HALF-YEAR FINANCIAL REPORT · 2020-04-07 · personalized digital printing activities continue to post strong annual growth, with revenue up tenfold in five years. PRINTING & GIFTING

HALF-YEAR FINANCIAL REPORTAS OF DECEMBER 31, 2019

CHAIRMAN’S MESSAGE 4

KEY FIGURES 5

PROFIL 6

BUSINESS REVIEW 8

ACTIVITY REPORT FOR THE HALF-YEAR ENDED DECEMBER 31, 2019 11

CONDENSED HALF-YEAR CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED DECEMBER 31, 2019 28

STATUTORY AUDITORS’ REVIEW REPORT ON THE HALF-YEAR FINANCIAL INFORMATION 52

GLOSSARY 53

SUM

MA

RY

In the Half-Year Financial Report,

the term “Group” refers to Claranova and its subsidiaries and the terms “Claranova” and the

“Company” refer to the company, Claranova.

This Half-Year Financial Report contains information about the Company’s objectives and development strategy. Such information may

be identified by the use of the future and conditional tenses and by forward-looking terms such as “consider”, “envisage”, “think”, “target”, “expect”, “intend”,

“should”, “aim”, “estimate”, “believe”, “wish” and “may” or, in certain cases, the negative form of these terms, or similar expressions.

The reader’s attention is drawn to the fact that these objectives and development strategy depend on circumstances and events which may or may not occur.

These objectives and development strategy are not historical data and should not be considered to give any assurance that the stated events and data will occur, the assumptions confirmed, or the objectives attained. By their nature, these objectives may not be achieved and the statements and information presented in the Registration Document may prove incorrect, without the Company being required in any way to provide an update, subject to applicable regulations and particularly the AMF General Regulations (Autorité des Marchés Financiers : French Regulator).

This Half-Year Financial Report contains information about the Company’s business and the market and industry in which it operates. This information notably stems from

studies conducted by internal and external sources (analysts’ reports, specialized studies, sector publications, and any other information published by market

research firms, companies and government agencies). The Company considers that this information presents a true and fair view of

the market and industry in which it operates and accurately reflects its competitive position. However, while this

information is considered reliable, it has not been independently verified by the

Company.

— 3HALF-YEAR FINANCIAL REPORT AS OF DECEMBER 31, 2019 - CLARANOVA

CHAIRMAN’S MESSAGE

01

We remain vigilant and focused on our profitable growth objectives and determined to provide our customers with a unique experience

I am proud and pleased to confirm the Group’s strong growth trajectory in H1 2019-2020 (July-December 2019), with revenue up by + 68% to €234.3 million. This increase reflects the significant organic growth

in our businesses (+19%) and the successful acquisition of the Personal Creations® personalized gifts business. Gifting activities surpassed our expectations, contributing €63.9 million to Claranova revenue over the first five months of integration. This acquisition confirms the Group’s ability to quickly integrate and boost the value of activities by several tens of millions of euros.In H1 2019-2020, Claranova posted EBITDA of €11.2 million, i.e. a 5% operating margin. This level of profitability reflects significant investment in our business divisions to build the foundations of our long-term expansion and profitability. We are bolstering our position as a reference in personalized digital printing by boosting our market shares in our current markets, while pursuing our targeted geographical expansion strategy. The acquisition of Personal Creations® also marks a decisive step in the development of our digital printing activities, the Group’s core business. This acquisition confirms the success of our strategy of expanding printing media and techniques to make Claranova one of the global leaders in this booming sector. To reflect the expansion of our digital printing activities and the potential offered by the penetration of the personalized gifts market, the Mobile division has become the Printing & Gifting division.

We are continuing to transform our software publishing activity into a subscription-based proprietary software business. The percentage of repeat revenue increased sharply during the half-year to reach 42 % of the activity of the division. This transition also involves a refocusing of our activities on our proprietary brands in three high growth potential segments: Security, PDF and Photo. The development of the business model will secure and generate greater visibility over the division’s growth and profitability. To mark the transition of our activities towards proprietary software publishing and distribution, the Internet division has become the Software division.In our IoT activities, we have chosen to focus our efforts on expanding the reseller network and rolling out our temperature management and panic button solutions. The commercial development of our IoT activity continued with the support of our various partners, confirming its status as a medium-term growth driver for Claranova.These investments in our various activities are shaping our growth and profitability and preparing Claranova to achieve its long-term goals.In a complex economic environment, Claranova has a privileged position. For the moment, our activities remain little exposed to the current health crisis both in terms of our supplies and our markets, where an upwards trend in online BtC product and service consumption has been established. We remain vigilant and focused on our profitable growth objectives and determined to provide our customers with a unique experience based on simplicity, creativity and the quality of our products.

PIERRE CESARINIGroup Chief Executive Officer

4 —

KEY FIGURES

NET DEBT(In € million)

H120172018

H120182019

H120192020

12.5

19.4

37.012/31/2017

12/31/2018

12/31/2019

-43.1-42.8

-27.5

68%Half-year growth

€234.3 millionHalf-year revenue

EBITDA(1)

(In € million)

(1) Organic growth is equal to the increase in revenue at constant consolidation scope and exchange rates. EBITDA (earnings before interest, taxes, depreciation and amortization) is a non-GAAP aggregate used to measure the operating performance of the businesses. It corresponds to earnings before depreciation, amortization and share-based payments, including related social security expenses, and the IFRS 16 impact on the recognition of leases

(2) Adjusted net income is equal to Net income before the impact of share-based payments, including the related social security expenses, other operating income and expenses and fair value remeasurement of financial instruments and excluding the IFRS 16 impact on the recognition of leases.

OVERALL AND ORGANIC GROWTH

H120172018

H120182019

H120192020

2.8

10.9 11.2

CASH FLOW FROM OPERATIONS(In € million)

HALF-YEAR REVENUE (In € million)

H120172018

H120182019

H120192020

89.9139.6

234.3

ADJUSTED NET INCOME(2)

(In € million)

H120172018

H120182019

H120192020

1.8

6.6

4.3


H120172018

Overall figure

H120182019

H120192020

25%

55%

68%

33% 33%

19%

Organic growth

PROFIL

UNITED STATES

65%

FRANCE

5%

OTHER EUROPEAN COUNTRIES

7%

REST OF THE WORLD

4%

GERMANY

4%

UNITED KINGDOM

15%

A high-growth technology group, Claranova is an international player that is firmly positioned in the long term, drawing on resilient business models for high growth potential markets.

95%revenue generated outside France

In percentage of Group’s revenu

6 —

(1) The “Mobile” division has become the “Printing & Gifting” division following the acquisition of the Personal Creations’® personalized gifts business in August 2019. Printing activities combine the

personalized photo products sold on the SimplytoImpress.com, PhotoAffections.com, CanvasWorld.com and MyCustomCase.com websites as well as FreePrints mobile apps

(FreePrints, Photobooks, Photo Tiles, FreePrints Cards). Gifting activities combine the personalized gift products on the PersonalCreations.com and Gifts.com websites.

(2) The “Internet” division has become the “Software” division to better reflect the transition of the division’s activities to proprietary software publishing.

As the leader in personalized digital printing (Printing & Gifting(1)), Claranova also stands out for its technological expertise in software publishing (Software(2)) and the Internet of Things (IoT). These three business divisions share a common vision: simplify access to new technologies using reliable solutions, combining innovation and ease of use.

Drawing on this vision, for the past four years, Claranova has enjoyed an average annual growth trajectory of +30% while improving its profitability, both through organic and external growth. The Group generated revenue of €234.3 million in H1 2019-2020, for an operating margin of 5%.

Simplify access to new technologies using

reliable solutions, combining innovation and ease of use

+30%4-year average annual growth


BUSINESS REVIEW

The Printing & Gifting activities embody Claranova’s vision in the personalized digital printing sector: offer the simplest and most affordable solution to order a personalized object.Claranova’s core business, the Printing & Gifting division combines a range of FreePrints mobile apps and personalized gift and photo product sites (SimplytoImpress.com, PhotoAffections.com, CanvasWorld.com, myCustomCase.com, PersonalCreations.com and Gifts.com).

Available in 12 countries and 3 continents, Printing & Gifting division offers have already enticed around 20 million customers worldwide. The high level of customer loyalty illustrates the success of its offering and ensures the sustainability of the division’s activities and its long-term growth and profitability potential.

Driven by the success of its various websites and mobile apps, personalized digital printing activities continue to post strong annual growth, with revenue up tenfold in five years.

PRINTING & GIFTINGPersonalized digital printing

H120172018

H120182019

H120192020

69.297.8

186.2

• European leader in mobile photo product printing

• New growth perspectives with expansion into the Gifting market

• Only market player present on 3 continents

• Very strong growth with continuous improvement of the Printing business profitability

HALF YEAR REVENUE (In € million)

8 —

H120172018

H120182019

H120192020

19.7

40.1

45.9

H120172018

H120182019

H120192020

1.0

1.72.2

With its IoT platform myDevices, Claranova provides technological expertise to manage connected devices for professionals. With its unique application interface, myDevices offers companies of all sizes an infinite range of IoT solutions to simplify and optimize the management of their assets, whatever the connected device, network type, business sector or application field: cold chain management, alert management, space utilization, customer satisfaction monitoring, waste management, etc.

To roll out its technology on a large scale, Claranova distributes its mainly turnkey solutions under white labels through its international network of business partners, such as Sprint in the United States.

SOFTWAREBtC software publishing and ditributions

IOT(1)

Platform for Internet of Things management

(1) IoT : Internet of Things.

• Leading player in BtC proprietary software publishing

• Positioning in three high growth potential segments (Security, PDF, Photo)

• Repeat and profitable business model

• A unique platform for infinite IoT solutions

• A technology recognized by global IoT leaders

• Next growth driver for the Group



By offering simple and innovative software solutions which provide easy daily access to new technologies, Claranova is now a leading BtC software publishing player in three high growth potential segments: • Security: antivirus, ad blocker, cleaning and

optimization tools sold under the Adaware brand

• PDF: document management tools grouped under the SodaPDF brand

• Photo: photo editing software and apps developed under the InPixio brand

Developed internally, this software sold through subscriptions offers Claranova greater visibility over repeat revenue and profitability.


ACTIVITY REPORT FOR THE HALF-YEAR ENDED DECEMBER 31, 2019 11

1.1 — Selected financial information and other data for the first-half of 2019-2020 11

1.2 — Economic data and financial performance 121.3 — Major events impacting business 241.4 — Debt and cash 241.5 — Trends and objectives 261.6 — Main risks and uncertainties 271.7 — Principal transactions with related parties 27

CONDENSED HALF-YEAR CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED DECEMBER 31, 2019 28

2.1 — Statement of comprehensive income 282.2 — Statement of financial position 292.3 — Statement of cash flows 302.4 — Statement of changes in equity 312.5 — Notes to the condensed half-year

consolidated financial statements 32

STATUTORY AUDITORS’ REVIEW REPORT ON THE HALF-YEAR FINANCIAL INFORMATION 51

STATEMENT BY THE PERSON RESPONSIBLE FOR THE HALF-YEAR FINANCIAL REPORT 52

GLOSSARY 53

CLARANOVA - HALF YEAR FINANCIAL STATEMENTS, AS OF DECEMBER 31, 201910 —

1.1 Selectedfinancialinformationandotherdatafor the first-halfof2019-2020

(in € million)H1 2019-2020

(6 months)H1 2018-2019

(6 months)H1 2017-2018

(6 months)

REVENUE 234.3 139.6 89.9

% Growth 68% 55% 25%

EBITDA(1) (3) 11.2 10.9 2.8

EBITDA/Revenue 4.8% 7.8% 3.2%

Recurring operating income 9.7 10.7 1.3

Operating income 6.8 6.6 0.2

Net income 1.5 1.5 (0.6)

Adjusted Net Income(2)(3) 4.3 6.6 1.8

Adjusted Net Income per share (in €)(4) €0.10 €0.17 €0.05

Equity, Group share 55.8 14.9 15.8

Borrowings and other financial liabilities 63.9 29.2 0.3

Available cash 91.4 72.0 43.5

Net Debt (27.5) (42.8) (43.1)

Ratio of net financial liabilities/equity (gearing ratio) (0.5) (2.9) (2.7)

Cash flow from operations 9.1 9.6 1.6

Cash flow from operating activities 37.0 19.4 12.5

Cash flow from investing activities (32.4) (10.9) 13.2

Cash flow from financing activities 9.7 (2.7) 1.7

(1) EBITDA (Earnings before interest, taxes, depreciation and amortization) is a non-GAAP aggregate used to measure the operating performance of the businesses. It is equal to Recurring Operating Income before the impact of share-based payments (-€12.4 thousand in H1 2019-2020), including related social security contribution, and depreciation and amortization (-€3.0 million in H1 2019-2020), and the impact of IFRS 16 on the accounting for lease contracts (€1.6 million at EBITDA level in H1 2019-2020). The impact of IFRS 16 is detailed in the Note 15 to Chapter 2 of this document.

(2) Adjusted net income corresponds to Net income before the impact of share-based payments (-€12.4 thousand in H1 2019-2020), including related social security contribution, before Other operating income and expenses (-€3.0 million in H1 2019-2020), before fair value remeasurement of financial instruments (€0.3 million in H1 2019-2020) and excluding IFRS 16 impact on the recognition of leases (-€0.2 million in adjusted net income in H1 2019-20). IFRS 16 impact is detailed in Note 15 to Chapter 2 of this document.

(3) EBITDA and Adjusted net income are non-GAAP measures and should be viewed as additional information. They do not replace operating and financial performance measures of an accounting nature. Claranova’s Management considers these measures to be relevant indicators of the Group’s operating and financial performance. It presents them for information purposes, as they enable most non-operating and non-recurring items to be excluded from the measurement of business performance.

(4) The number of outstanding shares used to calculate Adjusted net income per share was restated in H1 2018-2019 and H1 2017-2018 to take into account the reverse stock split in H1 2019-2020. See Note 1 to Chapter 2.

