LETTER TO SHAREHOLDERS | CREALOGIX HALF-YEAR REPORT 2014/2015

Bruno Richle, Chairman of the Board of Directors and CEO

Dear Shareholders,

The first half-year of the 2014/2015 financial year (1 July to 31 December 2014) of

CREALOGIX Group was characterised by the internationalisation in the defined growth

markets launched in 2014. This meant among other things setting up the new

CREALOGIX locations in the United Kingdom, Austria and Singapore, establishing an

internationally operative sales organisation, investing in the product portfolio, and not

least evaluating and training globally active implementation partners for the scaling of

our activities both in Europe and in the Asia-Pacific region (APAC).

This development led to an expansion in the employee base at CREALOGIX from 282 (as

of 30 June 2014) to 302 (as of end of the reporting period on 31 December 2014) or to

the current level of more than 350 following the takeover of MBA Systems Ltd in the UK

in January 2015.

We now find ourselves at the most cost-intensive point of this expansion phase, compa-

rable with a start-up company in the global fintech competitive environment; the un-

derlying business plan is being continuously and rigorously implemented. CREALOGIX

financed the highly focused investments with its own funds. It fully expensed the deve-

lopment work instead of capitalising it. This will cut heavily into our profits this year as

expected.

The aim of this investment is to anchor CREALOGIX as a provider of solutions for

tomorrow’s digital bank on an international level, enabling it to benefit from the oppor-

tunities arising as a result.

Letter to shareholders

CREALOGIX HALF-YEAR REPORT 2014/2015 | LETTER TO SHAREHOLDERS

The fact that our products are competitive is demonstrated among others by the presen-

tation of the “Most Innovative Digital Offering“ award by PBI Private Banker Interna-

tional in Singapore in October 2014 to our customer Coutts & Co.

Equally pleasing was the fact that CREALOGIX was included by IDC Financial Insights in

the list of the global Top 100 fintech companies in 2014 for the first time.

At the world’s most important fintech conference, the Finovate in London in February

2015, CREALOGIX’s BankClip – “on-demand video counselling for wealth management”

– was rated by Finews as one of the five top trends globally.

Development of sales and results

In the first half of the 2014/2015 financial year CREALOGIX generated sales of CHF 23.9

million. This equates to growth of 1.2 per cent over the previous year (CHF 23.7 million).

Recurring maintenance sales increased by 13.5 per cent to CHF 6.3 million. New licence

sales fell short of those generated in the very strong previous year. Profitability was hit

sharply by the rigorously pursued policy of investment in internationalisation. Operating

loss (EBIT) amounted to CHF 6.8 million (previous year: profit (EBIT) CHF 1.1 million).

This resulted in CREALOGIX generating a consolidated loss of CHF 5.2 million compared

to a profit of CHF 0.7 million in the first half of the 2013/2014 financial year.

Despite this massive investment, the CREALOGIX Group remains perfectly healthy: its

equity ratio stood at 65.4 per cent as of the end of the financial year (previous year:

67.5 per cent). Net cash flow from operating activities amounted to CHF –1.9 million

(previous year: CHF 3.8 million).

A special event in the reporting period worthy of note was the distribution of a share pre-

mium totalling CHF 2.1 million (CHF 2.00 per share).

Tomorrow’s digital banking

Digital channels have achieved global strategic significance in banking, resulting in struc-

tural changes in the banking world. Digital channels will not only facilitate electronic

access to the bank, as was the case hitherto, but will also form the basis of new, addi-

tional services and business models in the future. CREALOGIX is ideally positioned here

as a provider of innovative solutions.

The flagship product, the CREALOGIX digital banking platform, is an open, innovative

and, at the same time, proven, secure and effective portal for tomorrow’s digital bank –

both for classic Internet banking and for mobile banking. The bank’s customers are

being offered a consistent and uniform user experience. New online security solutions

from CREALOGIX respond to the enhanced mobile usage behaviour of bank customers

and expand the range of security products available.

The core of the digital banking platform from CREALOGIX enables each bank to lay a

homogeneous integration layer over the existing, mostly fragmented back office systems.

As such, the bank can separate itself from the complexity of the back office and obtains

Top 100 Fintech

Finovate Europe 2015

ebanking. crealogix.com

LETTER TO SHAREHOLDERS | CREALOGIX HALF-YEAR REPORT 2014/2015

via the existing programmable interfaces (APIs) the flexibility needed for digital solu-

tions, notably for the integration of third-party products.

