Interim Results

29 March 2016

Artilium plc

("Artilium" or the "Company")

Half yearly results for the six months ended 31 December 2015

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 2015.

Financial Highlights

§ Revenue for the six months to 31 December 2015 was € 4.3 million (2014: € 4.1 million)

§ Adjusted EBITDA of €- 0.2 million (2014: € 0.1 million)

§ Net loss after tax of € 0.8 million (2014: net loss after tax of € 0.2 million)

 Commenting on the results, Jan-Paul Menke, Non-Executive Chairman of Artilium said: 

"In the first half of our fiscal year 2015 we focussed on improving our retail offering and strengthening our platform for value added cloud services. This resulted in sales growth and significant growth of the users on the Artilium platforms to approximately 1.5 million.

 We acquired Talking Sense and *bliep to improve our retail offering. These acquisitions are now fully integrated and are contributing to sales growth and higher customer satisfaction.

We also acquired Comsys and Livecom which strengthened our leading position in value added cloud telecom services for our international clients. We already see international interest for these combined services on the Artilium platform.

The telecommunication world has moved more towards innovative software and we benefit from this as a leading provider of these services. We are pursuing numerous sales opportunities and are looking to convert these to our unique telecom software platform. We have made the necessary investments on the technology side and we are focussing increasingly on the commercial side.

The acquisitions and investments put us in a strong position to add value to our customers on an international scale. We expect to convert the strong order book into contracts resulting in acceleration of sales growth. I would like to thank all employees for their efforts in the last period."

For further information please contact: 

Chief Executive's Statement

Introduction

While the pace of growth has been somewhat slower than expected, the Company is making steady progress and we are pleased to see that the order book is considerably stronger than this time last year. New opportunities in the machine to machine ("M2M") market are being developed from which we expect further growth going forward and we are investing in additional platform capabilities to capture this growing market. The Directors remain confident of the long term prospects of the Company. A number of high margin projects for customers of Artilium have been delayed which has impacted the Group's performance at both the revenue and EBITDA levels. These projects are still expected to complete and so their impact has been delayed rather than lost. In conjunction with this, there have been delays to the start dates of a number of United Telecom's new MVNOs. Again, these projects are contracted and expected to complete in due course. The early stages of MVNOs are lower margin than more established ones due to the cost that has to be incurred in the early stages to secure customers to the platform.

The six months to 31 December 2015 were an extremely busy period for Artilium where several acquisitions have taken place that have transformed the composition of the Group and created an international footprint. To strengthen our retail offering we acquired Talking Sense Networks (a Voice over Internet provider) as well as *bliep (a Dutch MVNO focussed on the younger generation of mobile users). Our platform and software business was strengthened with the acquisition of Comsys (value added services in voice, IVR, voicemail and call center solutions), which has given the Company an international customer base in more than 15 countries and a platform for further international growth. The Group is already benefiting from the synergies of being able to offer a more complete suite of solutions to (potential) customers. After the period end we completed the acquisition of Livecom which supplements the cloud based call center offering of Comsys.

In addition to these transactions a number of new MVNO and other business agreements were signed and are in the process of implementation. These include Taza Mobile and FMS Contact which will launch services in the next two months. Management is strongly focused on enlarging the customer base for managed services that can be delivered with the ARTA software. Our strong order book will continue to bring new business and contracts leading to further revenue growth going forward.

Financial results

Reported revenue for the six months to 31 December 2015 of € 4.3 million (2014: € 4.1 million) was generated primarily from maintenance and professional services rendered to existing customers and by United Telecom fixed calling, broadband and mobile services. The Group generated a gross profit of € 2.8 million or 65.3 per cent. of reported revenue (2014: € 3.0 million or 74.9 per cent. of reported revenue) and generated an adjusted EBITDA of € -0.2 million (2014: € 0.1 million).

The Group reported a net loss after tax of € 0.8 million (2014: net loss after tax of € 0.2 million).

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 forward-looking 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, one-time 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 forward-looking statements.

* * * * *

CONDENSED CONSOLIDATED INCOME STATEMENT

A key performance indicator for the Group is adjusted EBITDA. This was € -0.2 million for the six months to December 2015 (2014: € 0.1 million). The reconciliation of adjusted EBITDA to the income statement is disclosed below.

Reconciling table operating result-adjusted EBITDA

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Continued)

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

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 9-13 St. Andrew Street, London EC4A 3AF. The Group's principal place of business is Belgium and the Netherlands.

2. Basis of preparation

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 2015, 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 2006. 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 2015 were approved by the Board of Directors on 29 October 2015 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 2015.

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 2015. 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 intra-group 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 generated based on its pipeline, together with the renegotiation of the repayment terms of certain borrowings. 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 2015 and has not been updated at the interim date.

The Group is in the process of finalising the valuation of the deferred consideration and the purchase price allocation exercise with regard to the business combinations undertaken during the period ended 31 December 2015, in order to recognise separately from goodwill the identifiable assets acquired, together with their estimated useful economic lives. The valuation if the deferred consideration and completion of the purchase price allocation exercise will be finalised in due course and included in the audited annual financial statements for the year ending 30 June 2016.

3. Earnings per share

4. Share capital

5. Post Balance Sheet Events

On 10 February 2016 the Company acquired the entire issued share capital of Livecom International B.V as well as a 50 per cent. stake in the Chinese JV of Livecom. The Company paid €450,000 in cash; the balance was paid by the issue of 880,460 new ordinary shares at 5.38 pence per share.

6. Further Copies

Copies of the half-yearly financial report are available from the Company's registered office at 9-13 St. Andrew Street, London EC4A 3AF and on the Company's website www.artilium.com