company financial statements prepared in accordance · pdf file ·...

COMPANY FINANCIAL

STATEMENTS PREPARED IN

ACCORDANCE WITH IFRS AS OF 31 DECEMBER 2014,

31 DECEMBER 2015,

& 31 DECEMBER 2016

NETWORK SOLUTIONS FOR INTERNET OF THINGS

KERLINK COMPANY IFRS Company financial statements

CONTENTS

INCOME STATEMENT 3

OPERATING PERFORMANCE INDICATOR 3

STATEMENT OF COMPREHENSIVE GAINS AND LOSSES 4

STATEMENT OF FINANCIAL POSITION 5

CASH FLOW STATEMENT 6

STATEMENT OF CHANGES IN EQUITY 7

NOTES TO THE COMPANY FINANCIAL STATEMENTS RESTATED IN ACCORDANCE WITH IFRS 8

1. COMPANY OVERVIEW AND HIGHLIGHTS OF THE YEAR 8

2. ACCOUNTING PRINCIPLES AND VALUATION METHODS 10

3. NOTES RELATED TO SEGMENT REPORTING 20

4. NOTES TO THE INCOME STATEMENT 23

5. NOTES TO THE STATEMENT OF FINANCIAL POSITION 27

6. OTHER INFORMATION 40


INCOME STATEMENT

In thousands of euros Note 2016 2015 2014

Revenue 4.1 14,117 7, 429 5,241

Costs of purchased materials and subcontracting (8,585) (3,563) (2,379)

Margin on cost of materials and subcontracting 5,532 3,866 2,862 Customer and subcontractor management

expenses 4.2 (1,406) (594) (515)

Research & Development expenses 4.2 (1,053) (850) (772)

Selling expenses 4.2 (2,101) (1,096) (734)

Administrative expenses 4.2 (2,389) (1,938) (1,023)

Operating margin (1,417) (612) (182)

Cost of net financial debt (271) (333) (41)

Other financial income and expenses (137) (16) (1)

Net financial costs 4.4 (408) (349) (42)

Income taxes 4.5 100 41 6

Net profit/(loss) of the Company (1,725) (920) (218)

Attributable to:

Equity owners of the Company

(1,725)

(920)

(218)

Basic earnings per share (euro) 6.2 (0.55) (1.58) (0.37)

Diluted earnings per share (euro) 6.2 N/A N/A N/A Weighted average shares outstanding (basic) 6.2 3,110,779 582,500 582,500

Weighted average shares outstanding (diluted) 6.2 3,194,438 603,869 603,630

OPERATING PERFORMANCE INDICATOR


EBITDA 3.2 (689) (77) 391

as a % of revenue -5% -1% 7%

Notes 1 to 7 are an integral part of these IFRS financial statements.


STATEMENT OF COMPREHENSIVE GAINS AND LOSSES


STATEMENT OF COMPREHENSIVE INCOME

Net profit/(loss) for the year (1,725) (920) (218)

Actuarial gains (losses) on defined benefit plans 5.12 (36) 9 (45)

Items that will not be recycled to profit or loss (36) 9 (45)

Deferred taxes on retirement benefit obligations 4.5 & 5.3 12 (3) 15

Items that will be recycled to profit or loss 12 (3) 15 Gains and losses recognized in equity,

not transferable to income statement (24) 6 (30)

Total comprehensive income for the year (1,748) (914) (248)

Attributable to :

Equity owners of the Company (1,748) (914) (248)



STATEMENT OF FINANCIAL POSITION

In thousands of euros

Note 31.12.2016 31.12.2015 31.12.2014

Property, plant and equipment 5.1 919 623 338

Intangible assets 5.2 4,028 2,233 1,568

Investments in subsidiaries 6.7 33 47 0

Other non-current assets 69 59 53

Deferred tax assets

Impôts différés 5.3 343 232 195

Total non-current assets 5,393 3,194 2,154

Inventories 5.4 8,197 2,381 1,138

Trade accounts receivable 5.5 5,665 2,892 1,267

Prepaid expenses and other current assets 5.6 1,284 632 164

Current income tax assets 5.7 678 475 575

Cash and cash equivalents 5.8 426 3 539

Total current assets 16,250

6,383 3,683

Total assets 21,643

9,576 5,837

Share capital 973 757 757

Other reserves 12,831 1,471 1,471

Retained earnings -3,649 -2,037 -1,138

Total equity 5.9 10,156

191 1,090

Long-term borrowings 5.10 & 5.17 1,069 1,371 1,584

Bonds redeemable in shares 5.11 0 0

0

Retirement benefit obligations 5.12 224 159 138

Provisions for other liabilities 5.14 77 87 0

Total non-current liabilities 1,370 1,617 1,722

Short-term borrowings 5.10 & 5.17 1,687 905 462

Bonds redeemable in shares 5.11 0 2,841 0

Trade accounts payable 5,648 2,146 907

Other current liabilities 5.15 2,783 1,876 1,657

Total current liabilities 10,118 7,768 3,026

Total liabilities and equity

21,643 9,576 5,837



CASH FLOW STATEMENT

In thousands of euros Notes 2016 2015 2014

Profit/(loss)t before income taxes 3.2 (1,825) (961) (224)

Depreciation and amortisation 770 879 629

Tax credits – CIR & CICE 5.7 (678) (475) (575)

Non-cash stock option charge 4.3 8 16 5

Other non-cash effects 6 (45)

Change in net working capital 5.16 (4,841) (2,160) (135)

Cash generated from operations before taxes and cost of

net debt (6,566) (2,696) (345)

Income taxes paid 475 575 389

Cost of net debt 4.4 271 333 41

Cash generated from operations (5,819) (1,788) 84

Purchase of property, plant and equipment 5.1 (484) (404) (251)

Purchase, capitalisation of intangible assets 5.2 (2,336) (1,080) (639)

Proceeds from sale of property, plant & equipment &

intangible assets (11) (6) 0

Net cash used in investing activities (2,831)

(1,490) (890)

Proceeds from issue of share capital 5.9 11,789 0 0

Proceeds from bonds redeemable in shares 5.11 0 2,550 0

Conversion of bonds redeemables in shares 5.11 (2,550) 0 0

Sale (purchase) of treasury shares 5.9 (89) 0 0

Variation in subsidies and grants 5.10 903 15 46

Proceeds from loans and borrowings 5.10 244 0 1,200

Repayment of borrowings 5.10 (417) (369) (331)

Interest paid on borrowing (9) (12) (20)

Interest paid on bonds redeemable in shares 5.11 (522) 0 0

Other flows related to financing operations 0 0 0

Net cash from financing activities 9,350 2,184 895

Net increase (decrease) in cash and cash equivalents 699 (1,095) 90

Cash and cash equivalents at the beginning of the year 5.8 (659) 436 346

Cash and cash equivalents at the end of the year 5.8 40 (659) 436


* Cash and cash equivalents includes bank overdrafts that are repayable on demand and arean integral part of

the Company’s cash management policy.


STATEMENT OF CHANGES IN EQUITY

Equity attributable to owners of the Company


Share

capital

Other

reserves

Retained

earnings

Revaluation

reserves

Total

Equity

At 1 January 2014 757 1,471 (896) 3 1,332

Gains and losses recognized in equity 0 0 15 (45) (30)

Net profit/(loss) 0 0 (218) 0 (218)

Total comprehensive income 2014 0 0 (203) (45) (248)

Stock option plan and similar expenses 4.3 0 0 5 0 5

Balance at 31 December 2014 757 1,471 (1,096) (42) 1,090

At 1 January 2015 757 1,471 (1,096) (42) 1,090

Gains and losses recognized in equity 0 0 (3) 9 6

Net profit (loss) 0 0 (920) 0 (920)

Total comprehensive income 2015 0 0 (923) 9 (914)


Balance at 31 December 2015 757 1,471 (2,004) (33) 191

At 1 January 2016 757 1,471 (2,004) (33) 191

Gains and losses recognized in equity 0 0 12 (36) (24)

Net profit/(loss) 0 0 (1,725) 0 (1,725)

Total comprehensive income 2016 0 0 (1,713) (36) (1,748)


Decrease in nominal value of shares 5.9 (128) 0 128 0 0

Issue of ordinary shares 5.9 274 8,940 0 0 9,214

Conversion of redeemable bonds 5.11 66 2,484 0 0 2,550

Treasury shares 0 (89) 0 0 (89)

Balance at 31 December 2016 974 12,831 (3,580) (68) 10,156



IFRS

NOTES TO THE COMPANY FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS Kerlink, is a French limited liability company (Société Anonyme), whose registered office is located at 1, rue

Jacqueline Auriol, 35235 Thorigné Fouillard, France.

In these financial statements and notes, amounts are shown in thousands of euros (k€) and differences of ± k€1 are

due to rounding.

The financial statements cover a period of 12 months for the years ended 31 December 2016, 31 December 2015

and 31 December 2014.

The financial statements include Kerlink SA, hereinafter referred to as the "Company".

1. COMPANY OVERVIEW AND HIGHLIGHTS OF THE YEAR

Company overview

Kerlink, founded in 2004, is a global expert in providing network infrastructure solutions for the Internet of Things (IoT).

The offering includes solutions (software, hardware, and services) for public operators, businesses, and utilities.

Kerlink's products are known to be robust, easy to integrate into all kinds of networks and fleets, compatible with

the majority of global standards, and inexpensive to operate and deploy. The services Kerlink offers cover client

needs including: network planning, network performance optimisation, remote network management, and GPS-

free location.

More than 70,000 products have been deployed in France and internationally for more than 260 clients including

GrDF, Saur, Suez, Bouygues, Orange, Swisscom, Médiatmétrie, and Tata Communications.

Highlights of the year

Throughout 2016, Kerlink communicated about technological innovations being developed as well as new

products on the market, responding to its partners' specific needs and complex issues.

Early in 2016, the company launched its very latest innovative infrastructure equipment: WIRNET IFEMTOCELL. This

indoor access point features an innovative compact design and optimal performance. The product's safety was

optimised to meet operator requirements for deployment inside buildings, for professional and private clients alike.