These benefits of the digital banking platform and its flexibility are also reflected in a va-

riety of customer projects. Some examples: Raiffeisenbank relies on the e-banking solu-

tion from CREALOGIX in the long term too and has just launched a new innovative ver-

sion, BCI (New Caledonia) is enhancing the current project with the supply of a

complete banking portal from CREALOGIX, Société Générale Private Banking is creating

a totally new user interface for its e-banking solution, and leading Swiss private banks,

such as Julius Bär and Banque J. Safra Sarasin, are upgrading their e-banking solutions to

encompass the new digital banking platform from CREALOGIX.

In our second home market Germany too, leading online banks are relying on the pro-

ducts and competence of CREALOGIX in digital banking.

Together with DKB (Deutsche Kreditbank) the product portfolio of CREALOGIX is un-

dergoing continuous refinement, whereby we are contributing to the internet presence

and online banking.

The new financial planner of Consorsbank is an essential component of the online

bank’s realignment. In technological terms the solution is based on the digital banking

platform from CREALOGIX which integrates the Personal Finance Management (PFM)

solution from our partner Meniga. Consorsbank customers are thus provided with a

comprehensive overview of their income and expenses as all the data from their accounts

and credit cards is shown together in summary form.

Moreover, CREALOGIX supports the bank’s advisory processes with its Advice Manager

and makes sure regulatory requirements are met during the advice process. On the basis

of the developments with the private bank Donner & Reuschel, the product line compa-

tibility of the solution was established which has enabled us to market the product in-

ternationally.

The innovative software CLX.NOVA for digital payment transactions of the future was

launched successfully. Our corporate customers can rent this at low cost and in this way

use it as an SaaS solution (Software as a Service). The feedback is positive and promising.

The high investment in this digital platform of the future was also debited to the income

statement.

The growth of our e-learning market services that has been ongoing for several years

continued in the first half of the financial year, whereby we were able to extend our

lead ing position with financial institutions still further.

14 financial institutions are already using our teaching platform CLX.Tracker to train their

employees and increasingly to train their partners too. December 2014 saw the success-

ful market launch of the completely redeveloped successor product CLX.Tracker 3. Entris

Banking, Leonteq and UBS are three renowned financial institutions that have already

decided in favour of our new teaching platform.

nova. crealogix.com

crealogix.com/ education

7CREALOGIX HALF-YEAR REPORT 2014/2015 | LETTER TO SHAREHOLDERS

The Center for Young Professionals (CYP) trains Swiss banking apprentices and numer-

ous junior staff using tools and teaching modules from CREALOGIX. CYP is now enter-

ing the market for the banking specialist training of adults. The specialist teaching plat-

form needed for this, a central element of the system, was provided by CREALOGIX.

In addition to this, technologically leading companies from other sectors also use our

teaching platforms and the associated products for digital teaching purposes and do so

successfully.

Outlook

The CREALOGIX Group is in the midst of a process of transformation on its way to becom-

ing an internationally active fintech company of the next generation. In contrast to most

start-ups in this area, CREALOGIX is not building on ‘disruptive’ solutions that are

against banks but instead on innovative solutions for banks, helping them to reach the

intended digitalisation of their business models quickly. CREALOGIX’s business plan is

demanding and the necessary investments high as expected. As already highlighted in

the previous year, sales in the second half-year will not yet improve, whereby the

strength of the Swiss franc also has a dampening effect. Due to the investments made

and the new sales organisation, we anticipate sales growth of 10 per cent or more as

from the com ing 2015/2016 financial year, and are striving to return to a balanced re-

sult. As from the 2016/2017 financial year, we expect greater profitability in addition to

a further growth in sales.

The current prospects of establishing CREALOGIX in the fintech sector as a leading in-

ternational software provider for tomorrow’s digital bank are excellent. We are confi-

dent that we can and must make use of them rigorously and in line with the motto ‘The

trend is our friend’.

A word of thanks

On behalf of the Board of Directors and Group Management Committee, I would like to

thank all our employees for their hard work in the first half of the 2014/2015 financial

year. I am also grateful to our customers for their confidence in our services and their

close cooperation. I would also like to sincerely thank you, our valued shareholders, for

your trust in CREALOGIX Group.

Bruno Richle

Chairman of the Board of Directors and Group CEO

CYP