KPS half-year report 2020-2021

GROUP

HALF-YEAR-REPORT

CONTENT

TO THE SHAREHOLDERS Page 3

KPS in the capital market 2020/2021 Page 5

INTERIM MANAGEMENT REPORT Page 10

Economic report Page 11

Opportunities and risk report Page 21

Outlook report Page 22

INTERIM FINANCIAL STATEMENTS Page 25

Income Statement Page 26

Group Balance Sheet Page 28

Consolidated Cash Flow Statement Page 30 Statement of Changes in Shareholders` Equity Page 32

SELECTED EXPLANATORY NOTES Page 34

Segment Reporting for the First Half-year 2020/2021

Development of the fixed assets Page 46

DECLARATION BY THE LEGAL REPRESENTATIVES Page 44

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KPS GROUP

TO THE SHAREHOLDERS

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In the first half of the current business year, the top priority continued to be overcoming the impacts of the COVID-19 pandemic for the KPS group of companies. In particularly, our activities in the German market are especially affected by the situation. New customers are pushing back the award of new transformation projects. Some existing customers are still asking for project breaks and project postponements. Conversely, our foreign business activities have proved to be comparatively robust. Sales outside Germany amounting to 39.1 million euros were at the year-earlier level and amounted to 51.0 % of our consolidated revenues.

Over the course of the ongoing high levels of uncertainty and the lockdown measures lasting longer than expected in Germany, we have modified our expectations for the current year. Originally, we assumed that sales at the year-earlier level could be achieved in the business year 2020/2021 along with generating a slightly higher EBITDA. Now, we assume that the consolidated revenue for the entire financial year 2020/2021 will be in a range of 5% - 9% and the consolidated EBITDA in a range 3% to 6% below the respective level of the previous year 2019/2020.

The key reasons for adjustment are the sustained COVID-19 pandemic and in particular the impacts of the lockdown measures on the business situation of some customers lasting longer than expected. Some of these customers have had a break on their projects or postponed them.

In the first half of the year, sales came down by 18.4 % or 17.3 million euros to 76.9 million euros. We were able to partly compensate for the drop in sales through strict management of our cost base at the level of EBITDA. Consequently, the decrease in EBITDA was 1.6 million euros. KPS achieved an operating result before depreciation and amortization, and interest amounting to 11.4 million euros. The EBITDA margin at 14.8 % was above the level of the year-earlier period at 13.8 %.

We believe that the KPS Group with a sound balance sheet and financial structure, its technological expertise and robust business model continues to be well positioned to tackle the current uncertainties and get off to a flying start once the challenges of the pandemic have been mastered.

We would like to thank you for your confidence in us during these current challenging times and we will be delighted if you continue to accompany KPS on its journey into the future.

Munich, May 2021 Leonardo Musso

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TO THE SHAREHOLDERS

KPS IN THE CAPITAL MARKET IN THE FIRST HALF-YEAR 2020/2021

5.40 euros on 20 November 2020.

The share reached its high for the period at 6.26 euros on 20 January 2021. In the subsequent months, the price remained stable at above 5.0 euros and at the end of the reporting period the share price closed at 5.26 euros on 31 March 2021.

The average daily trading volume of the KPS share on all German stock exchanges increased during the reporting period to around 51,657 no-par shares (previous year: 18,820 shares). On 31 March 2021, the market capitalization of KPS AG was

195.5 million euros on the basis of 37,412,100 shares in circulation.

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