NETGEM (EPA:ALNTG) - Interim Results 2021 and Outlook - Raised annual objectives

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30/07/2021 07:30

Press Release
Interim Results 2021 and Outlook Raised annual objectives

* Recurring revenues represent 90% of the activity, with 320,000 subscribers to
  the group's Content-as-a-service platform.

* Gross pro?t growth of 20% in the ?rst half of 2021.

* This growth is accompanied by a return to pro?tability with EBITDA reaching
  EUR 2.0m (H1 2020: - EUR 0.3m) and a signi?cant improvement in net cash (EUR
  4.3m at June 30, 2021 vs. EUR 1.8m at the end of 2020).

* The company raises its annual objectives, anticipating gross pro?t growth
  in 2021 of about 15%, compared to 10% as announced previously.

Paris, July 30, 2021

The Netgem Board of Directors of July 29, 2021 approved the accounts for the
?rst half of 2021.

For Mathias Hautefort, CEO of Netgem, "Our business model has stabilized. We
are growing with our existing customers and discussions are underway with other
telecom operators or publishers of video streaming services. We are revising
our objectives upwards and are now aiming for organic annual gross pro?t
growth of close to 15% in 2021."

H1 2021 results

IFRS data in millions of euros
(unaudited)                  2021   2020
                              H1     H1       Change
Revenue                      14.7   15.4       -4%
Gross pro?t                   9.0    7.5     + 20%
Operating expenses          - 7.0   -7.9      -12%
EBITDA                        2.0   -0.3      N / A
Current operating income     -2.2   -2.3      + 4%
Operating income             -2.1    7.7
Financial income               -    -0.2
Taxes                          -      -
Overall net income           -2.1    7.5
Net income (Group share)     -1.0    8.5
Net income from minority
interests                    -1.1   -1.0
Comprehensive net income
(Group share)                -0.7    8.4

Growing subscriber base and gross pro?t

The Group markets a multi-screen streaming video technology platform in an
as-a-service mode to telecom operators and video services publishers, NetgemTV.
Use of the platform's services is billed per subscribed end-user. Depending on
the territories and distribution partners, the Group markets either the
platform on its own (B2B mode), or in conjunction with all or part of the video
rights that make up the ?nal service (B2B2C mode). In France, some
subscribers are addressed directly (B2C). Finally, some offers include the
supply of a TV terminal, sold or rented to the partner operator.

The total number of subscribers to the Group's services stood at 320,000 at the
end of June, up 45,000 over the ?rst half of 2021. The slight drop in
turnover in the ?rst half is explained by a product mix including
signi?cantly more terminals delivered to new subscribers in the 1st quarter
of 2020 compared to the 1st quarter of 2021. In the second quarter of 2021,
revenue amounted to EUR 7.6m, up from EUR 7.4m for the same period in 2020.

The gross pro?t for the ?rst half of 2021 stands at EUR 9.0m, compared with
EUR 7.5m for the same period last year. It is up 20% compared to the same
period the previous year, due to the growth of the subscribers base and also to
the favorable evolution of the service - product mix over the ?rst half of
2021.

Return to pro?tability

EBITDA amounted to + EUR 2.0m, compared to - EUR 0.3m over the same period last
year, the growth in gross pro?t taking place in the context of a cost
structure under control thanks to the savings plans implemented in 2019 and
2020.

Current operating income remained stable between the two years due to the
increase in depreciation on equipment directly linked to the growth in
activity, and depreciation recognized in the ?rst half of 2021 (EUR 1m) on
the assets identi?ed as part of the allocation of the Vitis goodwill over the
2020 ?nancial year.

Operating income amounted to - EUR 2.1m over the past semester, against + EUR
7.7m over the ?rst half of 2020. As a reminder, the operating pro?t for
2020 includes EUR 10m of capital gain recognized as the impact of the full
consolidation of Vitis as of January 1, 2020.

Overall net income therefore stands at - EUR 2.1m and net income group share at
- EUR 1.0m due to minority interests (Caisse des Dépôts and Groupe Océinde)
in the French subsidiary Vitis 53% owned by Netgem.