Activity report for the half-year ended December 31, 20191

Half year Financial Report as of December 31, 2019 – CLARANOVA— 11

1 — Activity report for the half-year ended December 31, 2019Economic data and financial performance

1.2 Economicdataandfinancialperformance

Revenue–First-Halfof2019-2020Claranova group confirmed its strong growth trajectory in H1 2019-2020 (July-December 2019) with a +68% increase in consolidated revenue to €234.3 million, including €63.9 million from the

personalized gifts business Personal Creations® acquired in August 2019. Outside scope and exchange rates, first-half revenue growth remained steady +19%.

(in € million)H1 2019-2020

(6 months)H1 2018-2019

(6 months)H1 2017-2018

(6 months)

REVENUE 234.3 139.6 89.9

% growth 68% 55% 25%

% organic growth(1) 19% 33% 33%

% forex impact 5% 2% -8%

% scope impact(2) 44% 20% 0%

(1) Organic growth is equal to the increase in revenue at constant consolidation scope and exchange rates.(2) Acquisition of Personal Creations®.

The breakdown of revenue by division has changed to the advantage of personalized photo printing activities (Printing & Gifting), the Claranova group’s core business, following the integration of the new personalized gifts activities of Personal Creations®. The Printing

& Gifting division now represents 79% of revenue, compared with 70% in the first-half of 2018-2019. Software publishing (Software) and Internet of Objects (IoT) activities represent 20% and 1% of Group revenue, respectively.

Revenue breaks down by business division as follows:

H1 2019-2020 REVENUE(in € million)



186.2 M€ (��

��

45.9 M€ (��

��

2.2 M€ (��

��

2019 - 2020234.3 M€

97.8 M€ (��

��

40.1 M€ (��

��

1.7 M€ (��

��

2018 - 2019139.6 M€

69.2 M€ (��

��

19.7 M€ (��

��

1.0 M€ (��

��

2017 - 201889.9 M€

(in € million)H1 2019-2020

(6 months) ChangeH1 2018-2019

(6 months) ChangeH1 2017-2018

(6 months)

Printing & Gifting 186.2 90% 97.8 41% 69.2

Software 45.9 14% 40.1 103% 19.7

IoT 2.2 28% 1.7 77% 1.0

REVENUE 234.3 68% 139.6 55% 89.9

The Group confirmed its international positioning, realizing 95% of its revenue outside France. The integration of Personal Creations®, which generates revenue exclusively in the United States, boosted the Group’s position in this country which represents 65% of H1 2019-2020 revenue, compared to 50% for the same period last year.

12 —

1

— 1 Activity report for the half-year ended December 31, 2019Economic data and financial performance

Revenue breaks down by region as follows:


H1 2018-2019 REVENUE(1)

(in € million)H1 2017-2018 REVENUE(in € million)

152.0 M€ (��

��

15.7 M€ (��

��9.6 M€ ��

��

34.8 M€ ��

��

11.8 M€ (��

��

10.4 M€ (��

��

2019 - 2020234.3 M€

70.3 M€ (��

��

10.6 M€ (��

��9.0 M€ (��

��

30.7 M€ (��

��

9.6 M€ (��

��

9.4 M€ (��

��

2018 - 2019139.6 M€

56.7 M€ (��

��

3.0 M€ (��

��

5.7 M€ (��

��

17.9 M€ (��

��

5.6 M€ (��

��

0.9 M€ (��

��

2017 - 201889.9 M€

First-half2019-2020resultsIn H1 2019-2020, Claranova posted EBITDA of €11.2 million, i.e. a 4.8% operating margin. At constant scope, EBITDA totaled 6% or €10.2 million, compared with €10.9 million in H1 2018-2019. The evolution in the profitability of the Group’s activities reflects the efforts undertaken in the three divisions: integration of Gifting

activities and further geographical expansion of Printing activities in Europe, accelerated transition of Software division activities to a subscription-based proprietary software sales model and the commercial ramp-up of IoT activities.

(in € million)

H1 2019-2020(6 months)

H1 2019-2020(6 months)

Constant scope

H1 2019-2020(6 months)

Constant scope and rates

H1 2018-2019(6 months)

Revenue 234.3 170.4 166.1 139.6

Change 68% 22% 19% 55%

EBITDA 11.2 10.2 9.2 10.9

EBITDA/Revenue 4.8% 6.0% 6.0% 7.8%

EBITDA breaks down by business division as follows:

(in € million)H1 2019-2020

(6 months)

% of revenue of the

divisionH1 2018-2019

(6 months)

% of revenue of the

division

H1 2017-2018

(6 months)

% of revenue of the

division

Printing & Gifting 10.1 5.4% 6.6 6.8% 3.7 5.4%

• Printing 9.1 7.4% 6.6 6.8% 3.7 5.4%

• Gifting 1.0 1.6%

Software 3.7 8.0% 6.1 15.3% 1.2 6.0%

IoT (2.6) (118.1)% (1.9) (107.9)% (2.1) (209.9)%

EBITDA 11.2 4.8% 10.9 7.8% 2.8 3.2%

(1) The geographical breakdown of revenue for the first half of 2018-2019 has been modified compared to the data indicated in the half-year financial report 2018-2019 to take into account the location of the end-customer of certain activities of the Software division instead of the location of the commercial partner.



The profitability of the activities reached a level comparable with that of the same period last year with net income of €1.5 million. Excluding the IFRS 16 impact on the recognition of leases and non-operating and non-recurring items, adjusted net income totaled €4.3 million, compared to €6.6 million in H1 2018-2019.

(in € million)H1 2019-2020

(6 months)H1 2018-2019

(6 months)H1 2017-2018

(6 months)

EBITDA 11.2 10.9 2.8

EBITDA/Revenue 4.8% 7.8% 3.2%

Recurring Operating Income 9.7 10.7 1.3

Operating Income 6.8 6.6 0.2

Net Income 1.5 1.5 (0.6)

ADJUSTED NET INCOME 4.3 6.6 1.8

ADJUSTED NET INCOME (in €) €0.11 €0.17 €0.05

The transition from Recurring Operating Income to EBITDA is as follows:

(in € million)H1 2019-2020

(6 months)H1 2018-2019

(6 months)H1 2017-2018

(6 months)

Recurring Operating Income 9.7 10.7 1.3

Share based payment and related social charges 0.0 (0.3) 1.2

Depreciation, amortization and provisions 3.0 0.4 0.3

Leases (IFRS 16) (1.6)

EBITDA 11.2 10.9 2.8

The transition from Net Income to Adjusted Net income is as follows:

(in € million)H1 2019-2020

(6 months)H1 2018-2019

(6 months)H1 2017-2018

(6 months)

Net Income 1.5 1.5 (0.6)

Share based payment and related social charges 0.0 (0.3) 1.2

Fair value remeasurement of financial instruments (0.3) 1.2 -

Other operating income and expenses 3.0 4.2 1.1

Lease (IFRS 16) 0.2

ADJUSTED NET INCOME 4.3 6.6 1.8

14 —

1


Revenueandresultsbybusinessdivision

Printing & Gifting

LeaderinpersonalizeddigitalprintingThe Printing & Gifting activities embody Claranova’s vision in the personalized digital printing sector: offer the simplest and most affordable solution to transform the most precious moments into a personalized object. As the Claranova group’s core business, the

Printing & Gifting division combines a range of FreePrints mobile apps and E-commerce sites selling personalized gifts and photo products (SimplytoImpress.com, PhotoAffections.com, CanvasWorld.com, myCustomCase.com, PersonalCreations.com and Gifts.com).

A100%DIGITALOFFERING(WEBANDAPP)COVERINGALLPHOTOPRODUCTANDPERSONALIZEDGIFTSEGMENTS

100% DIGITAL

PHOTOS CARDSPHOTO

ALBUMSPERSONALIZEDPHOTO OBJECTS

PHOTOTILES

PERSONALIZED GIFTS

��TM

APPS

Drawing on the digital printing expertise gained through the various Web offerings, Claranova rapidly positioned itself in the mobile photo printing market, with the launch of the FreePrints brand in 2013. The first mobile app developed by the Group offers a unique tool that can be used to select photos directly on a smartphone from the

internal memory, social networks (Facebook, Instagram, Flickr, etc.) or cloud storage services (Dropbox, Google Drive, One Drive, etc.) and edit them as needed in a few seconds. Printed in a professional laboratory, the photos are then mailed directly to the customer’s address merely days after its order.



By responding to the growing demand for printing photos stored on smartphones and tablets, the FreePrints app has been highly successful around the world since its launch. This offer’s momentum is partly driven by increased household smartphone ownership (3.2 billion people owned a smartphone in 2019 up from 2.5 billion in 2016(1)) and the rapid replacement of digital cameras by smartphones, following the significant improvement in picture quality in recent years. These technological developments and the

(1) Statista Research, “Number of smartphone users worldwide 2016-2020”, 2019.(2) Market Research Future, “Photo Printing Market Research Report – Global Forecast till 2023”, 2019.

resulting new photographic practices stimulate taking photos and, at the same time, demand for paper prints. The increased smartphone penetration rate and changes in consumer practices should support the growth of the mobile photo printing business. The Photo Printing market could exceed US$26 billion by 2023, with an expected average annual growth rate in excess of 12%, according to the firm, Market Research Future(2).

NUMBER OFDIGITALCAMERASANDSMARTPHONESSOLDWORLDWIDE(in millions)

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

305 495

725

1,004

1,3021,433 1,473 1,466 1,402 1,382 1,409

Smartphones

NUMBER OF DIGITAL CAMERAS AND SMARTPHONES SOLD WORLDWIDE (in millions)

Digital cameras

2020e (1)

Sources: CIPA (Camera & Imaging Products Association) / IDC(1) Estimated data.

• Fast replacement of digital cameras by smartphones

• Number of digital cameras sold worldwide divided by 10 in 10 years

• Number of smartphones sold worldwide multiplied by nearly 5 in 10 years

SIZEOFTHEPHOTOPRINTINGMARKET(in millions)

2023e(2)2017 2018 2019e(2) 2020e(2) 2021e(2) 2022e(2)

Source: Market Research Future(1) Average annual growth over the period 2017-2023.(2) Estimated data.

26,113

13,125

SIZE OF THE PHOTO PRINTING MARKET (in millions)

12.3%(1)

• Strong growth in photo printing number: growth average of more than 12% by 2023

• Scope by the increasing number of photos taken: 160 photos by living in 2017

• Mostly on smartphone or tablet: 9 of 10 photos

Supported by the momentum of the mobile photo printing market and its status of market pioneer, FreePrints currently has over 15 million customers worldwide and has printed over 2 billion photos since its launch. These figures bear witness to Claranova’s successful shift to mobile and the quality of services proposed by the

app, confirmed by the ratings awarded by its customers. FreePrints has been awarded an average rating of 4.8 obtained on millions of opinions filed by its customers in 12 countries around the world. This level is quite remarkable in the mobile apps segment, demonstrating the quality of the app and the effectiveness of its positioning.

16 —

1


RANKING

REGULARLY IN THE

TOP 5 APP STORE (1)

DOWNLOADS

47 M

AVERAGE RATINGON MILLIONS OF OPINIONS

4.8 / 5ON MILLIONS OF REVIEWS

GEOGRAPHICALCOVERAGE

12COUNTRIES

(1) Within the photo printing app category in all 12 countries covered by FreePrints products

Following the global success of its first app, FreePrints, the Printing and Gifting segment capitalized on its extensive loyal customer base with the launch of three further apps. FreePrints Photobooks (2016) allows users to create photo albums from a smartphone, FreePrints PhotoTiles (2018) allows customers to easily order photo tiles that can be stuck, unstuck and moved on walls as often as they want and FreePrints Cards (2019) can be used to create personalized cards for all occasions (birth, wedding, birthday, etc.). These different product ranges share the same vision: offer the simplest and most affordable solution for ordering personalized items in a few clicks, direct from a smartphone or tablet.

The FreePrints product range stands out for its “free” component and attractive prices that have enabled the brand’s apps to carve out a dominant position in all its local markets. This offering is unique for its quality/price and ease of use, enabling it to attract and retain numerous customers. The majority of division sales are therefore realized with its existing customers. Marketing investment feeds the segment’s future growth and margin, with a customer life cycle of several years. With this positioning, the division can roll out higher value-added offers (photo books, photo frames, personalized cards) to a wider customer base.



FreePrints apps are now available in 12 countries worldwide. Claranova is the only player in the mobile photo printing market present on three continents.

United States United Kingdom

United StatesFrance

United KingdomIreland

ItalyGermany

SpainNetherlands

Belgium

United StatesFrance

United Kingdom

GermanyItaly

SpainIreland

India NetherlandsBelgiumAustriaPoland

India

United States United KingdomGermany

ItalyFrance

SpainIreland

India NetherlandsBelgiumAustriaPoland

2013 2014 2015 2016 2017 2018 2019

Acceleration of geographical deploymentand expansion of the product range to products with higher added value

18 —

1


Boosted by the success of its various apps, Claranova is currently the leader in mobile digital printing solutions in the United States and Europe, where FreePrints apps regularly top photo printing app rankings.

TOP 5 MOBILE PRINTING APPS(1) POSITION OF THE OTHER FREEPRINTS

BRAND APPS#1 #2 #3 #4 #5

Uni

ted

King

dom

4.8(2) 4.8 4.8 4.8

SNAPFISH

4.7

Irel

and

4.8 4.8

SNAPFISH

4.7 4.8

MIXTILES

4.9

Fran

ce

4.7

CHEERZ

4.6 4.6

LALALAB

4.8 4.8

Ital

y

4.7

CHEERZ

4.6

PHOTOSI

4.6

LALALAB

4.8 4.7 #6 4.6

Uni

ted

Stat

es SHUTTERFLY

4.7

CHATBOOKS

4.8 4.8

MIXTILES

4.9

SNAPFISH

4.7 #6 4.8 #7 4.8 #8 4.8

(1) Ranking as of 12/31/2019 within the Apple Store mobile printing app category, source: App Figures(2) Average rating out of 5 obtained since the app’s launch.

(1) Technavio, “Global Personalized Gifts Market 2017-2021”, 2017.

