NETGEM (EPA:ALNTG) - H1 2020 results

Transparency directive : regulatory news

31/07/2020 07:30

Press release

                                H1 2020 results

Paris, July 31, 2020,

The accounts for H1 2020, approved by the Board of Directors on July 30, 2020
and presented below, are the first to reflect the new consolidated scope
including the control of Vitis-Videofutur, and translating in the figures the
withdrawal from the equipment supplier business and the strategic reorientation
towards the services started several years ago.

This semester was marked by the following events:

* Major change in scope with strategic refocusing and synergies.
* Good resilience to the Covid crisis.
* Acquisition finalized in early July of a very high-speed subscriber base.

Results (in millions of euros, IFRS)

Netgem Group                           2020 H1    2019 H1    H1 / H1
Revenue                                   15.4       13.1        2.2
Net revenue                               13.1        6.7        6.5
Ebitda                                    -0.3        0.2       -0.5
Current operating income                  -2.3       -0.3       -2.1
Operating income                           7.7       -0.1        7.8
Financial result                          -0.2       -0.5        0.3
Equity method (Vitis / VideoFutur)           -       -1.7        1.7
Tax                                          -       -0.1        0.1
Overall net income                         7.5       -2.4        9.9
Net income, Group share                    8.5       -2.4       10.9
Net income from minority interests        -1.0          -       -1.0
Comprehensive net income, Group share      8.4       -2.4       10.8

Over the past half-year, customer base management services activities,
measured by Net revenue, represented more than 80% of activity of the Group and
are today the only generators of the Group's growth and value. The
consolidation of the French activities (Vitis) brings EUR 7.9m out of the total
Net revenue of EUR 13.1m, and thus enables a growth of more than 100% in
services.

Current operating income of - EUR 2.3m mainly reflects the contribution of
consolidated Vitis-Videofutur activities (- EUR 2.4m). The synergies made
possible by the takeover of these activities are only weakly reflected in these
figures at this stage. The operating income of + EUR 7.7m reflects mainly the
positive IFRS impact of the first consolidation of French activities.

Equity and debt (in millions of euros, IFRS)

Netgem Group             At 06/30/2020  At 12/31/2019   Change

Equity, group share          26.1            15.5        10.6
Current and
non-current
financial liabilities         6.1             0.8         5.3

Analysis of net cash (in millions of euros, IFRS)

                                          As of         As of
Netgem Group                           06/30/2020    12/31/2019    Change
A.
Liquidity                              10.9           8.5         2.4
B.
Current financial liabilities           5.4           0.5         4.9
C.
Current net cash position (A) - (B)     5.5           7.9        -2.5
D.
Non-current financial liabilities       0.6           0.2         0.4
E. Net
cash position before IFRS 16
impact (C) - (D)                        4.9           7.7        -2.9
F.
Impact of IFRS 16                       0.5           0.7        -0.2
G. Net
cash position (E) - (F)                 4.4           7.0        -2.6

The statutory auditors have carried out their limited review procedures and
their report is in the process of being issued.

Increase in gross cash to EUR 10.9 million

It should be noted that current debt within the meaning of IFRS includes EUR
2.4 million in respect of the bond redeemable in shares issued by Vitis in 2020
and subscribed by CDC. This amount corresponds economically to equity as it is
planned to be repaid in Vitis shares in April 2021. Net cash restated
accordingly amounted to EUR 6.8m as of June 30, 2020, virtually unchanged
compared to the end of 2019.

Resilience of the business

In the first half of 2020, Netgem demonstrated the resilience of its market and
its business model. Thus, its turnover and net income remained at levels very
close to those of the 1st quarter, despite the consequences of the Covid-19
crisis. More generally, the epidemic has not had a significant impact on
strategic orientations, performance, cash flows and balance sheet aggregates.

On the French market, the slowdown in customer acquisitions in the 2nd quarter
was partially offset by the decrease in churn rate on the existing subscriber
base and by a significant consumption of video on demand (+ 50%).

In Great Britain, NetgemTV was launched commercially with fiber operators Pure
telecom, Origin and Gigaclear.

Finland was little impacted by the crisis and sales of the service Elisa Viidhe
Premium remained strong on that market.

Outlook for the second half of the year

In France, Netgem anticipates that the deteriorating economic context could
lead to pressure on the acquisition of new subscribers. Conversely, the strong
trends in teleworking reinforce the importance of fiber in lower density
territories, the Group's natural market in France.

The contribution of new operator partners in the United Kingdom, continued
growth in Finland and the impact of the acquisition of Comcable's business
should reduce the consequences of this uncertainty, and should make it possible
to post sequential growth on the second semester.

In addition, the operational synergies made possible by the change in
consolidation scope should demonstrate their first effects by a reduction in
the structure of fixed costs from the second half of this year.

NETGEM thus has the assets to emerge stronger from this economic and health
crisis, primarily because of its agile organization, its new market positioning
- Fiber and digital - and its good financial health.

For Mathias Hautefort, CEO of NETGEM, "This semester is the first with our new
consolidation scope, and serves as a point of reference for our development
plan. This semester demonstrated the strong capacity of the teams of the new
"ONE Netgem" organization to mobilize and be agile in order to meet the
expectations of our customers. We are confident that taking into account the
overall market opportunity, our commercial refocus and the operational
synergies that we are developing within the new scope, we will be able to
improve the main activity indicators in terms of growth and profitability
semester after semester."

Financial communication calendar

* Q3 2020 Turnover and Net revenue     October 21, 2020, before market

Contacts

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

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

About Netgem
Netgem is an independent provider of ultra-broadband consumer services. The
customers managed by the Group are located in Europe, mainly in France, Great
Britain and Finland. They are managed for Netgem's own account (in France) and
for the account of third-party operators. In France, the Group operates in
rural areas in conjunction with infrastructure investments underwritten by
public authorities aiming to reduce the digital divide and improve regional
planning.
The Group stands out thanks to its end-to-end technological mastery of its
digital TV, video and music streaming offer with a unified and unique
experience on TV, mobile and voice control, including the biggest brands of
local and global content.
Netgem is listed on Euronext Paris Compartment C
(ISIN: FR0004154060, Reuters: ETGM.PA, Bloomberg: NTG: FP) www.netgem.com

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