Artilium plc. ( Artilium or the Company or the Group ) Half yearly results for the six months ended 31 December 2017

Transcription

1 27 March 2018 Artilium plc ( Artilium or the Company or the Group ) Half yearly results for the six months ended 31 December 2017 Artilium plc (LSE/AIM: ARTA), the AIM quoted provider of innovative telecommunication software and solutions, announces its unaudited half yearly results for the six months ended 31 December Financial Highlights Revenue for the six months to 31 December 2017 was 5.5 million (2016: 5.1 million), an increase of 7.8% Adjusted EBITDA of 0.6 million (2016: 0.1 million) Record results reported and Artilium is upbeat on full year forecasts Operational Highlights Several new MVNOs activated and new large customers won on cloud PBX Successful integration of Wbase and Digiweb, acquired in 2017, into the Group Livecom integration into Comsys creating increased cross selling across the Group Appointment of Chief Financial Officer, Rupert Hutton, to the Board on 1 July 2017 Entered into a strategic partnership and share exchange with Pareteum Corporation (NYSE: TEUM) to jointly pursue new and developed markets, accelerate growth and market share First contract signed with Chinese MVNO through the Pareteum partnership New office opened in Germany where strong demand is seen for the Group s fixed line mobile and data telecom based software solutions IoT fuelling the increase in demand for Artilium s products and services Post Period End Acquisition of Interactive Digital Media GmbH (IDM), a German based cloud communication company, with integration proceeding according to plan Commenting on the results and outlook, JanPaul Menke, NonExecutive Chairman of Artilium said:

2 Artilium has made considerable progress in the last six months with positive developments across our key financial metrics. We have achieved sales growth and strengthened interest in our core and expanding business offerings. The Group s strategic partnerships, such as the one with Pareteum Corporation, are bearing fruit. The telecommunications market is increasingly moving towards innovative and expanded software products and services and Artilium is now establishing itself as a leading provider of these services. Our integrated offering makes us an attractive business partner on a global scale. The new financial year has started well and we look forward to updating the market on our continued progress in due course. For further information please contact: Artilium PLC +32 (0) Bart Weijermars Chief Executive Officer finncap Ltd Jonny FranklinAdams / Scott Mathieson (corporate finance) Camille Gochez (corporate broking) +44 (0) Buchanan +44 (0) Chris Lane / Jamie Hooper / Catriona Flint About Artilium Artilium is a demonstrated leader in the development of next generation communication technologies. Artilium's strategy focuses on supporting its customers to successfully grow their business by providing flexible, cost effective and innovative solutions. Artilium's innovationdriven strategy empowers telecom operators around the globe to face the tremendous challenges ahead. We combine nextgeneration technology with traditional telecom environments to create exciting new business opportunities for our customers. This ensures that our customers are able to keep up with rapidly evolving market demands while simultaneously growing their businesses. ARTA is the realtime Authentication, Authorization and Accounting (AAA) software that brings a full suite of new functionalities to telecom Operators and virtual Operators. Thanks to ARTA valueadded services portfolio, including for instance AAA of voice, text and data services, VoIP, 3G and 4G compliance, mobile payments and locationbased services, our partners are more than ready to meet future customer needs. Today, multiple renowned national and international telecommunication companies rely on Artilium to deliver voice, text and data services to about 1.5 million end users every day.

3 Artilium's "PayAsYouGrow" model allows us to scale our solutions to the exact needs of our customers. As a latest innovation, Artilium offers its product suite from the Cloud as a PAAS (Platform As A Service), yielding ARTA's scalability, flexibility and proven stability. Artilium PLC is a publicly listed software company on the London Stock Exchange (LSE/AIM: ARTA). Forward Looking Statements This report contains certain forward looking statements and information relating to the Company that are based on the beliefs of the Company s management as well as assumptions made by and information currently available to the Company s management. When used in this report, the words anticipate, believe, estimate, expect, and intend and words or phrases of similar import, as they relate to the Company or its subsidiaries or Company management, are intended to identify forwardlooking statements. Such statements reflect the current risks, uncertainties and assumptions related to certain factors including, without limitation, competitive factors, general economic conditions, customer relations, relationships with vendors, borrowing arrangements, interest rates, foreign exchange rates, litigation, governmental regulation and supervision, seasonality, product introductions and acceptance, technological change, changes in industry practices, onetime events and other factors described herein and in other announcements made by the Company. Based upon changing conditions, should any one or more of these risks or uncertainties materialise, or should any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. The Company does not intend to update these forwardlooking statements.

