Easyvista 29Th November 2017 a Bet on Renewable Licences TMT Fair Value EUR40 (Price EUR29.60) COVERAGE INITIATED

CORPORATE RESEARCH EasyVista 29th November 2017 A bet on renewable licences TMT Fair Value EUR40 (price EUR29.60) COVERAGE INITIATED

Bloomberg ALSTA FP We are initiating coverage of EasyVista with a DCF-derived Fair Value Reuters ALEZV.PA of EUR40. After years of investment spending, we consider that the 12-month High / Low (EUR) 30.2 / 24.0 software firm could become profitable as of 2018 thanks to the roll-out Market capitalisation (EURm) 49 Enterprise Value (BG estimates EURm) 53 of a new renewable licence model. Avg. 6m daily volume ('000 shares) 0.10 Free Float 21.0%  A huge replacement market. EasyVista publishes software that manages 3y EPS CAGR NM Gearing (12/16) NM company IT service desks. Its offer based on mobile access and a codeless Dividend yield (12/17e) NM architecture is an alternative to ServiceNow. Its addressable market totals more than USD3bn and is set to be fuelled by the wide scale replacement YE December 12/16 12/17e 12/18e 12/19e Revenue (EURm) 22.90 27.97 37.60 44.15 of obsolete solutions. EBITA EURm) -1.7 -2.4 2.5 4.8 Op.Margin (%) -7.6 -8.5 6.8 10.8  The switch to renewable licences. Contract catering and services group Diluted EPS (EUR) -0.89 -2.04 1.13 2.19 EV/Sales 2.24x 1.88x 1.33x 1.00x Elior was the first client to sign up to this mode, which consists of EV/EBITDA NS NS 15.7x 8.2x separating the cost associated with using the software in SaaS mode, and EV/EBITA NS NS 19.7x 9.3x the cost of managing the associated IT infrastructure. While this sales P/E NS NS 26.2x 13.5x ROCE NM NM NM NM model, which is to be extended to the entire group in 2018, changes

nothing in terms of the reception of licence payments, it enables recognition of 80% of revenue from the contract when it is signed. 35.6 33.6  Margins could take off in 2018. EasyVista has not been profitable since 31.6 2006 due to the switch to the SaaS model and investment spending in the 29.6 US. However, with the EUR4-5m in revenue that the renewable licences 27.6

25.6 could generate in 2018 with no additional expenditure, we estimate that

23.6 EBIT margin could reach around 7% in 2018 and approach 13% in 2020.

21.6 27/05/16 27/08/16 27/11/16 27/02/17 27/05/17 27/08/17 27/11/17 EASYVISTA SXX EUROPE 600 TECHNOLOGY  Attractively valued. Our DCF-derived Fair Value of EUR40 is based on the renewable licence model. 2019e EV/EBIT of 9.3x represents a discount of 45-50% relative to the average of European software firms.

Analyst: Sector Analyst Team: Gregory Ramirez Richard-Maxime Beaudoux 33(0) 1 56 68 75 91 Thomas Coudry [email protected] Frédéric Yoboué

This Report has been sent to you for marketing purposes. It is non-independent research within the meaning of the FSA rules. It is not being held out as an objective or independent explanation of the matters contained in it and should not be treated as such. It has not been prepared in accordance with the legal requirements designed to promote the independence of investment research. Accordingly, the Firm is not subject to any prohibition on dealing ahead of the dissemination of investment research. Please see the section headed “Important information” on the back cover.

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EasyVista

Simplified Profit & Loss Account 2020e 2014 2015 2016 2017e 2018e 2019e (EURm) Revenues 19.4 20.2 22.9 28.0 37.6 44.2 50.9 Change (%) 31.7% 4.2% 13.5% 22.1% 34.4% 17.4% 15.2% lfl change (%) 32.0% 4.0% 14.0% 17.0% 32.0% 17.4% 15.2% Adjusted EBITDA (0.03) (2.3) (1.7) (1.8) 3.2 5.4 7.1 Depreciation & amortisation (0.31) (0.31) 0.01 (0.58) (0.65) (0.65) (0.65) Adjusted EBIT (0.33) (2.6) (1.7) (2.4) 2.5 4.8 6.5 EBIT (0.56) (2.9) (3.2) (2.8) 1.8 4.0 5.7 Change (%) -% -% -% -% -% 125% 42.9% Financial results 0.69 0.66 0.36 (2.6) (0.70) (0.77) (0.80) Pre-Tax profits 0.13 (2.2) (2.9) (5.4) 1.1 3.2 4.9 Exceptionals 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Tax 0.77 (0.34) 0.04 1.0 0.0 (0.19) (0.66) Profits from associates 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Minority interests 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net profit 0.89 (2.6) (2.8) (4.4) 1.1 3.0 4.2 Restated net profit 1.1 (2.4) (1.6) (3.8) 2.1 4.0 5.2 Change (%) -% -% -% -% -% -% -% Cash Flow Statement (EURm) Operating cash flows 0.63 (1.8) (2.0) (3.2) 2.5 4.4 5.7 Change in working capital (0.74) 2.0 0.15 2.0 0.37 1.8 0.57 Capex, net (0.88) (0.15) (0.37) (0.39) (0.50) (0.50) (0.50) Financial investments, net 0.0 0.0 0.0 (0.07) 0.0 0.0 0.0 Acquisitions, net 0.0 0.0 0.0 (1.6) 0.0 0.0 0.0 Dividends 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other 0.30 (0.31) 7.3 (0.10) 0.10 0.0 0.0 Net debt 0.11 0.11 2.3 3.5 1.1 (4.7) (10.4) Free Cash flow (0.99) (0.01) (2.2) (1.7) 2.4 5.8 5.7

Company description Balance Sheet (EURm) Founded in 1988 and listed on the Tangible fixed assets 0.61 0.52 0.53 0.18 0.06 (0.08) (0.22) Intangibles assets & goodwill 1.2 0.76 0.70 1.9 1.1 0.29 (0.49) Alternext compartment of Euronext Investments 0.25 0.18 0.22 0.29 0.29 0.29 0.29 Paris since 2005, EasyVista is a Deferred tax assets 2.0 1.9 2.0 2.0 2.0 2.0 2.0 software vendor that specialises in Current assets 6.1 6.4 6.9 7.9 12.9 14.8 18.1 information technology (IT) Cash & equivalents 2.2 1.3 5.9 5.9 8.3 14.1 19.8 Total assets 12.3 11.0 16.2 18.1 24.7 31.4 39.4 management. The company provides Shareholders' equity 0.29 (3.0) (6.2) (8.4) (7.3) (4.3) (0.07) integrated and modular solutions to Provisions 1.0 0.97 1.3 1.3 1.3 1.3 1.3 cover a range of IT management Deferred tax liabilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 requirements, including programs for L & ST Debt 2.3 1.4 8.2 9.4 9.4 9.4 9.4 inventories, audits, and asset Current liabilities 8.7 11.6 13.0 15.8 21.3 25.0 28.8 Total Liabilities 12.3 11.0 16.2 18.1 24.7 31.4 39.4 management for IT and Capital employed 0.40 (2.9) (3.9) (4.9) (6.3) (9.0) (10.5) telecommunication equipment, among Ratios others. EasyVista's products are Operating margin (1.73) (13.09) (7.57) (8.54) 6.77 10.78 12.73 primarily marketed under the Tax rate (598) (15.22) 1.51 18.51 0.0 6.00 13.50 EasyVista brand name, offering Net margin 4.61 (12.80) (12.27) (15.74) 2.86 6.86 8.34 ROE (after tax) NM NM NM NM NM NM NM EasyVista Classic (the traditional ROCE (after tax) NM NM NM NM NM NM NM license option) and EasyVista.com Gearing NM NM NM NM NM NM NM (SaaS mode). The Company is Pay out ratio 0.0 NM NM NM 0.0 0.0 0.0 operational in six countries, including Number of shares, diluted 1.59 1.58 1.77 1.85 1.85 1.85 1.85 France, the United States, the United Data per Share (EUR) Kingdom, Spain, Portugal and Italy, EPS 0.57 (1.64) (1.78) (2.66) 0.65 1.83 2.56 Restated EPS 0.69 (1.49) (0.89) (2.04) 1.13 2.19 2.84 and has also a network of over 60 % change -% -% -% -% -% 93.8% 30.1% certified partners in 16 countries in EPS bef. GDW 0.69 (1.49) (0.89) (2.04) 1.13 2.19 2.84 Europe, Africa, the United States, BVPS 0.18 (1.89) (3.53) (4.56) (3.98) (2.34) (0.04) Canada and Asia. Operating cash flows 0.40 (1.15) (1.13) (1.74) 1.35 2.41 3.07 FCF (0.62) (0.01) (1.24) (0.90) 1.28 3.12 3.10

Net dividend 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Source: Company Data; Bryan, Garnier & Co ests.

