Interim Results

30 March 2015

Artilium plc

("Artilium" or the "Company")

Half yearly results for the six months ended 31 December 2014

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 2014.

Financial Highlights

§ Revenue for the six months to 31 December 2014 was € 4.1 million (2013: € 5.5 million)

§ Adjusted EBITDA of € 0.1 million (2013: € 0.8 million)

§ Net loss after tax of € 0.2 million (2013: net profit of € 0.3million)

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

"2014 was a challenging year for Artilium as it transitioned from being a project focused to a subscriber focused company whilst at the same time facing fierce pricing pressure from mobile operators. I am pleased to see that the transformation, led by our new CEO Bart Weijermars, is well underway and that we have already seen some rewards with a record amount of requests from clients for our services and products. We significantly increased investment in 2014 in order to improve our software offering and we are now capable of offering it in a flexible cloud solutions format. We believe that these developments put us in a strong position to add value to our customers on an international scale and for the prospect of revenue and cash flow growth over the next twelve months. I would like to thank all the Artilium employees for their efforts the last 6 months. I would also take the opportunity to thank our shareholders for their patience and continuing support. We are more focussed than ever on delivering value to them.

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Chief Executive's Statement

Introduction

The first half of this financial year has seen the first evidence of the changes and adjustments that the company had to make in order to stay competitive in the Belgian marketplace with its United Telecom business together with the changing business model in the company software development business.

The company's main line of business is delivering our real time software to mobile operators. We have concentrated on expanding and further professionalising the release delivery process in this part of the business. We are transforming the business model from a project based revenue model to a license model based on the number of subscribers. This has been done in light of the increased pressure of mobile operators on project expenses and the upside potential of a subscriber based model. The reduction of revenue that we have seen in the first half of the year is a direct result of a number of larger one-off implementation and hardware projects finished in the last financial year. The core revenues from licenses and maintenance contracts have remained stable. The focus going forward will be on filling the capacity of the platform already in place and at the same time expanding the offering internationally. A number of interesting prospects give us the comfort that we can grow our business in this area.

The lower margin traffic re-sales of mobile, fixed and broadband business has experienced very challenging conditions especially in the mobile domain. Mobile operators in Belgium have lowered their prices significantly and this has had an impact on the United Telecom revenue. As a result United Telecom has lowered its prices to resellers and MVNO's which resulted in a decrease in revenue. This step has been taken in order to secure the future business and to enable the MVNO's of United Telecom to develop a profitable business so that they can start growing again. The economic benefits of the contracts which we have already announced have not been realised in the first half of the financial year as most implementations have only been finalised since the period end. We expect this effect to start showing in the second half of the year.

Having taken these important steps, and accepted their inevitable short term impact on the top-line, we believe that their implementation will help us to develop a healthy business in Belgium and beyond.

Financial results

Reported revenue for the six months to 31 December 2014 of €4.1million (2013: €5.5 million) was generated primarily from maintenance and professional services rendered to existing customers and by United Telecom fixed calling, broadband and mobile services. The Company generated a gross profit of €3.0 million or 74.9% of reported revenue (2013: €4.0 million or 71.9% of reported revenue) and generated an adjusted EBITDA of €0.1 million (2013: €0.8 million).

The company generated a net loss after tax of €0.2 million (2013: net profit after tax of € 0.3 million).

Outlook

Management is focused on enlarging the customer base for managed services that we can deliver with the ARTA software. As mobile operators become more focussed on cost savings, we believe that the ARTA platform, with its high performance and low cost IT engine, is a unique asset and management anticipate that current discussions with prospects should lead to further revenue growth going forward.

With respect to United Telecom we are looking to expand its position with selected additions and new distribution channels in order to restore revenue levels.

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.

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CONDENSED CONSOLIDATED INCOME STATEMENT

A Key performance indicator for the company is adjusted EBITDA. This was € 0.1 million for the 6 months to December 2014 (2013:€ 0.8 million). The reconciliation of adjusted EBITDA to the income statement in disclosed below.

Reconciling table operating result-adjusted EBITDA

CONDENSED CONSOLIDATED INCOME STATEMENT OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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 EC4A3AF, The Group's principal place of business is Belgium.

The Group's condensed consolidated half yearly financial statements are presented in round thousand Euro's because that is the principal currency the Group operates in. These condensed consolidated half yearly financial statements have been approved for issue by the directors on 30 March 2015. The financial information for the year ended 30 June 2014 set out in this half yearly report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 30 June 2014 have been filed with the Registrar of Companies.

2. Basis of preparation

These unaudited condensed consolidated half yearly financial statements have been prepared in accordance with IAS 34 - Half yearly Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the 30 June 2014 annual consolidated financial statements. These condensed consolidated half yearly financial statements have been prepared in accordance with the accounting policies adopted in the last financial statements for the year ended 30 June 2014.

Basis of consolidation

The unaudited consolidated financial statements incorporate the financial statements of Artilium plc ('the Group') and the entities controlled by the Company (together 'the Group'). Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

The accounting policies have been applied consistently throughout the group for the purposes of preparation of these condensed consolidated half yearly financial statements.

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 revenue that will be generated to April 2016 based on its pipeline. These forecasts are considered in conjunction for the directors to satisfy themselves that the going concern assumption 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 2014. This has not been updated at the interim date. The review of the carrying value of the Group's intangible assets and goodwill at 30 June 2014 was carried out and the assets were found to be unimpaired. The directors do not consider that any indicators of impairment exist at 31 December 2014.

4. Earnings per share

The share options in issue do not have a dilutive effect due to the result for the period being a loss, and as a result diluted loss per share is the same as basic earnings per share.

5. Share capital

6. Status of half yearly financial statements

The condensed set of half yearly financial statements for the six months ended 31 December 2014 is unaudited and does not constitute statutory accounts as defined by The Companies Act 2006. The comparative figures for the period to 31 December 2013 are also unaudited. The comparative figures for the year to 30 June 2014 are extracted from the statutory accounts to that date. A copy of those statutory accounts has been filed with the Registrar of Companies.

7. Further Copies

Copies of the half-yearly financial report are available from the Company's registered office at 9-13 St. Andrew Street, London EC4A3AF and on the Company's website www.artilium.com.