NETGEM (EPA:ALNTG) - 2015 First Half Results

Transparency directive : regulatory news

29/07/2015 20:59

2015 First Half Results

ParisLa Défense, July 30th, 2015

Activity, results and financial position

EUR million Consolidated IFRS   1st half of 2015   1st half of 2014    Change
Revenue                                      37.3               37.7      0.4
of which Netgem TV*                          14.2               17.9      3.7
of which NetBox Services*                    23.1               19.8     +3.3
Gross profit                                 11.6               14.9      3.3
Current operating income                      0.6                  -      0.6
Operating income                              0.6                0.3      0.3
Net income                                    0.3                0.6     +0.3
OCI                                           0.2                0.1     +0.1
Total comprehensive income                    0.1                0.5     +0.4

* nonGAAP measure

For the first half of 2015, Netgem reports EUR 37.3 million in consolidated
revenue, stable compared to the same period in 2014. The successful launch in
the UK has offset the impact on international revenues due to the end of the
distribution of the TBox in Australia.

Gross profit reached EUR 11.6 million, down EUR 3.3 million on the first half of
last year. A significant part of the decrease is a consequence of deferral of
profit due to a change in business model: revenue with Telstra pertained mainly
to a licensing model (oneoff profit earned in proportion to the acquisition of
new endusers) whereas revenue with EE pertains mainly to a "software as a
service" model (recurring profit earned in proportion to the active base of
endusers). This new model ensures a better alignment of interests between
Netgem and its customers. Gross profit was also impacted by an increase in cost
of sales due to the sharp rise of the US dollar, only partially offset by
contractual provisions with customers and currency hedges.

The streamlining of operations initiated in 2014 has resulted in a EUR2.7
million decrease of operating expenses from EUR14.9 million in H1 2014 to EUR
12.2 million in H1 2015. The transition of the Videofutur business from physical
(DVD) to digital (VOD) has accelerated, leading to additional store closures and
a nonrecurring EUR 0.9 million charge during the semester.

The financial income amounts to EUR 0.2 million including income from the
investment of the Group's available cash. The Group recorded a net loss of EUR
0.3 million (group share) over the period.

                                             1st half            1st half
EUR million Consolidated IFRS                of 2015             of 2014
Cash flow related to operations (A)               7.0                 4.1
of which:
-   before tax and changes in working capital     0.1                 2.6
-   tax paid                                      0.1                 0.3
-   Decrease (increase) in working capital        7.0                 7.0
Cash flow related to investments (B)              1.4                 1.6
Operating cash flow (A + B)                       8.4                 5.7
Cash flow related to financing                    5.8                 6.0
Net change in cash                               14.2                11.7

Operations have consumed EUR 7.0 million of cash in the semester, mainly due to
a substantial increase in working capital : after taking into account a EUR3.1
VAT credit due, the remaining cash variation is the result of the extension of
payment conditions from certain operators, amplified by the business model
transition explained above. The Group has already implemented measures which are
expected to lead as soon as the second half of 2015 to a substantial reduction
in working capital.

After taking into account the cash flow related to investments (EUR 1.4 million
primarily related to the acquisition of intangible and tangible assets), the
dividend distribution of EUR 5.9 million, cash outflows for the share buyback
program (EUR 0.3 million) and the financial income derived from the investment
of available cash (EUR 0.4 million), the Group's cash balance amounted to EUR
26.5 million, a decrease of EUR 14.2 million for the semester.

Since the beginning of 2015, the Group has acquired 217.000 of its own shares at
EUR 1.94. The group holds 2.1 million treasury shares representing 5.1% of its
capital.

EUR million Consolidated IFRS                 30/06/2015     31/12/2014
Shareholders' equity and debt
Equity, Group share                                  53.1           59.4
Current and noncurrent financial liabilities          5.6            0.6
Analysis of net cash
A. Cash                                              31.5           40.7
B. Current financial liabilities                      5.6            0.6
C. Current net cash (A) (B)                         25.9           40.1
D. Noncurrent financial liabilities
E. Net cash (C) + (D)                                25.9           40.1

Strategy and outlook

First half year results demonstrate the good performance of the current customer
base. Netgem expects this favourable trend to continue in the second half of the
year, resulting in positive growth on a full year basis.

The performance in the very competitive UK market illustrates the quality of
Netgem offer. Netgem proposes EE TV, the local version of its #TelcoTV service,
combining rich content on demand and an innovative multiscreen user
experience.

This service being cloud based, the Group expects to widen and diversify the
distribution of its solution through a larger number of local service providers.
The product benefits from its turnkey conception which allows a significant
reduction of initial integration and adaptation costs as compared to traditional
digital TV offerings.

Beyond the UK success, this approach has been successfully tested with first
customer wins in France and Australia and will be gradually extended to other
markets

Provisional calendar of financial communications
    - Revenue for Q3 2015: Thursday, October 8th, 2015 before opening of the
        market

About Netgem

Netgem is a provider of innovative solutions and video entertainment services
for the connected home. Combining proven technology assets and expertise in
content and new uses on all screens, Netgem's offers help multiservice
operators worldwide to enhance and enrich their relationship with endusers.
Netgem is present in Europe, Asia and South America with over 4 million active
households worldwide. Netgem is listed on NYSE Euronext Paris Compartment C
(ISIN: FR0004154060, Reuters: ETGM.PA, Bloomberg: NTG FP)

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