EasyVista

Table of contents

1. Investment Case ...... 4 2. DCF model: EUR40 per share ...... 5 3. A service desk specialist ...... 7 3.1. Huge changes in service desk management ...... 7 3.1.1. ITSM software: ERP for the CIO ...... 7 3.1.2. Renewal market growing by 15% a year ...... 8 3.2. The competitive backdrop...... 9 3.2.1. General overview ...... 9 3.2.2. Analysis of EasyVista rivals ...... 11 3.2.3. Competitive advantages of EasyVista ...... 12 4. Transition almost over ...... 14 4.1. Sales model: SaaS by default ...... 14 4.2. Investment spending has affected profitability ...... 16 4.3. Strengthening sales and marketing spend ...... 17 4.3.1. Sales strengthening in Europe ...... 18 4.3.2. Sales strengthening in North America ...... 19 4.4. Acquisition of Knowesia ...... 20 4.4.1. Terms of the acquisition ...... 20 4.4.2. Sales synergies based on EasyVista's installed base ...... 20 5. Our forecasts ...... 21 5.1. Targets maintained for 2017 ...... 21 5.1.1. Q4 is set to be key for delivering the SaaS target ...... 21 5.1.2. The launch of a renewable licence model ...... 22 5.2. We expect a return to profits in 2018 ...... 23 5.3. Strengthening the balance sheet ...... 24 6. EasyVista's capital ...... 27 7. Accounts...... 28 7.1. Income statement ...... 28 7.2. Balance sheet ...... 29 7.3. Cash flow statement ...... 29 Bryan Garnier stock rating system...... 30

EasyVista

1. Investment Case

The reason for writing now On 15th November, EasyVista announced the launch of a three-year renewable licence offer. This enables 80% of the contract's value to be booked as sales as of the contract signature, corresponding to the right to use the software for 36 months, whereas revenue associated with hosting is to remain spread across the duration of the contract. As such, we estimate that renewable licences are set to radically change the make-up of earnings as of 2018, with the prospect of significant margin improvement.

Valuation The share is trading on attractive levels for a prospective recovery in margins, with 2018e and 2019e EV/EBIT multiples at 19.7x and 9.3x. Our EUR40 Fair Value is derived from a 10-year DCF valuation highlighting average annual growth in sales of 10% over the medium term and EBIT margin of 13%.

Catalysts 2017 sales on 13th February 2018. For 2017, we are forecasting a 22% rise in sales (+17% excluding the acquisition of Knowesia) with a sharp acceleration in growth in SaaS (+30.7%, including +76.7% in Q4) thanks to the roll-out of a temporary licence model, with Elior as the first client, announced in November. For H2 2017, we expect EBIT close to breakeven, vs a loss of EUR2m in Q1. However, in our view, the main positive catalyst that would be capable of generating a rally in the share price would be a return to profitability in 2018.

Difference from consensus Our 2018 sales estimate (EUR37.6m) is higher than the consensus, given that it has yet to factor in the switch to renewable licences. Similarly, whereas the consensus is forecasting EBIT at breakeven in 2018, we expect EBIT margin of 6.8% thanks to a EUR4-5m contribution from this new model to sales.

Risks to our investment case 1) Execution risks: Lower-than-expected revenue per sales person and/or slip-ups in operating costs. 2) Forex: around 25% of sales is generated in the US, thereby implying fairly-wide exposure to the USD. 3) A deterioration in the economic backdrop, which could very likely undermine sales growth.

EasyVista

2. DCF model: EUR40 per share Our new DCF-derived Fig. 1: DCF assumptions

Fair Value of EUR40 Risk-free interest rate 1.6% includes adjusted EBIT Equity risk premium 7.0% margin of 13% over the Beta 1.66 medium-term Return expected on equity 13.2% Stock price (EUR) 29.6 Number of shares (m) 1.65 Market Capitalisation (EURm) 49 Net debt on 31/12/2017e (EURm) 4 Enterprise value (EURm) 53 Interest rate on debt 5.0% Tax rate 30.0% Sales growth rate to perpetuity 2.5% WACC 12.7%

Source: Company Data; Bryan, Garnier & Co ests.

Fig. 2: Discounted FCF

in EURm (FYE 31/12) 2016 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e

Sales 23 28 38 44 51 56 62 68 74 82 90 99 % change 13.5% 22.1% 34.4% 17.4% 15.2% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% Operating profit -2 -2 3 5 6 7 8 9 10 11 12 13 as a % of sales -7.6% -8.5% 6.8% 10.8% 12.7% 13.0% 13.0% 13.0% 13.0% 13.0% 13.0% 13.0% Theoretical tax rate 0.0% 0.0% 0.0% 6.0% 13.5% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0% 30.0% Theoretical tax 0 0 0 0 1 2 2 3 3 3 4 4 NOPAT -2 -2 3 4 6 5 6 6 7 7 8 9 Depreciation 0 1 1 1 1 1 1 1 1 1 1 1 as a % of sales -0.1% 2.1% 1.7% 1.5% 1.3% 1.3% 1.3% 1.3% 1.3% 1.3% 1.3% 1.3% Capex 0 0 1 1 1 1 1 1 1 1 1 1 as a % of sales 1.6% 1.4% 1.3% 1.1% 1.0% 1.3% 1.3% 1.3% 1.3% 1.3% 1.3% 1.3% WCR -6 -8 -8 -10 -11 -13 -15 -16 -18 -20 -22 -24 as a % of sales -26.3% -28.5% -22.2% -23.0% -21.1% -24.0% -24.0% -24.0% -24.0% -24.0% -24.0% -24.0% Change in WCR 0 -2 0 -2 -1 -3 -1 -1 -2 -2 -2 -2 Free cash flows -2 0 3 6 6 8 7 8 8 9 10 11

Discounted free cash flows -2 0 3 5 4 5 4 4 4 4 3 3 Sum of discounted FCF 35 Terminal value 33 Enterprise value 68 Fair value of associates 0 Fair value of financial assets 0 Provisions 1 Fair value minority interests 0 NPV of tax credits 2 Dilution (s/o, warrants, conv bds) 8 Net debt on 31/12/2017e 4 Equity value 73 Diluted no. of shares (m) 1.8 Valuation per share (EUR) 40

Source: Company Data; Bryan, Garnier & Co ests.

EasyVista

We obtain a DCF valuation of EUR40, or 35% above the current share price, based on a risk-free rate of 1.6%, an equity risk premium of 7% and a beta of 1.66 (discount rate of 12.7%).

Fig. 3: Sensitivity analysis - EBIT margin and WACC (EUR)

EBIT margin

41 5.0% 9.0% 13.0% 17.0% 21.0% 11.5% 34 39 45 51 56 WACC 12.0% 32 37 43 48 53 12.7 % 31 35 40 44 49 13.0% 30 34 38 42 47 13.5% 29 32 36 40 44 Source: Bryan, Garnier & Co. ests.

To calculate EasyVista's beta of 1.66, we have multiplied the Software & IT Services sector beta of 1.06 by a coefficient corresponding to the division between the median of overall scores for our Software & IT Services coverage and the overall score for EasyVista. We call β the company beta, βₐ the sector beta, c the company coefficient, n the overall company score, n the company's fundamental score, n the company's momentum score, and Md the statistical symbol of the median ₁ whereby: β = βₐ * c, avec c = Md(n) / n, with n = n * 0.5 + n * 0.5. ₂ ₁ ₂ For EasyVista's overall score, we have attributed a score of 1 for the share's (very low) liquidity, financial strength (negative equity and some net financial debt), leadership (niche market player), potential to surprise (history of publishing earnings below initial forecasts), acquisitions history (no significant acquisitions except Knowesia five months ago) and earnings momentum (deterioration in earnings at least until 2017). We have attributed a score of 4 for the recurring nature of sales (72% for 2017e) and economic momentum (global economic growth of more than 3%).

Fig. 4: Fundamental score (from 1=low to 5=excellent)

Liquidity Financial Sales Leadership Surprise Acquisition Fund. score (1) strength (2) recurrence (3) (4) potential (5) history (6) A=avg(1) to (6) EasyVista 1 1 4 1 1 1 1.50

Source: Bryan, Garnier & Co ests.

Fig. 5: Momentum score (from 1=low to 5=excellent)

Economic momentum (7) Earnings momentum (8) Momentum score B=avg(7)to(8) EasyVista 4 1 2.50

Source: Bryan, Garnier & Co ests.

Fig. 6: Overview of factors comprising company beta calculation

Fundamental Momentum Total score (n) Company Industry beta Company beta score (n score (n coefficient (c) (βₐ) (β)

EasyVista 1.50₁) 2.50₂) 2.00 1.57 1.06 1.66 Source: Bryan, Garnier & Co ests.

EasyVista

3. A service desk specialist 3.1. Huge changes in service desk management

3.1.1. ITSM software: ERP for the CIO EasyVista publishes IT EasyVista publishes IT management software for companies, in a niche market called ITSM service desk management (IT Service Management), and more specifically known as IT service desks. Service desks handle software for companies, requests for assistance by users of a company's IT system. The software is a type of Enterprise Resource as well as other services Planning (ERP) suite for the Chief Information Officer (CIO), enabling the IT department to manage using IT resources events, incidents and problems, IT production starts and changes, user service requests, service levels, material and software configuration and assets, as well as the availability and capacity of IT resources, continuity of service and the services portfolio. EasyVista products also help manage other services for users than those offered by the IT department: HR, general services, operations, sales, marketing, etc. Finally, the group's offer does not only cover the needs of internal users in companies, but also external users (customers, suppliers, partners etc.).

An addressable market of As indicated in Fig. 7, the market addressed by EasyVista is estimated at more than USD3bn, more than USD3bn and includes the following segments: IT Service Desk (est. USD1.8bn), IT Asset & Financial Management (est. USD0.6bn), and Enterprise Service Applications (est. USD0.6bn).

Fig. 7: Markets addressed by EasyVista in ITSM (USDbn)

Source: Company Data.

The market is not new Service desks were born at the same time as company IT systems. However, they started to become a genuine market for software vendors during the 1980s/90s with the wave of client- server IT architectures that marked the installation of PCs and open systems (Unix, Windows, Linux) in companies, as well as software independent of hardware providers. Indeed, with the loosening of the hold that IT hardware manufacturers had over software and services, IT departments found themselves confronted with rising problems in managing their computer and software assets. Over time, the organisation of service desks became segmented with different service levels (1, 2 and 3 depending on how complex the issue is) and different specialities (assistance in PCs, networks, servers, telephony,

EasyVista

mobile, and applications - for ERPs, CRM etc.). This was the backdrop in which EasyVista grew up following its creation in 1988 under the Staff and Line banner.

