NETGEM (EPA:ALNTG) - NETGEM - 2018 full year results New growth engines

Transparency directive : regulatory news

22/03/2019 08:35

PRESS RELEASE
2018 full year results
New growth engines

  * Growth Strategy in Services for High-Speed Broadband and Fiber
  * Results FY 2018
  * Dividends maintained at 10 cents per share, option of payment in equity
    chosen by founding shareholders

Paris, March 22th, 2019

Netgem's Board of Directors having approved the financial statements,
announces 2018 FY results and the growth plan in services for High-Speed
Broadband and Fiber.

Connected home specialist since its creation, Netgem adapts and anticipates a
favorable market evolution for its recent investments.

Netgem was created on the mission of connecting each home to digital services.
Over the past 15 years, Netgem has connected nearly 9 million homes in more
than 20 countries through a connected product offering: the BoxTV.

Today, connected objects are multiplying and transforming. Operators become
multi-service, to meet all the needs that arise as the end consumer
experiences the power of fiber: video streaming throughout the home,
connected speakers with voice control for music and home automation, but also
remote surveillance and connected security, home support, etc.

In France and Europe, market organisation favors the emergence of a new
competition on services with the Ultra High Speed Internet. In France, 40% of
households are located in "non-dense" zones, known as RIP (Public Initiative
Networks). For these 17 million French households, the Fiber network will be
financed by public-private funds, resulting in an "open" access model,
allowing any multi-service operator to provide its digital services without
having to support very heavy infrastructure investments.

In this context Netgem Group has joined forces with Caisse des Dépôts and
Océinde to create Vitis, a multi-service and ultra-speed internet operator
operating as Videofutur brand, which is currently the leader in RIP zones.
This investment makes it possible both to benefit from the very high growth
potential of this market and for the Group to have direct access to the end
customer.

To address this market change, Netgem Group positions itself as a platform for
solutions and services for the connected home that meets the needs of
multiservice operators, offering à la carte Connected Equipment and Operated
Services.

Investments in recent years have allowed the development of both a
multi-screen cloud platform for video streaming on the fiber, and a
multi-service connected speaker. These new products and services are now
expanding the offer available on the Netgem platform. The ZTE partnership
will also contribute.

The Group's vision in this new context is to connect millions of households to
the services allowed by Fiber and Ultra-Speed Internet, offering consumers
and multi-service operators a platform for secure digital services and
connected equipment, open and innovative.

2018 Positive Results and Sound Cash-flow position:

EUR Million - consolidated IFRS(1)            2018     2017    Change

Revenue                                       41.8     61.8     -32%
Net revenue                                   19.6     25.2     -23%
Ebitda                                         2.7      6.6     -59%
Current operating income                       2.3      6.3     -63%
Operating income                               4.4      7.0     -37%
Financial income                              -0.9      0.2
Equity method result (Vitis)                  -2.8     -2.0
Tax                                           -0.6     -0.6
Net income                                     0.2      4.7
Total comprehensive income                     0.3      4.4

Revenue amounted to EUR 41.8 million and net revenue to EUR 19.6 million in
2018, due to the slowdown of operators' investments in TV Box. The more
moderate slowdown in net revenue comes from the contributory impact of service
activities.

Revenue from the non-consolidated scope (Vitis - Videofutur), mainly
consisting of sales of services, was up 86% to EUR 10.4 million.

Operating income reached EUR 4.4 million in 2018. Operating expenses, which
include restructuring costs of EUR 0.7 million, however, dropped by 11% due to
the reduction of international expenses and the refocusing of R&D.

In the non-consolidated scope, Vitis remains at a loss of EUR 5.5 million, due
to the costs related to the acquisition of a subscriber base. In 2018, Caisse
des Dépôts and Réunicable contributed EUR 4 million in cash to Vitis, whose
cash position amounted to EUR 5.3 million at the end of 2018.
Subject to the approval of the next general meeting of shareholders, Netgem
will bring its platform business in France and Germany to Vitis, valued at
EUR 5.3 million, which will enable the Group to regain its shareholding
position at around 53% of the share capital (fully diluted).

After taking into account the share of Vitis' results under the equity method,
a financial expense of EUR 0.9 million (currency effects) and a tax charge of
EUR 0.6 million, the Group recorded a net profit of EUR 0.2 million in 2018
(group share).

(1) Netgem's financial statements were approved by the Board of Directors on
21 March 2019. Audit work had been completed and the auditors' report is in
the process of being published.

EUR Million - consolidated IFRS                                2018     2017

Cash flow related to operations, after tax (A), of which:       1.4     14.0
- Cash flow before tax and changes in working capital           2.8      6.4
- Taxes paid                                                    0.1     -0.4
- Decrease (increase) in working capital                       -1.5      8.0
Cash flow related to investments (B)                            3.2     -1.5
Operating cash flow (A + B)                                     4.6     12.5
Cash flow related to financing                                 -3.9    -35.1
Net change in cash                                              0.7    -22.6

Netgem's cash position at the end of 2018 was EUR 11.0 million, an increase of
EUR 0.7 million compared to 2017.

The Group's operations generated EUR 1.4 million of cash after tax in 2018.
Cash flow related to investments included the implementation of financing
solutions and their repayments.

Cash flow related to financing encompassed -EUR 2.0 million of share buy back,
-EUR 2.8 million of dividends paid in 2018 and +EUR 1.2 million of factoring
implementation and repayment, backing the financings mentioned above.

EUR Million - consolidated IFRS                   31/12/18    31/12/2017
Shareholders' equity and debt
Equity, Group share                                   24.0          27.7
Current and non-current financial liabilities          7.5           5.9
Analysis of net cash
A. Cash                                               11.0          10.2
B. Current financial liabilities                       7.2           3.0
C. Current net cash (A) - (B)                          3.8           7.2
D. Non-current financial liabilities                   0.3           2.9
E. Net cash (C) - (D)                                  3.5           4.4

Dividends

The Board of Directors proposes to maintain the dividend at 10 cents per share.
An option to pay the dividend in equity with a discount of 10% will be
proposed. The founding shareholders (30% of share capital at the end of 2018)
have indicated that they will opt for this option, expressing their
confidence in the opportunity represented by the connected home services for
the Group in the medium term.

Financial Communication Calendar
- Revenue and net revenue for Q1 2019 May 10, 2019, before stock market
  opening
- Annual General Assembly May 14, 2019
- First half 2019 revenue and results 1st August 2019, before stock market
  opening
- Revenue and net revenue for Q3 2019 Oct. 17, 2019, before stock market
  opening

Contacts

Investor Relations
Charles-Henri Dutray
charles-henri.dutray@netgem.com
+33 1 55 62 56 11

Shareholders Relations & PR
Nicolas Castex
nicolas.castex@equitystories.fr
+33 (0) 6 09 58 07 72

About Netgem
NETGEM is the pioneer of the connected home, with the invention of the Box in
1996, and the co-creation of the independent operator of services for the very
high-speed and Fiber in France, under the brand VideoFutur. Millions of homes
around the world today use the NETGEM Box, under brands of our distribution
partners, operators of telecommunications services and entertainment. NETGEM
is listed on Euronext Paris Compartment C (ISIN: FR0004154060, Reuters:
ETGM.PA, Bloomberg: NTG: FP)

www.netgem.com

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