From January to June 2016, the Company conducted its initial public offering (IPO) project and managed day-to-

day activity, thereby adapting the strategic roadmap laid out early in the year: financing and managing growth.

On 29 March 2016, at the Annual Shareholders' Meeting, the Company carried out a capital reduction, a division

of the nominal value of its equities by one-fourth, and a transformation into a French limited liability company with

a Board of Directors when launching its initial public offering.

The Company announced its intention to perform an IPO on the Alternext Paris Market on 11 April 2016.

On completion of the IPO, announced on 19 May 2016, the Company raised about €12.8 million reaching €13.2

millionafter the partial exercise of the over-allotment option.

The share price at the IPO was set at €10.43per share. In all, the number of new shares issued under the global offer

was 1,016,453 (978,069 new shares + 38,384 new shares in the context of the partial exercise of the over-allotment

option).

The Company's shares were first listed on the Alternext Market of the Paris stock exchange on 24 May 2016.

In keeping with the plan to launch the IPO, Kerlink was supported by its historic shareholders. All convertible bonds

issued in June 2015 were converted into ordinary shares on the date the Company shares were registered on the

Alternext market. Those 244,488 shares were reimbursed at the IPO price for a total of €2.55 M.

On 18 May 2016, the Company entered into a liquidity contract with Louis Capital Market (LCM). The partnership

took effect at the opening of negotiations on 24 May 2016.


IFRS

On 14 June 2016, the Company announced the launch of its pilot project with telecom carrier Tata

Communications to deploy the first IoT dedicated network in India.

On 30 June 2016, the Company announced the signature of a technology partnership with SEMTECH for the

marketing of an innovative GPS-free geolocation solution.

On 15 November 2016, the Company was honoured at the Fast Technology 50 Ouest Awards, taking the jury

favourite "Coup de Coeur" award.


IFRS

2. ACCOUNTING PRINCIPLES AND VALUATION METHODS

2.1. PUBLICATION ENVIRONMENT

Kerlink prepares its statutory financial statements in accordance with general accounting principles applicable in

France (French GAAP) and the French General Accounting Plan. However, for its initial public offering on 19 May

2016, Kerlink wanted to voluntarily prepare its financial statements in accordance with IFRS for the financial years

ended 31 December 2015, 31 December 2014, and 31 December 2013. The transition date was set at 1 January

2013.

As a result, those financial statements were prepared specifically for the needs of the prospectus (Document de

Base) submitted for AMF approval, and do not replace the statutory financial statements prepared in accordance

with French GAAP approved by the Annual Shareholders’ Meeting. Furthermore, it is clearly stated that the

Company, given its size, is not currently required to prepare consolidated financial statements. Likewise, the

admission of shares on Alternext does not entail an obligation to prepare consolidated financial statements, unless

the Company exceeds the legal thresholds.

These IFRS financial statements for the financial years ended at 31 December 2016, 31 December 2015, and 31

December 2014 were approved by the Board of Directors on 6 March 2017.

2.2. BASIS OF PREPARATION

The main accounting methods applied when preparing the IFRS financial statements are set out hereinafter. Unless

otherwise indicated, these methods have been permanently applied to all the financial years presented.

Statement of Compliance

The IFRS financial statements have been prepared in accordance with the IFRS as adopted by the European Union

at 31 December 2016, and their application is mandatory at that date, with a comparison to 31 December 2015

and 31 December 2014.

The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS)

published by the International Accounting Standards Board (IAS B) and endorsed by the European Union. The IFRS

as adopted by the European Union can be consulted on the European Commission’s website:

http://ec.europa.eu/finance/company-reporting/ifrs-financial-statements/index_en.htm.

In addition, the financial statements include the information deemed material as required by the French

accounting standards-setter (Autorité des Normes Comptables – ANC) in Standard no. 2016-09.

First-Time Adoption of IFRS

The Company's first IFRS-compliant accounts were prepared at 31 December 2015. IFRS 1, "First-Time Adoption of

International Financial Reporting Standards", was applied at the transition date, 1 January 2013. The accounts were

prepared in accordance with IFRS as adopted by the European Union in force at 31/12/2015, for all the periods

presented.

Principle of preparing financial statements

IFRS financial statements were prepared according to the historical cost convention, except as regards certain

assets and financial instruments that have been measured at their fair value at the end of each reporting period,

as explained in the accounting methods below.

Generally, historical cost is based on the fair value of the counterparty given in exchange for goods and services.

Business Continuity

The financial statements were approved according to the business continuity principle.


IFRS

2.3. CHANGES TO STANDARDS, AMENDMENTS AND INTERPRETATIONS

Standards, amendments and interpretations that were mandatory in 2016

The new amendments to the standards and interpretations, which had to be applied as of 1 January 2016, had no

impact on the Company's financial statements:

Amendments to IFRS 11 Accounting for Acquisitions of Interests in Joint Operations

Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation

Improvements to IFRS 2012-2014 cycle: IAS 19 States that the market yields on government bonds shall be

used to discount actuarial debt.

Improvements to IFRS 2012-2014 cycle: Clarifies the meaning of 'elsewhere in the interim report'.

Improvements to IFRS 2012-2014 cycle: IFRS 5 Specific guidance on changes in methods of disposal

Amendment to IAS 1 Presentation of Financial Statements

Standards, amendments, and interpretations published by IASB but not yet applicable at 31 December 2016

The Company did not apply in advance any of the new standards and interpretations mentioned hereinafter,

which might affect it and whose application is not mandatory at 1 January 2016:

IFRS 9: Financial Instruments

IFRS 15: Revenue from Contracts with Customers

IFRS 16: Leases

Annual improvements, 2014-2016 cycle

Amendment to IAS 7 Disclosure Initiative

Amendments to IAS 12 Recognition of Deferred Tax Assets for Unrealised Losses

Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or

Joint Venture

Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions IFRIC 22: Foreign Currency Transactions and Advance Consideration

Kerlink is currently conducting an assement of the impacts and practical consequences of applying IFRS 16 The

approximate impact on the balance sheet of the first-time adoption of IFRS 16 may be assessed based on the

amount of lease commitments as of 31 December 2016, i.e.about €0.6M. See Note 6.1.

As for IFRS 15, the Company has multiple-item contracts (sale of hardware and support) for which the impacts are

currently under review.

2.4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS

With a view to the preparation of the financial statements, Management may make estimates and assumptions

that have an impact on the application of accounting methods and the amounts of assets and liabilities, income

and expenses, and the information provided in the notes.

The underlying estimates and assumptions are based on past experience and other factors considered reasonable

in view of the circumstances.

They are also used as a basis for exercising judgement required to determine the carrying amounts of assets and

liabilities, which cannot be obtained directly from other sources.

The use of estimates and assumptions is particularly important for:

- The measurement of the progress-based profit of construction contracts;

- The recoverable value of property, plant & equipment and intangible assets, as well as their useful life;

- Measuring provisions and social commitments;

- The Research tax credit (CIR);

- The tax liabilities and recognition of deferred taxes.


IFRS

2.5. PROPERTY, PLANT & EQUIPMENT AND INTANGIBLE ASSETS

Intangible assets

Under IAS 38, acquired intangible assets are recognised at cost, on the assets side of the balance sheet. The

intangible assets are primarily Research & Development costs.

Research & Development Costs

Research costs are recorded as expenses when incurred.

Development costs are essentially costs incurred to develop products or protocols that result in one or more patents.

Thus, development costs are capitalised, if the six criteria set out by IAS 38 are met:

Technical feasibility,

Intention to complete the intangible asset and use or sell it,

Ability to use or sell it,

Probable future economic benefits,

Availability of resources,

Ability to measure reliably the expenditure attributable to the project.

Capitalised development costs are only those costs that are directly attributable to a project, based on cost

tracking and analysis by project. The quota of the research tax credit and subsidies for the capitalised projects is

restated as subsidies and prepaid income

Implementation of IAS 23 Borrowing Costs did not lead to capitalising interest.

The Company regularly analyses compliance with capitalisation criteria. These costs are held on the assets side as

long as the Company retains most of the benefits and risks of the projects, and if the Company retains intellectual

property and has granted temporary use and/or operation rights to the results of the development phases.

Ongoing development projects undergo depreciation testing per the procedures defined in Note 2.6.

Capitalised costs are amortised using the straight-line method over the expected useful life for the company, which

is the same as the expected future economic beneficial life. This life is defined on a per-project basis, according to

the economic features specific to each development project.

Software

The costs of acquiring computer software, software, and licences are entered as assets on the basis of the costs

incurred to acquire and start up the relevant software.

Amortisation period and expense

The Company appraises whether the useful life of an intangible asset is finite or infinite.

Intangible assets having a finite life are amortised over their economic useful life and are tested for impairment any

time there is an indication that an intangible asset has been impaired. The amortisation period and the amortisation

method of an intangible asset having a finite useful life are re-examined at the end of every financial year, at least.

The straight-line amortisation for the main intangible assets covers a period of:

- Capitalised development costs, 3-5 years.

- Software: 3 years

Derecognition of intangible assets

An intangible asset is derecognised when it is sold or when there is no future economic benefit expected from its

use or sale. The profit or loss resulting from the derecognition of an intangible asset (calculated as the difference

between the net proceeds from the sale of the asset and its carrying amount) is recognised as net income when

the asset is derecognised.

Property, plant & equipment

Property, plant & equipment are recorded at their acquisition (or internal production) cost lesstotal depreciation

and impairment.


IFRS

Assets are subject to projected depreciable lives based on the probable useful life and conditions of the goods as

generally acknowledged in the industry, in consideration of a residual value, and calculated according to the

straight-line method, or, generally:

- Fixtures and fittings: 9-14 years

- Office & Computer Equipment: 3-8 years

- Furniture: 3-5 years

The assets' residual values and useful lives are reviewed and, as appropriate, adjusted at the end of each financial

year. An asset's carrying amount is immediately written down to bring it back to its recoverable value if the asset's

carrying amount is higher than its estimated recoverable value.