4 Chief Executive s Statement Introduction We have made strong progress during the first six months of the current financial year. The delivery of increasing volumes of new software, including IoT platforms and data delivery portals, is building a healthy order book from both new and existing customers. The Group s international prospects for our products and services are geographically diverse and growing which gives us much confidence in our ability to expand our customer base. Financial results Reported revenue for the six months to 31 December 2017 of 5.5 million (2016: 5.1 million) was generated primarily from maintenance and professional services rendered to existing customers and by United Telecom from fixed calling, broadband and mobile services. The Group generated a gross profit of 4.3 million or 78.9 per cent. of reported revenue (2016: 3.8 million or 74.3 per cent. of reported revenue) and generated adjusted EBITDA of 0.6 million (2016: 0.1 million). The Group reported a net loss after tax of 0.4 million (2016: depreciation and amortisation on historic acquisitions of 0.8 million. 0.9 million), after charging Business overview In October 2017, Artilium signed an agreement and share exchange with Pareteum Corporation, a NYSE quoted SoftwareasaService provider. Under the agreement both parties are developing new joint products and services, experiencing enhanced sales coverage, increasing speed to market and gaining access to greater knowledge and resources, forming a significant competitive advantage in the fastgrowing IT telecoms market. The agreement with Pareteum is focused on mature markets but has also enhanced Artilium s prospects in high growth and traditionally underserved developing markets. Artilium is pleased to announce that Pareteum has signed its first contract in China. Artilium is enabling the new customer s Chinabased subscribers to connect and transact on their mobile devices anywhere in the world. Pareteum is powering this new customer to expand its subscriber revenues through global connectivity and data, without the need for investment in infrastructure or software. Fully integrated cloudbased product sets are continuing to enable the Artilium philosophy of connecting any device, anywhere, on any network.

5 At United Telecom ( United ), the Group s Belgian telecoms service provider operating in fixed and mobile telecom, several new MVNOs were activated and new large enterprise customers were won on the cloud PBX platform. The Digiweb customers, which we acquired in May 2017, have been successfully transferred to the United Telecom brand, and have added revenues from July United now benefits from a much broader customer base to cross sell into the growing enterprise market. At Comsys, our specialist interactive telephony services business, performance was solid and we have also seen increasing interest in our Livecom products and services from customers around the world. The integration of Livecom into Comsys has significantly increased the appeal of these products and services and, with further integration of the business, crossselling within the existing customer base is increasing and expected to continue to do so. The Group can now offer telco customers and potential customers with a multichannel call centre solution, and through these synergies we can offer clients the full range of services, making Artilium more appealing to its growing customer base and positioning us well for future growth. The telecommunications market continues to innovate and evolve, and the Group s growing presence as a leading integrated provider with cross selling capabilities is benefiting from the evolving market opportunities. I would like to thank all employees for their hard work through the period and to our shareholders for their trust in the management team as we continue to build momentum and add further value for our customers and shareholders alike. Post Period End and Current Trading The start of 2018 calendar year has been very positive, with Artilium selling an IoT platform that has been developed for Telenet, our largest customer. Under this agreement, Artilium will sell products and services within Telenet s customer base which should increase our sales potential for the whole Group. Our new office in Germany will enable Artilium to further expand into the significant and growing German market, where sales will initially be achieved through IT resellers and systems integrators to our business customers. Our first enterprise customers have been signed up and are now on the Artilium platform in Germany. Artilium s expansion into Germany was underpinned this calendar year by the acquisition of Interactive Digital Media GmbH ( IDM ), a Germanbased cloud communication company. This deal is expected to increase Artilium s Group revenue by 45 per cent. for the current

6 financial year. The integration of IDM is progressing very well and Artilium is already benefiting from access to IDM s large customer base. The Board is optimistic about Artilium s prospect for the rest of the year and has confidence that Artilium will build on the very encouraging start made to this calendar year. Historically the Group has presented its results by business line (ARTA, United Telecom, Comsys). However, following the transformational acquisition of IDM, going forward the directors consider that presenting its operations in terms of telecoms services and enterprise services better represents the Group's business by highlighting more clearly the growth characteristics of each offering and how each it is positioned in the market. Bart Weijermars 27 March 2018