On August 2, 2019, the Group’s Printing and Gifting division announced the acquisition of Personal Creations’® assets, the personalized gifts business of the US group, FTD Companies, Inc. With this acquisition, the segment will expand into the personalized gifts business, estimated at over US$26 billion worldwide by the research firm, Technavio(1).

This first sizable acquisition boosts the division’s growth potential by adding the personalized gifts market, twice as large as the photo printing market. The 100% web Gifting activities can benefit from the division’s unique expertise in developing mobile offerings to cater for the uses and growing personalization demands of its customers.



WORLDPHOTOPRINTINGANDPERSONALIZEDGIFTSMARKET(1)

(in billions of dollars)

2021 e(1)2020 e(1)2019

31.728.8

26.3

14.0 15.7 17.0

WORLD PHOTO PRINTING AND PERSONALIZED GIFTS MARKET (in billions of dollars)

(1) Estimated data.

(1) F/22 Consulting, “Growing Photo Printing Opportunities in the USA”, 2018. Futuresource, “Photo Prints Market analysis in Western Europe”, 2017.(2) This figure includes all downloads of the FreePrints, Photobooks and Photo Tiles apps on the Google Play and Apple Stores since their launch.(3) This figure includes all customers having placed an order on the FreePrints, Photobooks and Photo Tiles apps on the Google Play and Apple Stores.

Personalized gifts market

• A market around 2x larger than the photo printing market

• Which has yet to be impacted by the mobile world

• A global market with local features requiring agility and responsiveness

New market share wins and successful integration of the Personal Creations® personalized gifts businessIn H1 2019-2020, the Printing & Gifting division business virtually doubled in size compared to the previous year, amounting to €186.2 million, i.e. a +90% increase period-on-period. Excluding the acquired Gifting business, Printing division revenue totaled €122.3 million, i.e. up + 25% period-on-period. This improvement was driven by both mobile and web activities, which represented €75 million and €48 million, respectively, for the half-year ended December 31, 2019, up + 27% and + 22%.

The division continued to strengthen its positioning in the mobile segment in its three main countries (United Kingdom, United States and France) where FreePrints completed new market share wins. In these countries, the Group continues to develop its customer base, average baskets and order renewal rates while limiting the rise in customer acquisition costs. With around 35 million downloads (+ 39% in one year), the FreePrints(2) app now brings together over 15 million customers worldwide(3) (+ 36% in one year) who have printed more than 2 billion photos since its launch (+ 41% in one year).

NUMBER OFTOTALFREEPRINTSDOWNLOADS(in millions)

201920182016 2017

34.5

11.917.0

24.9

NUMBER OF TOTAL FREEPRINTS DOWNLOADS (in millions)

NUMBER OFTOTALFREEPRINTSCUSTOMERS(in millions)

201920182016 2017

15.7

5.2

7.9

11.6

NUMBER OF TOTAL FREEPRINTS CUSTOMERS(in millions)

20 —

1


NUMBER OFTOTALPHOTOSPRINTED(in millions)

201920182016 2017

2,183

598

1,018

1,552

NUMBER OF TOTAL PHOTO PRINTED (in millions)

After Belgium and the Netherlands, the group pursued its targeted geographical coverage strategy with the launch of its FreePrints and FreePrints Photobooks mobile apps in Poland and Austria, the third and fourth European countries to deploy the apps in 2019. While

(1) Sources: Statista & eMarketer.(2) Relevant information on this business’ revenue trend cannot be provided due to the specific nature of the deal (company subject to Chapter 11 proceedings in the United

States) and the absence of audited accounts for the period prior to the acquisition.

these new markets are relatively small at this stage, they constitute attractive future growth vectors for the group. These four countries alone represent over 10% of smartphone users in Europe(1). This penetration into new geographical areas illustrates the group’s desire to boost its development in mobile photo printing in Europe, despite the draw on short-term resources (initial marketing investments required to convince, build loyalty and establish brand reputation among new customers). The contribution of the European zone to mobile photo printing therefore reached 62% in H1 2019-2020, compared to 59% in the previous year. A figure which should further increase over the next few quarters given the past and future investments to boost this activity’s foothold in Europe.

The Printing and Gifting division’s robust growth was also driven by the successful integration of Personal Creations®. This new personalized gift sales business exceeded group expectations, generating revenue of €63.9 million in only five months(2). This is however a highly seasonal business, as generally the first half of the year (July-December), marked by the year-end festivities, usually far outshines the second half (January-June) in terms of revenue and profitability.

The division’s revenue trend and breakdown between Printing and Gifting are as follows:

(in € million)H1 2019-2020

(6 months)H1 2018-2019

(6 months) Change

Printing 122.3 97.8 25%

Gifting 63.9

REVENUE 186.2 97.8 90%

With this first integration phase (team relocation, product portfolio strategic review, start of back office pooling, etc.) now finalized, the division’s teams can focus on creating technical and commercial synergies between the historical printing activity and the new personalized gifts business, which can benefit from the unique know-how acquired by the division in developing mobile commercial offerings.

In H1 2019-2020, Printing & Gifting division gross profit totaled 5.4%, for EBITDA of €10.1 million, including a €1.0 million contribution from the new Gifting business. At constant scope, the division’s business

posted a level of operating profitability comparable to that of the same period last year with adjusted EBITDA of €9.1 million or 6.8% of revenue.

The integration of Personal Creations® together with the first half-year marketing and technological investments weighed on the Printing & Gifting division’s profitability. Nevertheless, these investments form part of the Claranova growth strategy and are required to consolidate the division’s positioning in Europe and the United States, a future profitability growth lever.

The Printing & Gifting division’s half-year results are as follows:

(in € million)H1 2019-2020

(6 months)H1 2018-2019

(6 months) Change

Revenue 186.2 97.8 90%

EBITDA 10.1 6.6 +53%

% of revenue 5.4% 6.8% -1.3pts



The division’s half-year results break down between Printing and Gifting as follows:

H1 2019-2020 (6 months)(in € million)

Printing & Gifting Printing Gifting

Revenue 186.2 122.3 63.9

EBITDA 10.1 9.1 1.0

% of revenue 5.4% 7.4% 1.6%

Software

LeadingplayerinBtCsoftwarepublishing

(1) Excluding businesses sold.(2) Indicative figures.

By offering simple and innovative software solutions which provide easy daily access to new technologies, Claranova is now a leading BtC software publishing player in three high-growth potential segments:

• Security: antivirus, ad blocker, cleaning and optimization tools sold under the Adaware brand;

• PDF: document management tools grouped under the SodaPDF brand;

• Photo: photo editing softwares and apps developed under the InPixio brand.

Secure, repair and optimize your IT tools and Internet searches

Convert, edit and securely sign your PDF documents

Transform your best memories into perfect photo

With these three proprietary brands, Claranova meets the global needs of Internet users by using products which put them at the core of this software creation process. This enables Claranova to offer the most tailored products to its customers and enhance loyalty and the value generated by all the users who appreciate and recommend its software.

Drawing on the technical and marketing expertise of our teams, we can convince, as efficiently as possible, the thousands of monthly visitors who use our solutions to support them on a daily basis. Mostly sold through subscriptions, the software developed by the Group’s research and development teams offer a broad visibility over the revenue and profit generated by the Software division’s activities.

Ongoing transition towards a repeat revenue proprietary software publishing modelThe Software division, which includes the software publishing and distribution activities (PDF, Security, Photo) achieved a turnover of 45.9 million euros in the first half of the year, up by 14%. In this six-month period, Claranova continued the refocusing of Software activities towards the development of proprietary software products by subscription.

This refocusing was accompanied by an acceleration in marketing investments, which increased by 36% to 22% of the division’s revenue (compared to 19% in the first half of 2018-2019). These efforts resulted in a significant increase in the share of recurring revenues, which represented 42% of the division’s turnover over the six-month period, compared to 35% in the previous year. The efforts made during the semester were also devoted to the development of new software versions in all three segments of the Software division. The launch of these new versions will take place during the second half of the year and should help fuel the Group’s growth and accelerate the transition to a subscription sales model.

In the short term, this shift to a subscription sales model limits the growth of software publishing activities, with software sales prices per subscription being comparatively lower than the perpetual licenses so far offered to cluster customers. This decrease in average baskets combined with the increase in marketing investments had a double effect limiting the level of operational profitability of the division, which reached 8.0% of sales (compared to 15.3% in the first half of 2018-2019).

The efforts made during this Software semester should nevertheless bear fruit in part during the second half of the year and even more at the end of 2020. These results correspond to the Group’s vision for more than a year: to build a recurrent and predictable business capable of generating strong and profitable growth over the long term.

REPEATREVENUE(1)(2)(as % of revenue)

2018-2019 H1 2019-20202017-20182015-2016 2016-2017

Repeat revenue

(1) Excluding businesses sold (2) Indicative figures

REPEAT REVENUE (as % of revenue) (1) (2)

5% 8% 35% 42%

58%100% 95% 92% 65%

Non recurrent revenue

22 —

1


The Software division’s half-year results are as follows:

(in € million)H1 2019-2020

(6 months)H1 2018-2019

(6 months) Change

Revenue 45.9 40.1 14%

EBITDA 3.7 6.1 -40%

% of revenue 8% 15%

IoT

AuniqueplatformforinfiniteIoTsolutionsWith its Iot myDevices platform, Claranova puts its technological know-how at the service of managing connected objects for professionals.

From a single application interface, myDevices offers companies of all sizes an infinite number of Iot solutions to simplify and optimize the management of their assets, regardless of the connected object,

network typology, business sector and field of application: cold chain control, alert management, space occupancy, customer satisfaction monitoring, waste management, etc.

In order to deploy its large-scale technology, Claranova distributes its turnkey solutions mainly in white label through its international network of commercial partners, such as Sprint in the United States.

Commercial roll-out of the IoT divisionThe Claranova IoT division’s revenue rose by + 28% in H1 2019-2020, amounting to €2.2 million. This revenue includes €1 million from its distribution partnership with one of the US telecommunications operator (compared to €0.9 million from this partnership in H1 2018-2019). Restated for this one-off revenue, IoT business revenue increased by +50%. This increase reflects the gradual ramp-up of myDevices solution sales, with around 300 signed customers and 100 resell partners at the end of December 2019.

In H1 2019-2020, the IoT division focused its efforts on the distribution of temperature management solutions in the catering, hospitality, healthcare and agro-food sectors and the launch of its No Dead ZoneTM panic button technology announced in January to protect hotel employees. The first revenues generated by this technology will contribute to the division’s second half-year revenue.

Considering the investments made to support the roll-out of these various offerings, the IoT division reported Recurring Operating Income of -€2.6 million in H1 2019-2020. Although it contributes little to revenue and consumes short-term resources for the Group,

the IoT business represents a strategic asset and a major medium-term growth vector relying on three levers: increase in the number of customers, growth in the number of IoT solutions by customer and the number of sites and connected devices deployed on each site.

280 (+ 146%)(2)

number of customers(1)

(1) Number of customers served directly or via our partner Sprint (does not include indirect customers served by our reseller network).

(2) Growth since June 2019.

96 (+ 153%)(2) number of resellers

The IoT division’s half-year results are as follows:

(in € million)H1 2019-2020

(6 months)H1 2018-2019

(6 months) Change

Revenue 2.2 1.7 28%

EBITDA (2.6) (1.9) 40%

% of revenue (118.1)% (107.9)% -10.2pts


1 — Activity report for the half-year ended December 31, 2019Major events impacting business

1.3 Majoreventsimpactingbusiness

Acquisitionofthepersonalizedgiftsbusiness,PersonalCreations®

(1) Business-to-Consumer.(2) See Note 4 of the 2018-2019 URD.

On August 2, 2019, the Group’s PlanetArt division announced it had completed the acquisition of the assets of Personal Creations®, the personalized gifts business of the US group, FTD Companies, Inc. This business was integrated into the Group’s Printing & Gifting

division. Over the first five months of integration, the personalized gifts business generated revenue of €63.9 million for EBITDA of €1.0 million.

1.4 Debtandcash

1.4.1 Cash flow sources and amountsClaranova ended H1 2019-2020 with cash of €91.4 million as at December 31, 2019, i.e. a €14.3 million increase compared to June 30, 2019. This increase was backed by cash flow from operating activities of €37.0 million, including €9.1 million in cash flow from operations and €33.7 million in changes in working capital requirement. This increase in working capital requirement reflects the growth of the Printing & Gifting division (organic and external), the seasonal nature of these businesses (significant activity during year-end festivities implying a non-standard peak in cash flow at the end of December)

and their specific business model (BtC(1) distribution which naturally develops with negative WCR, including for the Gifting business whose production is internalized).

Net cash flow used in investing activities of -€32.4 million reflects the outstanding amount payable to Adaware, Upclick and SodaPDF business vendors (paid on July 3, 2019(2)) and the acquisition of Personal Creations® assets on August 2, 2019 for €16.5 million. This last deal, which was partly loan-financed, generated cash flow from financing activities of €9.7 million.

(in € million)H1 2019-2020

(6 months)H1 2018-2019

(6 months)

Cash flow from operations 9.1 9.6

Changes in working capital 33.7 19.4

Tax and net Interest paid (5.7) (1.8)

Cash flow from operating activities 37.0 19.4

Cash flow from investing activities (32.4) (10.9)

Cash flow from financing activities 9.7 (2.7)

Change in cash 14.3 5.8

Opening cash position 75.4 65.7

Effects of exchange rate fluctuations on cash and cash equivalents 1.7 0.5

Closing cash position 91.4 72.0

24 —

1

— 1 Activity report for the half-year ended December 31, 2019Debt and cash

1.4.2 Financial position, borrowing conditions and financing structureClaranova’s financial position remains particularly healthy with cash of €91.4 million and financial debt of €63.9 million, resulting in negative net debt(1) of -€27.5 million as at December 31, 2019. The group’s financial position is therefore still extremely solid with an undiminished financing capacity securing further growth.

The Group’s financing structure is as follows:

(in € million) 12/31/2019 06/30/2019

Bank debt 14.2 2.7

Bonds 47.9 48.4

Other financial liabilities 0.5 0.8

Accrued interest 1.3 0.0

TOTAL FINANCIAL LIABILITIES(1) 63.9 51.9

Available unpledged cash 91.4 75.4

NET DEBT (27.5) (23.5)(1) Without rental expenses linked to IFRS 16 standard.