2.6 IMPAIRMENT TESTING OF FIXED ASSETS

Impairment testing is carried out on property, plant & equipment and intangible fixed assets at the end of their

useful life or as soon as an indication of impairment appears. Impairment testing consists of comparing the asset's

carrying amount to its recoverable value. An asset's recoverable value is the higher of the two: fair value less selling

costs, or value in use. The value in use is based on the discounted future cash flows that will be generated by those

assets.

Intangible assets that are not yet ready for start-up undergo impairment testing at least once a year and any time

there is an indication that the asset may have been impaired.

The data used under the discounted projected cash flow method are taken from annual budgets and multi-year

plans prepared by Management. The plans consist of five-year projections. As for value in use, it is calculated on

the basis of the discounted value of future flows over the residual life of the development costs. The discount rate

of projected cash flows reflects the expected rate of return for an investor in the company's line of business and

the risk premium specific to our company.

2.7. FINANCE LEASES AND OPERATING LEASES

At 31 December 2016, the company was not bound by any finance leases. A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset. For

operating leases, lease payments (excluding benefits obtained by the lessor) are recognised as an expense on a

straight-line basis over the life of the lease. When an operating lease ends before the lease period expires, the exit

fees are recognised as expenses of the period when the contract ended.

2.8. FINANCIAL ASSETS

Financial assets include:

- assets available for sale;

- assets held to maturity;

- loans and receivables;

- assets measured at fair value through profit or loss.

The measurement and recognition of financial assets and liabilities are defined in IAS 39, Financial Instruments:

Recognition and Measurement.

Assets held to maturity

These are exclusively fixed or determinable income securities with fixed maturities, other than loans and

receivables that the company intends and is able to hold until maturity. After their initial recognition at fair value,

they are measured and recognised at amortised cost using the effective interest rate method.

Assets held to maturity are tracked using an objective depreciation index. A financial asset is impairedif its

carrying amount is greater than its estimated recoverable value in impairment testing. Impairment is entered

under profit and loss.


IFRS

Assets at fair value through profit or loss.

Assets considered to be held for trading include assets that the Company intends to sell in the near future to

generate a capital gain, that belong to a portfolio of instruments managed together and for which there is a

practice of short term selling.

Trading assets can also include assets voluntarily classified in this category, regardless of the criteria listed above.

Receivables

Receivables are measured at their nominal value. As appropriate they have been impaired through a provision to

account for the difficulties in recovery to that they may have caused.

Management regularly reviews and measures the recoverable value of client receivables. If the recoverable value

is less than the net carrying amount, a provision for impairment or bad debt is recognised under net income. This

measurement of credit risk is based on past experience in recovering receivables and payment default, the age

of the receivables overdue, and the payment terms extended.

2.9. INVENTORIES

Inventories are recognised at the lower of: cost and net realisable value

Supply inventories are valued using the weighted average unit cost method.

Semi-finished and finished products, and works in progress were measured at their standard production cost.

A provision for impairment was created each time the realisable value or the current market price was lower than

the inventory value.

2.10. CASH AND CASH EQUIVALENTS

For the balance sheet, the Cash and cash equivalents item includes the cash in banks and term deposits (with

maturities less than three months or dischargeable at any time).

Bank overdrafts are included in current liabilities in "Borrowings and financial debts."

For the purposes of the cash flow table, cash and cash equivalents include cash and cash equivalents as defined

above, net of bank loans and overdrafts.

2.11. FOREIGN CURRENCY TRANSACTIONS Foreign currency transactions are converted to euro at the exchange rate in force on the transaction date. On the

closing date, monetary assets and liabilities in foreign currencies are converted to euro at the closing exchange

rate. The resulting gains or losses on foreign exchange are recognised as income or loss for the period.

2.12. EQUITY AND CAPITAL INCREASE EXPENSES

Ordinary shares are classified as equity.

Classification as shareholders’ equity results from the specific analysis of the characteristics of each issued

instrument. Accordingly, preference shares have been classified as equity instruments.

According to IAS 32, external expenses directly linked to an issue of new shares other than for reacquiring are

accounted for as a deduction from equity, net of any related income tax. It is recognized in this standard that if

the capital increase is carried out in conjunction with an IPO, the expenses incurred are apportioned reasonably

between the existing shares and the new shares. Only costs related to the issue of new shares are recorded as a

reduction of equity.

2.13. PROVISIONS FOR LIABILITIES AND CHARGES

Pursuant to IAS 37 - Provisions, Contingent Liabilities and Contingent Assets, the Company records a provision at the

end of the reporting period for each event that fulfils all of the following conditions:


IFRS

The existence of a legal or constructive obligation resulting from an event occurring prior to the end of the

reporting period;

The probability or certainty that an outflow of funds to a third party will be necessary to settle the obligation

without compensation after the end of the reporting period;

The existence of a reliable valuation estimate.

The estimated value of provisions is reviewed at the end of each reporting period. Provisions are maintained for as

long as the company is unable to determine their outcome with clarity and certainty.

Excluding exceptional, duly substantiated cases, provisions are presented on the balance sheet under non-current

liabilities.

Provisions are discounted if necessary. For the Company, the impact of this rule concerns only provisions for

employee benefits.

Provisions for contingencies and losses relate primarily to litigation and other risks.

The amount recognised as a provision represents the best estimate of the expenditure required to settle the

obligation. Management bases its judgement on the circumstances of each event and the available information.

However, given the difficulty of estimating certain commitments in these areas (particularly those of a social,

environmental or commercial nature), we cannot guarantee that the costs will not ultimately exceed the

provisioned amounts.

Provisions for warranty costs

A provision is made for costs to be incurred in future years to honour warranties for material sold. The costs incurred

represent the cost of labour and the cost of spare parts.

2.14. EMPLOYEE BENEFITS

Pension commitments

The Company's obligations with regard to compensation (as stipulated by legislation or in agreements) upon

retirement were evaluated on 31 December 2016 using the projected unit credit method. The method takes into

account the following actuarial assumptions:

- the estimated duration of future service by the employee;

- future salary;

- life expectancy;

- staff turnover.

The calculated obligation is discounted (using IBOXX Corporates AA 10+ index) and recognised according to the

years of service of employees, taking into account the corresponding social security contributions.

Actuarial gains and losses are recognised as other comprehensive income.

Long-service awards

The Company does not recognise commitments for long-service awards because they represent an immaterial

amount.

Individual Right to Training

The Company does not recognise the application of the Individual Right to Training (Droit individuel à la

formation/DIF) as it does not meet the criteria for liabilities, given that the training activity relates not to past services

but to services to be rendered in the future by employees.

BSPCE plans

The Company grants stock options in the form of “share options for business creators” (Bons de souscription de parts

de créateur d'entreprise/BSPCE). The fair value of the services provided by the employees in order to receive the

option discount is recognised as an expense over the vesting period, offset by an equity account entry. Income

net of transaction costs is credited to share capital (nominal value) and other reserves when the options are

exercised.


IFRS

Employee bonuses

The Company recognises a liability and a personnel expense for bonuses according to calculation formulas that

take into account the earnings of the companies in question. The Company recognises a provision when there is a

contractual obligation or if a constructive obligation exists due to a past practice.

2.15 STOCK OPTION AND SIMILAR PLANS

Some employees of the Company receive compensation in the form of share-based payment through a “share

options for business creators” (Bons de souscription de parts de créateur d'entreprise/BSPCE) plan.

Pursuant to IFRS 2, the cost of equity-settled transactions is recognised as an expense for the period in which the

rights to the equity instruments are acquired, against a corresponding increase in equity.

If an employee leaves the Company during the vesting period, the expenses previously recorded for the employee

pursuant to IFRS 2 are reversed for the financial year. Kerlink has implemented IFRS 2 for all equity instruments

granted since the Company's creation.

The fair value of the granted options is determined by applying the Black-Scholes-Merton options pricing model.

Note 5.13 presents these items in detail.

2.16. Borrowings and financial liabilities

Financial liabilities are initially recognised at fair value and subsequently measured at amortised cost using the

effective interest method, net of transaction costs incurred if they are material.

The Company has taken out various loans and credit lines.

The Company has conducted a specific review of its liquidity risk and believes that it is able to meet its future

commitments.

In March 2016, the Company entered into a factoring contract. According to IAS 39, in order to determine whether

the transfer of receivables to the factoring company results in derecognition of receivables and payables, the

entity's exposure to the risks and benefits associated with the transfer of credit assets. Since the contract signed by

the Company is not without recourse, the assets cannot be derecognised and are therefore valued as trade

receivables in exchange for financial debts

2.17. PUBLIC SUBSIDIES RECEIVABLE

The Company receives several forms of public assistance, namely conditional advances and subsidies. This

assistance is detailed in Note 5.10.

Repayable advances

The Company obtains non-interest-bearing repayable advances for the financing of its collaborative projects and

certain research and development projects. The difference between the present value of the advance at the

market rate (i.e. the principal ultimately repaid in the absence of interest flows, adjusted at the market rate) and

the amount received in cash from the public body constitutes a subsidy as defined in IAS 20. This difference must

be recorded as a subsidy related to income insofar as the research and development costs generated as part of

the project are recognised immediately as expenses, and is recorded as income in the statement of comprehensive

income.

The financial cost of the repayable advances calculated at the market rate is subsequently posted to financial

expenses.

Subsidies are presented in the income statement as a deduction from “Research and Development Expenses” as

they constitute assistance for innovation and the financing of research activities.

Subsidies

Subsidies received are recorded as soon as the corresponding receivable becomes reasonably certain, taking into

account the conditions set for the granting of the subsidy.

Operating subsidies are recorded in “Research and Development Expenses”, taking into account, where

applicable, the timing of the corresponding expenses in accordance with the principle of matching expenses to

income.


IFRS

2.18. SECTOR INFORMATION

Pursuant to IFRS 8-Operating Segments, the sector information presented is established on the basis of the internal

reporting data used to analyse the performance of activities and the allocation of resources by the Management

Committee, which is comprised of the CEO, CFO, CTIO and CSO and constitutes Kerlink's main operational decision-

making body.