ITSM software help Via the automation they provide, ITSM software aim to offer IT departments answers to a answer numerous number of challenges: 1) heightening the level of service provided to the company's businesses, 2) challenges for companies reducing the overall cost of IT services, 3) improving the traceability of services provided, 4) aligning in terms of management services with business needs, 5) transforming IT departments into service providers. These five and IT dimensions have become even more important in recent years with the roll-out of digital transformation strategies in companies, in which IT departments are playing a key role.

 With the "consumerisation" of IT, employees or professional IT users, would like to use their IT equipment as easily as they do in their private lives when they order a product on Amazon or a cab via Uber, with ready-to-use applications available on smartphone or tablet.

 Meanwhile, IT departments are aiming to successfully implement this costly transformation by reducing costs. The cost of IT assistance in a large company can represent up to 30-40% of its IT budget. Consequently, managing to cut assistance costs by 10% could have a genuine impact on a company's digital transformation.

3.1.2. Renewal market growing by 15% a year A market set to grow by A study published in June 2016 by MarketsandMarkets 1 estimated that the ITSM solutions 15% a year thanks to the market, including software and associated services, represented USD4.4bn in 2016 and could replacement of obsolete grow by an average annual 15% to stand at USD8.8bn in 2021. The market seems far from saturated solutions since it evolves from one generation to the next:

 The first generation of ITSM software was just a segment of the vast networks and systems administration market. This period saw the emergence of software firms like Remedy, CA Technologies (formerly Computer Associates), BMC Software, Novell, Peregrine Systems, Clarify, without forgetting the presence of hardware manufacturers such as IBM (Tivoli) and HP (OpenView), and Intel (via the acquisition of vendor LANDesk in 1991). In addition, a number of niche-market players enjoyed sky-high growth during the internet bubble (Novadigm, Marimba, ON Technology, Altiris, Tally Systems…) before collapsing and being bought out thereafter.

 With the bursting of the internet bubble and the disappearance of the main players (takeover of Clarify by Nortel in 2000, of Remedy by Peregrine in 2001 then its resale in 2002 to BMC Software, bankruptcy of Peregrine in 2002 followed by its takeover by HP in 2005, acquisition of ON Technology in 2003 by Symantec, acquisition of Novadigm by HP in 2004, takeover of Marimba by BMC Software in 2004, acquisition of Tally Systems by Novell in 2005, acquisition by Altiris by Symantec in 2007), the ITSM market reconsolidated around HP,

1 Cloud-Based ITSM Market by Solution (Service Portfolio Management, Change & Configuration Management, Service Desk Software, Operations & Performance Management, Dashboard, Reporting, & Analytics), Service, Vertical, & Region - Global Forecast to 2021, MarketsandMarkets, June 2016.

EasyVista

IBM, BMC, CA, Novell, Symantec and Intel. However, with the emergence of the Cloud and the SaaS model, as well as of ITIL standards, new players also began to come on the market during the 2000s: ServiceNow, Zendesk, Cherwell, and Staff and Line (the future EasyVista).

 Over the past 10 years, the structure of the ITSM market has focused on the roll-out of the ITIL 2 reference system, which is a services-oriented library, based on good practices in IT services management. ITIL makes ITSM an approach based on processes, with notions of lifecycle, resource optimisation, service and quality. In its third version developed over 2007-2011, the use of ITIL for governance of IT systems posed the question of the strategic alignment of the IT system with company business processes, thereby placing the user and the business at the heart of the IT department's concerns, whereas the businesses guide the actions of the IT department and not the other way round.

 There are now no more new entrants in the ITSM solutions market. The market has automatically become a replacement market. The leading groups of 10-15 years ago (HP, BMC, CA, Symantec) missed out on the SaaS wave and generate virtually no more growth, in favour more specifically of ServiceNow (sales of USD1.4bn in 2016, or a market share that we estimate at 32%). As such, players that were non-existent or virtually non-existent 20 years ago have expanded, such as Cherwell Software (sales of USD60m), and EasyVista (EUR23m in sales in 2016).

3.2. The competitive backdrop

3.2.1. General overview The major traditional The commercial success of EasyVista's offer is materialising thanks to its presence in Gartner's ITSM players (BMC, CA, magic quadrant for the ITSM market since 2011, thereby making it easier for the group to reference Micro Focus ex- its offer with large companies. In the August 2017 edition of the quadrant 3, nine companies were HP/HPE, IBM) are referenced, six of which are US-based (IBM, CA, BMC, ServiceNow, Cherwell and Ivanti) and three losing momentum European (French group EasyVista and UK groups Micro Focus and Axios Systems). Gartner's magic quadrant considers EasyVista as a niche player among seven others, bearing in mind that only two out of the nine companies are considered as leaders (ServiceNow and BMC). Out of the nine players

2 Drawn up in the 1980s, originally by the UK government, and then improved by experts at major IT services and consulting companies, ITIL ("Information Technology Infrastructure Library") is a group of works listing good practices in management of IT systems. The reference system looks at four subjects associated with the IT system: its organisation, improving its efficiency, reducing risks associated with it and enhancing the quality of IT services. Via a process-based approach, ITIL enables an improvement in the quality of IT systems and assistance for users by creating the services centre function, or the Services Desk), the aim of which is to centralise all IT systems management. This helps ensure a better traceability of actions by the IT department and the improved monitoring is a means of permanently optimising the services processes in order to reach maximum client satisfaction.

3 Matchett C., R. Doheny, K. Gonzalez, Magic Quadrant for IT Service Management Tools (2017), Gartner, 10th August 2017.

EasyVista

referenced by Gartner in ITSM, EasyVista is only really in competition with ServiceNow and Cherwell in calls for tenders.

Fig. 8: Gartner magic quadrant for ITSM tools

Source: Gartner (August 2017).

A pool of 10,000 The major traditional ITSM players are losing momentum, as is the case for IBM and Micro Focus organisations would like (products stemming from HP) since the two groups did not take the SaaS corner early enough. These to change their ITSM players are focused on optimising their installed base, with a defensive commercial approach. This solution in the historical installed base represents a huge renewal market bearing in mind that ITSM solutions in short/medium term cloud mode have only conquered part of the market at this stage. EasyVista has identified 10,000 organisations that would like to change their solutions in the short and medium term.

The two market leaders For very large companies, the two main ITSM players are ServiceNow (rapidly expanding) and are ServiceNow and BMC BMC (the historical player that is defending its positions), while EasyVista does not address this Software, but the real segment. EasyVista is positioned in the mid-market, with companies that have between rivals to EasyVista are thousands and tens of thousands of employees. Here the group is in competition with ServiceNow, ServiceNow and Cherwell whose solutions are often outsized relative to the requirements of companies of this size, and Cherwell, Software which is more at the lower end of the segment and above all addresses companies in the US with very few located in Europe. There are players at the bottom of the market (SME), but EasyVista is not positioned here.

Finally, among the competition we still find historical players in systems administration and ITSM, namely CA Technologies, BMC Software and IBM. HP exited the market when it was split into two distinct companies, with its software division going to Hewlett Packard Enterprise (HPE),

EasyVista which was sold to UK vendor Micro Focus in September 2017. As such, we can now consider that Micro Focus ranks among the historical players given its inheritance from HP. Meanwhile, LANDesk, which was spun off from Intel in 2002, merged with HEAT Software in January 2017 to create Ivanti.

3.2.2. Analysis of EasyVista rivals  ServiceNow. Founded in 2004 by the former Chief Technical Officer (CTO) of Peregrine Systems, and based in Santa Clara (California), ServiceNow has become the world leader in ITSM software publishing, 100% in SaaS mode. For 2016, ServiceNow reported sales of USD1.391bn (+38%) and non-GAAP EBIT margin of 12.8%. For 2017, management is forecasting non- GAAP sales of USD1.903-1.913bn (+37-38%) and a non-GAAP EBIT margin of 16%. Its offer is based on the Now Platform and includes ITSM, IT Operations Management, IT Business Management, Software Asset Management, Performance Analytics, Security Operations, HR Service Delivery, Customer Service Management, and GRC (Governance, Risk & Compliance). Its solution for mature clients is ServiceNow Service Management Suite, whereas ServiceNow Express is destined for the mid-market and entry level clients. Via its SaaS positioning targeting mature clients and a global presence, ServiceNow has become a virtually unavoidable player at the top-end of the market: like Salesforce in CRM, it has succeeded in building a significant ecosystem of technological and integration partners. In contrast, in the mid and low-end market segment, its rigid approach in terms of its licence policy (licence per named user, bundles including less strategic functionalities for clients with less sophisticated uses etc.) and the time and the resources required to install and maintain the solution, is a handicap.

 BMC Software offers four different ITSM products: Remedy Service Management Suite (RMS) for mature organisations, Remedyforce (for the Salesforce PaaS platform) and FootPrints for the mid-market, and Track-IT for the entry level. BMC's strengths lie in the size of its ITSM installed base, which is the largest in the world thanks to the takeover of Remedy and the extent of its ITOM product portfolio rounding out ITSM. As such, BMC recently improved the ergonomics and flexibility of RMS with a new and more convivial user interface. In contrast, BMC continues to suffer from the reputation that Remedy solutions had in the past of lacking in flexibility and ergonomics. Indeed, Remedyforce suffered from a two-year suspension to its promotion by Salesforce sales staff.