7 CONDENSED CONSOLIDATED INCOME STATEMENT ended ended Ended December December 30 June Unaudited Unaudited Audited Notes Continuing Operations Revenue 5,481 5,090 10,452 Cost of sales (1,201) (1,310) (2,716) Gross profit 4,280 3,780 7,737 Depreciation and amortization (816) (818) (1,768) Administrative expenses before redundancy costs (3,722) (3,633) (7,413) Redundancy costs (63) (92) (227) Administrative expenses (3,785) (3,732) (7,640) Operating loss (321) (770) (1,671) Finance costs (68) (176) (324) Loss before tax (389) (946) (1,995) Tax credit Loss for the period from continuing operations attributable to owners of the Company (269) (858) (1,760) Earnings per share from continuing operations (cents) (0.08) (0.29) (0.58) A key performance indicator for the Group is adjusted EBITDA. This was 0.6 million for the six months to December 2017 (2016: 0.1 million). The reconciliation of adjusted EBITDA to the income statement is disclosed below. Reconciling table operating resultadjusted EBITDA ended ended ended December December 30 June Unaudited Unaudited Audited Operating loss (321) (770) (1,671) Redundancy costs Depreciation, amortization and impairments ,824 Adjusted EBITDA

8 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ended ended ended 31 December 31 December 30 June Unaudited Unaudited Audited Loss for the period (269) (858) (1,760) Other comprehensive income: Items that may be subsequently reclassified to profit or loss Exchange differences on translation of foreign operations (24) Change in fair value of available for sale financial assets 2,064 Total comprehensive income for the period attributable to owners of the Company 1,771 (807) (1,573)

9 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION ended ended ended 31 December 31 December 30 June Unaudited Unaudited Audited Notes Noncurrent assets Goodwill 2 17,127 17,127 17,127 Other intangible assets 3,125 4,297 3,812 Property, plant and equipment Available for sale financial assets 5,498 Other receivables 1,000 26,205 21,875 22,472 Current assets Inventories Trade and other receivables 3,938 4,073 2,434 Cash and cash equivalents 2,916 2,301 2,863 6,966 6,480 5,381 Total assets 33,170 28,355 27,853 Noncurrent liabilities Deferred tax liabilities Bank loans Other borrowings Other payables ,115 1,603 1,255 Current liabilities Trade and other payables 7,640 5,985 7,801 Other borrowings 100 2,574 1,308 Bank loans ,750 8,827 9,194 Total liabilities 8,865 10,430 10,449

10 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Continued) ended ended ended 31 December 31 December 30 June Unaudited Unaudited Audited Notes Equity attributable to owners of the Company Share capital 4 22,168 20,123 20,267 Share premium 49,524 47,504 47,480 Shares to be issued 1, Merger relief reserve 1,488 1,488 1,488 Capital redemption reserve 6,503 6,503 6,503 Available for sale reserve 2,064 Translation reserve (2,180) (2,292) (2,156) Own shares (2,336) (2,336) (2,336) Retained deficit (54,236) (53,065) (53,967) Total equity 24,305 17,925 17,404 Total liabilities and equity 33,170 28,355 27,853

11 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Share capital Share premium account Merger relief reserve Shares to be issued Capital redemption reserve Available for sale reserve Translation reserve Own shares Retained deficit Total Eur 000 Eur 000 Eur 000 Eur 000 Eur 000 Eur 000 Eur 000 Eur 000 Eur 000 Eur 000 Balance at 1 July ,267 47,480 1, ,503 (2,156) (2,336) (53,967) 17,404 Unaudited: Nominal value of shares issued 1,901 2,044 (125) 3,820 Shares to be issued 1,310 1,310 Total transaction with owners, recognised directly in equity 1,901 2,044 1,185 5,130 Loss for the period (269) (269) Other comprehensive income 2,064 (24) 2,040 Total comprehensive income for the period 2,064 (24) (269) 1,771 Balance at 31 December ,168 49,524 1,488 1,310 6,503 2,064 (2,180) (2,336) (54,236) 24,305

12 Share Merger Capital Available Share premium relief Shares to redemption for sale Translation Own Retained capital account reserve be issued reserve reserve reserve shares deficit Total Eur 000 Eur 000 Eur 000 Eur 000 Eur 000 Eur 000 Eur 000 Eur 000 Eur 000 Eur 000 Balance at 1 July ,601 47,379 1,488 6,503 (2,343) (2,336) (52,207) 18,085 Unaudited: Nominal value of shares issued 522 Premium arising on issue of placement shares 125 Total transaction with owners, recognised directly in equity Loss for the period Other comprehensive income currency translation differences (858) (858) Total comprehensive income for the period 51 (858) (807) Balance at 31 December ,123 47,504 1,488 6,503 (2,292) (2,336) (53,065) 17,925

