NETGEM (EPA:ALNTG) - 2019 first half results : first operational achievements for the new Services strategy

Transparency directive : regulatory news

01/08/2019 06:45

Press release

  2019 first half results: first operational achievements for the new Services
                                   strategy

Paris, August 1, 2019

Netgem's Board of Directors meeting on July 31, 2019 approved the half-year
financial statements and highlights its salient features:

- Launch of the new generation of multi-screen products
- First deployments of new business models on 4K Boxes
- Continued growth of Videofutur and confirmed ambition of EUR 30 million in
  turnover by 2021
- Managed decline of the Box business and associated savings plan
- Commitment of the founding shareholders, with the choice of payment of the
  annual dividend in shares
- New governance, with the separation of the functions of Chairman and CEO,
  and the appointment at the later post of Mr. Mathias Hautefort, effective
  July 1, 2019

"The new range of multi-screen services, associated with high-end equipment,
and with new business models must allow the Netgem Group to take advantage of
the growth of the very high-broadband market and the emergence of new
operators" says Mathias Hautefort, Chief Executive Officer

Results (in million euros, IFRS)
Netgem Group           H1 2019  H2 2018  H1 2018  H1'19 / H2'18 H1'19 / H1'18

Revenue                  13.1     18.8     23.0       -5.7          -9.9
Net revenue               6.7      8.6     11.0       -1.9          -4.3
Net revenue Vitis /
Videofutur (not
consolidated) (*)         6.8      5.5      3.8       +1.3          +3.0
Ebitda                    0.2      0.6      2.1       -0.4          -1.9
Operating income         -0,1      2.6      1.8       -2.7          -1.9
Financial income         -0.5     -0.9       -        +0.4          -0.5
Equity method result
(Vitis / Videofutur)     -1.7     -1,2     -1.6       -0.5          -0.1
Tax                      -0.1       -      -0.5       +0.1          +0.5
Net income               -2.4      0.5     -0.3       -2.9         - 2.1
Overall net income       -2.4      0.4      -         -2.8          -2.4

(*) as Vitis is consolidated with the equity method, its net income is not
included in net consolidated income of the Group.

The impact of the expected decline in "Box" revenue was buffered by the
contribution of the service activities (slower decline in net revenue) and cost
reductions, which enabled the Ebitda to remain positive and the operating
income close to balance.

In addition, on May 14, 2019, Netgem transferred to Vitis its "multi-screen
cloud platform and digital recorder" business. The result of this activity is
isolated on a specific line in the accounts for the period and is not
significant. For information purposes, without this transaction, Netgem's
consolidated net revenue would have been higher by EUR 0.7 million over the
period.

Box sales are refocusing on contracts with new recurring business models, and
more upmarket products. Elisa, a long-time Netgem customer, has embraced this
change by renewing its multi-year commitment to Netgem

The commercialization of traditional Boxes has been refocused on a limited
number of references, with a sharp reduction in operational costs and long-term
contracts. This decision implies a gradual decrease in consolidated net revenue
in the short term. New, more upscale equipment adapted to the specific Fiber
market will be presented in the coming months.

These new connected pieces of equipment will be marketed as part of new
business models combining the sale or rental of equipment with value-added
services. This is how Netgem will provide Elisa as from the second half of 2019
with its new generation 4K HDR Box.

New customer offerings launched successfully on the multi-screen Cloud platform
developed by Netgem

New customer offerings have already been launched by Vitis on this platform,
allowing users to benefit from new multi-screen services such as Live, replay
and recording in the Cloud (nPVR): the triple-play offer "VICTORIA 100%
Entertainment" and the offer "VIC 100% Digital", designed for "digital
natives", without a TV Box.

Vitis thus becomes a showcase for the new offerings, and other customers of
Netgem have shown an interest in this comprehensive content management solution
independent of TV Boxes.