Claranova’s balance sheet increased from €176.1 million to €224.8 million between the end of June 2019 and the end of December 2019. This rise reflects the Group’s organic growth and the integration of the personalized gifts business Personal Creations® acquired on August 2, 2019. The impact of this acquisition on the Group’s balance sheet is described in Chapter 2 of this document.

The Group’s simplified balance sheet is as follows:

(in € million) 12/31/2019 06/30/2019

Goodwill 64.3 63.0

Other non-current assets 32.0 12.1

Current assets 37.1 25.5

Cash and cash equivalents 91.4 75.4

TOTAL ASSETS 224.8 176.1

Equity 67,1 63.6

Financial liabilities 63.9 51.9

Lease liabilities 10.2 -

Non-current liabilities 2.7 2.8

Current liabilities 80.9 57.8

TOTAL LIABILITIES 224.8 176.1

(1) Without rental expenses linked to IFRS 16 standard.


1 — Activity report for the half-year ended December 31, 2019Trends and objectives

1.5 Trendsandobjectives

MaintrendsaffectingtheGroup’sbusinesssincetheendofthefiscalyearIn H1 2019-2020, Claranova rolled out the strategic vision shared at the previous year-end in its various divisions: further geographical expansion of its mobile photo printing activities in Europe and penetration of the Gifting market with the acquisition of Personal Creations®, transition of its Software activities to a repeat revenue model based on subscription sales for its three proprietary brands (Adaware, SodaPDF and InPixio) and the gradual deployment of its IoT offering through its business partner network. The implementation of this strategy resulted in the extension of the FreePrints offering to new countries in Europe (Poland, Austria) and market share wins in its key countries (United States, United Kingdom, France, Italy, Ireland). The integration of the Gifting activities was successfully completed and their growth in the first

five months of business exceeded the Group’s expectations. The Software division maintained its efforts to speed up the transition of its activities to a repeat revenue business model offering greater visibility over revenue and profit generation. These efforts helped to significantly boost the percentage of repeat revenue, which already represented 42% of the division’s revenue at the end of December 2019, compared to 35% at the end of June 2019. Finally, the IoT division focused on expanding its reseller network and rolling out its temperature management solution in the catering, hospitality, health and agro-food sectors. The number of resellers doubled over the period, from less than 50 to close to 100 between late June and late December 2019.

Trendsidentifiedforthecurrentfiscalperiod,forecastsandoutlookClaranova will continue to bolster the position of its FreePrints mobile offering in Europe, while focusing its efforts on its key markets: United Kingdom, France, Italy and Ireland. This focus should strengthen its offering’s dominant position in the countries where its FreePrints app range already has strong brand equity, thus naturally limiting customer acquisition costs. By drawing on these key markets, the Group can pursue its targeted geographical coverage strategy, by penetrating new countries which, although less profitable in the short term, will fuel the future growth and profitability of the Printing & Gifting division.

After an initial phase to integrate the personalized gifts activities of Personal Creations® (team relocation, product portfolio strategic review, start of back office pooling, etc.), the division’s teams can focus on creating technical and commercial synergies between the historical printing activity and the new web-based Gifting business, which can benefit from the unique know-how acquired by the division in developing mobile commercial offerings. At the same time, photo printing activities will benefit from the experience of the Personal Creations® teams in managing production, enabling the Group to gradually climb up the value chain. Nevertheless, the pole Gifting is now affected by the global health crisis linked to the outbreak of Covid-19 since its plant located in Illinois is currently closed. At this stage, commercial activity continues and deliveries are only delayed.

Claranova will also further the transition of its Software activities to subscription-based proprietary software publishing. This transition should go on which should increase the share of recurring revenue from this activity in the coming months.

Finally, for its IoT activities, the Group will continue to focus its efforts on distributing the temperature management solutions and launching its new “No Dead ZoneTM” panic button technology announced in January to protect hotel employees. There is a great deal of interest in both number of new customers increases each month. Nevertheless, the current health crisis has resulted in a suspension of the installations of these solutions, in particular the technology of warning buttons.

On the date of publication of this report and taking into account uncertainties about the evolution of the health crisis we are going through at this time, it is still too early to determine the impacts of the Covid-19 outbreak on the Group’s outcomes, including its ambition displayed by 2023.

At the date of publication of this report and taking into account the uncertainties about the evolution of the current health crisis, it is still too early to determine the impacts of the Covid-19 epidemic on the Group’s results, including its ambition stated for 2023.

26 —

1

— 1 Activity report for the half-year ended December 31, 2019Principal transactions with related parties

1.6 Mainrisksanduncertainties

Apart from the impact of the Covid-19 epidemic presented below, the nature of the risks and uncertainties has not changed significantly compared to the one described in the universal registration document (annual report) as at 30 June 2019 in part 4.

RiskslinkedtotheCovid-19epidemicThe Covid-19 outbreak in China in December 2019 caused a major slowdown in the global economy. This situation is also likely to affect the health of employees and contractors, ongoing operations and projects, and the financial situation of the Group.

In this time of global crisis, our main challenge is to protect the health and safety of our employees, while ensuring the continuity of our operations. We have quickly privileged homeoffice work and provide to each of our employees the collaborative tools enabling working remotely in the best conditions and maintain the cohesion of our teams.

Even if the impacts are at this stage difficult to quantify, the main risk factors of this epidemic have been identified. Without be comprehensive, the risk factors identified are as follows:

• Health of our employees. Our Group’s greatest strength is the quality and motivation of our employees. The greatest risk identified to date lies in the loss of the living forces that make our value and could have impacts at all levels of the organization;

• Slower production of photo products managed by our subcontractors in Europe and the United States (in case of closure part or all of their plants);

• Disruption or shutdown of deliveries especially for our Printing & Gifting division;

• Change in purchasing behaviour with a refocusing of purchases of basic necessities.

For the moment, the impact of this epidemic on our activities seems fairly measured:

• Printing: no impact identified at this stage;

• Gifting: decision to close our plant in Illinois (USA) for a few weeks (This closure takes place in period of trough of activity therefore the impact should for the moment remain measured knowing that sales are not stopped, only deliveries are delayed);

• Software: Some specialized stores closed

• products sold in physical stores in France and Germany, with a relatively low impact at Group level. Online activity (majority) seems to continue;

• Iot: shutdown of No Dead Zone™ solution installations in hotels for the moment. This activity remains marginal at the glance of the Group’s revenue, the impacts are expected to be low.

At the date of publication of this report and taking into account the uncertainties on the evolution of the situation, it is still too early to determine the overall impact on the Group’s results, including its ambition displayed by 2023.

Despite the potentially significant economic impact of this major crisis, the group has solid fundamentals, as well as a good financial position as at December 31, 2019 with a cash level of €91.4 million and net debt negative at €27.5 million.

1.7 Principaltransactionswithrelatedparties

• The agreement governing the employment contract of the Chairman and CEO, Pierre Cesarini, in connection with his management of the Claranova Development entity, continued under normal conditions. It resulted in a variable compensation of €350,000 for fiscal year 2018-2019, as stated in the corporate governance report available in the 2018-2019 Universal Registration Document.

This variable compensation was approved by the General Shareholders’ Meeting of December 23, 2019 in its resolutions relating to the “ex post” vote under say on pay regulations.

The Board of Directors’ meeting of September 30, 2019 also validated the performance criteria triggering the Chairman and CEO’s variable compensation for fiscal year 2019-2020. They were also approved by the General Shareholders’ Meeting of December 23, 2019.

• The Board of Directors’ meeting of December 2, 2019 extended the agreement with Cloudy Bay, of which Mrs. Caroline Bouraine Le Bigot is a shareholder, that had been approved by the Board on June 9, 2019.

This agreement was entered into on July 1, 2019 with this company to conduct a digital and communication strategy consulting engagement for a renewable period of 6 months. As this engagement was scheduled to continue, the Board of Directors decided to extend this agreement for a final additional period of six months for €17,500 excluding tax as of January 1, 2020.


Condensed half-year consolidated financial statements for the half‑year ended December 31, 2019

Information is expressed in millions of euros, unless otherwise stated.

2.1 Statementofcomprehensiveincome

(in € million) NotesH1 2019-2020(1)

(6 months)H1 2018-2019

(6 months)

NET REVENUE Note 6 234.3 139.6

Raw materials and purchases of goods Note 7 (73.5) (39.4)

Other purchases and external expenses Note 8 (113.1) (64.0)

Taxes, fees and similar payments (0.3) (0.1)

Employee expenses Note 9 (26.8) (17.8)

Depreciation, amortization and provisions (net of reversals) Note 15 (3.0) (0.4)

Other recurring operating income and expenses (7.9) (7.1)

RECURRING OPERATING INCOME 9.7 10.7

Other operating income and expenses Note 10 (3.0) (4.2)

OPERATING INCOME 6.8 6.6

Net borrowing costs (1.8) (0.7)

Fair value remeasurement of financial instruments 0.3 (0.9)

Other financial expenses (0.8) (1.2)

Other financial income (0.1) 0.5

FINANCIAL INCOME Note 11 (2.3) (2.4)

Tax expense Note 12 (2.9) (2.7)

Share of profit or loss of associates - -

NET INCOME FROM CONTINUED OPERATIONS 1.5 1.5

Net income from discontinued operations - -

NET INCOME 1.5 1.5

Attributable to owners of the Company 1.2 1.6

Attributable to non-controlling interests 0.3 (0.0)

Earnings per share

Earnings per share, Group share (in €) 0.03 0.04

Earnings per share, Group share, after potential dilution (in €) 0.03 0.04

NET INCOME 1.5 1.5

Translation adjustments on foreign operations 2.3 0.0

TOTAL OTHER COMPREHENSIVE INCOME 2.3 0.0

COMPREHENSIVE INCOME 3.8 1.5

Attributable to owners of the Company 3.4 1.6

Attributable to non-controlling interests 0.4 (0.0)

All items of comprehensive income may be reclassified to income or loss, except for actuarial gains and losses on post-employment obligations.(1) The impacts of the adoption of IFRS 16 are described in Note 15.

2

28 —

1

— 2 Condensed half-year consolidated financial statements for the half-year ended December 31, 2019Statement of financial position

2.2 Statementoffinancialposition

(in € million) Notes 12/31/2019(1) 6/30/2019

Goodwill Note 13 64.3 63.0

Intangible assets Note 14 11.1 6.9

Property, plant and equipment Note 14 6.5 1.4

Right of use of Property, Plant and Equipment Note 15 10.2 -

Financial assets 0.7 0.6

Equity interests in associates - -

Other non-current receivables Note 17 2.5 2.4

Deferred tax assets 1.2 0.9

NON-CURRENT ASSETS 96.3 75.1

Financial assets – Less than one year 0.0 -

Work-in-progress Note 16 11.1 4.8

Trade receivables Note 17 14.2 11.6

Current tax assets 1.1 1.1

Other receivables Note 18 10.8 8.0

Cash and cash equivalents Note 19 91.4 75.4

CURRENT ASSETS 128.5 100.9

TOTAL ASSETS 224.8 176.1

(in € million) Notes 12/31/2019 6/30/2019

Share capital 39.4 39.4

Share premium and consolidated reserves 15.1 54.0

Net income ( Group share ) 1.2 (40.8)

EQUITY – SHARE OF EQUITY OWNERS OF THE PARENT COMPANY 55.8 52.6

Non-controlling interests 11.3 11.0

TOTAL EQUITY Note 20 67.1 63.6

Non-current lease liabilities Note 15 7.4 -

Non-current financial liabilities Note 21 57.1 49.1

Deferred tax liabilities 1.3 1.2

Non-current provisions 0.3 0.5

Other non-current liabilities 1.1 1.2

TOTAL NON CURRENT LIABILITIES 67.3 52.0

Current provisions 0.4 0.1

Current lease liabilities Note 15 2.8 -

Current financial liabilities Note 21 6.7 2.7

Trade payables Note 22 67.1 28.0

Current tax liabilities Note 9 1.1 3.0

Other current liabilities Note 23 12.2 26.7

CURRENT LIABILITIES 90.4 60.5

TOTAL LIABILITIES 224.8 176.1

(1) The impacts of IFRS 16 standard are described in Note 15.


2 — Condensed half-year consolidated financial statements for the half-year ended December 31, 2019Statement of cash flows

2.3 Statementofcashflows

(in € million) NotesH1 2019-2020(5)

(6 months)H1 2018-2019

(6 months)

Operating activities

Consolidated net income 1.5 1.5

Share of profit or loss of associates - -

Elimination of items with no impact on the cash position or not related to operations:

-

• Net depreciation, amortization and provisions (excluding current provisions) Notes 14 et 15 3.2 0.8

• Share-based payments (IFRS 2) and other restatements 0.0 3.5

• Net borrowing costs recognized(1) Notes 11 et 15 1.8 0.7

• Change in fair value of financial instruments(2) Note 11 (0.3) -

• Gains/(losses) on disposal 0.0 -

• Tax expense (including deferred taxes) recognized Note 12 2.9 2.7

• Other items (0.0) 0.4

Net cash flow from operating activities 9.1 9.6

Changes in working capital requirements 33.7 11.6

Taxes paid(4) Note 12 (5.3) (1.8)

Net interest paid (0.5) 0.1

Cash flow from operations 37.0 19.4

Investment activities

Acquisitions of intangible assets - (2.0)

Acquisitions of property, plant and equipment Notes 14 et 15 (0.7) (0.2)

Disposals of property, plant and equipment and intangible assets (0.0) 0.0

Acquisitions of financial assets (0.1) (0.0)

Disposals of financial assets 0.0 0.0

Impact of changes in scope(3) Notes 1 et 23 (31.6) (8.7)

Net cash flow from (used in) investing activities (32.4) (10.9)

Financing activities

Capital increase (0.2) 0.0

Dividends received from companies accounted for using the equity method - -

Share buyback 0.0 (1.9)

Proceeds from borrowings Note 21 11.8 (0.7)

Principal payments on borrowings Notes 21 et 15 (1.8) (0.1)

Other flows related to financing - -

Net cash flow from (used in) financing activities 9.7 (2.7)

Net cash from discontinued operations - -

Net increase (decrease) in cash 14.3 5.8

Opening cash position 75.4 65.7

Effects of exchange rate fluctuations on cash and cash equivalents 1.7 0.5

Closing cash position 91.4 72.0

(1) Including €1.3 million in accrued interest on bonds (ORNANE and Euro PP) at Claranova SE, €0.3 million in interest on the bank loan taken out by PlanetArt LLC to finance the acquisition of Personal Creations®, and €0.3 million in connection with the lease liability (IFRS 16).