13 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS ended ended ended 31 December 31 December 30 June Unaudited Unaudited Audited Net cash generated from/(used in) operating activities (844) 1,290 3,858 Investing activities Acquisition of subsidiaries and businesses, net of cash acquired 87 Purchase of intangible fixed assets (4) (155) Purchase of property, plant and equipment (12) (206) Loans advanced (1,000) (1,000) Net cash used in investing activities (12) (1,004) (1,274) Financing activities Proceeds on issue of shares 1,310 Proceeds from borrowings 1,925 1,751 Interest paid (68) (176) (312) Repayment of borrowings (333) (156) (1,582) Net cash generated from/(used in) financing activities 909 1,593 (143) Net increase in cash and cash equivalents 53 1,879 2,441 Cash and cash equivalents at beginning of the period 2, Cash and cash equivalents at the end of the period 2,916 2,301 2,863 Noncash transactions The principal noncash transactions comprise the issue of shares as consideration for business combinations and the issue of shares to settle Group liabilities. NOTES TO THE CONDENSED CONSOLIDATED HALF YEARLY FINANCIAL STATEMENTS 1. Nature of operations and general information Artilium plc and its subsidiaries (together the Group ) operates in the business to business communications sector delivering innovative software solutions which layer seamlessly over disparate fixed, mobile and IP networks to enable the deployment of converged services and applications. Artilium plc is incorporated and domiciled in the United Kingdom. The address of its registered office is 913 St. Andrew Street, London EC4A 3AF. The Group s principal place of business is Belgium and the Netherlands. 2. Basis of preparation

14 These unaudited condensed consolidated half yearly financial statements have been prepared under the historical cost convention and in accordance with the AIM Rules for Companies. As permitted, the Group has chosen not to adopt IAS 34 Interim Financial Statements in preparing this interim financial information. The unaudited condensed consolidated half yearly financial statements should be read in conjunction with the annual financial statements for the year ended 30 June 2017, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The unaudited condensed consolidated half yearly financial statements do not constitute statutory financial statements within the meaning of the Companies Act They have been prepared on a going concern basis in accordance with the recognition and measurement criteria of IFRSs as adopted by the European Union. Statutory financial statements for the year ended 30 June 2017 were approved by the Board of Directors on 30 October 2017 and delivered to the Registrar of Companies. The report of the auditor on those financial statements was unqualified. The same accounting policies, presentation and methods of computation are followed in these unaudited condensed consolidated half yearly financial statements as were applied in the preparation of the Group s annual audited financial statements for the year ended 30 June The preparation of unaudited condensed consolidated half yearly financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the end of the reporting period. Significant items subject to such estimates are set out in the Group s Annual Report and Financial Statements for the year ended 30 June Except as described below, the nature and amounts of such estimates have not changed significantly during the interim period. The presentational currency of the Group is round thousand Euros. Basis of consolidation The unaudited condensed consolidated half yearly financial statements incorporate the financial statements of Artilium plc and the entities controlled by the Company. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. All material intragroup transactions, balances, income and expenses are eliminated on consolidation. Going concern The Directors have adopted the going concern basis in preparing the condensed consolidated half yearly financial statements, having carried out a going concern review. In carrying out the review the Directors have made assumptions about the future revenue that will be

15 generated based on its pipeline. The Directors are satisfied that the going concern basis is appropriate. Intangibles IAS 36 requires the Directors to consider intangible assets and goodwill for impairment on an annual basis. The last review was performed at 30 June 2017 and has not been updated at the interim date. 3. Earnings per share Profits/(Losses) Loss from continuing operations attributable to owners of the parent Number of shares Weighted average number of ordinary shares for the purposes of basic and diluted earnings /loss per share ended ended ended 31 December 31 December 30 June Unaudited Unaudited Audited (269) (858) (1,760) No. No. No. 316,738, ,746, ,597,997 Earnings per share (cents) (0.08) (0.29) (0.58)

16 4. Share capital Issued and fully paid ordinary shares: 341,283,755 (30 June 2017: 307,583,545) ordinary shares of 5p each ended ended ended 31 December 31 December 30 June Unaudited Unaudited Audited ,212 20,123 20,267 ended ended ended 31 December 31 December 30 June No. 000 No. 000 No. 000 Issued and fully paid ordinary shares: Balance at beginning of financial period 307, , ,853 Issued during the period 33,701 4,568 9,730 Balance at end of financial period 341, , , Post Balance Sheet Events On 16 January 2018 Artilium acquired the entire issued share capital of Interactive Digital Media GmbH ("IDM"), a Germanbased cloud communication company, for an aggregate consideration of 3.5 million. The consideration was satisfied in 2.0 million cash and 1.5 million in options over ordinary shares or payment in ordinary shares of 5 pence each in the capital of the Company. 6. Further Copies Copies of the halfyearly financial report are available from the Company s registered office at 913 St. Andrew Street, London EC4A 3AF and on the Company s website