Interim Results

Artilium plc

("Artilium" or the "Company" or the "Group")

Half yearly results for the six months ended 31 December 2016

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 2016.

Highlights

§ Revenue for the six months to 31 December 2016 was € 5.1 million (2015: € 4.3 million)

§ Adjusted EBITDA of € 0.1 million (2015: € -0.2 million)

§ Net loss after tax of € 0.9 million (2015: net loss after tax of € 0.8 million)

§ Several new MVNOs activated and new large customers won on cloud PBX

§ Successful integration of Ello Mobile, acquired in December 2016

Post Period End

§ Telenet licence renewed in February 2017 for € 5.3m for services over the next five years

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

"Artilium has made strong progress in the last six months with increasing volumes of our ARTA® software delivered as well as building a healthy order book."

"The telecommunication market continues to move towards innovative software and consequently we are benefiting from this as a leading provider of these services. Our cloud and datacentre telecom solutions make us attractive on a worldwide scale, particularly in emerging markets. We are now active in numerous countries and additional business growth is expected, especially from new markets such as Africa."

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

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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 innovation-driven strategy empowers telecom operators around the globe to face the tremendous challenges ahead. We combine next-generation 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 real-time Authentication, Authorization and Accounting (AAA) software that brings a full suite of new functionalities to telecom Operators and virtual Operators. Thanks to ARTA® value-added services portfolio, including for instance AAA of voice, text and data services, VoIP, 3G and 4G compliance, mobile payments and location-based 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.

Artilium's "Pay-As-You-Grow" 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 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.

Chief Executive's Statement

Introduction

We have made strong progress in the last six months with the delivery of increasing volumes of new software and building a healthy order book. Our international list of prospects for our products and services is growing, giving us confidence in expanding our international customer base.

Financial results

Reported revenue for the six months to 31 December 2016 of € 5.1 million (2015: € 4.3 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 € 3.8 million or 74.3 per cent. of reported revenue (2015: € 2.8 million or 65.3 per cent. of reported revenue) and generated an adjusted EBITDA of € 0.1 million (2015: € -0.2 million).

The Group reported a net loss after tax of € 0.9 million (2015: net loss after tax of € 0.8 million).

Business overview

The Artilium business delivered a successful release of its billing and activation software to its fast growing strategic partner in datacentre technology Green IT Globe ("GIG"). The business also secured a strategic alliance with GIG to successfully launch the OneApp, which is capturing the mobile data cloud market. The agreement with GIG is aimed at the rapidly growing African and Asian markets where consumption and the need for mobile storage and cloud services are rapidly increasing. According to Cisco Global Cloud Index ("GCI"), global storage requirements are expected to grow from 14 exabyte ("EB") annually in 2014 to 39 EB by 2019 at a compound annual growth rate of 23 per cent, which presents significant future opportunity for the Group. We are pleased to confirm that Artilium has signed its first customer within the Africa region, and hope to sign more within our target emerging markets.

At United Telecom ("United"), several new MVNOs were activated and new large customers won on cloud PBX. Ello Mobile, acquired in December 2016, is an excellent mobile brand with a loyal following to United's offering and has been successfully integrated. United has returned to growth as its product capabilities and pricing of its offering have been strengthened.

At Comsys, our specialist interactive telephony services business, performance was solid during the first half and integration with the Artilium platform is going well, allowing the business to sell additional value added services to both existing and new customers. We are particularly encouraged by the integration of Livecom into Comsys and the wider Artilium group. The Group can now offer customers and potential customers with a multi-channel call centre solution, and through these Group synergies we can offer clients the full range of services, which positions us well for future growth.

The telecommunications market continues to move towards innovative software and consequently we are benefiting from this as a leading provider of these services. Our cloud and datacentre telecom solutions make us attractive on a worldwide scale. We are now active in numerous countries and additional business growth is expected, especially from Africa.

I would like to thank all employees and shareholders for their efforts and trust in the management team as we continue to build momentum and add further value to our customers.

Current trading

In January 2017, we secured an expanded MVNE platform agreement with our largest customer, Telenet Group BVBA ("Telenet"), securing the relationship for the next five years. Telenet has decided, given the importance of the partnership and their overall satisfaction with our solutions, to make a commitment to us for the services it is due to receive over the next five years. As part of the extension, we have received cash of €5.3 million, comprising revenue which will be recognised in equal instalments over the next five years. New opportunities are also developing in the Internet of Things ("IoT") market and from this we are developing billing and invoicing software as well as cloud services from which we expect further growth going forward. We are investing in additional platform capabilities to capture this growing market in the future. 

Bart Weijermars

28 March 2017

CONDENSED CONSOLIDATED INCOME STATEMENT

A key performance indicator for the Group is adjusted EBITDA. This was € 0.1 million for the six months to December 2016 (2015: € -0.2 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

Non-cash transactions

The principal non-cash 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 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 2016, 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 2016 were approved by the Board of Directors on 3 November 2016 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 2016.

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 2016. 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 2016 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 2016, in order to recognise separately from goodwill the identifiable assets acquired, together with their estimated useful economic lives. The valuation of 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 2017.

3. Earnings per share

4. Share capital

5. Post Balance Sheet Events

In January 2017 Artilium PLC secured an expanded MVNE platform agreement with its largest customer, Telenet Group BVBA ("Telenet"), securing the relationship for the next five years. Telenet has decided, given the importance of the partnership and their overall satisfaction with Artilium's solutions, to make a commitment to Artilium for the services it is due to receive over the next five years. As part of the extension, Artilium has received cash of €5.3 million, comprising revenue which will be recognised in equal instalments over the next five years.

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