(2) Including €0.3 million in change in fair value of ORNANE bonds at Claranova SE.(3) Acquisition of Personal Creations® for €16.5 million and settlement of the remaining deferred payment relating to the acquisition of the Adaware, SodaPDF and Upclick

businesses for €15.1 million (see Note 4 of the 2018-2019 URD).(4) The income tax expense relates to the Printing & Gifting division in the United Kingdom and the Adaware and SodaPDF businesses.(5) The impacts of the adoption of IFRS 16 are described in Note 15.

30 —

— 2 Condensed half-year consolidated financial statements for the half-year ended December 31, 2019Statement of changes in equity

2

2.4 Statementofchangesinequity

(in € million)Share

CapitalShare

premiumTranslation

reservesConsolidated

reservesNet

incomeGroup share

Non controlling

interests TotalAS OF JUNE 30, 2018 39.4 120.9 (2.7) (137.1) (7.9) 12.5 1.8 14.3Actuarial gains and losses on post-employment obligationsTranslation adjustmentsOther items of comprehensive incomeIncome for the period - 1.6 1.6 - 1.5Comprehensive income - 1.6 1.6 - 1.6Treasury shares (1.9) - (1.9) - (1.9)Share capital increase - - - - -Appropriation of retained earnings (7.9) 7.9 - - -Share-based payments 2.7 - 2.7 0.0 2.8Financial instruments for acquisitionAllocation between group share and NCIChanges in scopeTransaction between shareholdersDistribution of dividendsAS OF DEC 31, 2018 39.4 120.9 (2.7) (144.2) 1.6 14.9 1.8 16.7Actuarial gains and losses on post-employment obligations

- (0.1) - (0.1) - (0.1)

Translation adjustments 1.8 (0.1) - 1.7 0.0 1.7Other items of comprehensive income 1.8 (0.1) - 1.6 0.0 1.7Income for the period - - (42.4) (42.4) (0.6) (42.9)Comprehensive income 1.8 (0.1) (42.4) (40.8) (0.6) (41.2)Treasury shares - - - - - -Share capital increase 0.1 0.4 - - - 0.5 - 0.5Appropriation of retained earnings - - - - -Share-based payments - - - 0.0 -Financial instruments for acquisition 85.3 - 85.3 - 85.3Allocation between group share and NCI (7.7) - (7.7) 7.7 -Changes in scope - - - - -Transaction between shareholders 0.5 - 0.5 2.0 2.5Distribution of dividends - - - - -AS OF JUNE 30, 2019 39.4 121.3 (0.9) (66.4) (40.8) 52.6 11.0 63.6Impact of IFRS 16 application(1)

AS OF JULY 1, 2019 INCLUDING THE IMPACT OF IFRS 16 APPLICATION 39.4 121.3 (0.9) (66.4) (40.8) 52.6 11.0 63.6

Actuarial gains and losses on post-employment obligationsTranslation adjustments (0.1) 2.3 - 2.2 0.1 2.3Other items of comprehensive income (0.1) 2.3 - 2.2 0.1 2.3Income for the period - - 1.2 1.2 0.3 1.5Comprehensive income (0.1) 2.3 1.2 3.4 0.4 3.8Treasury shares - - - - - -Share capital increase - - - - - -Appropriation of retained earnings - (40.8) 40.8 - - -Share-based payments - 0.0 - 0.0 0.0 0.0Financial instruments for acquisition - - - - - -Allocation between group share and NCI - - - - - -Changes in scope - (0.2) - (0.2) (0.0) (0.2)Transaction between shareholdersDistribution of dividendsOther items - (0.1) - (0.1) - (0.1)AS OF DEC 31, 2019 39.4 121.3 (1.0) (105.1) 1.2 55.8 11.3 67.1(1) The impacts of the adoption of IFRS 16 are described in Note 15.


2 — Condensed half-year consolidated financial statements for the half-year ended December 31, 2019Notes to the condensed half-year consolidated financial statements

2.5 Notestothecondensedhalf-yearconsolidatedfinancial statements

Note 1 Highlights of the periodThe highlights of the period impacting the Group’s business and that of its subsidiaries are described in Section 1.3 of this Half-Year Financial Report. The other highlights are described below:

Claranova reverse stock split

Claranova performed a reverse stock split of one new share for 10 existing shares following its approval by shareholders at the Extraordinary General Shareholders’ Meeting of June 11, 2019. The par value of the Claranova share was increased in proportion to the exchange parity from €0.10 to €1.

The former Claranova shares (ISIN code: FR0004026714) were delisted from the Euronext market on July 31, 2019 and replaced by the new Claranova shares (ISIN code: FR0013426004) on August 1, 2019.

Following the reverse stock split, the Company’s share capital comprises 39,442,878 ordinary shares, including 242,125 treasury shares.

Acquisition by PlanetArt of FTD Companies Inc.’s personalized gifts business

On August 2, 2019, the Group’s PlanetArt division announced it had completed the acquisition of the assets of Personal Creations®, the personalized gifts business of the US group, FTD Companies, Inc.

This business was integrated into the Printing & Gifting division and enabled the Group to extend its activity to the buoyant personalized gifts market and incorporate manufacturing and logistics capacities.

This acquisition totaled €18.1 million, plus certain additional costs relating to the Chapter 11 bankruptcy proceedings filed by FTD Companies, Inc. and was financed by a €3 million revolving credit facility and a US$12 million 4-year loan secured on June 24, 2019.

Summaryofnotes

Note 1 Highlights of the period 32

Note 2 Scope of consolidation 34

Note 3 Accounting principles, rules and methods 38

Note 4 Main judgments and estimates underlying the preparation of the half-year financial statements 39

Note 5 Operating segments 39

Notes to the income statement 40

Note 6 Revenue 40

Note 7 Raw materials and purchases of goods 41

Note 8 Other purchases and external charges 41

Note 9 Employee expenses 41

Note 10 Other operating income and expenses 41

Note 11 Net financial income (expense) 42

Note 12 Tax expense and liabilities 42

Additional information on Balance Sheet assets 42

Note 13 Goodwill 42

Note 14 Property, plant and equipment and intangible assets 42

Note 15 Leases 42

Note 16 Inventories and work-in-progress 46

Note 17 Trade receivables 46

Note 18 Other non-current and current receivables 46

Note 19 Cash and cash equivalents 47

Additional information on Balance Sheet liabilities 47

Note 20 Share capital 47

Note 21 Current and non-current financial liabilities 49

Note 22 Trade payables 49

Note 23 Other current liabilities 49

Additional notes 50

Note 24 Risk and legal proceedings 50

Note 25 Subsequent events 50

32 —

— 2 Condensed half-year consolidated financial statements for the half-year ended December 31, 2019Notes to the condensed half-year consolidated financial statements

2

The Group analyzed this acquisition as a Business Combination under IFRS 3. The analysis of the fair value of the assets acquired and liabilities assumed and the purchase price allocation are ongoing. The recognition of this acquisition may change by the end of the year.

(1) EBITDA: earnings before the deduction of interest, taxes and duties, depreciation, amortization and share-based payments, including related social charges, and excluding the IFRS 16 impact.

Over the five months of activity from the purchase date to December 31, 2019, Personal Creations generated €63.9 million in revenue and EBITDA(1) of €1.0 million.

The impacts of this business on the consolidated income statement and balance sheet are highlighted in grey in the following notes.

Settlement of the remaining deferred payment relating to the acquisition of the Adaware, SodaPDF and Upclick businesses

The remaining deferred payment relating to the acquisition of the Adaware, SodaPDF and Upclick businesses was settled in early July 2019 for €15.1 million (Note 23).

Follow-up on the lack of quorum at the extraordinary Shareholders’ Meeting of December 23, 2019

Due to the impossibility of reaching a quorum, the company decided, in agreement with the managers and minorities concerned, to terminate all agreements concluded as part of the integration of Canadian subsidiaries by contributing and/or redeeming preferred shares.

Merger of Avanquest Canada Inc. and 1169260 B.C.Ltd

In order to simplify the Group’s legal structure, Avanquest Canada Inc. and 1169260 B.C.Ltd were merged on September 19, 2019. This merger did not affect the conduct of operations and had no financial impact.



Note 2 Scope of consolidation

Companies Country % control % interestConsolidation method

Claranova SE89/91, boulevard National

92257 La Garenne-Colombes Cedex

SIRET 329 764 625 00078

France Parent company

Adaware Holdings (7095040 Canada Inc.)7075 Place Robert-Joncas, Suite 142

Saint-Laurent, QC H4M 2Z2

Canada 100.00% 50,01%(1) Full consolidation

Adaware Software (7095058 Canada Inc.)7075 Place Robert-Joncas, Suite 142



Avanquest America Inc.7031 Koll Center Parkway 150

Pleasanton, CA 94566

United States 100.00% 100.00% Full consolidation

Avanquest America Holdings LLC23801 Calabasas Road, Suite 2005

Calabasas CA 91302-1547


Avanquest Canada Holding Inc.1750-1055 West Georgia Street

Vancouver, BC V6E 3P3

Canada 100.00% 100.00%(1) Full consolidation

Avanquest Canada Inc.1750-1055 West Georgia Street

Vancouver, BC V6E 3P3


Avanquest China LtdRoom 1201-HuiTong Building

569# East Jin Ling Road

Shanghai 200021

China 100.00% 92.27% Full consolidation

Avanquest Deutschland GmbHMoosacher Str.79

80809 München

Germany 100.00% 100.00%(1) Full consolidation

Avanquest Iberica SLCalle Peru 6, Edificios Twin Golf

28290 Las Matas, Madrid

Spain 100.00% 100.00%(1) Full consolidation

Avanquest North America LLC23801 Calabasas Road, Suite 2005


United States 100.00% 100.00%(1) Full consolidation

Avanquest Software SAS89/91, boulevard National

92257 La Garenne-Colombes Cedex

France 100.00% 100.00%(1) Full consolidation

Avanquest UK LtdInternational House, George Curl Way

Southampton – Hampshire SO18 2RZ

United Kingdom

100.00% 100.00%(1) Full consolidation

Claranova Development SA47 Côte d'Eich

L-1450 Luxembourg

Luxembourg 100.00% 100.00% Full consolidation

(1) Before conversion of the preferred shares.

34 —


2


EMME Deutschland GmbHMoosacher Str.79

80809 München

Germany 100.00% 100.00%(1) Full consolidation

FreePrints India Private LtdH-23A, Office No.204 S/F, Kamal Tower Near Sai Baba Mandir

Laxmi Nagar, DELHI Esta Delhi DL 110092

India 100.00% 92.27% Full consolidation

Lavasoft Software Ltd (C 45996)48/4 Amery Street,

Sliema, SLM 1701

Malta 100.00% 50,01%(1) Full consolidation

Lulu Software (7270356 Canada Inc.)7075 Place Robert-Joncas, Suite 142



Lulu Software Holding (7104189 Canada Inc.)7075 Place Robert-Joncas, Suite 142



myDevices Inc.3900 W Alameda Ave Suite 1200

Burbank, CA 91505


PC Helpsoft Labs Inc.300 – 848 Courtney Street

Victoria BC V8W 1C4

Canada 100.00% 100.00%(1) Full consolidation

Upclick 6785719 Canada Inc.7075 Place Robert-Joncas, Suite 142



Upclick Holding Ltd (C 46064)48/4 Amery Street,

Sliema, SLM 1701


Upclick Malta Ltd (C 42231)48/4 Amery Street,

Sliema, SLM 1701


UC Distribution (9213015 Canada Inc)7075 Place Robert-Joncas, Suite 142



UPC Distribution Malta Ltd (C 69518)48/4 Amery Street,

Sliema, SLM 1701


C.S. Support Network Ltd (C 42815)48/4 Amery Street,

Sliema, SLM 1701


PlanetArt LLC23801 Calabasas Road, Suite 2005



PlanetArt LtdGateway House Tollgate, Chandler's Ford, Eastleigh

Southampton – Hampshire SO53 3GT

United Kingdom

100.00% 92.27% Full consolidation





Proreach Software Holdings (C 45983)48/4 Amery Street,

Sliema, SLM 1701


Simple Link Network Ltd (C 81177)48/4 Amery Street,

Sliema, SLM 1701


6700845 Canada Inc.7075 Place Robert-Joncas, Suite 142










36 —


2

The Group’s legal structure as of December 31, 2019 is as follows:

CLARANOVA SE

myDevices Inc.

0,01%

Claranova Development SALuxembourg

100%

United States

62%

PlanetArt LLCUnited States

92%

Avanquest China LtdChina

100%

PlanetArt LtdUnited Kingdom

100%

FreePrints India Private LtdIndia

99,9%

Avanquest Software SASFrance

100%

Avanquest North America LLCUnited States

100%

GermanyAvanquest Deutschland GmbH

100%

GermanyEMME Deutschland GmbH

100%

CanadaAvanquest Canada Holding Inc.

100%

Avanquest UK LtdUnited Kingdom

100%

PC Helpsoft Labs Inc.Canada

100%

1169260 B.C. Ltd

Avanquest Iberica SLSpain

100%

Avanquest America Inc.United States

100%

Avanquest America Holdings LLCUnited States

100%

CanadaAvanquest Canada Inc.

100%

Adaware Holdings (7095040 Canada Inc.)

6700845 Canada Inc.Canada

Adaware Software(7095058 Canada Inc.)

