NETGEM (EPA:ALNTG) - Annual results 2020 - Outlook 2021 Successful Pivot

Transparency directive : regulatory news

19/03/2021 08:00

Press release

                      Annual results 2020 - Outlook 2021
                               Successful Pivot

- In 2020, the Group has shown that the pivot that began several years ago
  towards the business of streaming video access provider (OTT) is bearing
  fruit.

- 90% of Net Revenue is now recurring and the growth in Gross Margin coupled
  with synergies linked to the integration of Vitis enables to post a positive
  EBITDA in the second half of 2020.

- The group is targeting further growth in 2021 with an improvement of its key
  ?nancial aggregates.

Paris, March 19, 2021

Netgem's Board of Directors met on March 18, 2021 and pproved the annual
accounts for 2020.

For Mathias Hautefort, CEO of Netgem, "The year 2020 has been exceptional due
to both the health crisis and the responses we have had to provide. The group's
profound transformation into an OTT operator for the connected home has
demonstrated its relevance. With a solid ?nancial situation, the group is
equipped to continue its growth in 2021.

In the special conditions of this past year, I would like to thank in
particular our teams and our operator partners who were formidable in their
mobilization and allowed users of our services to make the most of the
possibilities of Ultra-Fast Broadband when they need it most."

Results 2020

DataIFRS EUR million           2020     2019   Change

Turnoverr                      30.3     25.3     5.0
Net revenue (*)                26.8     13.5    13.3
Gross pro?t                    15.9     13.2     2.6
Opex                          -15.0    -12.5    -2.5
EBITDA                          0.9      0.7     0.2
Operating income               -6.0     -0.1    -5.9
Operating result                4.2      0.7     3.5 For

(*) de?ned as turnover less the cost of equipment sold.

Over the ?nancial year ended December 31, 2020, Netgem achieved consolidated
sales of EUR 30.3 million, up 20% compared to ?nancial year 2019.

Net revenue grew by 99% from 2019, and over 90% of that net revenue is
recurring services.

The growth in gross margin and the cost reductions made possible by the ONE
NETGEM plan to integrate Vitis and refocus on the OTT operator businesses
enabled a return to positive EBITDA as from the second half for a total of EUR
0.9 million for the whole year.

The current operating income of EUR -6.0 million includes the contribution of
consolidated Vitis activities including EUR -2.0 million depreciation on assets
identi?ed as part of the allocation of goodwill of Vitis.

The operating result of EUR 4.2 million includes EUR 10 million for the IFRS
impact of the ?rst full consolidation of Vitis.

The contribution of the full integration of Vitis on the accounts presented
above is therefore EUR 16.6 million on turnover, EUR 16.0 million on net
revenue and EUR -6.6 million on current operating pro?t.

IFRS data in millions of euros       2020    2019   Change

Operating income                      4.2     0.7     3.5
Financial income income              -0.1    -0.5     0.4
Equity accounting result (Vitis)        -     3.1     3.1
Taxes                                   -    -4.0     4.0
Overall net income                    4.1    -7.0    11.1
Net income (Group share)              7.2    -7.0    14.2
Net income from minority interests   -3.1       -    -3.1
Comprehensive net income
(Group share)                         7.0    -6.9    14.0

After taking into account a ?nancial charge of EUR -0.1 million, the Group
records a net gain of EUR 7.2 million in 2020 (group share).

IFRS data in millions of euros                      2020    2019

Cash flow from operating activity (A) (*)            3.8     1.3
Of which:
Operating cash flow before before payment of tax     1.0     1.5
Tax paid                                               -    -0.1
Decrease (increase) in working capital               2.8    -0.1
Cash flow from investments (B)                      -6.0    -2.0
Cash flow from operations (A + B) (*)               -2.3    -0.7
Cash flow from financing (C) (*)                     4.0    -1.6
Of which:
Dividends                                              -    -1.7
Capital increase                                     0.3       -
Net purchase of own shares                             -     0.1
Issuance of loans and financial debts                3.7     0.0
Discontinued operations & currency variation (D)       -    -0.2
Net change in cash (A + B + C + D)                   1.7    -2.5

(*) excluding IFRS 16 restatement

Netgem's cash position at the end of 2020 amounts to EUR 10.2 million, an
increase of EUR 1.7 million compared to the end of 2019.

The Group's operating activity generated an amount of cash after tax of EUR 3.8
million in 2020, compared to EUR 1.3 million in 2019.

Investment cash ?ows include acquisition costs (equipment, connections,
content, etc.) related to the growth in the number of direct or indirect
subscribers to the services operated by the Group. The marketing expenses
related to the acquisition of the general public part of the activity are not
capitalized but recorded directly in charge. The growth of these amounts is
directly linked to the growth of the activity.

The cash ?ow from ?nancing includes EUR 2.4 million related to a bond
redeemable in shares issued by Vitis in 2020 for the bene?t of Caisse des
Dépôts and a loan of EUR 1.6 million taken out in anticipation of future
repayments research tax credits.