 Cherwell Software. Founded in 2004 and based in Colorado Springs (Colorado), in 2007 Cherwell Software launched its Cherwell Service Management platform available in SaaS mode as well as in perpetual licence form, covering ITSM, ITAM (IT Asset Management), Software Licence Management, IT Event Management, Supplier Management, and Organisation Service Management. Like EasyVista, Cherwell's metadata architecture provides a platform enabling personalisation and applications to be built on the platform without writing code. Cherwell has also launched a series of mobile applications for iOS and Android (Cherwell Mobile Applications) and a suite combining ITSM and Software Asset Management (Express Software Manager). However, the software firm is primarily present in the US and has low presence in Europe and in Asia Pacific with offices in the UK, Germany and Australia. Finally, we understand that only around 30% of Cherwell's sales are generated via SaaS, with the rest in traditional mode.

 CA Technologies has the ITSM CA Service Management solution, which only targets very mature clients and only in on-premises mode, albeit with the possibility of hosting the solution at the client's request. CA withdrew from its ITSM offer in SaaS mode, Cloud Service Management.

EasyVista

Given its positioning, CA is regularly losing market share in ITSM, even though the company seems to have a pretty good reputation on the market, has an extensive complementary ITOM offer and has recently improved the ergonomics of its user interface, even though this is an ongoing project.

 Micro Focus International offers ITSM Micro Focus IT Service Management Automation (ITSMA), which includes Service Manager, Asset Manager and Configuration Management System modules. This is destined for mature clients and also benefits from an extensive offer in ITOM as well as analytical and advanced search capacities inherited from HP and Autonomy. The offer is uniquely on-premises, bearing in mind that the former ITSMA owner, HPE stopped marketing an SaaS ITSM offer in 2016 (Service Anywhere). In our view, this is typically the sort of platform that could continue losing market share in the future, especially since Micro Focus aims to maximise maintenance sales in order to favour profitability.

 Ivanti. Based near Salt Lake City (Utah), Ivanti stems from the merger in January 2017 between LANDesk (created in 1985, it became an Intel division between 1991 and 2002 and was then acquired by Avocent in 2006, followed by private equity fund Thoma Bravo in 2010) and HEAT Software (which stems from the 2015 merger of FrontRange Solutions - created in 1989 - and Lumension, steered by private equity fund Clearlake Capital Group which already owned Lumension). The new pairing has more than 1,600 employees in 23 countries and boasts upwards of 22,000 customers. However, ITSM is only part of the Ivanti offer, since we estimate the majority of the offer lies in IT security and ITAM. In ITSM, Ivanti Service Manager is now available in SaaS mode and covers Service Desk and Service Management, while targeting mature and mid-market clients. Note that at this stage, few historical Ivanti clients have switched to SaaS, and the installed base of clients with older ITSM products by LANDesk and HEAT Software could be tempted to look to the competition.

 Axios Systems. Founded in 1988 by Tasos Symeonides, former head of IT operations at retailer John Menzies and based in Edinburgh (UK), Axios Systems has based its development on the implementation of good practices in management of the IT system and ITIL standards, with the launch of the Assyst solution. Its position is upscale, in companies with the most mature requirements. According to Gartner, Axios has the smallest market share among the nine groups referenced, with recent growth lagging that in the ITSM market. Its geographical presence is above all European. Finally, although Axios has had a SaaS version of Assyst since 2009, its clients do not use it very much.

 IBM has IBM Control Desk as its ITSM solution targeting mature clients. The offer is also available in cloud mode (IBM Control Desk on Cloud) and benefits from IBM's clout, especially in Europe and Asia where rivals are not very present. However, in practice, IBM does not really push Control Desk commercially except for use under the framework of an IBM Global Services outsourcing contract, in addition to IBM ITOM offers.

3.2.3. Competitive advantages of EasyVista EasyVista stands out from EasyVista stands out in the market for its aim to simplify use of its software in very complex its rivals for its aim to processes that need automating. The EasyVista "codeless" technology enables users to define simplify use of its and update their IT processes via a template-based interface. The latest innovation is Service Apps, a software thanks to a platform that enables the user to develop "consumerised" apps but in a professional context, with no codeless technology and code to write thanks to a user interface enabling drag-and-drop of bricks assembled by the client. In templates

EasyVista

contrast, a platform such as ServiceNow's requires a lot of code writing to adapt the tool to client specifics which is expensive, long and difficult to maintain, thereby making installation of the entire solution quite difficult. This results in failures that could prompt a number of companies to turn to EasyVista. Large groups can deploy EasyVista in just a few weeks on a global scale whereas products from major rivals need months, if not years to be installed. This is how PwC France chose EasyVista rather than ServiceNow since the solution included Service Apps and allowed storage of data in France.

EasyVista is targeting as a In the replacement market, the installed bases of rivals targeted by EasyVista are those of BMC priority the replacement Software (Magic Service Desk, FootPrints Service Desk), HP and CA Technologies. For example, in of installed bases at 2014, EasyVista pinched Canadian paper manufacturer Domtar (250 employees in the IT department BMC, HP and CA, with a and a total of 9,000 internal users) from BMC at the end of a selection process including 600 assessment degree of success in view criteria. More recently, in 2017, the City of Paris (35,000 end users) chose EasyVisa rather than BMC of the business won recently under the framework of its digital transformation, with ServiceNow not chosen in the final of the tender for a contract that is set to generate EUR783,000 over four years for EasyVista (of which EUR90,000 recurring annually, or a maintenance rate of 21%). Finally, EasyVista has just replaced the HP Service Manager product at Canadian insurance group Intact Insurance to handle customer demands (change in contract, relocation etc.) thanks to Service Apps. This client, which is deploying EasyVista for 250 users (initial SaaS contract of CAD250,000 a year over five years), is considering replacing all of the Lotus Notes applications by EasyVista in two/three years' time in a move that would increase the total number of EasyVista users to 1,000.

Fig. 9: EasyVista competitive positioning

Source: Company Data.

EasyVista

4. Transition almost over 4.1. Sales model: SaaS by default EasyVista completed the We estimate that EasyVista has completed the transition of its sales model to SaaS, a process transition of its sales started in 2008 and which was penalising for sales and earnings over 2010-2015. Indeed, in SaaS mode, model to SaaS generating sales are spread over a three-year period on a pro-rata basis depending on the date the contract is signed, 50% of sales in this mode instead of being registered in one go for the licence. While this indeed steps up the recurring nature of in 2016 sales - in 2016 EasyVista generated 50% of sales from SaaS subscriptions and just 15% from licences, vs. respectively 2% and 37% in 2010 - it comes at the price of sales recognition spread over time whereas the associated costs are registered at the time they are shouldered.

Fig. 10: Transition of sales model to SaaS (2008-2017e)

15 53% 50% 10 46% 38% 34% 5 26% 13% 2% 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e

Services Maintenance Licences SaaS

Source: Company Data; Bryan, Garnier & Co ests.

SaaS has become the default sales model at EasyVista. Fig. 11 shows the take-off in SaaS, which started to materialise in sales as of 2010-2011, and exceeded licence sales as of 2012 and "on- premises" software sales (licences + maintenance) as of 2015. Sales generated by SaaS rocketed 500% in 2011, 146% in 2012, 60% in 2013, 46% in 2014, 25% in 2015 and 24% in 2016.

Fig. 11: Change in product sales by type (2008-2016) (EURm)

12 11,4

10 9,2

8 7,3

5,3 6 5,0 5,2 4,9 5,2 4,4 4,4 4,4 4,3 3,9 4,2 4 3,2 3,4 3,2 3,3 3,3 3,5 2,8 2,6 2,8

2 1,3 0,0 0,0 0,2 0 SaaS Licences Maintenance

2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: Company Data.

EasyVista

However, clients can still In this respect, it seems important to review the EasyVista sales model: buy perpetual licences if they prefer  SaaS contracts are signed for three years. Every year, the client, benefits from a dedicated instance, pays upfront, but sales are recognised on a monthly basis. The average contract in SaaS mode totals around EUR50-70,000 a year in Europe and USD80-100,000 in North America. In H1 2017, new business represented 51% of EasyVista's SaaS sales. The contract renewal rate with existing clients stand at 97%, and the rare clients that abandon EasyVista do so for internal policy reasons mostly. Contract renewals go ahead on good terms in our view, since the average price increase for the 38 renewals undertaken in H1 2017 stood at 5%.

 From a technical viewpoint, EasyVista has two supervision centres for its data centres in Noisy-le-Grand and Montreal, employing around 20 people. Management considers these offer excellent availability rates (99.99%) out of more than 3m hours of operation with 300 servers spread between different cloud suppliers (Orange, Amazon, Swisscom etc.). At the end of 2016, these supervision centres obtained SSAE 16/ISAE 3402 Type 2 certification, the highest security standard to date.

 EasyVista continues to sell perpetual licences to clients who prefer not to sign a SaaS contract for security reasons (banks, administrations, casinos…) or due to internal policy. As such, the company sells licence scope extensions (additional users) to its clients in the installed base. Consequently, after the migration period of the sales model to SaaS at the expense of perpetual licences (2010-2013), we estimate that licence sales should remain stable at around EUR3-4m a year, corresponding to clients that are still against SaaS or continue to extend their user scope.

 Annual maintenance prices for perpetual licences stand at 20% of the initial price of the licence. Maintenance sales grow slowly on average at a quarterly pace of EUR1.3-1.4m, given the stabilisation in licence sales and the very low churn rate in the installed base. The acceleration witnessed over nine months in 2017 (+7.3%) was a direct consequence of the rebound in licence sales between Q2 2016 and Q1 2017 (+26.6%).

 Services sales were up sharply in 2013 and 2014 (+22% and +50%) in the wake of the rebound in licence sales during these years, especially in North America, although these have been stable since early 2015. EasyVista is not aiming to develop them, and has generally chosen to jointly handle them with IT services companies that can also provide business for the group.