Internal reporting is defined along two main lines: sector of activity (public operators, private operators and

Reference Design) and sales type (products, services, licences, expertise). The sectors of activity have been

designated by Kerlink as the main areas for analysis by the main operational decision-making body. Accordingly,

and pursuant to IFRS 8, the Company presents the sectors of activity as operating segments, covering:

Public infrastructure (products and services): The “Public Operators” activity encompasses sales of network

solutions for the Internet of Things and associated products and services to operators using a network that

is open to customers or providing customers with electronic communications services.

Private infrastructure (products and services): The “Private Operators” activity encompasses sales of

network solutions for the Internet of Things and associated products and services to entities seeking to

create electronic communications networks reserved for the use of one or multiple persons constituting a

closed user group for the purposes of exchanging internal communications within the group.

Reference Design (service): The “Reference Design” activity encompasses sales to meter manufacturers

that include a Kerlink reference design (hardware and software) in the original assembly of their product.

This design incorporates all of the high-performance embedded technologies developed by Kerlink (radio,

consumption, software stack, etc.) and enables the manufacturer to access the market more quickly with

a proven solution.

The Management Committee evaluates the performance of these sectors on the basis of revenue and EBITDA. As

the assets and liabilities connected to these sectors are not covered in a specific report to the Management

Committee, no information is presented by operating segment in the notes within the scope of IFRS 8.

Financial data by operating segment is compiled according to the same rules as those used for IFRS financial

statements. The information provided with regard to these sectors is not reported on a consolidated basis.

2.19. PRESENTATION OF THE INCOME STATEMENT

Kerlink presents its income statement by function, as defined in Recommendation 2013-03 of the ANC (France's

accounting standards authority). Details on income and expenses are provided in Notes 4.1 and 4.2.

Purchasing costs and sub-contracting

Purchasing costs and sub-contracting consist essentially of:

purchases of components and other products necessary for the production of the goods sold;

third party services for the manufacture, assembly and testing of the goods sold;

customs duties, transport costs and other taxes directly attributable to these purchases;

the cost of outside personnel, IT hosting and telephone lines directly attributable to the sale of services.

EBITDA

EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortisation) is an indicator that measures the contribution

from business activity before the amortisation and depreciation of fixed assets.

Operating profit/loss

Operating profit/loss encompasses all of the income and expenses directly linked to the Company's activities,

whether they are recurring or the result of one-time decisions or operations.

Net cost of financial debt

All of the expenses and income resulting from the net financial debt during the period, representing the Company's

overall cost of financing, excluding the cost of equity.


IFRS

2.20. REVENUE

The main types of contracts identified at the Company are contracts pertaining to the sale of products in series

(base stations, gateways, concentrators, etc.), contracts pertaining to the provision of services (mainly related to

research and development) and licensing agreements. In the course of its operations, the Company also signs

multiple-element arrangements for goods and services, which may correspond to a combination of different

services. In such instances, the revenue is recognised separately for each element provided they are separately

identifiable.

Contracts for the sale of products

Pursuant to IAS 18, revenue is only recognised if the company has transferred to the buyer the significant risks and

rewards of ownership and if it is probable that the economic benefits associated with the transaction will flow to

the company. Revenue is measured at the fair value of the consideration received, net of any discounts and

rebates and excluding VAT and other taxes.

Contracts related to research and development

With regard to contracts pertaining to research and development, revenue is recognised if:

- the stage of completion can be measured reliably;

- the costs incurred, or to be incurred, in respect of the transaction can be measured reliably.

The earnings on contracts for the rendering of research and development services are recorded by reference to

the stage of completion. The stage of completion is determined by comparing the costs incurred to date to the

total cost provided for in the contract. If the earnings on a contract cannot be estimated reliably, the revenue is

recognised only to the extent of the incurred costs of the contract that are expected to be recoverable.

Licensing agreements

The licensing agreements in use pertain exclusively to software. The revenue related to the royalties collected on

the basis of the number of items deployed is recognised as and when it is acquired.

2.21 RESEARCH TAX CREDIT

Research tax credits are awarded to companies by the French government to encourage them to carry out

technical and scientific research. Companies that evidence expenses that meet the required criteria are eligible

for a tax credit that may be used toward the payment of the corporate tax due for the financial year in which the

expenses are incurred and the following three financial years. If applicable, the remaining portion is reimbursed.

The research tax credit is presented in the statement of comprehensive income as a deduction from “Research

and Development Expenses”.

2.22. TAXES

The income tax expense is comprised of current tax and deferred tax. Deferred taxes are stated for all temporary

differences resulting from the difference between the tax base and accounting base for assets and liabilities

disclosed in the financial statements. The main temporary differences are related to tax loss carryforwards.

Current taxes are calculated according to the tax rates (and tax regulations) enacted or substantively enacted at

the reporting date. The tax rate used to calculate deferred taxes is 33.33% for the reporting periods ended 31

December 2014 and 31 December 2015. For the reporting period ended 31 December 2016, the rate used is 28%.

This change is due to the French Draft Finance Law for 2017, adopted on 29 December 2016, which stipulates a

reduction of the corporate tax rate to 28%, is to be phased in between 2017 and 2020.

Deferred tax assets are recorded if there is a high probability that tax expenses will be set against future taxable

earnings. In assessing the Company's ability to recover these assets, forecasts of future taxable profits and records

of taxable income for previous years are taken into account. Deferred tax assets are only recognised if it likely that

future profits will be sufficient to absorb the losses carried forward. For financial years 2014, 2015 and 2016, the

Company did not recognise deferred tax assets generated by tax loss carryforwards as it is not possible to determine

the date on which Kerlink will record profits with sufficient certainty.


IFRS

On the income statement, the CICE tax credit for competitiveness and employment is deducted from personnel

expenses (Note 4.3), and the CVAE (value-added contribution for businesses) is included as part of “other

expenses” under “Administrative Expenses” (Note 4.2).

2.23. METHODS FOR CALCULATING EARNINGS PER SHARE

Earnings per share is calculated by dividing the net income attributable to shareholders by the weighted average

number of shares outstanding during the financial year.

Diluted earnings per share is calculated by dividing the net income attributable to shareholders by the weighted

average number of shares outstanding during the financial year, adjusted for the impact of the conversion of

dilutive securities into ordinary shares. The Company uses the following categories of dilutive securities: stock

options.

2.24. MANAGEMENT AND EVALUATION OF FINANCIAL RISK

Kerlink may become exposed to different kinds of financial risk.

The Company employs simple methods appropriate to its size to limit the potentially unfavourable impacts from

these risks to its financial standing.

The Company affirms that it does not use financial instruments for speculative purposes.

Interest rate risk

The Company does not have material exposure to interest rate risk as it has not incurred any variable-rate debt.

Foreign exchange risk

The main risks associated with the impacts of foreign currency exchange are deemed immaterial. This is because

the Company pays only a very small number of suppliers in foreign currencies. The Company does not have a bank

account in US dollars.

At this stage of its development, the Company has not used hedging to protect its business against exchange rate

fluctuation.

Its foreign exchange risk concerns only the settlement of operating expenses for its Singapore subsidiary. This

subsidiary's purpose is to pursue business development for the Group in the Asia-Pacific region. It is fully financed by

the parent company, with which it has established a service provision agreement.

Liquidity risk

Since its creation, the Company has financed its growth through the strengthening of its capital base, employing

successive capital increases, bonds convertible into shares, bonds redeemable for shares, public assistance for

innovation (BPI repayable advances), the repayment of receivables associated with the research tax credit and

bank loans.

The Company is not exposed to liquidity risk related to the potential exercise of early redemption clauses on bank

loans.

The Company monitors its risk of liquidity shortages on a regular basis through monitoring mechanisms.

Credit risk

The exposure to credit risk is associated with the research tax credit, cash and cash equivalents and accounts

receivable:

- Receivables associated with the research tax credit present a credit risk that is deemed immaterial in view of

the Company's history;

- With regard to its cash investments, the Company deals with leading financial institutions and therefore does

not bear material credit risk associated with cash flow. A factoring agreement was signed on 4 March 2016;

- With regard to accounts receivable, credit risk exists in that a loss may occur if a customer fails to honour its

commitments within the agreed timeframe. This credit risk associated with accounts receivable is limited due

to internal procedures in place and the signing of a credit insurance policy with COFACE on 3 March 2016.


IFRS

3. NOTES RELATED TO SEGMENT REPORTING

3.1. INFORMATION BY OPERATING SEGMENT

Revenue

In thousands of euros 2016 2015

Change in %

16 vs 15 2014

Change in %

15 vs 14

Private Networks 8,800 6,741 31% 4,795 41%

Public Networks 5,163 688 650% 446 54%

Reference Design 153 0 0

Total revenue 14,117 7,429 90% 5,241 42%

Revenue increased by 90% to € 14.1 million, compared to € 7.4 million for financial year 2015. This strong growth

momentum, which is totally organic, is perfectly in line with the Company’s operating plan announced at the time

of its IPO on the Alternext Paris market in May 2016.

The excellent performances of the year were carried by both public operators and private operators. The

intensification of commercial actions towards public operators (historical and alternative telecoms operators),

initiated at the end of 2014, began to measure up with sales up sharply.

As announced, the Reference Design offer recorded its first revenues in 2016.

EBIDTA

In thousands of euros 2016 2015 2014

Private Networks 24 57 483

Public Networks (719) (135) (92)

Reference Design 6 0 0

EBITDA (689) (77) 391

This indicator is used by Management to monitor and track the performance of the activities and to decide on the

allocation of resources.

Thanks to the increase in the volume of activity in the Private Infrastructure segment, EBITDA remains positive despite

the increase in overheads.

EBITDA in the Public Infrastructure segment is in deficit given the large investments made to gain market share and

take strategic positions.

With the signing of several contracts, public utilities have increased significantly (+ 650% of revenue) and now

represent 37% of the Company's revenue (compared with 9% in 2015).

3.2. RECONCILIATION WITH COMPANY DATA

The table below reconciles EBITDA with consolidated operating margin:


EBITDA 1 (689) (77) 391

Depreciation and

amortisation of

property, plant

and equipment and

intangible assets

(728) (535) (573)

Operating margin (1,417) (612) (182) 1 EBITDA: Earnings before interest, taxes, depreciation and amortisation.