Netgem invests in the UK to benefit from the expected growth of the Fiber
market
The United Kingdom has undertaken a massive plan to catch up on fiber
deployment, generating the emergence of many new operators with significant
financial resources. The first contracts were signed with such local FIbre
operators to provide them with NetgemTV's global cloud-based management
solution for connected home services.

Vitis confirms its growth ambitions

The business plan for Vitis (Videofutur), an entity that is not consolidated in
Netgem's accounts, demonstrates the continued robust growth of its business,
driven by the deployment of Fiber in France. The Videofutur offer is now
available for marketing on more than 1.2 million access points and distributed
in about 40 French départements, based on infrastructures operated by Altitude
Infrastructure, Axione, Covage, TDF and soon SFR.

Netgem's financial structure remains solid
Equity and debt (in million euros, IFRS)

Netgem Group                       As at 30/06/2019  As at 31/12/2018  Change

Shareholders' equity, Group share        20.0              24.0         -4,0
Current and non-current financial
liabilities (*)                           4.9               7.5         -2.6

(*) including a financial liability of EUR 1 million in application of IFRS 16
as of June 30, 2019.

Net cash analysis (in million euros, IFRS)
Netgem Group                      As at 30/06/2019  As at 31/12/2018  Change
A. cash                                  8.6              11.0         -2.4
B. current financial liabilities         3,6               7.2         -3.6
C. Current net cash (A) - (B)            5.0               3.8         +1.2
D. Non-current financial liabilities     0.3               0.3           -
E. Net cash before impact
of IFRS 16 (C) - (D)                     4.7               3.5         +1.2
F. Impact of IFRS 16                     1.0                 -         +1.0
G. Net cash (E) - (F)                    3.7               3.5         +0.2

Cash is essentially impacted over the period by the portion of the annual
dividend paid in cash, i.e. EUR 1.7 million.

Net cash before impact of IFRS 16 increased by EUR 1.2 million over the period
due to the partial unwinding of the financing solutions put in place with
certain customers.

The application of IFRS 16 has a limited impact on the result for the period

The main impacts resulting from the application of IFRS 16 are:
- the recognition of a non-current asset "right to use the leased assets" for
  EUR 1.0 million,
- the recognition of a non-current liability of EUR 0.5 million and a current
  liability of EUR 0.5 million,
- a reduction in operating expenses of EUR 0.2 million, offset by an increase
  in amortization charges of the same amount.

This application has no significant impact on the financial income of the
period.

Gouvernance

As previously announced on May 14, 2019, Mr. Mathias Hautefort was appointed as
Chief Executive Officer of the Group, effective July 1, 2019, replacing Mr.
Joseph Haddad, who remains Chairman. This new organization reflects the
strategic priority of high-speed fiber services already announced in March
2019. Mr. Mathias Hautefort remains President of Vitis, a subsidiary of Netgem
focused on these services in France.

Financial calendar

Revenues and net income for the 3rd quarter of 2019: October 17, 2019, before
market.

The Statutory Auditors are in the process of finalizing their limited review
procedures and their report will be issued as soon as possible.

Contacts
Investor Relations
Bertrand Soleil
bertrand.soleil@double-digit.com
Tel: +33 (0) 6.23.31.06.53 Media

Press Relations
Patricia Ouaki
patricia.ouaki@forcemedia.fr
Tel: +33 (0) 1.44.40.24.01

About Netgem
Netgem, listed on the stock market since 2001, is since 1996 the pioneer of the
connected home in France, with the invention of the Box in 1996, and the
co-creation of the independent operator of services for very high broadband and
Fiber in France, under the Videofutur brand. Millions of homes around the world
today use the Netgem Box, under the brand names of its distribution partners,
telecom operators and entertainment operators.
Netgem is listed on Euronext Paris Compartment C
(ISIN: FR0004154060, Reuters: ETGM.PA, Bloomberg: NTG: FP)
www.netgem.com

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