 Whether in terms of SaaS or perpetual licences, the pricing model is based on the number of concurrent back-office users (and not named), and authorises access to the entire EasyVista offer. Add-ons that clients can then purchase therefore only concern additional users, and not additional modules. The average size of the operating teams at clients targeted by EasyVista stands at around 50-100 staff, including outsourcing provided by external services providers. In general, a client starts with two/three of the most common ITIL processes, and then extends its scope to other processes enabling a further 30-50 users to be reached.

EasyVista

Fig. 12: ARR (annual recurring revenue) from SaaS in EURm (2015-2017)

14,0 13,7 13,4 13,5 13,0 12,7 12,5 12,1 12,1 12,1 12,0 11,4 11,5 11,010,6 10,5 10,0 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17

Source: Company Data.

4.2. Investment spending has affected profitability EasyVista has not been Fig. 13 below shows that EasyVista has not been profitable since 2006, despite two years of virtual profitable since 2006 breakeven in 2009, following a cost-cutting programme and a marketing repositioning, and 2014, thanks given the transition to to a clear improvement in profitability in Europe. In addition to the change in sales model, came SaaS and sales the commercial development in North America, started in 2010. Whereas France and Europe are development in North profitable (EBIT of respectively EUR3.3m and EUR0.6m in 2016), North America continued to America generate negative EBIT of around EUR3.7m in 2016 (vs a loss of EUR2.7m in 2015.

Fig. 13: Change in sales and EBIT margin (2003-2016) (EURm and %)

25 12% 15% 11% 11% 23 20 19 10% 20 3% 5% 15 15 -2% -2% 0% 12 12 11 11 10 -5% -7% 10 9 -8% -5% 10 -9% 6 7 7 -11% -13% -13% -10% -14% 5 -15%

0 -20% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Revenues (EURm) (left scale) Operating margin (%) (right scale)

Source: Company Data; Bryan, Garnier & Co ests.

Higher recruitment in 2015 and 2016 saw losses deepen due to higher recruitment, especially with a net increase of 16 France and the US staff in France in 2016 and 11 in North America between June 2016 and June 2017, as shown in Fig. 14 below.

EasyVista

Fig. 14: Geographical change in headcount (2014-2017)

100 92 90 83 85 80 67 69 70 60 60 50 40 33 40 31 31 30 33 28 29 28 29 28 29 30 20 10 0 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17

France North America Rest of Europe

Source: Company Data.

A sharp increase in Fig. 15 below shows changes in operating expenses, with an increase of around 25% in 2013 and operating expenses to 2014, primarily in other purchases and external costs (+35% a year over the two years) and staff costs underpin future growth (+27% in 2013 and +18% in 2014) given the rise in sales investments in North America. This growth slowed to 16% in 2015 and 8% in 2016, with good control of staff costs (+16% in 2015 and +10% in 2016) and other purchases and external costs (+11% in 2015 and +10% in 2016).

Fig. 15: Change in operating expenses (2003-2016) (EURm)

30 80% 70% 25 60% 50% 20 40% 15 30% 23 25 20% 10 20 10% 16 13 12 13 0% 5 11 11 10 11 6 6 6 -10% 0 -20% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Operating expenses (EURm) (left scale) chg % (right scale)

Source: Company Data.

4.3. Strengthening sales and marketing spend A new sales and Recent years have been affected by the roll-out of a new sales and marketing organisation, with marketing organisation a new head of sales responsible for Europe and a Chief Marketing Officer (CMO). The sales

EasyVista

organisation is now divided into two teams: 1) one for Europe, led by Frédéric Pierresteguy 4 since March 2017, with a regional director below him for Southern Europe & Latin America, and four country managers (France, Italy, Spain, Portugal); 2) the other focused on North America directed by Kevin Coppins 5 (based in Tampa in Florida), and two VP Sales North America: Evan Carlson 6 (East region based in New York) and Gary Mellott 7 (West region, based in Denver). In North America, EasyVista has set up four sales teams depending on the regions (with offices in New York, Denver, Tampa and Montreal, 40 staff and around 100 clients, 10 partners and 4 data centres) with sales and presale engineers and sales staff.

US marketing now has a The arrival of John Prestridge in early 2017 as Chief Marketing Officer (CMO) - previously at management leader SunView (eight years) and Citrix (five years) - should enable EasyVista to strengthen work on the EasyVista brand in the context of its 120 clients in North America. Until now, global marketing had been piloted by France, which was not optimal given the maturity of the US in digital marketing. From now on, the US takes care of all its local marketing, whereas Europe remains fairly autonomous in order adapt to the specific features of each of the countries addressed. Within a few months, John Prestridge had hired a marketing team with three members, which helped simplify the commercial message and adapt it to the US: less marketing communication, more product marketing.

4.3.1. Sales strengthening in Europe Target to develop indirect For the EMEA zone, Frédéric Pierresteguy benefits from his experience in indirect sales. At sales to account for 50% present, 75% of EasyVista's sales stem from direct channels via its own sales staff vs. 25% from indirect of sales vs. 25% at present channels. The aim is to lift the share of indirect sales to 50% on average over the medium term.

 Developing indirect sales 8. A head of partnership development has been named for France and Spain. EasyVista is favouring direct sales for large accounts where this is requested, but indirect sales are to become the default model for other clients. This clarification in the sales approach involves redefining a distribution programme, motivating and providing technical and sales

4 Recruited in March 2017 as VP Sales EMEA, Frédéric Pierresteguy worked for 12 years at LANDesk as head of sales for southern Europe, Middle-East and Africa (as well as Asia) and was previously at Altiris, Commvault, Legato and Bull.

5 Recruited in 2015 as General Manager Americas, Kevin Coppins worked for 12 years at Novell as head of sales for the US.

6 The VP East Region, Evan Carlson, arrived in 2010 to set up EasyVista's business in the US after an experience as sales executive at various software firms specialised in networks systems administration.

7 The VP West Region, Gary Mellott, arrived in 2016 after working for six years at Cherwell.

8 EasyVista's main partner integrators are Econocom, GFI Informatique, Infodis and LANExpert in Europe (5-10 consultants each focused on EasyVista) and FMX Solutions in North America (12 consultants). The other partners are ComputerLand, Computacenter, Neurones, Doopera, Prolival, Deodis, SCC, SoluTech, IDSoft, ASI and Flycast Partners.

EasyVista

training for the network of distributors, strengthening existing partnerships and actively recruiting partners for the Middle East, eastern Europe and Nordic countries.

 The commercial positioning of the solutions has been clarified, with ongoing sales of the ITSM offer in the upper end of the mid-market, while the Service Workplace and Knowesia offers are also sold to large accounts with a view to acquiring new clients in addition to the offers of major software vendors that EasyVista does not replace.

 The organisation has been optimised in the Spanish, Portuguese and Italian subsidiaries, while the sales force has been strengthened with more sedentary sales staff as support for those on the ground.

4.3.2. Sales strengthening in North America EasyVista has had a Since its opening in 2010, EasyVista has spent a total of EUR12m on its development in North bumpy development in America. In 2011, sales in North America exceeded USD1bn (EUR0.8m) in line with the internal the US so far budget, and in 2012 sales were up 58%. In 2013, investments in the region were stepped up in order to rapidly reach critical mass, whereas the volume of business climbed by 93% and the backlog of SaaS contracts rose 112%. In 2014, the company continued its investments at a similar pace to that in 2013 enabling it to address large-sized regional clients and double its sales in the region, thanks to significant licence sales. In 2015, sales in the US suffered due to a massive switch in new business to SaaS, but the 13 new contracts in the zone correspond to average business volumes 2.5x higher than in Europe, bearing in mind that the teams continued to be strengthened to reach an optimal structure. Sales in North America reached EUR5.4m in 2015 (+8%, with -68% in licence sales, +75% in SaaS and +4% in services) and EUR6.3 M EUR in 2016 (+17%) with SaaS business up 41%, licence sales up 45% and services sales down 41%.

The target is to generate EasyVista aims to generate 50% of its sales in the US vs. 25% in 2016. This is the reason why 50% of sales in North the company has invested massively in 2017 using funds raised in 2016 9, to set up the teams with America vs. 25% in 2016, net recruitment of 11 people in North America between June 2016 and June 2017. Management and to make the local estimates that over time, the growth rate in revenues will become higher than that in costs. So far, subsidiary profitable EasyVista has favoured growth rather than margins since it needs to get a foothold in the US to succeed there, although sales growth and reaching critical mass in the country should help reach this goal. We estimate that these efforts should continue to pay off in 2018.

9 Issue of convertible bonds worth EUR7.5m in two tranches with a price per bond of EUR40m: a first was subscribed in July 2016 for EUR3.1m by Isatis Développement and Conversion Funding, and a second was subscribed in September 2016 for EUR4.4m by Isatis Capital and Alton Invest, after the Innovative Enterprise label was obtained by BPI France.

EasyVista

4.4. Acquisition of Knowesia

4.4.1. Terms of the acquisition Knowesia publishes Announced on 14th June 2017, the acquisition of Knowesia was finalised on 3rd July 2017 but solutions in interactive consolidated on 30th June. Knowesia publishes interactive knowledge base solutions (Knowledge knowledge bases for the as a Service) for the automation of services provided by help desks and service desks. Founded automation of services in 2017 and based near Nantes (Saint-Herblain), Knowesia has developed a collaborative platform that supplied by service desks enables any business or industry to model procedures as decision trees, using a codeless script code. The offer includes an analytical model of performance indicators integrating algorithms for constant improvement, autonomous learning and resolution. The software is used by 45% of companies in the CAC 40 (Accor, Axa, Orange, Société Générale, L’Oréal, Bouygues…) as well as by French companies such as the SNCF, La Poste Mobile, Direct Energie, TF1 and Canal Plus.

