NETGEM (EPA:ALNTG) - 2016 First Half Results

Transparency directive : regulatory news

29/07/2016 07:00

2016 First Half Results
Solid Performance In All Markets
A New Initiative in France

Paris-La Défense, July 29th, 2016

Activity, results and financial position

                                      1st half   1st half
EUR million Consolidated IFRS        of 2016    of 2015          Change

Revenue                                   39.1       37.3      +5%      +1.8
Gross profit                              14.6       11.6     +26%      +3.0
Current operating income                   3.4       0.6       ns       +4.0
Operating income                           3.3       0.6       ns       +3.9
Net income                                 2.7       0.3       ns       +3.0
Total comprehensive income                 2.5       0.1       ns       +2.6

For the first half of 2016, Netgem reports EUR 39.1 million in consolidated
revenue, +5% compared to the same period in 2015.

Gross profit increases by 26%, reflecting the growing positive impact of the
new SaaS business model ("Software as a Service"). It is however important to
note that last year H1 gross profit was negatively impacted by the rapid US
dollar appreciation.

Current operating income reaches EUR 3.4 million as operating expenses decrease
by EUR 1.0 million. Financial income is EUR 1.0 million, of which EUR 0.3
million from investment of the Group's cash balance and EUR 0.7 million from
foreign exchange hedging positions on 2016 operations.

After taking into account an income tax expense of EUR 1.6 million, the Group
records a net profit of EUR 2.7 million (group share) and a total comprehensive
income (IFRS) of EUR 2.5 million.

                                                   1st half    1st half
EUR million Consolidated IFRS                     of 2016     of 2015

Cash flow related to operations - after tax (A)        3.1         7.0
of which:
- before tax and changes in working capital            4.9         0.1
- Taxes paid                                           0.3         0.1
- ecrease
(increase) in working capital                          7.6        7.0
Cash flow related to investments (B)                   0.9        1.4
Operating cash flow (A + B)                            4.0        8.4
Cash flow related to financing                         6.0        5.8
Net change in cash                                    10.0       14.2

The Group's operations used EUR 3.1 million of cash after tax during the first
half of 2016. The increase in working capital of EUR 7.6 million is mainly due
to the use of part of the cash position to provide financing solutions to
certain strategic customers.

After taking into account a EUR 0.9 million investment for the acquisition of
operating assets and the EUR 5.8 million dividend distribution for 2015, the
Group's cash balance at end of June 2016 amounted to EUR 26.3 million, a EUR
10.0 million decrease compared to the end of year 2015.

EUR million Consolidated IFRS                30/06/2016   31/12/2015
Shareholders' equity and debt
Equity, Group share                                 51.6         54.9
Current and noncurrent financial liabilities         0.2          0.6

A. Cash                                             26.3         36.4
B. Current financial liabilities                     0.2          0.6
C. Current net cash (A) (B)                        26.1         35.8
D. Noncurrent financial liabilities                    -            -
E. Net cash (C) + (D)                               26.1         35.8

Strategy and outlook

First half year activity is the result of the strong commercial performance of
Netgem's customers in all geographical markets, as TV services are becoming a
strategic activity for operators that have launched such services. Netgem
expects this favourable trend to continue in the second half of the year.

The Group continues its share buy back program and now owns about 5.8% of its
capital.

Fiber project in France

Netgem announces the project to form a joint-venture with Océinde Group and
Caisse des Dépôts ("CDC") aiming to become the reference alternative
triple-play operator of Fiber To The Home (FTTH) in the geographical areas in
France covered by the Réseaux d'Initiatives Publiques ("RIP") financed by
public-private partnerships.

Netgem would provide its #TelcoTV technology platform and bring the Videofutur
brand and business to the venture. Océinde Group, already a fiber operator,
would provide its knowhow and platform  for IP access and voice services.
Netgem and Océinde Group have been partners for several years. CDC would
provide part of the financing.

The total investments and contributions by the partners would value the new
company to EUR 21 million. Netgem would be the majority shareholder and M.
Mathias Hautefort, currently in charge of the Videofutur business at Netgem,
would lead it.

This project remains subject to certain conditions precedent, including the
completion of additional due diligence and the approval by the Extraordinary
General Meeting of shareholders of Netgem. It is expected to close in Q4 2016.

Provisional calendar of financial communications

Revenue for Q3'2016: October 14, before market opening

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 multi-service
operators worldwide to enhance and enrich their relationship with end-users.
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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