Canada

Canada

Proreach Software HoldingsMalta

MaltaLavasoft Software Ltd

100%

100%

100%

72,4% 100%

27,6%

C.S. Support Network LtdMalta

Upclick Malta LtdMalta

UPC Distribution Malta LtdMalta

100%

100%

100%

Simple Link Network LtdMalta

(Percentage of control as of December 31, 2019)

100%


100%

Canada

Upclick6785719 Canada Inc.

100%


100%

Upclick Holding LtdMalta

100%

UC Distribution(9213015 Canada Inc.)

Canada

100% Canada

Lulu Software (7270356 Canada Inc.)

Lulu Software Holding(7104189 Canada Inc.)

Canada

27,5%

72,5%

100%

As outlined in Note 4 of the 2018-2019 URD, the entities held by Avanquest Canada Holding were fully consolidated following the adoption of IAS32 and IFRS9. A 59.99% share of the Software division’s profit or loss was allocated to minority interests.



Note 3 Accounting principles, rules and methodsThe Claranova group condensed consolidated financial statements for the half-year ended December 31, 2019 include Claranova SE and its subsidiaries (referred to collectively as “the Group”) and the Group’s share of associates and jointly-controlled companies.

Claranova is a european company listed on Euronext Paris. Its registered office is located at 89/91, boulevard National – 92250 La Garenne-Colombes, France.

The accounting principles used for the preparation of the consolidated financial statements are consistent with IFRS and their interpretations as adopted by the European Union on December 31, 2019 and available at: https://eur-lex.europa.eu/legal-content/FR/TXT/?uri=CELEX%3A02008R1126-20160101. These accounting policies are consistent with those used to prepare the annual consolidated financial statements for the year ended June 30, 2019, excluding the application of new standards and interpretations that are mandatory for periods beginning on or after January 1, 2019.

• IFRS 16, “Leases”

On January 13, 2016, the IASB published a new standard on the recognition of leases. This standard replaces IAS 17 and its interpretations. It results in most leases being recognized on the lessee’s balance sheet in accordance with a single lessee accounting model, comprising a “right-of-use asset” and a “lease liability” (the distinction between operating and finance leases is eliminated for lessees).

As a lessee, the Group primarily leases real estate, vehicles and computer hardware.

The Group transitioned to IFRS 16 using the simplified retrospective method. As of July 1, 2019, the lease liability was calculated by discounting future lease payments at rates reflecting the estimated residual lease terms. The corresponding right-of-use assets were recognized in the same amount as the lease liability. The first-time application of IFRS 16 did not therefore impact Group equity as of July 1, 2019.

In accordance with the options offered by IFRS 16, the Group applies the following exemptions and practical expedients:

• short-term leases and leases of low-value assets are not restated,

• analyses performed pursuant to IAS 17 and IFRIC 4 to determine whether a contract is a lease are maintained,

• leases with a residual term of less than 12 months are considered equivalent to short-term leases and are restated,

• the onerous nature of a lease is assessed in accordance with IAS 37.

Pursuant to the provisions of IFRS 16 on the simplified retrospective method, comparative information for fiscal year 2018-2019 is not restated.

The impacts and analyses are described in Note 15;

• IFRIC 23 “Uncertainty over income tax treatments”: this standard had no impact on the measurement of corporate income tax liabilities or their presentation in the Group financial statements;

• amendments to IAS 19-b “Plan amendment, curtailment or settlement”;

• IFRS 2015-2017 annual improvements;

• amendments to IFRS 9 “Financial Instruments – Prepayment Features with Negative Compensation”;

• amendments to IAS 28 “Long-term Interests in Associates and Joint Ventures”.

These new standards had no material impact on the annual financial statements, with the exception of IFRS 16 (see Note 15).

The following new standards and interpretations were not of mandatory application as of July 1, 2019 and were not adopted in advance as of December 31, 2019:

• amendments to IFRS 9, IFRS 7 and IAS 39 on the reform of interest rate indices;

• amendment to IFRS 3 “Definition of a business”, applicable to acquisitions completed as of January 1, 2020;

• amendments to IAS 1 and IAS 8 “Materiality”.

The Group is currently analyzing the impact and practical consequences of applying these standards.

The Group’s condensed consolidated financial statements for the half-year ended December 31, 2019, were drawn up under the responsibility of the Board of Directors on March 30, 2020.

Pursuant to IAS 34, only the major notes are presented below.

Figures are presented in millions of euros, with a decimal point. Rounding off to the closest tenth of a million euros can, in certain cases, result in immaterial differences in the totals and sub-totals shown in the tables.

38 —


2

Note 4 Main judgments and estimates underlying the preparation of the half-year financial statements

(1) EBITDA: earnings before the deduction of interest, taxes and duties, depreciation, amortization and share-based payments, including related social charges, and excluding îthe IFRS 16 impact.

The consolidated financial statements were prepared on a going concern basis.

In preparing the Group’s financial statements, management uses judgments, estimates, and assumptions that have an impact on the amounts recognized in the financial statements as assets, liabilities, income and expenses.

The main assumptions and estimates impacting the half-year financial statements primarily concerned:

• revenue recognition on certain IoT contracts. Pursuant to IFRS 15, the Group in line with the managers responsible for the contracts allocated the contract price to various performance obligations: platform delivery and revenue sharing. The revenue corresponding to the delivery of various platform versions is recognized on the date of delivery to the customer (date on which control is obtained), in accordance with the principles adopted in previous contracts of this type, and pursuant to sections B83 and B86 in Appendix B of IFRS 15. The shared revenue is recognized on a straight-line basis over the period covered by the services and limited to the minimum guaranteed amount, in accordance with the principles adopted in previous contracts of this type, and pursuant to sections 56-58, and section B18 of IFRS 15;

• measurement of rebates to be obtained from certain suppliers of Printing & Gifting division entities. Rebate rates are negotiated annually in February for the previous calendar year. The Group renewed the previous year’s assumptions;

• measurement of certain managers’ bonuses depending on the achievement of annual objectives;

• application of IFRS 16: management has adopted terms consistent with the expected use of the leased assets, taking into account IFRS IC interpretations of November 2019. The group adopted incremental borrowing rates when the interest rate implicit in the lease could not be identified, based on the lease’s residual term, the lease currency and the Group’s various borrowing rates.

Furthermore, in connection with the acquisition of Personal Creations® by PlanetArt LLC, the analysis of the useful life of fixtures and improvements that are not fully depreciated and which should be discontinued in the event of lease expiry is still to be finalized under the PPA (Purchase Price Allocation). See Note 1;

• generally, in connection with the acquisition of Personal Creations® by PlanetArt LLC, the detailed analysis of the valuation of certain balance sheet headings is still to be finalized, particularly assets and inventories. Regarding inventories and their possible impairment, the Group renewed the methods applied by the previous owner. These analyses will be enhanced when the Group has a greater perspective of these recently acquired activities. These assessments will be finalized in parallel to the purchase price allocation (PPA) analysis. See Note 1;

• the measurement of the recoverable amount of intangible assets;

• measurement and accounting treatment of myDevices share subscription warrants granted under an agreement with a commercial partner;

• application of US tax reforms and deferred tax in the United States. A review is currently being finalized by the US teams and their advisors. As of December 31, 2019, the Group maintained a prudent stance and did not capitalize the deferred taxes relating to loss carryforwards. The Group is also working on the integration of the Personal Creation® activities acquired in August 2019 by the Printing & Gifting division in the United States and any impacts of this acquisition on short-term profitability. These activities were part of a group in liquidation and in crisis, and as such profit visibility in a short term was poor.

• In France, after the partial transfer of assets in 2017-2018, Claranova SE filed an application to transfer €56.1 million in tax losses carried forward to its then new subsidiary, Avanquest Software SAS. The French tax authorities have not yet ruled on this request. As a prudent measure, the Group did not capitalize the deferred taxes relating to these losses as of December 31, 2019.

Note 5 Operating segmentsPursuant to IFRS 8, “Operating Segments”, the information presented is based on internal reporting used by Group Management to assess the performance of the various divisions. The benchmark division aggregate is EBITDA(16)(1). This aggregate is calculated by allocating corporate expenses to the various operating segments.

The Group’s three operating segments as of December 31, 2019 are:

• Printing & Gifting: The Printing & Gifting activities embody Claranova’s vision in the personalized digital printing sector: offer the simplest and most affordable solution to transform the most precious moments into a personalized object. As the Claranova group’s core business, the Printing & Gifting division combines a range of FreePrints mobile apps and E-commerce sites selling personalized gifts and photo products (SimplytoImpress.com, PhotoAffections.com, CanvasWorld.com, myCustomCase.com, PersonalCreations.com and Gifts.com) ;

• Software division: by offering simple and innovative software solutions which provide easy daily access to new technologies, Claranova is now a reference in BtC software publishing in three segments: Security, PDF and photo;

• IoT division: with its platform IoT myDevices, Claranova offers its technological expertise to manage connected devices for professionals. With its unique application platform, myDevices offers its customers an infinite range of IoT solutions to optimize the management of their assets, whatever the type of connected device and network, business sector or application field: cold chain management, alert management, space utilization, customer satisfaction monitoring, waste management, etc.



The breakdown by division is as follows:

(in € million)

Printing & Gifting Sofware IoT

H1 2019-2020 H1 2018-2019 H1 2019-2020 H1 2018-2019 H1 2019-2020 H1 2018-2019

Revenue 186.2 97.8 45,9 40.1 2.2 1.7

EBITDA(1) 10.1 6.6 3.7 6.1 (2.6) (1.9)

EBITDA/Revenue 5.4% 6.8% 8.0% 15.3% -118.1% -107.9%

(1) EBITDA = recurring operating income before impact of share based payment, including related social security expenses, and amortization expenses, without the impact of IFRS 16.

Data for the Group as a whole:

(in € million) H1 2019-2020 H1 2018-2019

Revenue 234.3 139.6

EBITDA(1) 11.2 10.9

Depreciation, amortization and provision (3.0) (0.4)

Share based payment and related social charges (0.0) 0.3

Rental charges on the right of use 1.6

RECURRING OPERATING INCOME 9.7 10.7

(1) EBITDA: earnings before the deduction of interest, taxes and duties, depreciation, amortization and share-based payments, including related social security expenses, and excluding the IFRS 16 impact.

In H1 2019-2020, Claranova posted EBITDA of €11.2 million, i.e. a 4.8% operating margin. The evolution in the profitability of the Group’s activities reflects the efforts undertaken in the three divisions: integration of Gifting activities and further geographical expansion

of Printing activities in Europe, accelerated transition of Software division activities to a subscription-based proprietary software sales model and the commercial ramp-up of IoT activities.

Notestotheincomestatement

Note 6 Revenue

Revenue for the first-half of 2019-2020

(in € million) H1 2019-2020 H1 2018-2019 ∆

Printing & Gifting 186.2 97.8 90%

Software 45.9 40.1 14%

IoT 2.2 1.7 28%

REVENUE 234.3 139.6 68%

The breakdown of revenue by division has changed to the advantage of personalized photo printing activities (Printing & Gifting), the Claranova group’s core business, following the integration of the new personalized gifts activities of Personal Creations®. The Printing & Gifting division now represents 79% of revenue, compared with

70% in the first-half of 2018-2019. Software publishing (Software) and Internet of Objects (IoT) activities represent 20% and 1% of Group revenue, respectively.

The impact of the acquisition of Personal Creations® over five months (acquisition on August 2, 2019) is €63.9 million. Personal Creations® generates revenue exclusively in the United States.

40 —


2

REVENUEBYGEOGRAPHICREGION(in € million)

152.0 M€ (��

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15.7 M€ (��

��9.6 M€ ��

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34.8 M€ ��

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11.8 M€ (��

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10.4 M€ (��

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2019 - 2020234.3 M€

70.3 M€ (��

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10.6 M€ (��

��9.0 M€ (��

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30.7 M€ (��

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9.6 M€ (��

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2018 - 2019139.6 M€

The Group still conducts most of its business abroad with 95% of activity outside France, compared to 93% in H1 2018-2019.

The H1 2018-2019 figures were restated for certain Software division contracts to take into account the location of the end customer. In the 2018-2019 Half-Year Financial Report, only the business partner’s location was used.

Note 7 Raw materials and purchases of goodsRestated for the impact of the acquisition of Personal Creations®, i.e. €24.5 million, the heading increases naturally by €10 million in line with the increase in business during the half-year. The Printing & Gifting division is the main contributor to this heading, representing 92%.

Note 8 Other purchases and external chargesThe impact of the acquisition of Personal Creations® is €32.6 million. Restated for this impact, the improvement in the heading for the Printing & Gifting division (advertising and transport costs) is in line with the activity’s constant growth. In the Software division, the rise in advertising and traffic acquisition costs is also in line with the activity’s growth.

The IFRS 16 impact was €1.6 million (see Note 15): mainly the cancellation of lease payments on property leases.

Note 9 Employee expensesThe impact of the acquisition of Personal Creations® is €4.7 million.

Excluding this impact, the increase in this heading is directly linked to the growth in all Group activities, particularly the Printing & Gifting division. Furthermore, Claranova strengthened its head office teams to support the Group’s development.

Note 10 Other operating income and expensesOther operating income and expenses represent a net expense of €3.0 million and primarily comprise:

• expenses and fees relating to the acquisition of Personal Creations® for €1.7 million;

• provision for departures for subsidiaries in the amount of €0.3 million;

• one-off fees relating to the planned acquisition of Software division minority interests for €0.9 million.



Note11 Net financial income (expense)Net borrowing costs (-€1.8 million) in H1 2019-2020 comprise the interest on ORNANE and Euro PP bonds for -€0.7 million and -€0.6 million, respectively, as well as interest on the loan taken out to purchase Personal Creations® for -€0.3 million and the IFRS 16 financial expenses on the restatement of lease expenses for -€0.3 million.

The fair-value remeasurement of financial instruments (€0.3 million) in H1 2019-2020 involves the ORNANE bonds. The ORNANE bonds comprise a debt component at amortized cost and a derivative component in accordance with IFRS 9. Fair value gains and losses

on the derivative component and the change in the amortized debt are recognized in financial expenses. The derivative component is estimated using pricing models (Cox Ross Rubinstein method). H1 2018-2019 was representative of the half-year change in the fair value of financial instruments issued in connection with the acquisition of Adaware, SodaPDF and Upclick for -€0.9 million.

