New road map for 2020
Acquiring majority holding of Wyres:
A decisive competitive advantage in geolocation
Thorigné-Fouillard, 9 January 2019, 6:30 p.m.
Thorigné-Fouillard, France, 9 January 2019 - Kerlink (AKLK - FR0013156007), a
specialist in solutions dedicated to the Internet of Things (IoT), announces
its new route map for 2020 and a 51% equity investment in Wyres which will
reinforce the Group's technological expertise in geolocation.
2018 revenue: EUR17.1m
Market still affected by public carriers postponing major IoT deployments
Annual revenue of EUR17.1 million compared to EUR24.8 million in 2017. H2
improved slightly on H1 with revenue of EUR8.6 million. For data on Q4 and
full-year business growth see Annex. This confirms the trend seen in recent
months in a market where public carriers are putting off deployment of major
IoT projects. This continued to act as a brake on the Group's activity in the
last few months. Particularly in the last quarter, Group activity was marked by
indefinite delays to major international extension projects and pauses in
contracts with Tier 1 operators already signed but not yet executed.
Full-year gross margin should, as expected, top 40%, driven by the growing
contribution from the services business.
Revisions to 2020 ambitions
Given this environment, Kerlink has revised its initial ambitions which
targeted revenue of EUR70 million by 2020. The Group nonetheless stands by its
potential for growth.
Its confidence rests on solid fundamentals:
- An IoT market set for strong international development. According to the
GSMA's 2018 report, more than 25 billion connected objects should be in
circulation by 2025,
- A winning technological position with recognised expertise in the LoRaWan(tm)
environment. Despite the competing technologies now available (NB-IoT and
Sigfox) LoRa(r) has confirmed its leadership winning the endorsement of more
than 500 major industrial firms worldwide, a recent commitment from Google
and Tencent and multiple major deployments which are already up and running
across the world.
- An established competitive position as undisputed leader in LoRa(r) stations
with a market share now estimated at close to 35%(1)
- Positioned in all parts of the value chain from infrastructure to services.
An attack plan to drive market transformation
To restore solid growth momentum, the Group has undertaken a 5-point plan of
attack, presented at its interim results:
1) Consolidating the technological edge
2) Stepping up growth with private carriers
3) Supporting the conversion of public carriers to IoT networks
4) Developing market penetration in the high-potential Asia and Americas
5) Supporting the development of the service offer
A 51% stake in Wyres: decisive competitive advantage in indoor geolocation
To widen its technological lead, the first plank of the Group's 5-point
strategy, Kerlink announced the acquisition, on 8 January 2019, of 51% of the
fully diluted capital of simplified joint stock company Wyres.
Wyres has developed an indoor geolocation technology for multi-site industries
and operators (logistics, hospitals, agriculture). It was set up in 2015 and at
end-2018 had 15 employees and recognised expertise in object location with
comprehensive solutions integrating beacons, tags and evaluation kits for the
indoor environment. In 2017 it made revenue of EUR166 thousand and an EBITDA
loss of EUR393 thousand. For Kerlink, it is an essential technological
component of the Group's strategy, allowing the firm to strengthen its
geolocation offering in the indoor segment. It will act help drive sales growth
in priority markets such as Smart Airports, Asset Tracking, Cities & Towns and
the Industry & Manufacturing sector.
Yannick Delibie, Co-founder, Deputy General Manager and CTO of Kerlink Group
said: "The entrepreneurial spirit, shared vision and ability to innovate of the
two teams, backed by Kerlink's industrial capacity means the group can offer
its corporate clients industrial indoor geolocation solutions that are
high-performing, economically appropriate and technologically differentiated.
These genuinely innovative offers are built on a LoRaWanTM spine, leveraging
the fitness of this connectivity system for private networks with high
industrial value added. The future of industrial IoT is being decided as we
speak by bringing together an ecosystem that is growing every day."
(1) 80,000 stations deployed worldwide by end-2017 (Source: Semtech)
The investment was structured as a subscription for a EUR1 million capital
increase (including issue premium) financed by own funds. Post-deal, the other
shareholders in Wyres fully diluted capital are: the founders, with 28.19%, and
IoT Capital, with 20.81%.
Simultaneous the capital increase all Wyres partners signed a partners'
agreement. Its terms are as follows:
* Kerlink acts as president with a board of 5 members, 3 of whom will be
appointed on Kerlink's proposal;
* Reciprocal commitments were made by Kerlink (promise to buy) and the other
partners (promise to sell) such that the whole of Wyres' capital will be in
Kerlink's hands by the end of Q1 2022.
* The same day, Kerlink granted Wyres an associate current account advance of
EUR150,000 and undertook to grant Wyres, by 31 December 2020 a current
account advance of EUR350,000.
The transaction was approved by Kerlink's Board of Directors. Wyres will be
included in the Group's consolidated financial statements from January 2019.
Intensified drive for private carriers
Given the wait-and-see approach of public carriers, market growth is going to
depend increasingly on private and alternative operators looking to implement
their own network to deploy their IoT solutions. To fully profit from the
opportunities offered by this market, Kerlink has launched an aggressive
strategy to develop an ecosystem of partners to provide end-to-end offers in
each of its priority markets: Smart Airports, Smart Tracking, Smart Cities &
Towns and the Smart Industry & Smart Manufacturing sector.
This strategy has already begun to bear fruit with several deployments now
under way, particularly Smart Hotel solutions with Hxperience/Accor Invest.
A new road map: return to growth and operational profitability from 2020
In 2019, the Group is aiming to return to full-year growth, despite a
challenging comparison base in H1.
In 2020, Kerlink is confident about its new forecasts and is targeting
double-digit growth, positive EBITDA and a positive operating cash flow.
Annex: 2018 revenue - By business activity and region
by region (EURK) 2018 2017 Change
NCSA (Americas) 428 561 -24%
APAC (Asia-Pacific) 4,309 8,697 -50%
EMEA, excl. France 3,339 3,507 -5%
FRANCE 8,992 12,001 -25%
Total 17,068 24,767 -31%
IFRS - Unaudited figures
About Kerlink Group
Kerlink Group is a front-ranking international provider of end-to-end solutions
for the Internet of Things (IoT), addressing telecom carriers, businesses, and
public authorities worldwide. Its growing range of turnkey IoT service,
covering everything from network planning to design and operations
management, enhances its offer of carrier-grade, market leading
infrastructures. Widely recognised for its expertise in IoT, the Group
regularly unveils high value-added, innovative services, such as geolocation
from the network, remote management of connected equipment, and
energy-efficient IoT reference designs, enabling its clients to rapidly launch
IoT devices on the market and devise innovative business models for monetizing
their deployments. Kerlink has been listed on the Euronext Growth Paris market
since May 2016 and in 2017 was listed on the EnterNext PEA-PME 150 index of 150
fast-growing French SMEs. In April 2018, Kerlink joined the Tech 40 index,
which recognises the top- performing tech SMEs on the Euronext markets in
Amsterdam, Brussels, Lisbon and Paris.
For more information, go to www.kerlink.fr and follow us on Twitter
2018 annual results and 2019 Q1 revenue
16 April 2019, after trading