DECLARATION BY THE PERSON RESPONSIBLE FOR THE INTERIM FINANCIAL REPORT STATUTORY AUDITORS’ REPORT ON THE INTERIM FINANCIAL STATEMENTS MANAGEMENT REPORT HALF-YEAR FINANCIAL STATEMENTS CONDENSED INTERIM CONSOLIDATED 2 Notes to the consolidated income statement 25 AXWAY - 2021 INTERIM FINANCIAL REPORT Income tax expense Note 10 (in thousands of euros) H1 2021 H1 2020 Current tax 1,140 1,045 Deferred tax -62 -1,288 Total income tax expense 1,078 -243 The Group effective tax rate is 37.67% in H1 2021, compared to 3.88% in H1 2020. Deferred tax assets arising from tax losses carried forward are recognised if the subsidiaries or the tax consolidation group are likely to have sufficient taxable earnings to use them. At 30 June 2021, future profit forecasts for Axway Software SA in France and Axway Inc. in the United States enabled the capitalisation of additional losses compared to 31 December 2020. Axway Software At 30 June 2021, capitalised tax losses stood at €11.2 million (in deferred tax assets), compared to €9.8 million at 31 December 2020. Axway Inc. At 30 June 2021, capitalised tax losses stood at US$18.0 million (in deferred tax assets), compared to US$17.6 million at 31 December 2020. (€2.9 million), Axway SRL in Italy (€3.2 million), Axway Software Do Brazil Ltda in Brazil (€2.0 million), Axway Romania (€2.7 million) and Axway Pte Ltd in Singapore (€0.7 million). At 30 June 2021, deferred tax assets not recognised in respect of tax losses available for carry forward amounted to €24.6 million and concerned the following subsidiaries: Axway Inc. in the United States (€11.7 million), Axway Software SA in France (€1.3 million), Axway Ireland Axway Inc. in the United States receives research tax credits. These tax credits may be used to pay corporate income tax due in the 20 years following the year in respect of which the tax credits were recognised. Any excess not offset is not reimbursed. Axway Inc. research tax credits were received each year between 2001 and 2021. At 30 June 2021, we estimate the total amount of research tax credits available for offset against taxable profits at US$51.6 million (taxable base). These tax credits are recorded in deferred tax assets not capitalised as their probable date of utilisation is too far away. Based on substantiating evidence and detailed business plan estimates, the US$51.6 million in tax credits could be used between 2025 and 2041. In connection with the acquisition of Streamdata.io and its comprehensive asset transfer to Axway Software, an authorisation request for the transfer of around €10 million in tax losses was filed with the French tax authorities in June 2019. At 30 June 2021, authorisation is currently pending. These tax losses were not capitalised in the Group financial statements. Earnings per share Note 11 (in euros) H1 2021 H1 2020 Net income - attributable to owners of the Company 1,782,958 -6,008,845 Weighted average number of ordinary shares outstanding 21,455,034 21,267,257 Basic earnings per share 0.08 -0.28 (in euros) H1 2021 H1 2020 Net income - attributable to owners of the Company 1,782,958 -6,008,845 Weighted average number of ordinary shares outstanding 21,455,034 21,267,257 Weighted average number of securities taken into account in respect of dilutive items 891,490 813,253 Weighted average number of shares taken into account to calculate diluted earnings per share 22,346,523 22,080,510 Diluted earnings per share 0.08 -0.27
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