H1 2021 cash ?ows

IFRS data in millions of euros
(unaudited)                         2021 H1  2020 H1
Cash ?ow from operations (A) (*)       3.3     1.1
Of which:
Self-?nancing capacity before
payment of tax                         1.7    -0.1
Tax paid                                 -      -
Decrease (increase) in WCR             1.6     1.2
Cash ?ow from investments (B)         -3.6    -1.1
Operating cash ?ow (A + B) (*)        -0.2    -0.1
Cash ?ow from ?nancing (C) (*)        -2.3     2.5
Of which: Dividends                      -      -
Capital increase                         -     0.2
Net purchase of own shares               -     0.1
Issuance / Repayment of loans
and ?nancial debts                    -2.4     2.2
Discontinued operations & currency
variation (D)                            -      -
Net change in cash (A + B + C + D)    -2.6     2.4

(*) Excluding IFRS 16 restatement

The Group's activity generated EUR 3.3m of cash in the ?rst half of 2021
compared to EUR 1.1m for the same period in 2020. The improvement in working
capital requirements ("WCR") over the period is the consequence of the
reimbursement by the French State of receivables on research tax credits.

Cash ?ows from investments reached EUR 3.6m over the past half-year. They
mainly include the costs linked to the growth of the subscribers base (mainly
immobilized equipment).

Cash ?ows from ?nancing re?ect the repayment of the loan contracted in
anticipation of the payment by the State of research tax credits, and of loans
from BPI and another credit institution.

Equity and debt, net cash

IFRS data in millions of euros
(unaudited)
                                          At            At
                                     06/30/2021    12/31/2020
Shareholders 'equity and debt
Shareholders' equity, Group share       23.8           24.3
Current ?nancial liabilities and
non-current                              2.8            7.5

A. Cash                                  7.6           10.2
B. Current ?nancial liabilities          2.5            6.1
C. Current net cash (A) - (B)            5.2            4.1
D. Financial liabilities non-current     0.4            1.4
E. Net cash (C) - (D) before IFRS 16
impact                                   4.8            2.7
F. Impact of IFRS 16                     0.6            0.8
G. Net cash (E) - (F)                    4.3            1.8

Over the period, the group repaid inter alia the bond subscribed by Caisse des
Dépôts for the bene?t of Netgem's Vitis subsidiary, in Vitis shares, and in
cash the loan taken out in anticipation of the reimbursement by the French
State of the research tax credit. This resulted in an improvement in net cash
of EUR 2.5 million over the past period, which stood at EUR 4.3 million as of
June 30, 2021.

Activity and Outlook

In the Baltic region, deliveries remain strong with the operator Elisa for its
Elisa Viidhe offer in Finland and its subsidiary in Estonia. The pace of this
activity will remain sustained over the end of the year.

In the United Kingdom, the Group is experiencing growing success, which it
hopes to translate in the second half of the year into new partnerships with
leading players, which would allow the Group to increase its visibility in
2022.

In addition, in this same market, Netgem announced a ?rst series of
deployments of its SuperStream service, a powerful wi? optimized for each
household to improve the video streaming experience. This service offering
creates an opportunity for Netgem and its partners to improve the ARPU (average
revenue per user) on the NetgemTV service and to win new Telecom operator
customers.

In France, the Group continues to develop. The Viva offer, an OTT on-demand
cinema service, was launched in July 2021, and the commercial launch of France
Channel is scheduled for mid-August. This approach is combined with the
optimization of the B2C Videofutur activity in France.

The group is consequently raising its annual target of gross pro?t growth,
now expected to be close to 15% for the year as a whole, and of an EBITDA for
the second half of the year at least equal to that of the ?rst half, allowing
it to anticipate a return to positive cash ?ow generation at the end of 2021
or early 2022. The outlook presented above takes into account the impact of the
global shortage of certain electronic components.

Financial communication calendar

? Q3 2021 revenue and gross pro?t
October 20, 2021, before market

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 Netgem

NetgemTV 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

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