Other financial expenses (-€0.8 million) and financial income (-€0.1 million) in H1 2019-2020 break down into net foreign exchange losses for -€0.7 million and the amortization of the costs relating to the issue of ORNANE and Euro PP bonds for -€0.2 million.

Note 12 Tax expense and liabilitiesThe -€2.9 million tax expense for the first half of 2019-2020 mainly concerns the Printing & Gifting and Software divisions. As of December 31, 2019, deferred tax assets and liabilities presented respective balances of €1.2 million and €1.1 million, mainly for the Software division. As stated in Note 4, the Group is finalizing the

analysis of the US tax reform impact and has maintained a prudent stance by not capitalizing deferred taxes for US entities. Pending the French tax authorities’ response on the transfer of loss carryforwards, the Group did not capitalize deferred taxes for French entities.

AdditionalinformationonBalanceSheetassets

Note 13 GoodwillGoodwill of €64.3 million relates to the acquisition of Adaware, SodaPDF and Upclick in July 2018. The change in the half-year was attributable to translation differences.

The Group has not identified any indication of impairment.

As stated in Note 1, the Group analyzed the acquisition of Personal Creations® as a Business Combination under IFRS 3. The analysis of the fair value of the assets acquired and liabilities assumed and the purchase price allocation (PPA) are ongoing. At this stage, no goodwill was recorded for the integration of Personal Creations.

The figures presented for this acquisition are therefore provisional, and their recognition may change by the end of the year.

Note14 Property, plant and equipment and intangible assetsThe impact of the acquisition of Personal Creations® is €14.3 million, including:

• Intangible assets for €4.7 million;

• Property, plant and equipment for €5 million;

• IFRS 16 net impact for €4.5 million (see Note 15).

Personal Creations® is a US online vendor of personalized gifts, whose business includes a logistics and manufacturing center.

At this stage, intangible assets make up the Personal Creations® brands, whose fair value is still to be analyzed with respect to the PPA (Purchase Price Allocation. See note 1).

The total IFRS 16 impact was €10.2 million, including a transition impact of €6.3 million as of July 1, 2019, period changes (including Personal Creations®) for €5.3 million and depreciation of rights-of-use assets over the half-year for -€1.4 million (Note 15). The IFRS 16 impact on the right-of-use assets did not result in any disbursement.

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Note 15 LeasesIFRS 16 “Leases” is applicable to fiscal years beginning on or after January 1, 2019. It consists in recognizing a right-of-use asset, and a lease liability corresponding to the sum of discounted future lease payments. On the income statement, the operating expense (lease expenses) is replaced by a depreciation charge and an interest expense. On the cash flow statement, interest impacts cash flows from operating activities, cash flows from investing activities are not impacted and the repayment of the principal portion of the lease liability impacts cash flows from financing activities.

The Group has identified 3 main lease categories:

• buildings for office and industrial use: office leases concern the group’s 3 divisions. Plant and storage leases mostly concern the Printing & Gifting division;

• transport vehicles;

• miscellaneous and IT equipment.

These last two categories are immaterial for the Group.

The Group completed the transition to IFRS 16 using the simplified retrospective method and the comparative period of June 30, 2019 was not restated.

As of July 1, 2019, the lease liability was calculated by discounting future lease payments at rates reflecting the estimated residual lease terms. The corresponding right-of-use assets were recognized in the same amount as the lease liability. The first-time application of IFRS 16 did not therefore impact Group equity as of July 1, 2019.

In accordance with the options offered by IFRS 16, the Group applies the following exemptions and practical expedients:

• short-term leases and leases of low-value assets are not restated;

• analyses performed pursuant to IAS 17 and IFRIC 4 to determine whether a contract is a lease are maintained;

• leases with a residual term of less than 12 months are considered equivalent to short-term leases and are restated;

• the onerous nature of a lease is assessed in accordance with IAS 37.

Pursuant to the provisions of IFRS 16 on the modified retrospective approach, comparative information for fiscal year 2018-2019 is not restated.

In November 2019, the IFRS IC clarified certain points of the standard, including the assessment of lease terms and the useful lives of non-removable leasehold improvements. This committee clarified the term of a lease, by rejecting the legal approach consisting in only taking into account the terms and conditions of the lease between the lessor and the lessee to determine the period during which the lease is enforceable. The lease’s reasonably certain term should be assessed to determine the lease liability and the value of the right-of-use asset.

This clarification partly explains the difference between the off-balance sheet commitments as stated in the 2018-2019 URD, and the transition-date lease liability, as shown below.

On the date of preparation of these half-year consolidated financial statements, the accounting positions and implementation conditions for these matters were as follows:

• Regarding lease term assessment, the Group adopted in a certain number of cases the legal approach, considering that it corresponded to the lease’s reasonably certain term in the absence of other information indicating a different term. The term adopted was defined for each lease. It also took into account the laws and practices specific to each country.

• Furthermore, in connection with the acquisition of Personal Creations® by PlanetArt LLC, the analysis of the useful life of fixtures and improvements that are not fully depreciated and which should be discontinued in the event of lease expiry is still to be finalized under the PPA (Purchase Price Allocation. See note 1). The useful lives of leasehold improvements in the leased premises mainly concern the acquired activities of Personal Creations®. As stated in Note 4, these assets are currently being analyzed.

• As stated in Note 4, studies on the capitalization of deferred taxes in the United States and France are being analyzed. At this stage, the Group did not apply deferred tax to IFRS 16 restatements.

As of December 31, 2019:

• the recognition of right-of-use assets increased non-current assets by €10.2 million;

• the recognition of lease liabilities increased total liabilities by €10.2 million, including €7.4 million maturing in over one year and €2.8 million maturing in less than one year.

• The impacts on the income statement were as follows:

(in € million)H1 2019-2020

(6 months)

Cancellation of rents expenses 1.6

Amortization of right of use (1.4)

Financial interests related to the rental debts for the 6 month period as of December 31, 2019 (0.3)

TOTAL IMPACT (0.2)



Impacts on the statement of financial position

(in € million)Historical data

06/30/2019Impact IFRS 16

applicationRetraited data

07/01/2019

Tangible assets 1.4 1.4

Right of use 6.3 6.3

Deferred tax assets 0.9 0.9

NON-CURRENT ASSETS 75.1 6.3 81.4

CURRENT ASSETS 100.9 100.9

TOTAL ASSETS 176.1 6.3 182.4

TOTAL EQUITY 63.6 63.6

Non-current fiancial liabilities 49.1 49.1

Non-current lease debt 6.3 6.3

Deferred Tax Liabilitiies 1.2 1.2

TOTAL NON-CURRENT LIABILITIES 52.0 6.3 58.3

Current Provisions 0.1 0.1

Current financial liabilities 2.7 2.7

Current lease debt - 0

Current tax liabilities 3.0 3.0

CURRENT LIABILITIES 60.5 - 60.5

TOTAL LIABILITIES 176.1 6.3 182.4

Reconciliation between the operating lease off-balance sheet commitments presented under IAS 17 in URD 2018-2019 and the lease liabilities recognized under IFRS 16 as of July 1, 2019

(in € million)

Off-balance sheet financial debts as of June 30, 2019 (URD 2018-2019) 6.5

Lease terminated as of July 1, 2019 -

Low value and less than 12 months -

Rents difference 0.1

Lease term difference 0.5

Discounting impact (0.9)

Currency translation impact 0.1

TOTAL LEASE DEBTS ON THE DATE OF TRANSITION 6.3

Lease liabilities

As of December 31, 2019, lease liabilities totaled €10.2 million, including €7.4 million in non-current lease liabilities and €2.8 million in current lease liabilities.

The following table breaks down the timelines of lease liabilities:

(in € million) As of 12/31/2019

Terms of lease debts Less than one year From one to five years More than five years Total

Building 2.7 7.1 0.2 10.1

Vehicles 0.1 0.1 0.0 0.2

Other assets 0.0 0.0 0.0

TOTAL LEASE DEBTS 2.8 7.2 0.2 10.2

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2

The lease liabilities correspond to the present value of the remaining lease payments. The Group only takes into account the lease component in the lease liability measurement. For certain classes of assets which have leases including service and lease components, the Group may be required to recognize a single lease component (no distinction between the service and the lease component). This applies to vehicle leases.

For each lease, the discount rate used is determined using the government bond yield in the lessee’s country, according to the lease’s maturity and currency as well as the local borrowing rates that the subsidiary has obtained for its financing.

The weighted average incremental borrowing rate as of July 1, 2019 for all lease liabilities is 6.44% based on the residual term of the leases on the transition date. It was impacted by the ORNANE (annual nominal rate of 5%) and Euro PP (annual rate of 6%) bond rates.

The lease liability is excluded from the net financial debt definition.

Personal Creations lease liabilities totaled €4.5 million as of 12/31/2019.

The financial expenses relating to the lease totaled €0.3 million as of December 31, 2019.

Right-of-use asset

(in € million)

Net book value of right of use on the

transition date (07/01/2019)

Acquisitions of right of use

Amortization of right of use

Currency translation

impactNet as of

12/31/2019

Lease by asset:

Building 6.1 5.3 (1.4) 0.0 10.0

Vehicles 0.1 0.1 (0.0) 0.0 0.2

Other assets 0.0 - (0.0) - 0.0

TOTAL OF LEASE CONTRACTS RESTATED ACCORDING TO IFRS 16 6.3 5.3 (1.4) 0.0 10.2

The increase in the right-of-use assets mainly concerns Personal Creations®.

Lease expenses

As of July 1, 2019, lease expenses comprise payments for leases, the term of which is less than or equal to 12 months, leases for which the value of the asset when new is less than $5,000 (as recommended

by the standard) and lease payments not taken into account in the lease liability measurement (e.g. coworking offices not specific to the Group’s entities).

(in € million)H1 2019-2020

(6 months)

Lease less than 12 months (0.0)

Low value lease (0.1)

Services (0.2)

Co-working office (0.2)

Rents for shared parking (0.2)

Others (0.0)

TOTAL OF LEASE RENTS NOT RESTATED ACCORDING TO IFRS 16 (0.7)



Cash Flow Statement impact

(in € million)H1 2019-2020

(6 months)

OPERATINGACTIVITIES

Consolidated net income (0.2)

Elimination of items with no impact on the cash position or not related to operations:

• Net depreciation, amortization and provisions 'excluding current provisions) 1.4

• Net borrowing costs recognized 0.3

Cash flow from operations 1.5

Changes in working capital requirements 0.1

Net interest paid (0.3)

Net cash flow from (used in) operating activities (0.2)

INVESTINGACTIVITIES

Net cash flow from (used in) investing activities

FINANCINGACTIVITIES

Principal payments on borrowings (1.4)

Net cash flow from (used in) financing activities (1.4)

Net increase (decrease) in cash (0.0)

Note 16 Inventories and work-in-progressPersonal Creations® inventories totals €6.2 millions as of December 31, 2019. Restated for the impact of Personal Creations®, inventories are stable.

Note 17 Trade receivablesThe increase in trade receivables is equally attributable to both the Printing & Gifting and Software divisions due to the improvement in these two businesses. The impact of the Personal Creations® acquisition on the trade receivables balance as of December 31, 2019 is around €0.5 million.

Note 18 Other non-current and current receivablesOther non-current receivables reflect the prepaid expenses (at more than one year) of €2.5 million relating to the Adaware business, comparable to the June 30, 2019 amount (€2.2 million).

The increase in other current receivables is mainly due to:

• the acquisition of Personal Creations® activities for €3.4 million in prepaid expenses (mostly advertising costs);

• a €0.3 million increase in the Claranova VAT credit compared with June 30, 2019;

• contract assets relating to the restatement of deferred subscriptions for Upclick activities in the amount of €0.3 million.

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Note 19 Cash and cash equivalentsCash (€91.4 million as of December 31, 2019 compared to €75.4 million as of June 30, 2019) is made up of bank accounts and cash investments, the liquidation value of which is identical to that shown in the ledgers.

Claranova ended H1 2019-2020 with cash of €91.4 million as of December 31, 2019, i.e. a €14.3 million increase compared to June 30, 2019. This increase is backed by cash flow from operating activities of €37.0 million, including €9.1 million in cash flow from operations and €33.7 million in changes in working capital requirement.

Net cash flow of -€32.4 million used in investing activities breaks down as follows:

• acquisition of Personal Creations® assets on August 2, 2019 for €16.5 million;

• settlement of the remaining deferred payment relating to the acquisition of the Adaware, SodaPDF and Upclick businesses for €15.1 million (see Note 4 of the 2018-2019 URD) in early July 2019.

The €10.8 million loan contracted to partly finance the acquisition of Personal Creations® impact net cash flow from financing activities which total €9.7 million.

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Note 20 Share capital

Share capital

As of December 31, 2019, Claranova SE’s share capital comprises 39,442,878 shares of the same class, with a par value of €1 each.

The share capital has changed as follows since the previous fiscal year end:

Units Amount (in €)

As of June 30, 2019 394,428,788 39,442,879

Reverse stock split(1) 0 0

AS OF DECEMBER 31, 2019 39,442,878 39,442,878

(1) Reverse stock split: see 2.5, Note 1.



The number of treasury shares held has changed as follows:


Units

As of June 30, 2019 2,421,251

Reverse stock split(1) 0

AS OF DECEMBER 31, 2019 242,125


Exercise of Claranova SE stock options

The General Shareholders’ Meeting of November 30, 2015 authorized the issue of 1,876,592 stock options*(1). 44,069 of these stock options(1) have not been exercised, with no movements during the period.

Claranova SE share subscription warrants plan of June 7, 2017

On June 7, 2017, Claranova announced the grant of 375,220 Claranova SE share subscription warrants(1).

As of December 31, 2019, 375,220 subscription warrants had vested. No warrants have been exercised. There have been no movements since June 30, 2019.

Claranova SE share subscription warrants plan of December 24, 2018

On December 13, 2018, Claranova announced the grant of a maximum of 393,613 Claranova share subscription warrants, conferring entitlement to 393,613 new ordinary shares(1) to members of the Board of Directors, certain consultants and the management

team. As of December 31, 2019, 309,777 share subscription warrants were subscribed and 24,000 warrants were converted into new ordinary shares.