IFRS data in millions of euros                  12/31/20   12/31/19

Equity and debt
Equity, Group share                                 24.3      15.5
Current and non-current ?nancial liabilities         7.5       0.8
Analysis of net cash
A. Liquidity                                        10.2       8.5
B. Liabilities current ?nancial                      6.1       0.5
C. Net current cash (A) - (B)                        4.1       7.9
D. Non-current ?nancial liabilities                  1.4       0.2
E. Net cash (C) - (D) before IFRS 16 impact          2.7       7.7
F. Impact of IFRS 16                                 0.8       0.7
G. Net cash position (E) - (F)                       1.8       7.0

The IFRS current debt includes EUR 2.4 million in respect of the bond
redeemable in shares issued by Vitis for the bene?t of Caisse des Dépôts,
which will be redeemed in shares of Vitis in April 2021. Restated for this
amount, the net cash position amounts to EUR 4.2 million.

Dividend

In order to have the maximum ?exibility to ?nance its growth in 2021, the
Board, on the recommendation of the Chief Executive Of?cer, will propose to
the Shareholders' Meeting to extend the suspension of the dividend as decided
last year.

Outlook

The television market is profoundly shaken by the spectacular increase in the
role of streaming (OTT) in video consumption to the detriment of linear
channels, and by the growing role of new screens in this evolution of
consumption.

At a time when European consumers are massively switching to ?ber, more and
more people are questioning the validity of 3P packages integrating hundreds of
linear channels offered by telecom operators.

In this context, most operators, in order to more quickly amortize the massive
investments required by their presence on ?ber networks, now offer so-called
1P or 2P offers at aggressive prices for ?ber access and telephony without
TV, leaving room for stand-alone services to access streaming television (the
"cord-cutting" phenomenon already observed in the United States for several
years).

The Netgem Group, after inventing the "Box" in the 2000s, intends to become a
benchmark European operator in multi-screen access to video and television
streaming, offering its services directly to the end customer and / or in
partnership with telecommunications operators through its NetgemTV service.

To the end customer, NetgemTV provides a simpli?ed, personalized and
innovative interface, integrating the entire range of TV and streaming videos,
accessible on any screen - including televisions - in and outside the home,
through a single  application, for a family subscription at a very attractive
price. NetgemTV can be enriched with a SuperStream option to improve the
quality of WiFi, thanks to mesh technology, in all rooms of the household.

In its partnerships with operators, the Netgem Group can deploy a varied
approach, from the simple management of the technological assets necessary for
this service (SaaS mode - Software as a Service) to the provision of a turnkey
service (CaaS mode - Content as a Service) - content included - under one of
the Group's brands. The partner operator always has the possibility of
differentiating themselves by personalizing their content offer according to
their market.

Over 2021, the Group intends to consolidate its growth and improve its key
?nancial indicators (Net Revenue, Gross Margin, Ebitda) from half-year to
half-year by relying on the favorable outlook in its 3 main markets:

In France, the distribution model of The Group relies on the direct-to-consumer
distribution of NetgemTV in a bundle with the resale of ?ber access in the
local area under the VIDEOFUTUR brand and on indirect distribution via telecom
operator partners. The NetgemTV offer in French is particularly rich, and
various options for expanding its distribution are being studied.

The English market is experiencing very strong momentum in its ?ber market,
which is extremely fragmented with around a hundred operators. This context is
very favorable to the indirect distribution model favored in this territory. 14
partners have already been signed up, including 6 since the second half of
2020. In 2021 growth will be driven by the ramp-up of signed  operators,  the
expected signing of new  ones and the arrival of new content partners to enrich
the offer.

In Finland, the Group is bene?ting from the growth of Elisa, the leading
operator in the region and long-standing partner of the Group for more than 15
years. The Elisa Viidhe product, built on the Netgem Group's technologies, is
very successful and is marketed as a bundle with the Elisa Group's ?ber
offers, but also independently in order to bene?t from the cord-cutting trend
towards other Finnish operators.

The Group is closely monitoring the global tension on the supply of chipsets
and the potential consequences on its ability to support the growth of its
activity.

Netgem adopts the Middlenext corporate governance code

Netgem, which until now referred to the AFEP-MEDEF corporate governance code,
decided, at the term of the Board of Directors meeting of March 18, 2021, to
refer    to the Middlenext Corporate Governance Code. This code appears to be
better suited to the company, particularly with regard to its size and the
structure of its capital. It is, in its latest version published in September
2016, available on the Middlenext site (www.middlenext.com).

Financial communications calendar
- Turnover and Net Revenue Q1 2021       April 21, 202, before market
- Annual General Meeting                 May 26, 2021
- H1 2021 Results                        July 30, 2021, before market
- Turnover and net revenue Q3 2021       October 20, 2021, before market

The 2020 annual accounts are being audited by the auditors.

contacts

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

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

About NetgemNetgem's
NetgemTV (TV by Netgem) allows personalized access to the entire streaming
video and television offer on all screens in and outside the home, through a
single application. This service is marketed directly to consumers, or through
partnerships with ?ber access operators.

For a family, NetgemTV is the guarantee of paying only for the television that
everyone wants to watch, while having the freedom to choose the ?ber offer
that suits them. Thanks to its SuperStream option, NetgemTV greatly improves
WiFi coverage throughout the home.

For the operator, Netgem provides access to an innovative offer, designed for
new uses and enhancing the promise of ?ber; with an economic model without
investment and aligning interests with the satisfaction of the end customer.

Netgem is listed on Euronext Growth.
(ISIN: FR0004154060, Reuters: ETGM.PA, Bloomberg: ALNTG FP) www.netgem.com

NETGEM's latest news

30/04/2024 17:45

NETGEM (EPA:ALNTG) - Annual results 2020 - Outlook 2021 Successful Pivot

Transparency directive : regulatory news

NETGEM's latest news

Other stories