IFRS

The net income before tax in the cash flow is calculated as follows: Note 4.5


Net profit/(loss) of the year (1,725) (920) (218)

Income taxes (100) (41) (6)

Profit/(loss) before income

taxes (1,825) (961) (224)

3.3. REPORTING BY GEOGRAPHIC AREA

Information by geographic area


Change in %

16 vs 15 2014

Change in %

15 vs 14

France 10,578 5,987 77% 4,813 24%

EMEA outside France 2,918 1,249 134% 425 194%

APAC 450 87 419% 3 2,800%

NCSA 171 105 62% 0

Total revenue 14,117 7,429 90% 5,241 42%

The strong growth momentum was marked both in France and internationally (EMEA sales excluding France, APAC

& NCSA multiplied by 2.5 over the year). Revenue from ordinary activities abroad represented nearly 25 % of 2016

revenue versus 19% in 2015.

More specifically, revenue in the Europe area rose sharply to € 2.9m, up from € 1.2m in 2015 (+ 134%). With revenue

of € 450 k at the end of 2016, the Company also strengthened its positions in the Asia geographic area. Finally, in

the US market, which is expected to see strong growth, revenue achieved in 2016 is still marginal (€ 171,000 in 2016

versus € 105,000 in 2015).

3.4. BREAKDOWN OF REVENUE BY MAJOR CUSTOMER

The top 10 customers account for 69% of revenue in 2016, compared to 64% in 2015 and 71% in 2014.

2014

In thousands

of euros %

Client C 1,078 21%

Client A 737 14%

Client D 574 11%

2015

In thousands

of euros %

Client A 787 11%

Client B 749 10%

Client E 747 10%

2016

In thousands

of euros %

Client F 3,326 24%

Client D 1,181 10%

Client G 1,074 10%


IFRS

The Company invoiced more than 260 customers in 55 countries during 2016, compared with just over 120 in 34

countries for 2015.

Historical customers renew their trust year after year and continue the deployment of the Company's recognized

equipment. On the same development momentum, the new IoT partners are also eloquently positioned among

the Company's main customers in 2016.

3.5. NON-CURRENT ASSETS BY GEOGRAPHIC AREA


France 5,393 3,194 2,154

Rest of the world 0 0 0

Total non-current assets 5,393 3,194 2,154


IFRS

4. NOTES TO THE INCOME STATEMENT

4.1. REVENUE

Revenue include sales of products and services. They are measured at the fair value of the consideration

receivable, net of any trade discounts and volume rebates and excluding any VAT or other taxes.

Information by type of product


Change in %

16 vs 15 2014

Change in %

15 vs 14

Sales of equipment 12,553 4,966 153% 3,565 39%

Sales of services 1,411 2,462 -43% 1,676 47%

Sales of reference design 153 - -

Total revenue 14,117 7,429 90% 5,241 42%

The distribution of sales by nature obviously varies in favor of equipment sales.

This development, in line with the Company's operating plan, is driven by the sales of the new IoT infrastructure,

which is simple to use and open to a maximum of uses, which have received a very favorable reception from

Private and public operators. Historic equipment sales in M2M are also up in financial year 2016.

In financial year 2015, the Company experienced a strong level of activity on sales of services, due in particular to:

- The realization of the development of specific solutions for certain customers, for an amount of €1,235k. Today,

the progress of these projects allows the deployment of equipment on the ground.

- The deployment of a system of relief of hearings in India, for an amount of €234k

As a result, in 2016, the Company recorded an unfavorable base effect. IoT offers of services are up by 42%.


IFRS

4.2. EXPENSES BY NATURE ALLOCATED PER FUNCTION

Customer and subcontractor management expenses

The costs of the network monitoring / customer support services and management of the relationship with the

subcontractors are broken down as follows:


Salaries and social charges 1,125 540 477

Traveling expenses 0 3 3

Other expenses 281 52 34

Total 1,406 594 515

The structuring of the subcontractor management team made it possible to more effectively monitor the trends in

the manufacturing and delivery volumes during 2016. The Company also strengthened the support team in order

to meet the requirements of large public operators. (See Note 4.3)

Research & Development expenses

R&D expenses break down as follows:


Salaries and social charges 1,415 1,269 1,231

Prototypes costs 309 281 284

External personnel costs 1,009 418 161

Amortisation of R&D costs 426 413 497

Other R&D expenses 416 73 77

Total Research and Development costs 3,575 2,455 2,250

Capitalized development expenditure (2,137) (1,170) (836)

Research tax credit (CIR) (321) (249) (480)

Grants and subsidies (64) (186) (162)

Total Research and Development income (2,522) (1,605) (1,478)

Total 1,053 850 772

In 2016, the Company continued to intensify its research and development efforts in response to a very significant

increase in customer demand and a strategy focused on innovative products.

At the end of 2016, more than 20 service provider companies are working full-time on the Company's site and

contributing to the innovation effort within the Research & Development department.

Selling expenses

Marketing and commercial costs breakdown as follows:




Consultancy & advisory services 362 257 62

Trade shows and marketing 266 130 85

Other commercial expenses 104 35 24

Total 2,101 1,096 734

The strengthening of sales teams continued in 2016 with the recruitment of three employees as of January 2016. The

increase in the 2016 budget dedicated to trade shows and marketing enabled the Company to be present at17

strategic events abroad and 6 in France.


IFRS

Administrative expenses

Administrative and overhead costs break down as follows:



External personnel costs 74 268 258

Consultancy & advisory services 635 365 94

Seminars and traveling expenses 44 10 49

Accruals 28 321 0

Depreciation and amortisation 48 89 38

Other expenses 391 257 254

Total 2,389 1,938 1,023

In 2014 and 2015, two members of the Executive Committee received their remuneration directly from Arvallon SAS,

in which they held 100% of the shares. Arvallon SAS and Kerlink had entered into a service agreement. As of 1st April

2016, these two executives receive their compensation from the Company. (See Note 6.5)

The increase in Consultancy & advisory services is partialy due to the IPO and the cost of being listed on the Alternext

market.

4.3. PERSONNEL COSTS AND HEADCOUNT

Headcount 2016 2015 2014 Customer service activities and subcontractors mangagement 25 13 11

Research & Development 25 19 19

Sales and marketing 12 9 6

Administrative 16 12 6

Total headcounts 78 53 42

The average number of employees during the year was 64.3 compared to 44.4 the previous year and 39.2 for 2014.

Personnel expenses


Customer service activities and

subcontractors mangagement 1,125 540 477

Research & Development 1,415 1,269 1,231

Sales and marketing 1,090 516 521

Administrative 1,169 628 330

Personnel expenses 4,800 2,953 2,559


Wages and salaries 3,218 1,998 1,792

Social security charges 1,409 897 792

Tempory staff 199 62 10

Non-cash expenses related to share based

payments (Note 5.10) 8 16 5

Pension expenses under defined

contribution plans (Note 5.13) 29 31 11

Other personnel costs* (63) (51) (51)

Personnel expenses 4,800 2,953 2,559

* o/w CICE (69) (58) (53)


IFRS

Headcount 2016 2015 2014

Executives 4 2 2 Managers / Engineers 56 39 28

Employees 18 12 10

Total headcount 78 53 42

4.4. NET FINANCIAL COSTS


Interests costs on bonds redeemable in

shares 231 291 0

Borrowing costs 36 38 37

Amortization of borrowing costs 4 4 4

Cost of net financial debt

Borrowing costs 271 333 41

Net interest cost arising on provisions 35 1 0

Other financial income and expenses 22 13 2

Gains and losses on foreign exchange

transactions 80 2 (1)

Net financial costs 408

349 42

4.5. TAX PROOF


Current taxes 0 0 0

Deferred taxes (Note 5.3) 100 41 6

Income tax expense 100 41 6

Deferred tax assets arising from tax losses are recognized only for the deferred tax portion attributable to probable

future profits. For financial years 2014, 2015 and 2016, the Company did not recognize deferred tax assets arising

from tax losses carried forward because it is not possible to determine with sufficient assurance the date on which

Kerlink will realize profits. The differences between the theoretical tax rate applicable in France, used for the preparation of IFRS accounts,

and the effective tax rate recorded during the year are as follows: :


Result before income taxes (1,825) (961) (224)

Theoretical income tax expense (33.33%) 608 320 75

Impact on taxes :

Unrecognized tax losses (608) (320) (75)

Fair value of the zero rate loans (9) 22 14

Pension expenses under defined

contribution plans (10) (10) (4)

Origination and reversal of temporary

differences 0 3 (1)

Recognition of previously unrecognised tax

losses 0 0 0

Cancellation of tax specific depreciation (2) 6 0


payments (3) (5) (2)

Research tax credit (CIR) (96) (56) (14)

Impact of variations in tax rates (33.33% to

28%) 19 0 0

Other 0 0 0

Total tax expense per income statement (100) (41) (6)

Tax on items recognized in equity (12) 3 (15)

Total tax expense per statement of

comprehensive gains and losses (112) (38) (21)


IFRS

5. NOTES TO THE STATEMENT OF FINANCIAL POSITION

5.1. PROPERTY, PLANT AND EQUIPMENT


Equipment &

technical

installations

Other

property,

plant and

equipment

Total

As of 31 December 2014

Opening net carrying amount 69 89 158

Additions / reclassification (1) 238 13 251

Disposals - - 0

Depreciation and impairment (40) (30) (70)

Closing net carrying amount 267 72 339

Cost or valuation 468 223 690

Cumulative depreciation & impairment (201) (151) (352)

Net carryingmount at 31 December

2014 267 72 338


Opening net carryingamount 267 72 338

Additions / reclassification (1) 331

73 404

Disposals - - 0


Closing net carryingamount 511

112 623

Cost or valuation 799 295 1 094


Net carryingamount at 31

December 2015 511 112 623 As of 31 December 2016


Additions / reclassification (1) 425 59 484

Disposals - - 0


Closing net carryingamount 789 131 919

Cost or valuation 1 224 354 1 578


Net carryingamount at 31

December 2016 789 131 919 (1) A negative amount is the reclassification from “Assets in progress” to “Fixed assets” when it is brought into service.