There have been no movements since June 30, 2019.

Claranova Net Share-Settled Bonds Convertible into New Shares and/or Exchangeable for Existing Shares (ORNANE)

On June 19, 2018, Claranova issued 26,363,636 Net Share-Settled Bonds Convertible into New Shares and/or Exchangeable for Existing Shares (ORNANE) (see Note 23.1 to the 2017-2018 consolidated financial statements for more information on these bonds). As of

December 31, 2019, no ORNANE bonds had been converted early. As of the date of this document, the Company has not decided the bond redemption method.

As of December 31, 2019, Claranova held 455,000 ORNANE bonds. There have been no movements since June 30, 2019.

Other securities conferring access to share capital

Assuming all the rights attached to stock options and share subscription warrants become exercisable and are exercised, Claranova’s share capital would increase by €705,067.

This number does not take into account the June 2018 ORNANE bond issue, as the Company had not yet decided the method of redeeming these bonds at the date of this document. These ORNANE bonds mature on July 1, 2023.

The share capital would therefore increase from €39,442,878 to €40,147,945, an increase of 1.79%, spread over time as follows:

• stock options: may be exercised by beneficiaries until November 2026;

• June 7, 2017 share subscription warrants: must be subscribed and may be exercised by beneficiaries until November 2027;

• December 24, 2018 share subscription warrants: may be exercised by beneficiaries until December 2020.

48 —


2

12/31/2019

Number of shares existing as of December 31, 2019(1) 39,442,878

Treasury shares 242,125

Average number of shares oustanding 39,200,753

Dilutive effect of stock options 44,069

Dilutive effect of warrants 660,998

Theorical weighted average number of shares 39,905,820

(1) Following the reverse stock split: see 2.5 Note 1.

Note 21 Current and non-current financial liabilitiesAs of December 31, 2019, total Group debt amounts to €63.9 million, compared to €51.9 million as of June 30, 2019.

It mainly comprises bonds existing as of June 30, 2019: ORNANE (for €28.1 million) and Euro PP (for €19.7 million) bonds as well as the new loan of €14.2 million taken out by the subsidiary PlanetArt LLC to finance the acquisition of Personal Creations®.

Financial liability maturity dates are as follows:

(in € million) TotalLess than one year

From one to five years

More than five years

Bonds 47.1 - 47.1 -

Derivative component of Convertible bonds 0.7 - 0.7 -

Borrowings 14.2 5.3 8.8 -

Credit facilities - - - -

Other financial liabilities 0.5 0.1 0.4 -

Bank account overdrafts 0.0 - - -

Financial instruments – Liabilities - - - -

Accrued interest not yet due 1.3 1.3 - -

TOTAL 63.9 6.7 57.1 -

Note 22 Trade payablesThe impact of the acquisition of Personal Creations® on trade payables totals €14.5 million.

Excluding this impact, the change in the heading is primarily due to the major increase in the Printing & Gifting division’s business for €22.5 million in line with this division’s highly seasonal nature on websites. Its business peaked in November and December combined with substantial steady growth in this activity.

Note 23 Other current liabilitiesOther current liabilities decline by €14.5 million, mainly due to the settlement of the remaining deferred payment relating to the acquisition of the Adaware, SodaPDF and Upclick businesses for €15.1 million (see Note 4 of the 2018-2019 URD).

The impact of the acquisition of Personal Creations® on other current liabilities totaled €1.5 million. This concerns employee liabilities and liabilities relating to discount coupons.



Additionalnotes

Note 24 Risk and legal proceedingsRisks, as described in section 24.4 of Chapter 2 of the Registration Document for the fiscal year ended June 30, 2019, remain unchanged. They are supplemented by section 1.6, Chapter 1 of this document.

The Avanquest Software SAS entity underwent a tax audit for the period from June 1, 2017 (date of its creation) to June 30, 2019. The Group did not provide for any liability as it believes there is no significant risk.

Note 25 Subsequent events

Change in the name of an entity in Canada

The entity 9026851 Canada Inc changed its name on February 12, 2020. Its corporate name is now Avanquest Canada Management.

Covid-19 epidemic: Group activities protected

As the date of publication of this report, the Printing & Gifting Division and the Software Division, which represents more than 98% of the revenue of Claranova, do not see any significant impact on their activities. Being essentially online activities, they are not exposed to their customers’ travel limitations. To this stage, containment and production shutdown measures taken in the main affected countries, have relatively little impact on the activities of these divisions, or their supplies.

The Group made the decision to close the plant of Personal Creations® based in Illinois for several weeks. To date, this temporary shutdown has had little impact on Personal Creations® orders that continue and are historically weaker at this time of year.

On the Software pole, the closure of specialized stores for a limited number of products sold in physical stores in France and in Germany has a relatively low impact at the Group level. The main online activity seems to be continuing.

The Internet of Things (Iot) that could be partially sensitive to actions taken to slow the spread of Covid-19, myDevices Connected Objects Management Software Platform dependent on the production and deployment of these objects, nevertheless represents a non-significant risk since the activity represents less than 1.3% of the Group’s annual revenue.

Claranova has solid fundamentals with cash more than €90 million at December 31, 2019.

Furthermore, Claranova has taken the necessary measures to prevent the epidemic and put in place health protection measures in all the Group’s sites. Distance work has been generalized and the Group has made available to its employees all the tools necessary for its proper functioning. All travel and meetings are cancelled and replaced by video conferences.

The Group is fully mobilized to ensure the safety of its employees and the continuity of its services.

50 —

Statutory Auditors’ Review Report on the half‑year financial information

This is a free translation into English of the auditors’ report issued in the French language and is provided solely for the convenience of English speaking readers.

This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.

To the Shareholders,

In compliance with the assignment entrusted to us by your general shareholders’ meetings and in accordance with Article L. 451-1-2 III of the French Monetary and Financial Code (Code monétaire et financier), we hereby report to you on:

• the limited review of the accompanying condensed half-year consolidated financial statements of Claranova for the period from July 1, 2019 to December 31, 2019;

• the verification of the information contained in the half-year activity report.

These condensed half-year consolidated financial statements are the responsibility of the Board of Directors on March 30, 2019, in the specific evolving context of covid-19 health crisis. Our role is to express a conclusion on these financial statements based on our review.

1. Conclusion on the financial statementsWe conducted our limited review in accordance with professional standards applicable in France. A limited review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with professional standards applicable in France and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.

Based on our limited review, nothing has come to our attention that causes us to believe that the accompanying condensed half-year consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34, Interim Financial Reporting, as adopted by the European Union.

Without qualifying the aforementioned conclusion, we draw your attention to Note 15 “Leases” in Chapter 2 of the condensed half-year consolidated financial statements for the period ended December 31, 2019 which describes the terms and conditions and criteria used for the adoption of IFRS 16 on leases.

2. Specific verificationWe have also verified the information presented in the half-year activity report commenting the condensed half-year consolidated financial statements subject to our limited review, established under the responsibility of your Board of Directors on March 30, 2020.

We have no comments to make on its fair presentation and its consistency with the condensed half-year consolidated financial statements.

Paris and Paris-La Défense, March 31, 2020

The Statutory Auditors

APLITEC ERNST & YOUNG Audit

Stéphane LAMBERT Jean-Christophe Pernet

3

— 51CLARANOVA - HALF YEAR FINANCIAL STATEMENTS, AS OF DECEMBER 31,2019

Statement by the person responsible for the half‑year financial report

I hereby certify that, to the best of my knowledge, the condensed consolidated financial statements for the half-year ended December 31, 2019, have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and results of the Company and all consolidated companies, and that the appended Half-Year Financial Report provides a fair review of the major events that occurred during the first six months of the fiscal year, their impact on the financial statements, the main transactions between related parties, as well as a description of the main risks and uncertainties concerning the remaining six months of the fiscal year.

La Garenne-Colombes, March 31, 2020

Pierre Cesarini

Chairman of the Board of Directors

4

52 —

GLO

SSA

RY

CLARANOVA - HALF YEAR FINANCIAL STATEMENTS, AS OF DECEMBER 31, 201953

Glossary

Ajusted Net Income:

Is a non-GAAP aggregate used to measure the operating performance of the businesses. Adjusted net income corresponds to Net income before the impact of share-based payments, including related social security contribution, before Other operating income and expenses, before fair value remeasurement of financial instruments and excluding IFRS 16 impact on the recognition of leases.

AMF:

The French Securities Regulator (AMF – Autorité des marchés financiers) is an independent public authority which has the status of a financially independent legal entity, tasked with protecting savings invested in financial instruments, informing investors and ensuring the proper functioning of the financial instruments markets in France.

Ad blocker:

Software that allows users to block advertisements on visited websites.

Bond issue type Euro PP:

Euro Private Placement, a private financing transaction between a listed or unlisted company and a limited number of institutional investors through the issuance of euro-denominated bonds.

Brand Equity :

Added value that a brand brings to a product (loyalty, awareness, perceived quality).

BtC:

Business-to-Consumer, qualifies a commercial activity between a company and a consumer.

Claranova SE:

A European SE company or European undertaking is a company which may carry on its activities in all the Member States of the European Union in a single legal form common to all these States, as defined by Community law.

Cloud:

(or cloud computing) is an IT infrastructure in which computing power and storage are managed by remote servers to which users connect via a secure Internet link and a physical access point (desktop, smartphone, tablet, connected object).

Covenant:

Clause incorporated into a contract that may result in repayment a loan if the objectives set out in the loan are not met. These objectives may be in the form of financial ratios, providing financial statements or guaranteeing ability to repay.

Discounted Cash Flow:

The Discounted Cash Flow (DCF) method updates future revenues to estimate the value of the business.

Discount rate:

This is the rate used to calculate the present value of a future flowEuronext Paris – Eurolist Compartment B:

Euronext Paris – Eurolist Compartment B:

Euronext Paris is a regulated market that hosts the trading of shares, bonds, warrants and trackers. It is divided into four compartments according to the market capitalisation of the issuer and which fall under different admission and trading rules. Compartment B: companies valued between €150 million and €1 billion.

EBITDA:

EBITDA (Earnings before interest, taxes, depreciation and amortization) is a non-GAAP aggregate used to measure the operating performance of the businesses. It is equal to Recurring Operating Income before the impact of share-based payments payments, including related social security contribution, and depreciation and amortization , and the impact of IFRS 16 on the accounting for lease contracts.

Fintech:

The term Fintech combines the terms “finance” and “technology” and refers to innovative companies developing services and products that use technology to rethink financial and banking services. Fintech is also used to describe the economic sector encompassing these innovative companies.

IAS (International Accounting Standards):

Abbreviation for International Accounting Standards. IAS was the former name given to international accounting standards. New international standards issued from April 1, 2001 are known as IFRS.

IFRIC:

International Financial Reporting Interpretations Committee (IFRIC) develops interpretations of IFRS International Accounting Standards to ensure consistent application, clarification and practical solutions.

IFRS (International Financial Reporting Standards):

Abbreviation for International Financial Reporting Standards. IFRS are the international standards used to report on financial information, which seek to standardize the presentation of accounting data worldwide.

IoT:

Internet of Things, global infrastructure for the Information Society, which provides advanced services by interconnecting objects (physical or virtual) through existing or evolving interoperable information and communication technologies (definition of the International Telecommunication Union).

ISIN:

International Securities Identification Numbers corresponds to the identification code of a stock exchange value.

Method Cox Ross Rubinstein:

The Cox, Ross and Rubinstein (CRR) model is a model for evaluating options.

Mobile app:

Software package for mobile phones.

54 —

No Dead Zone panic button:

Multi-network technology for hotel chains – emergency communication solution to protect personnel of any harassment and to secure them as soon as possible

Operating income:

Income calculated on the basis of recurring operating income less other non-current operating income and expenses.

Organic growth:

Business development of a group (usually by measuring revenue growth) achieved by acquiring new customers, as opposed to an acquisitions process, which results in changes to the Company’s scope of consolidation.

ORNANE:

(Obligation Remboursable en Numéraire et en Actions Nouvelles et Existantes), Redeemable Bond in Cash and in New and Existing Shares, means a form of convertible bond offering its holder the possibility of being redeemed in cash or in shares.

PDF:

Portable Document Format. Electronic document exchange format that allows the transmission of documents containing text, graphics, images and color.

Preferred Shares:

Preference shares are securities which differs from ordinary shares by the prerogatives attached to them. Such actions may confer on their holders special rights at several levels, in particular as regards the right to vote and the right to benefit.

Pricing models:

Rate of return expected by the market for a financial asset based on its systematic risk.

Recurring operating income:

Income calculated on the basis of revenue plus other recurring operating income, less current operating expenses.

Related Parties:

For the purposes of IFRS, for an enterprise: any shareholder legal entity exercising control or influence on the company, the shareholders having a right to significant voting, associated or co-controlled enterprises, any company with a common officer/agent with the company, the members of the supervisory and management bodies.

Smartphone:

Mobile phone with advanced features similar to those of a computer (internet browsing, video playback, office tools, etc.)

Software:

All programs, processes and instructions for computer hardware to execute.

Stock option:

Right granted to an employee enabling him/her to buy shares from his/her company at a predetermined price (strike price) that includes a discount compared to the stock market price at the time of the grant and within a specific time frame.

Stock warrants:

A financial security that allows you to subscribe to a share for a specified period of time, at a fixed price in advance.

White Label:

Service or product designed by a company, as other companies take over and sell under their own brand.

Working capital:

The amount required for the business to pay its current expenses while waiting to receive the payment due from its customers.


Immeuble Vision Défense 89-91, boulevard NationalF-92257 La Garenne-Colombes Cedex - France

+33 1 41 27 19 [email protected]

European company with a Board of Directors and a share capital of €39,442,878 Nanterre Trade and Companies Register B 329 764 625 Activity Code 7010Z Intracommunity VAT No. FR 05 329 764 625

Documents

HALF-YEAR FINANCIAL REPORT · 2020-04-07 · personalized digital printing activities continue to post strong annual growth, with revenue up tenfold in five years. PRINTING & GIFTING