The acquisition was made In 2016, Knowesia had sales of EUR1.5m (70% of which in recurring mode) with 11 staff, including at 0.9x sales and 4.7x one sales person, and EBIT margin of 20%. Knowesia's sales model was very indirect: its EBIT (2016 figures) technology was embedded in the managed services offers of HelpLine (Neurones) and Atos for their large account clients. These two services providers together accounted for 45% of sales. The company was acquired for EUR3.2m, with EUR2.2m in new EasyVista shares (78,774 at EUR27.61 per share, or a 5% dilution of the number of non-diluted shares) and EUR1m in cash. Given the EUR1.8m in cash at Knowesia pocketed by EasyVista on 5th July 2017, the operation went ahead at enterprise value of EUR1.4m, or 0.9x 2016 sales and 4.7x 2016 EBIT.

4.4.2. Sales synergies based on EasyVista's installed base Knowesia enhances the This acquisition rounds out EasyVista's offer with its strategic clients and widens its scope of EasyVista offer for business. Knowesia provides a technological self-care brick which, once included in EasyVista's existing clients with a Service Apps with no additional R&D work, should prompt a drastic reduction in resolution time (fewer technological brick for calls to customer help line) and the cost of the help desk, by the automatic handling of half of self-solving problems repetitive level 1 cases, as well as a 30% increase in operating efficiency of help-desk staff. Finally, the brick also provides clients the base for development of virtual assistants (chatbots).

We estimate the Based on Knowesia's figures for 2016 and in view of the capital increase, we calculate that the acquisition should acquisition should provide a slight 0.4-point boost to the EBIT margin and enhance adjusted enhance adjusted EPS by EPS by 5% as of 2018. The synergies to unlock are essentially commercial since the aim for EasyVista 5% as of 2018 is to sell the Knowesia technology to the installed base, under the Self Help name, as an independent add-on to the IT Service Manager suite, bearing in mind that EasyVista and Knowesia only have two clients in common. Knowesia's sales and marketing integration started in September 2017, should be completed between now and end-December 2017 with the training of EasyVista sales staff in selling Self Help to the installed base. Thereafter, the target will also be to sell to new clients, for example by using the Knowesia offer as a “Trojan horse”, to open accounts currently equipped with ServiceNow and BMC at the service desk.

EasyVista

5. Our forecasts 5.1. Targets maintained for 2017

5.1.1. Q4 is set to be key for delivering the SaaS target The target for 2017 was to During the 2016 earnings publication in April 2017, management indicated that its target for 2017 was increase investment to increase investment spending in order to underpin the ramp-up in sales growth (including spending in to order to +25% in SaaS) with the recruitment of new sales staff to better capture growth opportunities, underpin the ramp-up in especially in North America. These investments were also set to include new mobility, Big Data and sales growth artificial intelligence functionalities, and a strengthening of marketing spend to promote technological differentiators for the EasyVista solution. In October, EasyVista added the successful integration of Knowesia as another target.

Q4 will be key to reaching Q4 is set to be key for reaching the 25% growth target in SaaS for 2017, bearing in mind that the 25% growth target in the level only stood at 14.8% over nine months. To be able to reach 25% growth (or at least SaaS in 2017 EUR14.2m), EasyVista would have to report SaaS sales for Q4 2017 of at least EUR4.8m, or at least 63% growth! This level of sales in SaaS would help reach overall 2017 sales, excluding Knowesia, of EUR27-27.5m with Q4 sales at EUR8.5-9m, to which the Knowesia contribution that we estimate at EUR0.8m for the quarter, can be added. In this case, we estimate that with a cost base of EUR29- 29.5m, the operating loss for 2017 excluding Knowesia would work out to EUR2-2.5m, with H2 2017 close to breakeven. We believe that these figures should be met thanks to the launch of a new sales model: renewable licences or term licences.

Fig. 16: Our 2017 estimates and 9m figures

FYE 31st Dec. (EURm) Q1 2017 Q2 2017 H1 2017 Q3 2017 Q4 2017e H2 2017e 2017e Total revenues 6.2 6.1 12.4 6.4 9.2 15.6 28.0 % chg 16.4% 4.3% 10.1% 12.4% 51.6% 32.6% 21.6% o/w SaaS + Term Licences 3.1 3.2 6.3 3.4 3.4 5.2 14.9 % chg 14.9% 12.0% 13.4% 17.4% 76.7% 47.1% 30.7% o/w Licences 0.8 0.6 1.4 0.8 1.4 2.2 3.6 % chg 16.2% -40.6% -17.8% 10.7% 59.1% 36.8% 9.0% o/w Maintenance 1.3 1.4 2.6 1.3 1.4 2.7 5.4 % chg 3.3% 10.5% 6.9% 8.2% 11.1% 9.7% 8.3% o/w Services 1.1 1.0 2.1 0.8 1.2 2.0 4.1 % chg 42.9% 24.1% 33.3% 2.5% 22.2% 13.3% 22.6%

Operating expenses -14.4 -16.0 -30.4 % chg 20.9% 26.8% 23.2%

Adj. Operating profit -2.0 -0.4 -2.4 Adj. Operating margin (%) -16.3% -2.4% -8.5%

Net profit -2.7 -1.7 -4.4

Source: Company Data; Bryan, Garnier & Co ests.

H1 and Q3 2017 reflected In H1 2017, EasyVista reported sales of EUR12.4m, up 10.1% with Q1 sales up 16.4% (with SaaS these trends up 14.9%, licences up 16.2% and services up 42.9%, while sales in North America rose 31%) and Q2 sales up 4.3% (with SaaS up 12%, licences at -40.6% and services at +24.1%), as well as an operating loss of EUR2m vs. EUR0.7m in H1 2016. Q3 sales rose 12.4% to EUR6.4m (est. +6% excluding Knowesia which accounted for 7% of Q3 sales, or EUR0.4m), with SaaS at +17.4%, licences at +10.7%

EasyVista

and services at +2.5%. Q3 was characterised by the delay of numerous contract signings, especially in North America, the booking of which is expected in Q4 2017.

For H1 2017 earnings, the key performance indicators were the following:

 Operating expenses rose 21%, including +18% for other purchases and external costs (higher marketing spend) and +17% for staff costs given the 18% increase in overall headcount over one year (+38% for North America, +11% for France and +18% for the rest of Europe, especially in marketing, management and sales force).

 The net loss of EUR2.7m (vs. a net loss of EUR0.6m in H1 2016) took into account a deterioration of EUR1.3m in financial items (increase of EUR0.4m in interest expenses given the issue of convertible bonds, rise of EUR0.9m in exchange rate losses due to the depreciation in the US dollar), fully offset by a better tax gain (EUR0.4m) and an exceptional gain of EUR0.7m associated with the a provision write-back for an adjustment to withholding tax on operations undertaken outside France in 2006-07.

 Management was still confident in its outlook thanks to the strengthening of the sales and marketing teams, expecting growth of at least 30% in SaaS sales in H2 2017, excluding Knowesia, despite slower growth in SaaS sales in H1 2017 (+13.1%) relative to the full-year target.

5.1.2. The launch of a renewable licence model The new renewable Management has just set up a renewable or term licence model, which already existed at licence model (“term Knowesia. Inspired by recommendations established under the framework of the new IFRS 15 licence”) consists of accounting standard, due to be applied in January 2018, this model consists of separating the cost separating use of the of using the software in SaaS mode and the cost of SaaS infrastructure management. The aim is software in SaaS mode to overhaul the contractual relationship with clients, as requested by major accounts since these and management of the associated cloud companies are well aware of the operating cost of their own IT infrastructure and would like to isolate infrastructure the billing of hosting in order to eventually bring the service in-house if needs be.

This new model radically In concrete terms, with renewable licences, the client rents a licence for three years (80% of the changes the recognition of value of the contract) and pays for hosting and migration separately (20% of the value). This sales for SaaS contracts at prompts significant changes for EasyVista since it enables recognition of sales for the three- EasyVista, with immediate year licence as soon as the contract is signed, and for hosting, spread over the three years. recognition of sales However, the payment terms for the renewable licence remain unchanged relative to a SaaS contract, associated with the licences since EasyVista will continue to cash in annual licence fees when the contract is signed and then on each anniversary of the contract. This type of contract was launched in France during Q4 2017 (with Elior as the first reference client) and is to be deployed in other countries in 2018.

The changes that the renewable licence implies for EasyVista are the following:

 If we take a pure SaaS contract of EUR120,000 over three years, the client is billed EUR40,000 when the contract is signed and EUR40,000 on each of the anniversary dates, but the amount is recognised in sales on a month by month basis for EasyVista (EUR3,333 per month). If the contract is signed on 1st December, EasyVista will indeed cash EUR40,000 on this date, but can only register sales of EUR3,333.

EasyVista

 In the case of a renewable licence, the client is still billed EUR40,000 a year when the contract is signed and on the anniversary dates of the contract, but: 1) the three-year licence is registered as sales in one go when the contract is signed (80% of EUR120,000 = EUR96,000) and if the client wishes, it is renewed for three years for EUR96,000 at its term, 2) hosting (20% = EUR24,000 over three years) is recorded as sales at EUR8,000 a year. EasyVista continues to cash EUR40,000 a year as with a pure SaaS contract, but a contract signed on 1st December generates sales recognition for the first year of EUR96,667 (EUR96,000 + 8,000/12), or 145x more than with a pure SaaS contract! If the contract is signed on 1st January, in the first year it generates sales recognition of EUR104,000 (EUR96,000 + EUR8,000) or 2.6x more than with a pure SaaS contract. In contrast, for the second year, EasyVista would only register EUR8,000 in annual sales on a month-by-month basis for the hosting side of the contract, or five times less than with a pure SaaS contract. The reverse side of this new model is that as of 2019, EasyVista will have to maintain a robust pace of new signings in order to maintain high growth.