The Company does not own the premises it occupies.

In addition, expenses amounting to € 398 k for the year ended December 31, 2016, € 274 k for 2015 and € 202 k for

2014 have been capitalised. These expenses are solely the production costs of test benches, equipment entrusted

to the subcontractors and necessary for functional tests of products during the manufacturing process.


IFRS

5.2. INTANGIBLE ASSETS


Assets in

progress

Development

costs

Other

intangible

assets

Total


Opening net carrying amount 3 1 423 6 1,431

Additions / reclassification (1) 634 - 6 639

Disposals - - - 0

Amortisation and impairment -

(497) (6) (503)

Closing net carrying amount 637 926 6 1,568

Cost or valuation 637 2,475 67 3,178

Cumulative amortisation & impairment - (1,549) (61) (1,610)

Net carrying amount at 31

December 2014 637 926 6 1,568


Opening net carrying amount 637 926 6 1,568

Additions / reclassification (1) 793 268 20 1,080

Disposals - - - 0

Amortisation and impairment - (413) (3) (416)

Closing net carrying amount 1,429 781 23 2,233

Cost or valuation 1,429 2,259 87 3,775

Cumulative amortisation & impairment (1,478) (65) (1,542)


December 2015 1,429 781 23 2,233


Opening net carrying amount 1,429 781 23 2,233

Additions / reclassification (1) 664 1,166 506 2,336

Disposals - - - 0

Amortisation and impairment - (426) (114) (540)

Closing net carrying amount 2,093 1,521 415 4,028 Cost or valuation 2,093 3,425 594 6111

Cumulative amortisation & impairment - (1,904) (179) (2,083)


December 2016 2,093 1,521 415 4,028 (1) A negative amount is the reclassification from “Assets in progress” to “Intangible asset” when it is brought into

service.

In 2015, an amount of € 129 k was recognized as an asset in progress for the implementation of an ERP system.

In 2016, an amount of € 355 k was capitalised for this same project, which was brought into service in March 2016.

Other current assets are product development work.

No impairment of intangible assets was recognized over the three years presented.


IFRS

5.3. DEFERRED INCOME TAXES

Deferred income taxes are calculated on all temporary differences under the liability method using an enacted

tax rate of 28% pour the year ended 31 Decmber 2016 and 33.33% for the financial years 2015 and 2014. The

movement on the deferred income tax account is as follows:

In thousands of euros : 2016 2015 2014

At beginning of year 232 194 173

Taxes recognized on other comprehensive

income 12 (3) 15

Tax exspense recognised in income

statement (Note 4.5) 100 41 6

At end of year 343 232 194

Deferred tax assets and deferred tax liabilities are offset in non-current items in accordance with IAS 12, as Kerlink

is a single French tax entity in 2016.

The amounts of deferred taxes are shown in the balance sheet as follows:


Deferred tax assets 343 232 195

Deferred tax liabilities 0 0 0

Total 343 232 195

The breakdown of recognised deferred income tax is as follows:


Fair value of the zero rate loans (27) (36) (14) Pension expenses under defined

contribution plans 75 53 46

Origination and reversal of temporary

differences 0 0 3

Recognition of previously unrecognised tax

losses 0 0 0

Cancellation of tax specific depreciation (4) (6) 0


payments 12 9 4

Research tax credit (CIR) 308 212 156

Impact of variations in tax rates (33,33% to

28%) (17) - -

Total 343 232 194 Losses carried forward are detailed below:

Period

In thousands

of euros

Before 01/01/2014 2,997

31/12/2014 796

31/12/2015 1,299

31/12/2016 2,003

Total 7,096

The deficits presented above can be carried forward indefinitely.


IFRS

5.4. INVENTORIES


Raw materials and supplies 3,868 1,590 684 Semi-finished goods 2,564 - -

Finished goods 1,828 831 454

Less : Provision for impairment of inventories (63) (40) 0

Total 8,197 2,381 1,138

Changes in impairment of inventories



Exchange differences 0 0 0

Addition 23 40 0

Decrease 0 0 0

Closing net carrying amount 63 40 0

An impairment charge of € 23 k was recognized during the year, compared to an amount of € 40 k in the previous

year.

The increase in inventories of intermediate products and finished products allows the Company to respond more

quickly to customer demand on successful range products.

5.5. TRADE ACCOUNTS RECEIVABLE


Trade accounts receivable – gross 5,861 3,088 1,267

Less : Provision for impairment of receivables (196) (196) 0

Total 5,665 2,892 1,267

All accounts receivable in 2014 is due less than one year. In 2015 an amount of € 835 k is due in more than one year.

In 2016 an amount of €652 k is more than one year.

In February 2016, the Company became aware of the financial difficulties of one of its customers. A provision of

€189 k was recognized in the financial statements as at 31st December 2015 on a total receivable of €189 k.

This Company has been in legal liquidation since 14 December 2016.

5.6. OTHER CURRENT ASSETS


Prepayments 0 14 1

Prepaid expenses 151 155 21

Other receivables 1,133 463 142

Less : Provision for impairment 0 0 0

Total 1,284 632 164

Other receivable are essentially made up of a VAT cedit of €703 k.


IFRS

5.7. CURRENT INCOME TAX ASSETS


Research tax credit (CIR) recognised in the

income statement 321 249 480

Activated research tax credit (CIR) 418 265 191

Amortisation of research tax credit (CIR) (130) (96) (149)

Research tax credit claim 608 417 522

Tax credit for encouraging competitiveness

and jobs (CICE) 69 58 53

Research tax credit (CIR) & CICE 678 475 575

5.8. CASH AND CASH EQUIVALENTS AND BANK OVERDRAFTS


Cash in hand 315 3 539 Liquidity agreement funds 111 - -

Cash & cash equivalents 426 3 539 Overdraft (386) (662) (103)

Cash and cash equivalents less bank

overdrafts 40 (659) 436

5.9. EQUITY

The share capital has changed as follows between 1st January 2014 and 31st December 2016:

Period Opening

Capital

decrease

(1)

Four to

one stock

split (2)

Redeemable

bond

conversion (3)

Capital

increase

(4)

Exercise

of

options

Closing Par value Share

capital

31/12/2014 582,500 - - - - - 582,500 1.30 757,250

31/12/2015 582,500 - - - - - 582,500 1.30 757,250

31/12/2016 582,500 0 1,747,500 244,488 1,016,453 14,400 3,605,341 0.27 973,442

(1) As part of the transformation of the Company from an SAS (French simplified stock company) to

an SA (French limited liability company), the share capital was reduced from € 757,250 to € 629,100

by a decrease of the par value from € 1.30 to € 1.08.

(2) As part of its initial public offering, the Company decided to divide the par value of the shares by

4, bringing this value to € 0.27 and therefore multiplying the number of shares by 4.

(3) The bonds redeemable in shares have been repaid by issuing 244,488 new shares.

(4) The admission of the Company on to the Alternext Paris market lead to a capital increase by issuing

978,069 ordinary shares. The over-allotment option was exercised and also resulted in a capital

increase through the issuance of 38,384 new shares.


IFRS

The breakdown of the shares is detailed in the table below:

Number of shares 31.12.2016 31.12.2015 31.12.2014 01.01.2014

Ordinary shares 3,605,341 431,250 431,250 431,250 Preferred shares 0 151,250 151,250 151,250

Number of shares 3,605,341 582,500 582,500 582,500 Characteristics of preference shares

Preferrence shares have the following principal characteristics:

A preferential distribution right in case of assignment, merger or liquidation

A conversion right with a anti-dilution protection clause in the event of new securities issuing more than €

500 k

An extended right to information

A right to convene the Shareholders’ Meetingght to designate a member of the Strategic Committee

Characteristics of BSPCE

BSPCE 2013 BSPCE 2015

Date of the Shareholders’Meeting 12 April 2013 29 June 2015

Date of the Chairman’ssion 12 April 2013 29 June 2015

No. of options authorised initially 22 500 15 000

No. of option granted 22 500 5 000

First BSPCE option exercise date 12 April 2016 29 June 2018

Last BSPCE option exercise date 12 April 2023 29 June 2025

Subscription price in € 7.94 € 10 €

Terms and conditions of exercise (1) (2)

Number of options

Exercised 3,600 0

Cumulative number of BSPCE canceled or lost 5,100 0

Number of remaining BSPCE 13,800 5,000

Number of potential shares issued from BSPCE after

¼ split (Note 5.13) 55,200 20,000

(1) Terms and conditions of exercise of BSPCE 2013:

The BSPCE may be exercised by the beneficiary only provided the beneficiary is still present in the Company on

the exercise date.

The BSPCEs may be exercised at any time from their issuance until 12 July 2023 at midnight. The rights to exercise

the BSPCE will be open in the following quantities and periods:

One third of the options issued may be exercised as of 12 April 2016, if the holder is an employee or officer

(the "presence condition") on that date;

One third of the options issued may be exercised as of 12 April 2017, if the presence condition is met on

that date;

One third of the warrants issued may be exercised as of 12 April 2018 if the presence condition is fulfilled

on that date; it being specified that in the event of the admission of the Company's shares on a

regulated market, the options all become immediately exercisable.

(2) Terms and conditions of exercise of BSPCE 2015:

The BSPCE may be exercised by the beneficiary only provided that the beneficiary is still present in the Company

on the exercise date

The BSPCEs may be exercised at any time from their issuance until 29 June 2025 at midnight. The rights to exercise

the BSPCE will be open in the following quantities and periods:

as of 29 June 2018, to the extent of 1,667 BSCPE;

as of 29 June 2019, to the extent of 1,667 BSPCE;

effective 29 June 2020, to the extent of 1,666 BSPCE;

The rights to exercise BSPCEs arising in respect of a period but not used in respect of that period will be cumulative

with those of the following periods


IFRS

Liquidity agreement

Following its initial public offering on the Alternext Paris market, on 19 May 2016, the Company signed a liquidity

agreement with Louis Capital Market LLP (LCM) to promote the liquidity of Kerlink’s shares.

