assets 40

GROUP

2017/2018

6

7

TO SHAREHOLDERS TO SHAREHOLDERS

Price performance of the KPS share

In a good economic environment with the highest global growth rates since 2011, the international equity markets concluded the year on a positive note. A closing price of 12,917.64 points on 29 December 2017 brought the DAX index a growth in value of

11.4 % for the year overall in 2017. Within this period, the Dow Jones was able to achieve a rate of increase of 24.3 % and this was significantly supported by the expansive fiscal policy of the US Federal Reserve. Most importantly, performance in the emerging economies was particularly positive. Driven by Asian technology stocks and the accelerated economic growth in the emerging economies, the MSCI Emerging Markets Index went up

Shareholder structure

The shareholder structure of KPS AG has traditionally been defined by the four company founders who held the majority of the voting shares at 56.6 % in the reporting year 2017/2018.

A change in the shareholder structure came about as a result of the reduction in the shareholding of the former Board Member, Dietmar Müller, to 10.5% of the capital stock. On 11 October 2017, Mr. Müller announced the start of a bookbuilding process for institutional investors. The reallocation of 11.7% of the capital stock to institutional investors Allianz Global Investors, Union Investment and DWS on 30 June 2017 yields a free float of around 36.75.

Oddo Seydler Bank AG is acting as the designated sponsor for the preparation of binding bid and offer prices for appropriate liquidity, and it ensures the corresponding tradability of the KPS share. Any investors interested in additional information can go to the Investor Relations section on the home page under www.kps. com/de.investor-relations.html.

Financial calendar

10 August 2018 Publication of the figures

in the 3rd quarter of 2017/2018

Analysts' research

The performance of the KPS share is continuously analyzed and

Share information

Sector Software (IT service provider)

ISIN DE000A1A6V48

WKN A1A6V4

Ticker symbol KCS

First listing 14 July 1999

Number and type of shares 37,412,100 registered no-par

value ordinary shares (no-par shares)

Capital stock 37,412,100.00 euros

by more than 30 percent.

During the reporting year 2017/2018, the share of KPS AG lagged significantly behind the development of the DAX and posted a price loss of 47.5 % during the reporting period. The performance curve was primarily defined by two significant price drops in October 2017 and at the end of January 2018. Accordingly, the price in spring and summer of 2017 to the middle of October moved sideways at a high level of just under 17 euros. At the beginning of the business year 2017/2018, the KPS share reached its high during the reporting period at 16.98 euros on 6

36.7 %

Free float

6.7 %

Allianz

I.A.R.D. S.A.

10.8 %

Uwe Grünewald

Investor relations

24.3 %

Michael Tsifidaris

10.5 %

Dietmar Müller

11.0 %

Leonardo Musso

evaluated by the investment company GBC Research and the leading banks Landesbank Baden-Württemberg (LBBW) and Oddo BHF AG. The analysts unanimously emphasized their recommendations to buy the KPS share in their latest studies on business performance and the perspectives of the company. Henning Steinbrink, analyst at Oddo BHF, raised the target price in his report dated 15 February 2018 to 17.00 euros and sees the reporting of the acquisition costs in the first quarter of the business year in conjunction with the strong sector development as positive messages for the outlook on the year 2017/2018 as a whole. In view of the strategic acquisitions and the positive sector

Stock exchange Frankfurt, Stuttgart, Hamburg, Berlin-Bremen, Düsseldorf and Munich, and XETRA

Market segment Regulated market

Transparency level Prime Standard

Designated sponsor Oddo Seydler Bank AG

High/low 16.98 / 8.73 euros

Opening price 16.94 euros

Closing price 8.89 euros

October. The price then fell significantly to 11.70 euros up to 13 November 2017. During the subsequent months, the price recovered by 26.5 % to 14.80 euros on 16 January 2018. Since this intermediate high, the price provided an exaggerated reflection of the downward movement experienced by the DAX and reached its low during the reporting period of 8.73 euros on 27 March 2018. The share concluded the reporting period at 8.89 euros on 29 March 2018.

The average daily trading volume of the KPS share at all German stock exchanges amounted to 40,673 nopar shares (previous year: 24,443 shares) in the period under review. The market capitalization of KPS AG was 332.6 million euros (previous year: 658.5 million euros) as a result of the price losses over the course of the first half-year at 31 March 2018 based on 37,412,100 shares (all information based on Xetra prices).

In the first-half of 2017/2018, KPS AG published disclosures immediately to institutional investors, financial analysts, and private shareholders about current business development and important events for the share price development of the company beyond the reporting obligations under statutory regulations and stock exchange rules.

During the period under review, the Executive Board of KPS AG communicated proactively with the financial and business press to present the profile of the company to the capital market. The Executive Board of KPS AG presented the corporate development and the corporate strategy in the context of roadshows at European financial centers. The Board also took part in several capital market conferences in Frankfurt, Munich and Lyon. In the first half-year, KPS AG also made use of the opportunities of a telephone conference with capital market participants to communicate the financial figures for the year 2016/2017. It also broadcast a webcast for participants in the capital market to publish the figures for the first quarter of 2017/2018.

environment, LBBW analyst Mirko Maier set the target price at

15.00 euros in his report dated 19 February 2018. Matthias Greiffenberger from GBC continues to perceive KPS as the European market leader for digital transformation in the area of retail and logistics to be well positioned in order to benefit from the lively demand in this sector. Greffenberger sets the price target at 16.60 euros in conjunction with the industrialization of the consulting initiative.

Market capitalization 332.6 million euros (Status: 31 March 2018)

GROUP

2017/2018