We estimate the On our figures, the renewable licence model could provide EUR4-5m in sales recognition in renewable licence model 2018, based on contract renewals. Consequently, where the initial plan was to generate EUR32-33m in could prompt sales sales in 2018, Knowesia's contribution (EUR1-2m) and the new renewable licence model (EUR4-5m) recognition of EUR4-5m should result in sales of EUR37-38m in 2018. In contrast, we do not expect this to generate in 2018 additional fixed costs since the new model implies no additional staff recruitments.

5.2. We expect a return to profits in 2018 Renewable licences could We estimate that with the renewable licence EasyVista could generate EUR50m in sales by enable EasyVista to 2020 (or double the 2016 level) and EBIT margin of close to 13% based on a 23% rise in operating generate sales of EUR50m costs in 2017, 16% in 2018, 12% in 2019 and 13% in 2020, as indicated in Fig. 17 below. in 2020 and EBIT margin close to 13% Fig. 17: Our earnings forecasts (2015-2020e)

FYE 31st Dec. (EURm) 2015 2016 2017e 2018e 2019e 2020e Total revenues 20.2 22.9 28.0 37.6 44.2 50.9 % chg 4.2% 13.5% 22.1% 34.4% 17.4% 15.2% o/w SaaS + Term Licences 9.2 11.4 14.9 23.6 29.5 35.4 % chg 26.0% 24.0% 30.6% 58.6% 25.0% 20.0% o/w Licences 2.8 3.3 3.6 3.8 3.9 4.0 % chg -35.3% 20.3% 9.2% 5.0% 1.3% 3.9% o/w Maintenance 4.9 5.2 5.4 5.5 5.6 5.8 % chg 10.7% 5.1% 3.8% 3.0% 2.5% 2.5% o/w Services 3.4 3.4 4.1 4.7 5.2 5.7 % chg 1.2% -0.7% 22.8% 14.0% 10.0% 10.0% Operating expenses -22.8 -24.6 -30.4 -35.1 -39.4 -44.4 % chg 15.8% 8.0% 23.2% 15.5% 12.4% 12.7% Adj. Operating profit -2.6 -1.7 -2.4 2.5 4.8 6.5 Adj. Operating margin (%) -13.1% -7.6% -8.5% 6.8% 10.8% 12.7% Net profit -2.6 -2.8 -4.4 1.1 3.0 4.2 Adj. EPS (EUR) -1.49 -0.89 -2.04 1.13 2.19 2.84

Source: Company Data; Bryan, Garnier & Co ests.

 For 2017, we estimate that renewable licence revenues should enable EasyVista to reach operating profit close to breakeven during H2, as in 2016, which would result in an EBIT loss of EUR2.4m over the year. This is based on a scenario of operating expenses up 27% in H2

EasyVista

2017 (including 7% for Knowesia) vs. +21% in H1 2017, given the 25% increase in headcount in North America in the first part of the year, but for which the weight on costs was fully felt during the second half, and the integration of Knowesia.

 For 2018, whereas the initial plan with pure SaaS was to return to breakeven, we estimate that with the renewable licence, EasyVista can deliver EBIT margin of around 7%, based on organic growth in sales of 32%, driven by SaaS sales plus renewable licences that we estimate at +59%, and operating expenses up 15% to EUR35.1m, or EUR33.5m excluding Knowesia. EasyVista expects a significant increase in productivity of the sales staff recruited in H1 2017, bearing in mind that it takes around 12 months for a newly recruited sales person to ramp up and that the sales cycle lasts six/nine months for each new contract.

 Beyond 2018, the share of SaaS and renewable licences in sales should continue to increase well beyond the 50% reached in 2016 to 70% in 2020, even though sales from perpetual licences will remain since some clients request this form and EasyVista intends to continue offering it, which is an advantage relative to ServiceNow. The two other strategic priorities in the medium term are development of Service Apps, as well as growth in the US - where growth and market size are higher than in Europe with larger and more numerous hospitals, universities and administrations, boasting higher IT budgets.

 Financial expenses are set to remain low despite the 2020 convertible bonds carrying interest of 5% a year, representing EUR0.4m per year.

 EasyVista has EUR7.5m in tax loss carry forwards, primarily in France, (inherited from the acquisition of Rift Technologies in 2013) and the US (given cumulated losses) that it can activate over 17-18 years. We estimate that the tax rate should remain low at least until 2020, despite a return to profitability, given the ability to use these tax-loss carry forwards. Whatever the case, we do not expect EasyVista to pay taxes until 2019 inclusive.

5.3. Strengthening the balance sheet EasyVista often has Despite the losses incurred since 2007, EasyVista is often in a positive operating cash flow positive operating cash position 10, thanks to negative WCR (since 2011) given the ramp-up in the SaaS model. This WCR flow despite losses was even negative to the tune of EUR6m in 2016. Indeed, the advanced reception of payments for SaaS subscriptions generates a differential in billing of around 10%, which helps finance accounting losses. In contrast, as indicated in Fig. 18, in view of capex (EUR0.5-0.6m a year), free cash flow has not been positive since 2012. We expect a return to positive free cash flow as of 2018 thanks to the return to profitability. However, we expect no acceleration in the decline in WCR since the renewable licence model has no consequence on the reception of royalty payments, even if it influences sales recognition for the first year of the contract.

10 Except in 2014 when it was negative at EUR0.1m due to higher WCR and in 2016, when it was negative at EUR1.8m due to high losses. We expect it to be the same in 2017 for the same reasons as in 2016.

EasyVista

Fig. 18: Free cash flow and FCF/EBITDA ratio (2011-2020e)

7 120% 5,8 5,7 6 105% 100% 5 4 79% 80% 3 72% 2,4 2 60% 0,4 1 0,0 40% 0 -1 - 0,1 0,0 20% -2 - 1,0 - 1,7 -3 - 2,2 0% 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e 2020e

Free cash flow (EURm) (left scale) in % of EBITDA (right scale)

Source: Company Data; Bryan, Garnier & Co ests.

Reduction in net financial On 30 June 2017, EasyVista had EUR0.9m in net debt, but this did not include Knowesia's cash debt in H1 2017 pile of EUR1.6m that was booked by EasyVista on 5th July. As such, if the Knowesia cash pile had been booked before the closing of H1 accounts, EasyVista would have had a net cash position of EUR0.7m. This was an improvement relative to the EUR2.3m in net debt on 31st December 2016, thanks to a decline of EUR4.3m in WCR in H1 2017 and a negative net investment of EUR1.3m including the cash effect of the Knowesia acquisition, with its cash pile of EUR1.6m. Net debt on 31st December 2016 nevertheless suffered from WCR up EUR1.3m in H2 2016 and investments of EUR1.7m.

Fig. 19: Net debt since end-2011 (EURm)

3 2,3 2,5 2 1,5 0,9 1

0,5 0,1 0,1 0

-0,5 - 0,2 - 0,3 -1 - 0,6 - 0,8 - 0,9 - 0,8 -1,5 - 1,2 -2 - 1,5 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17

Source: Company Data; Bryan, Garnier & Co ests.

We expect a decline in net In view of these factors, we expect an increase in net financial debt to EUR3.5m at end-2017, financial debt as of 2018, before a renewed decline at end-2018 and becoming negative again in late-2019/early-2020, to become negative again barring a further acquisition. at end-2019 or in 2020

EasyVista

Fig. 20: Net financial debt (2005-2020e)

6 3,5 4 2,3 2 1,1 0,1 0,1 0 - 0,3 - 0,1 -2 - 0,8 - 0,5 - 0,8 - 0,9 - 0,8 - 1,9 -4

-6 - 4,7 - 5,5 -8

-10

-12 - 10,4 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e 2020e

Source: Company Data; Bryan, Garnier & Co ests.

Consolidated equity is Finally, since H1 2015, EasyVista has negative equity on a consolidated level (EUR5.7m on 30th negative given the June 2017), entirely due to losses for development in North America, although the EasyVista SA cumulated losses in North parent company currently has positive equity of EUR7.6m. In addition, this equity can be America, although those strengthened in the event of a conversion of the EUR7.5m in 2020 convertible bonds, as long as of the parent company are the share price reaches the strike price of EUR40. If the conversion took place today, consolidated positive at EUR7.6m equity would total EUR1.8m (EUR15.1m for the parent company). In view of our forecasts, we estimate that consolidated equity could reach around EUR7.5m at end-2020 if the 2020 convertible bonds are converted.

EasyVista 6. EasyVista's capital EasyVista's free float is low representing only 21% of the capital for market capitalisation of less than EUR50m. The former Knowesia shareholders, who currently own 4.8% of EasyVista's capital, are bound by a lock-up period of 36 months, running until July 2020. The main individuals concerned are Thibaud Poirier de Clisson - the chairman of Knowesia until its acquisition - and its holding company NecSem Capital (2.5%), as well as Nantes based entrepreneur Alain Boulicot (1.2%).

Fig. 21: Breakdown of capital

Free float 21,0%

Knowesia Managers shareholders 44,0% 5,0%

Private Equity funds 30,0%

Source: Company Data.

The issue of EUR7.5m in convertible bonds in summer 2016 went ahead in two tranches at EUR40 per bond: a first tranche was subscribed to in July 2016 for EUR3.1m by Isatis Développement and Conversion Funding, and a second was subscribed to in September 2016 for EUR4.4m by Isatis Capital and Alton Invest, after the Innovative Enterprise label was obtained by BPI France. Conversion of the bonds would dilute the number of shares by 11%.