In this context, the Company has entrusted 200,000 euros to LCM in order for the latter to take positions in both the

purchase and the sale of the Company's shares. The portion of the contract that is invested in the Company's

own shares by this service provider is recorded as a diminution of the Company's at 31 December 2016 for their

acquisition costs. At December 31, 2016, treasury shares totaled € 89 k.

The cash reserve related to the liquidity contract is presented in cash (see Note 5.8).

5.10. BORROWINGS


Borrowings 1,467 1,614 1,943

Factor 903 - -

Cash & cash equivalents (40) 659 (436)

Net financial debt 2,331 2,273

1,507

Cash in hand 315 3 539

Liquidity agreement cash balance 111 - -

Total borrowings 2,756 2,276

2,046 More than 1 year 1,069 1,371 1,584

Less than one year 1,687 905 462

Total borrowings 2,756 2,276

2,046 The table below shows the change in current and non-current borrowings, excluding bonds redeemable in shares

presented in Note 5.11:

In thousands of euros 2016 2015 2014 At beginning of year 1,614 1,943 1,191

Undiscounting impact 28 26 (133)

Proceeds from borrowings 244 15 1,216

Repayment of borrowings (417) (369) (331)

At end of year 1,467 1,614 1,943 Factor 903 - - Bank overdrafts 386 662 103

Total borrowings 2,756 2,276 2,046 OSEO Loans

The Company obtained several loans from Oseo detailed in the tables below:

In thousands of euros Amount awarded 2016 2015 2014

Zero-rate loan for innvovation 2011 408 K€ 245 326 408

Zero-rate loan for innvovation 2014 1 000 K€ 919 893 867

Total 1,164 1,219 1,283

ZERO-RATE LOAN FOR INNOVATION (2011)

Amount: €408,000.00 (€408,000.00 received on 9 Febuary 2012)

Interest rate: 0%

Repayment: From March 2015 to March 2019 (20 quarterly strait-line installements)

Project: Design and development of a standardized end-to-end communication solution between sensors and

their operator's IT system, using standard IPv6 and 6lowpan.

Field applications are for remote reading of meter sensors.


IFRS

ZERO-RATE LOAN FOR INNOVATION (2014)

Amount: €1,000,000.00 (of which €970,000.00 received on 9 May 2014)

Interest rate: 0%

Repayment: From June 2017 to March 2022 (20 quarterly straight-line installements)

The terms of the loan include a grace period followed by a straight t-line amortization

Project: Development of a full automated chain for the retrieval and management of connected objects, dual

frequency, for the remote reading of energy meters.

A sum of € 30,000 was deducted from the loanby BPI France Financing for instruction fees (VAT exemption - Article

261 C of the CGI).

In accordance with IAS 39 and IAS 20, this interest-free advance was initially recognized at fair value and then at

amortized cost. The discount rate used is 3%.

Equity loan (in thousands of euros)

Organisation Purpose of loan 2016 2015 2014

OSEO

Innovation support – Early stage

loan 0 0 23

Repayable advance

Organisation Purpose of loan 2016 2015 2014 OSEO Development of an embedded

passenger information system - SIVE

project labeled by the Image and

Networks cluster

0 8 40

REGION BRETAGNE

+ RENNES METROPOLE

FUI 15 - Greenfeed: interoperable

software and hardware solutions for

charging electric vehicles

38 46 35

COFACE Prospecting Insurance Europe -

Internationalisation

0 16 18

COFACE Prospecting Insurance Asia -

Internationalisation

49 - -

Total 86 70 93

5.11. BONDS REDEEMABLE IN SHARES


Accrued interest 0 291 0

Bonds redeemable in shares 0 2,550 0

On 29 June, 2015, Kerlink’s historic shareholders subscribed to Bonds Redeemable for Shares (ORAs) in order to

enable the Company to prepare, under the best possible conditions, a capital increase scheduled for 2016.

Pursuant to the ORAs contract, the redemption was effected by the delivery of a variable number of shares,

justifying the presentation of the ORA in liabilities. As a result, as at 31 December 2015, the amount associated with

the ORAs was treated as a non-current liability in the financial statements. Nevertheless, these bonds were

automatically repaid in shares at the time of the capital increase, at the share value stipulated forthe IPO.

The main characteristics of the ORAsare as follows:

255,000 Bonds issued at a price of €10 each

18 months; End 31 December 2016

Redeemable in shares with a par value of €1.30

Annual fixed interest of 23%.


IFRS

The contract also provides for two cases of prepayment:

- Capital increase in cash or in kind in excess of € 3,000,000 with a price per share higher than the

reference price,

- Acquisition of at least 95% of the Company's shares, including the shares resulting from the repayment of

the bonds, following an offer to purchase accepted by shareholders representing more than 75% of the

Company's capital (Sale of control) with a price per share higher than the reference price.

Pursuant to the ORA contract, the redemption will be effected by the delivery of a variable number of shares,

justifying the presentation of the ORA in liabilities.

5.12. RETIREMENT BENEFIT OBLIGATIONS

The movements on the retirement benefit obligations account are as follows:


At beginning of year 159 137 82

Current service cost 46 31 16

Impact of employées mouvements (17) 0 (5)

Actuarial gain (loss) recognised in the year 36 (9) 46

Release of pension accrual 0 0 0

Closing amount 224 159 138

The main assumptions used in the calculation of commitments under the projected unit credit method for the

company are:

Assumptions 2016 2015 2014

Discount rate 1.31% 2.03% 1.80%

Life expectancy table INSEE 2008-2010 INSEE 2004-2006 INSEE 2004-2006

Rate of social security contributions 45.00% 45.00% 45.00%

Increases in salaries 2.00% 2.00% 2.00%

Retirement age According to current

legislation (*)

According to current

legislation (*)

According to current

legislation (*)

Turn-over Weak (**) Weak (**) Weak (**)

(*) cf. Law n°2014-40 du 20/01/2014 voted the 18/12/2013

(**) source "DARES"

The discount rate is calculated by reference to the market rate as at 31 December, based on the average rates of

return on Tier 1 corporate bonds, including the IBOXX Corporates AA Index.

The liability is recorded in the balance sheet as a non-current liability for the total commitment amount.

The Company does not cover the retirement benefit obligation through payments to a fund. There is therefore no

rate of return on the corresponding assets.


IFRS

5.13. SHARE- BASED PAYMENTS

Options are granted to certain officers and employees of the Company. The exercise price of options granted is

equal to the market price at the date of grant of the options. Options are subject to the completion of a period of

service by the beneficiary (vesting period). The options are exercisable after this period and have a total life of ten

years.

The Company is not bound by any contractual or constructive obligation to redeem or settle the cash options. The

weighted average fair value of options granted during the period is determined using the Black-Scholes valuation

model.

Date of

final award

Number of

options

Average

expected

option period

Average

subscription

price

Fair value of

options

Plan 12-04-2013 12/04/2013 22,500 7.5 €7.94 €4.29

Plan 29-06-2015 29/06/2015 15,000 7.5 €10.00 €3.41

The movement in ber of potential shares is as follows:

Number of options 2016 2015 2014

At beginning of the year 22,400 18,900 22,500

1 to 4 split 67,200 0 0

Potential shares granted 0 5,000 0

Potential shares exercised (14,400) 0 0

Potential shares expired/ lost 0 (1,500) (3,600)

At end of the year 75,200 22,400 18,900

In connection with the division of the paralue of sharesby 4, the number of shares issed from BSPCEs was also

multiplied by 4 on 29 March 2016.

As at 31 December 2016, a total of 75,200 potential shares are exercisable as the exercise dates for each plan are

exercised.

5.14. PROVISIONS FOR OTHER LIABILITIES AND LOSSES


Provisions for

contingencies

Provisions

for losses

Total

As at 31/12/2014 - - - As at 01/01/2015 - - -


Additional provisions 70 16 85

Utilised during year 0 0 0

Unused amounts reversed 0 0 0

As at 31/12/2015 70 17 87 Au 1/1/2016 70 17 87


Additional provisions 0 60 60

Utilised during year (70) 0 (70)

Unused amounts reversed 0 0 0

As at 31/12/2016 0 77 77

Provisions for contingencies and losseselate mainly to provisions for guarantees and the provision for exchange

losses.


IFRS

5.15. OTHER CURRENT LIABILITIES


Tax and social security 1,136 936 697

Suppliers of fixed assets 30 51 0

Deferred income 1,617 840 960

Other payables 0 49 0

Total 2,783 1,876 1,657

Deferred income includes:

The IFRS restatement of the Research Tax Credit,

Operating grants received in advance for non-capitalised research programs,

Down payments clients for which the goods have not been delivered.

Subsidies

The Company participates in collaborative projects benefiting from public subsidies granted on justification of

expenses incurred.

Subsidies are reported on the basis of the corresponding expenditure commitment.

These grants are mainly related to investment and job creation programs in the region, as well as local grants for

the design of innovative systems.

5.16. CHANGES IN NET WORKING CAPITAL

Changes in the principal items of working capital requirements (NWC) for the years 2016, 2015 and 2014 are as

follows:


Inventories (5,839) (1,283) (380)

Trade accounts receivable (2,773) (1,821) 51

Prepaid expenses and other current assets (652) (468) 56

Trade accounts payable 3,501 1,240 48

Other current liabilities 921 172 90

Change in net working capital (4,841) (2,160) (135)

In 2016, the NWC represents 34% of the annualised 4th quarter's revenue, compared to 15% in 2015. This increase is

due to a large inventory volume as at 31 December 2016, in anticipation of expected deliveries in the first quarter

of 2017. Finished goods as at 31 December 2016 represent 35 days of 4th quarter annualized revenue, compared

with 24 days as at 31 December 2015.


