KERLINK (EPA:ALKLK) - Kerlink Press Release : First-Half 2017 Results

Transparency directive : regulatory news

28/09/2017 17:35

PRESS RELEASE
Thorigné-Fouillard, 28 September 2017, 5:35 p.m.

                            First-Half 2017 Results
                                 Growth of 87%
       Industrial and commercial investments that are generating returns
                  Financial results in line with the roadmap
                                    Targets
                             2017 revenue: EUR25m
                      Highly positive second-half EBITDA

Thorigné-Fouillard, France, 28 September 2017 - Kerlink (AKLK - FR0013156007),
a global specialist in network solutions for the internet of things, is today
announcing its financial results for the first half of 2017.

As announced, the Group continued with its industrial and commercial
investments in order to extend its lead from a technology standpoint and
increase its international presence in a market that is accelerating. Growth
was in line with expectations in the first half of the year, with revenue
increasing 87% compared to the first half of 2016. This growth partially stems
from the execution of the contract signed with Tata Communications to roll out
the world's largest LoRa(TM) network, which covers 2,000 cities and communities
and over 400 million people. With over 2,000 stations already delivered as of
30 June 2017 out of the 10,000 Kerlink Wirnet(TM) iBTS Compact stations that
are planned, the contract is well underway, thereby ensuring the Group a wide
international reach and a flagship technology showcase.

Consolidated financial statements (IFRS)

On 26 September 2017, the Board of Directors approved the consolidated
financial statements for the half-year period ended 30 June 2017.

In thousands of euros      H1 2017*     H1 2016

Revenue                     10,088        5,400
Gross margin                 3,377        2,497
EBITDA                      -1,114         -595
EBITDA/revenue                -11%         -11%
Operating income            -1,586         -865
Financial profit (loss)        -35         -276
Net profit/(loss)           -1,579       -1,088

Under IFRS - Limited review

*The consolidated financial statements include KERLINK SA the parent company,
and its two subsidiaries: KERLINK SINGAPORE PTE. LTD. and KERLINK INC.

Continued strong growth momentum

Kerlink generated revenue of EUR10.1m in the first half of 2017, up 87% on the
first half of 2016 (EUR5.4m).

Growth was primarily driven by business with telecom operators, which increased
four-fold to over EUR5.3m (53% of total revenue). In addition to the major
contract with Tata Communications, Kerlink benefited from the execution of
several orders, in particular one with a major French telecommunications
operator.

Revenue generated with private operators grew by 15% over the period. This was
in line with Group projections, given that resources have been largely
allocated to gaining sales and accelerating the deployment of major projects
with international telecoms operators.

Over the period, revenue from value-added services increased by 70% to over
EUR1.1 million. While this segment's contribution to total business is still
limited, it should increase in the future, once the major infrastructure
projects have been completed. Revenue generated by the Reference Design
offering (turnkey services for producers of connected objects that want to
incorporate an optimised network connectivity solution into their products)
also remains modest, with the first significant royalties on agreements already
signed.

Revenue generated on international markets totalled almost EUR4 million, an
increase of 3.7 times on the first half of 2016. The contribution of sales
achieved outside France practically doubled over the period, accounting for
just under 40% of first-half revenue, compared with 20% in the first half of
2016.

Half-year results that reflect the efforts made to increase market share and
structuring necessary to support growth

Kerlink's gross margin for the first half of the year came out to almost
EUR3.3m, approximately 33% of revenue. Against a backdrop of market share gains
made from international public operators, and network rollouts, the anticipated
drop in gross margin is a reflection of the change in the product mix, with
equipment sales accounting for a greater portion of revenue.

EBITDA for the first half of 2017 was negative at -EUR1.1m. This is a result of
the major efforts to add to our teams who will support innovation and the
rollout of our commercial contracts. The Group's headcount was 98 at the end of
June 2017, compared to 80 at 31 December 2016. Payroll expenses totalled almost
EUR3.4m in the first half of 2017, up from EUR2.4m in the first half of 2016.
The increase in headcount reflects the efforts the Group is making to structure
in order to accommodate future growth in demand.

Taking into account depreciation, amortisation and provisions in the amount of
EUR0.5m, Kerlink's operating loss stood at almost EUR1.6m, compared with an
operating loss of EUR0.8m in the first half of 2016.

Net financial expenses declined sharply, totalling EUR35k.

The total net loss for the first half of 2017 came to EUR1.6m compared with a
loss of EUR1.1m in the first half of 2016.

A stronger financial structure thanks to a successful capital increase

Group shareholders' equity increased considerably thanks to the major success
of May's capital increase. Shareholders' equity now totals EUR27.6m vs.
EUR10.2m at the end of December 2016. Financial debt represents less than 23%
of shareholders' equity compared to 27% at the end of December 2016. Net cash
stands at EUR16.3m.

A new structure confirming the trend in infrastructures and preparing for the
increasing importance of services

In order to fully benefit from the Internet of Things market, optimise resource
allocation and support Kerlink's rise up the value chain, the company is
announcing the creation of two new Business Units that will drive its two
strategic development priorities worldwide:

- The "Kerlink Infrastructure Solutions" Business Unit will enable the Group
   to consolidate and enhance its position as a leading international player
   in the provision of high-quality infrastructure and network services,
   affording its public and private operator clients the opportunity to roll
   out and operate their connectivity solutions dedicated to the Internet of
   Things;

- The "Kerlink Advanced Services" Business Unit will have the strategic aim
   of putting Kerlink among the leading companies capable of offering
   value-added solutions that enable its business application developer
   clients to quickly design and fully operate their range of connected
   objects (management and geolocation of networked objects and Reference
   Design solutions).

FY 2017 revenue target: EUR25m

The second half of 2017 should allow Kerlink to continue its expansion. The
Group is targeting revenues of EUR25m in 2017, which would imply expected
growth of around 75%. As is the case each year, business is expected to be
particularly strong in the fourth quarter.

The growth expected in the second half of the year should also enable Kerlink
to generate highly positive EBITDA for the period. In view of this favourable
outlook, Kerlink is confirming its target of achieving revenue of EUR70 million
in 2020.

About Kerlink
Kerlink specialises in network solutions for the Internet of Things (IoT). Its
mission is to provide its clients - telecom carriers, businesses and public
authorities - with network solutions (equipment, software and services)
dedicated to the Internet of Things. Over the past three years, Kerlink has
invested more than EUR8 million in R&D. In just over 10 years, more than 70,000
Kerlink installations have already been rolled out for more than 260 clients,
including GrDF, Suez, Saur and Médiamétrie. Kerlink's solutions equip IoT
networks worldwide, with major roll-outs in Europe, South Asia and South
America. In 2016, Kerlink generated revenue of EUR14.1 million, 25% of which
internationally. Since 2013, it has posted average annual growth of more than
50%. Kerlink has been listed on Alternext Paris since May 2016.

For more information, go to www.kerlink.fr and follow us on
Twitter @kerlink_news

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          Third-quarter revenue - 24 October 2017 after market close
                                www.kerlink.fr

ACTIFIN

Benjamin Lehari
+ 33 1 56 88 11 25
blehari@actifin.fr

Press relations / Isabelle Dray
+ 33 1 56 88 11 29
idray@actifin.fr

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