EasyVista

7. Accounts 7.1. Income statement

EURm (FYE 31/12) 2013 2014 2015 2016 2017e 2018e 2019e 2020e CAGR 16-19e

Net revenue 14.7 19.4 20.2 22.9 28.0 37.6 44.2 50.9 24.5% % change 22.9% 31.7% 4.2% 13.5% 22.1% 34.4% 17.4% 15.2% Gross Margin 15.1 19.8 20.2 22.8 28.0 37.6 44.2 50.9 % of revenue 99.8% 99.9% 99.9% 99.4% 100.0% 100.0% 100.0% 100.0%

Other third-party expenses (5.5) (7.4) (8.2) (9.0) (10.0) (11.4) (12.6) (14.1) % of revenue 36.2% 37.6% 40.9% 39.4% 35.9% 30.3% 28.6% 27.8% Taxes (0.3) (0.5) (0.6) (0.5) (0.7) (0.9) (1.1) (1.2) Personnel costs (10.0) (11.7) (13.6) (14.9) (18.9) (22.0) (25.0) (28.3) % of revenue 65.7% 59.2% 67.2% 65.2% 67.7% 58.5% 56.5% 55.7% Other expenses (0.1) (0.1) (0.1) (0.0) (0.1) (0.1) (0.1) (0.1) Amortisation (0.2) (0.3) (0.5) (0.5) (0.8) (0.7) (0.7) (0.7) Net operating provisions 0.0 0.0 0.2 0.5 0.2 0.0 0.0 0.0 Adjusted EBIT (1.0) (0.3) (2.6) (1.7) (2.4) 2.5 4.8 6.5 n/m % of revenue -6.6% -1.7% -13.1% -7.6% -8.5% 6.8% 10.8% 12.7%

Net restructuring charge 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Capital gains or losses 0.1 0.1 (0.0) (0.0) 0.0 0.0 0.0 0.0 Goodwill amortisation (0.2) (0.2) (0.2) (0.1) (0.4) (0.8) (0.8) (0.8) Stock-based compensation 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other exceptional gains (losses) (0.0) (0.1) (0.0) (1.3) (0.0) 0.0 0.0 0.0 EBIT (1.1) (0.6) (2.9) (3.2) (2.8) 1.8 4.0 5.7 n/m % of revenue -7.4% -2.9% -14.4% -14.0% -10.0% 4.7% 9.0% 11.2%

Cost of net debt 0.0 (0.0) (0.1) (0.1) (0.6) (0.7) (0.8) (0.8) Other financial gains (losses) (0.2) 0.7 0.7 0.4 (2.0) 0.0 0.0 0.0

Profit before tax (1.3) 0.1 (2.2) (2.9) (5.4) 1.1 3.2 4.9 n/m Income taxes 0.4 0.8 (0.3) 0.0 1.0 0.0 (0.2) (0.7) Tax rate n/m -597.7% n/m n/m n/m 0.0% 6.0% 13.5%

Consolidated net profit (0.9) 0.9 (2.6) (2.8) (4.4) 1.1 3.0 4.2 n/m % of revenue -6.2% 4.5% -12.8% -12.3% -15.7% 2.9% 6.9% 8.3% Profit from associates 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Minority interests 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Attributable net profit (0.9) 0.9 (2.6) (2.8) (4.4) 1.1 3.0 4.2 n/m Average nb of shares - basic (m) 1.6 1.6 1.6 1.6 1.7 1.7 1.7 1.7 Average nb of shares - diluted (m) 1.6 1.6 1.6 1.8 1.8 1.8 1.8 1.8

Basic EPS (EUR) -0.60 0.57 -1.64 -1.78 -2.66 0.65 1.83 2.56 n/m % change n/m n/m n/m n/m n/m n/m 181.3% 40.0% Adjusted EPS (EUR) -0.50 0.69 -1.49 -0.89 -2.04 1.13 2.19 2.84 n/m % change n/m n/m n/m n/m n/m n/m 93.8% 30.1%

Source: Company Data; Bryan, Garnier & Co ests.

EasyVista

7.2. Balance sheet EURm (FYE 31/12) 2013 2014 2015 2016 2017e 2018e 2019e 2020e Goodwill 0.5 0.3 0.0 0.1 1.3 0.6 (0.2) (1.0) Intangible fixed assets 0.5 0.9 0.8 0.6 0.6 0.5 0.5 0.5 Tangible fixed assets 0.4 0.6 0.5 0.5 0.2 0.1 (0.1) (0.2) Fixed assets and goodwill 1.4 1.8 1.3 1.2 2.1 1.1 0.2 (0.7) Investments 0.2 0.2 0.2 0.2 0.3 0.3 0.3 0.3 Deferred tax assets 1.1 2.0 1.9 2.0 2.0 2.0 2.0 2.0 Inventories 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Accounts receivables 4.8 5.3 5.6 5.8 6.5 11.1 12.7 15.6 Other short term assets 0.7 0.8 0.8 1.1 1.3 1.8 2.1 2.4 Current assets 5.5 6.1 6.4 6.9 7.9 12.9 14.8 18.1 Cash & cash equivalents 2.0 2.2 1.3 5.9 5.9 8.3 14.1 19.8 TOTAL ASSETS 10.3 12.3 11.0 16.2 18.1 24.7 31.4 39.4 Shareholders' equity 0.1 0.3 (3.0) (6.2) (8.4) (7.3) (4.3) (0.1) Minority interests 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Consolidated equity 0.1 0.3 (3.0) (6.2) (8.4) (7.3) (4.3) (0.1) Long-term provisions 0.8 1.0 1.0 1.3 1.3 1.3 1.3 1.3 Deferred tax liabilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Convertible bonds 0.0 0.0 0.0 7.5 7.5 7.5 7.5 7.5 Long-term debt 1.3 2.3 0.9 0.2 0.2 0.2 0.2 0.2 Short-term debt 0.0 0.0 0.5 0.5 1.7 1.7 1.7 1.7 Debt 1.3 2.3 1.4 8.2 9.4 9.4 9.4 9.4 Accounts payable and accrued 0.9 1.0 1.6 2.1 2.6 3.5 4.1 4.7 Deferred revenues 4.6 5.3 6.9 7.8 9.5 12.8 15.0 17.3 Salary and income tax payable 2.5 2.3 2.9 3.0 3.7 4.9 5.8 6.6 Other liabilities 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Current liabilities 8.1 8.7 11.6 13.0 15.8 21.3 25.0 28.8 TOTAL LIABILITIES 10.3 12.3 11.0 16.2 18.1 24.7 31.4 39.4

Source: Company Data; Bryan, Garnier & Co ests.

7.3. Cash flow statement EURm (FYE 31/12) 2013 2014 2015 2016 2017e 2018e 2019e 2020e Operating cash flow (0.7) 0.6 (1.8) (2.0) (3.2) 2.5 4.4 5.7 Change in WCR 1.4 (0.7) 2.0 0.2 2.0 0.4 1.8 0.6 Capital expenditure (1.4) (1.9) (0.2) (0.4) (0.4) (0.5) (0.5) (0.5) Disposals in fixed assets 0.6 1.0 0.1 0.0 0.0 0.0 0.0 0.0 Net capex (0.8) (0.9) (0.1) (0.4) (0.4) (0.5) (0.5) (0.5) Free cash flow (0.1) (1.0) (0.0) (2.2) (1.7) 2.4 5.8 5.7 Investments 0.0 0.0 0.0 0.0 (0.1) 0.0 0.0 0.0 Disposals in investments 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Acquisitions (goodwill) (0.0) 0.0 0.0 0.0 (1.6) 0.0 0.0 0.0 Cash flow after investing activity (0.2) (1.0) (0.0) (2.2) (3.3) 2.4 5.8 5.7 Dividends paid 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Issuance of shares 0.1 0.1 0.0 0.1 2.2 0.0 0.0 0.0 Cap. Incr. for minority interests 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Incr. cash bef. loan repayments (0.1) (0.9) (0.0) (2.1) (1.1) 2.4 5.8 5.7 Repayment of loans 0.4 0.3 (0.3) 7.3 (0.1) 0.1 0.0 0.0 Net increase in cash 0.3 (0.6) (0.3) 5.2 (1.2) 2.5 5.8 5.7

Source: Company Data; Bryan, Garnier & Co ests.

EasyVista

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EasyVista Bryan Garnier stock rating system For the purposes of this Report, the Bryan Garnier stock rating system is defined as follows: Stock rating Positive opinion for a stock where we expect a favourable performance in absolute terms over a period of 6 months from the publication of a BUY recommendation. This opinion is based not only on the FV (the potential upside based on valuation), but also takes into account a number of elements that could include a SWOT analysis, momentum, technical aspects or the sector backdrop. Every subsequent published update on the stock will feature an introduction outlining the key reasons behind the opinion. Opinion recommending not to trade in a stock short-term, neither as a BUYER or a SELLER, due to a specific set of factors. This view is intended to NEUTRAL be temporary. It may reflect different situations, but in particular those where a fair value shows no significant potential or where an upcoming binary event constitutes a high-risk that is difficult to quantify. Every subsequent published update on the stock will feature an introduction outlining the key reasons behind the opinion. Negative opinion for a stock where we expect an unfavourable performance in absolute terms over a period of 6 months from the publication of a SELL recommendation. This opinion is based not only on the FV (the potential downside based on valuation), but also takes into account a number of elements that could include a SWOT analysis, momentum, technical aspects or the sector backdrop. Every subsequent published update on the stock will feature an introduction outlining the key reasons behind the opinion. Distribution of stock ratings

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