IFRS

5.17. MATURITY OF BORROWING AND liabilities

Analysis of financial liabilities


Less

than 1

year

Between

1 and 2

years

Between

2 and 3

years

Between

3 and 4

years

Between

4 and 5

years

More

than 5

years

Total

liabilities

As a 31December 2014 Bank loans 220 156 127 42 0 0 545

OSEO loans 64 55 205 260 255 445 1,283

OSEO equity loan 23 0 0 0 0 0 23

Repayable advance 53 14 6 6 6 9 93

Accrued interest 1 0 0 0 0 0 1

Overdrafts 103 0 0 0 0 0 103

Borrowings 462 225 338 308 260 453 2,046

Trade accounts payable 907 0 0 0 0 0 907

Tax and social liabilities 697 0 0 0 0 0 697

Other liabilities 0 0 0 0 0 0 0

Deferred revenue 960 0 0 0 0 0 960

Total 3,026 225 338 308 260 453 4,610 At 31 December 2015 Bank loans 156 127 42 0 0 0 325

OSEO loans 55 205 260 255 195 250 1,219


Overdrafts 662 0 0 0 0 0 662

Borrowings 905 340 310 263 203 254 2,276

Bonds redeemable in shares 2,550 0 0 0 0 0 2,550

Accrued interest on bonds 291 0 0 0 0 0 291

Bonds redeemable in shares 2,841 0 0 0 0 0 2,841

Trade accounts payable 2,146 0 0 0 0 0 2,146

Tax and social liabilities 936 0 0 0 0 0 936

Suppliers of fixed assets 51 0 0 0 0 0 51

Other liabilities 49 0 0 0 0 0 49

Deferred revenue 840 0 0 0 0 0 840

Total 7,768 340 310 263 203 254 9,139 At 31December 2016 Bank loans 136 51 9 10 10 1 217

OSEO loans 205 260 265 189 195 50 1,164


Factor 903 0 0 0 0 0 903

Overdrafts 386 0 0 0 0 0 386

Borrowings 1,687 320 283 207 209 50 2,756

Trade accounts payable 5,648 0 0 0 0 0 5,648

Tax and social liabilities 1,136 0 0 0 0 0 1,136

Suppliers of fixed assets 30 0 0 0 0 0 30

Deferred revenue 1,617 0 0 0 0 0 1,617

Total 10,118 320 283 207 209 50 11,187


IFRS

5.18. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

Carrying amount under IAS39

31/12/2016

31/12/2015

31/12/2014


Amortised

cost

Fair

value

through

equity

Fair value

through

income

Carrying

amount

Carrying

amount

Carrying

amount

Assets Investments in subsidiaries 33 0 0 33 47 0

Deposits and guarantees 62 0 0 62 51 45

Other non-current financial

assets

8 0 0 8 0 8

Trade accounts receivables 5,665 0 0 5,665 2,892 1,267

Cash and cash equivalents 426 0 0 426 3 539

Liabilites Bank loans 217 0 0 217 325 545

OSEO loans 1,245 0 (81) 1,164 1,219 1,283

OSEO equity loan 0 0 0 0 0 23

Repayable advance 86 0 0 86 70 93

Factor 903 0 0 903 - -

Overdrafts 386 0 0 386 662 103

Accrued interest 0 0 0 0 0 1

Borrowing 2,837 0 (81) 2,756 2,276 2,046

Bonds redeemable in shares 0 0 0 0 2,550 0

Accrued interest on bonds 0 0 0 0 291 0

Bonds redeemable in shares 0 0 0 0 2,841 0

Trade accounts payable 5,648 0 0 5,648 2,146 907

Tax and social liabilities 1,136 0 0 1,136 936 697

Suppliers of fixed assets 30 0 0 30 51 0

Other liabilities 0 0 0 0 49 0

Deferred revenue 1,617 0 0 1,617 840 960


IFRS

6. OTHER INFORMATION

6.1. OFF-BALANCE SHEET COMMITMENTS AND CONTINGENT LIABILITIES

Financial guarantees given and received on borrowing

The liabilities and borrowings listed below are already included in the Company’s balance sheet. The following table

only repeats these amounts when these borrowings are secured by securities.

The commitments received correspond to the guarantees of BPI France Financement on borrowings secured by the

Company up to a certain quota.


Guarantees given (guarantee, deposits, pledge of

(“Fond de commerce”) 562 702 850

Guarantees received – guarantee BPI France

Financement 185 185 383

Under certain financings agreements, the Company pledged as collateral its business value (goodwill and

customer base – “Fonds de commerce”) to the lending institutions in order to guarantee the repayment of the said

loans

Individual training allocation

Until 2014 the French law provided for each employee an individual training allocation (DIF) of 20 hours per year.

The number of hours available under the individual training allocation for all employees present at December 31,

2014 was 3,142 hours compared with 2,605 hours in 2013.

A change in the system introduced in 2015 has the effect of transforming the DIF into a personal training account

(CPF). The CPF is outsourced to the OPCA (FAFIEC) and as a result the company no longer has an off-balance sheet

obligation

Other contractual obligations given

The other contractual obligations and significant commercial commitments, not included in the balance sheet, are

as follows as of the 31st December 2016:

In thousands of euros Total -1 year

1 to5

years + 5 years

- Buildings 480 169 310 0

- Vehicules 10 3 6 0

- Other operating leases 204 124 79 0

Total 693 297 396 0 * Future aggregate minimum lease payments, non-cancellable (operating leases), discounted.

Amount recognized as an expense for the year 2016:

In thousands of euros Amounts

recognised in

2016 Other contractual obligations

- Buildings 131

- Vehicules 1

- Other operating leases 110

Total 241

Other commitments:

To the Company’s knowledge, no other significant off-balance sheet commitments are in existence at the end of

the financial year.


IFRS

6.2. EARNINGS PER SHARE

2016 2015 2014

Net profit/(loss)t (1,725) (920) (218)

Basic

Weighted average shares outstanding 3,110,779 582,500 582,500

Net income per share (in €) (0.55) (1.58) (0.37)

Diluted

Weighted average shares outstanding 3,194,438 603,869 603,630

Net incomeper share (in €) N/A N/A N/A

Since the Company reported a loss in financial year 2016, instruments are regarded as accretive. As a result, diluted

earnings per share are identical to basic earnings per share.

6.3. SUBSEQUENT EVENTS

Appointment of Stéphane Dejean as Marketing and Communication Director

In January 2017, Kerlink recruited Mr Stéphane Dejean as Director of Marketing & Communication and member of the

Executive Committee. His main dutiesare strengthening strategic marketing, developing product marketing and

accelerating operational marketing and communication.

Creation of a subsidiary in the United States

Kerlink Inc., registered in the State of Delaware - USA, has been incorporated on 5 January2017. Its offices, located in

Chicago - IL, will primarily focus on the American and Canadian markets, and progressively support the development

in South America.

Proposed capital increase on the Alternext Market in Paris

In order to finance the growth and development of the Company, will be carried out on the Alternext Market in Paris.

6.4. RELATEDPARTY INFORMATION

The Company considers as related parties:

Its subsidiary in Singapore, established in November 2015.

Shareholders with significant influence because of their percentage of ownership in the Company and their

seats on the Strategic Committee (Sodero Gestion and CM CIC) for financial years ending 31 December 2015

and 31 December 2014

Members of the Board of Directors

Transactions with companies in which some members of the Company’s top management have significant influence,

are the following:


Income statement

Rent 94 88 84

Management services provided by the

related party* 86 235 225


Interest on bonds redeemable in shares 0 285 -

Balance Sheet

Investments in subsidiaries 33 47 -

Trade accounts receivables due by a

related party 0 0 0

Bonds redeemable in shares 0 2,500 -

Accrued interest on bonds redeemable in

shares 0 285 -

Trade accounts payables due to a related

party

2 0 0

(*) Support services correspond in 2014 and 2015 to the remuneration of two members of the Executive Committee

through a Management service agreement with Arvallon SAS. In 2016, these expenses correspond to the

remuneration of two members of the Management Committee until the termination of the service agreement at the


IFRS

end of March, as well as the business development services invoiced at normal market conditions by a consulting

company owned by a member of the Board of Directors.

6.5 EXECUTIVE COMPENSATION

Key management personnel are the 4 members of the Executive Committee. For financial years 2014 and 2015, two

of these members did not receive any remuneration. They were remunerated by Arvallon SAS, of which they are 100%

shareholders and which had entered into a service agreement with the Company. The services covered by this

agreement include the implementation of general company policy, business strategy, financial management and

human resources. These support services ceased as from April 2016 following the termination of the service contract

by a decision of the Shareholders’ Meeting on 29 March 2016.

As of April 2016, these same officers have been receiving remuneration from the Company.

Compensation and benefits provided to members of the Executive Committee for their services are detailed in the

following table:


Compensation (amounts paid during the period) 535 260 159

Pension and other post-employment benefits - - -

Other long-term benefits - - -

Termination benefits - - -

Share-based payments 9 9 0

Compensation 544 269 159

The number of BSPCEs granted to members of the Executive Committee is 0 for the financial year ending 31

December 2014 and 5,000 for the financial year ending 31 December 2015 and 0 for the financial year ended 31

December 2016.

6.6 STATUTORY AUDITORS’ FEES

The Statutory Auditors' fees included in the income statement break down as follows:


Gilles LE

CORRE,

35 St Grégoire

Emmanuel

BOURGEOIS,

35 Betton

2 & 2 Audit,

35 Betton

DELOITTE,

35 Rennes Total

2016 Statutory audit, certification

and review of the individual

and consolidated financial

statements

- - 12 24 36

Other services - - - - -




statements

- 9 - - 9





statements

6 - - - 6


Emmanuel BOURGEOIS, secondary statutory auditor to Gilles LE CORRE took over his mandate following his retirement

in 2014.

Deloitte & Associés was appointed as joint Statutory Auditor by the Shareholders' Meeting on 19/01/16.


IFRS

6.7 INVESTMENTS IN SUBSIDIARIES

The list of subsidiaries is presented in the table below:

Company *

Country

Subsidiary of :

% of interest by

the Group

Date of

entry

Kerlink SA France Parent

Subsidiary of:

Kerlink Singapore Pte Ltd Singapore Kerlink SA 100 12/15

The incorporation of a subsidiary in Singapore in November 2015 resulted in the inclusion of €33 k thousand of shares

in the balance sheet, corresponding to the capital of SGD 50,000 converted into euros. The company started

activity in the second half of 2016. As of 31 December 2016, the subsidiary has 2 employees.

company financial statements prepared in accordance · pdf file ·...

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