Subscription, Acquisition and Issue of Equity

For immediate release                                                                                                                 16 January 2018

                                                                                        Artilium plc                                                              

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

Subscription for €1.25 million, Acquisition of Interactive Digital Media GmbH and Issue of Equity

Artilium plc (LSE/AIM: ARTA), the AIM-quoted provider of innovative telecommunication software and solutions, is pleased to announce the acquisition ("the Acquisition") of the entire issued share capital of Interactive Digital Media GmbH ("IDM"), a German-based cloud communication company, for an aggregate consideration of €3.5 million.  The consideration will be satisfied in €2.0 million cash and €1.5 million in options over ordinary shares of 5 pence each in the capital of the Company ("Ordinary Shares") (the "Options"). The cash element of the consideration will, in part, be funded by the proceeds a subscription for 11,485,930 new Ordinary Shares at a price of 9.58 pence per Ordinary Share, raising gross proceeds of approximately €1.24 million (the "Subscription"). The Acquisition will be immediately earnings accretive and profit and cash flow generative.

About IDM

Launched in 2003, IDM is a technology mid-market company offering its communication products and services to more than 1,750 customers including mobile network operators, large corporates and SMEs. The business is one of the largest mid-market companies supplying value-added cloud communication services and solutions around the world. In 2016, IDM generated €5.3 million of consolidated turnover, an EBITDA margin of 8.4% and net income above 5.3%. IDM made a pre-tax profit of €273,310 for the year ended 31 December 2016, and had total gross assets of €2,659,904

IDM is focused on three main activities:

1.    Enterprise messaging & communication

2.    Cost efficient SMS wholesale, and

3.    A2P SMS hubbing directly to OTT clients. 

IDM operates its own proprietary customer portal and its systems are co-located in three data centres across Germany. IDM's management team, which have a combined experience of 225 years, will remain with the enlarged Group post acquisition, and will play a key role integrating IDM services into Artilium.

The rationale for the Acquisition is as follows:

·     The Acquisition is transformational for Artilium and will increase the Group's revenue by more than 50%. Accordingly, Artilium's dependence on its largest customer will be significantly reduced

·     There is a significant opportunity to cross-sell Artilium's and IDM's products to their respective customers.  IDM's products & services are an excellent example of value-added communication services to enterprises and telecom players which allow the cross and upsell of additional services, including contact centre as well as Cloud PBX and telco wholesale services.  Artilium's software skills and products are based on the same technology as IDM; and is therefore able to immediately add value to IDM's customers and product ranges

·     The Acquisition will enable the Group to gain immediate traction in the global messaging market with messaging and SMS being common to any handset or smartphone in the world.  In 2015 an estimated eight trillion SMSs were sent worldwide

·     There are immediate synergies in development, wholesale and sales. IDM has relationships with over 40 telecom operators worldwide and IDM's presence and customer base do not overlap with the Group's existing footprint.  Accordingly, the acquisition will allow Artilium to grow its presence and customer base internationally

Options

The Options will be issued to the vendors of IDM as part of the consideration. The Options will be nil cost options over 11,110,138 Ordinary Shares at a price of 12 pence per Ordinary Share equating to €1.5 million in aggregate. The Options vest on 1 January 2020 and will be eligible for exercise at any time after that date. There are no performance criteria attached to the Options. The Options represent 3.26 per cent. of the currently issued share capital of Artilium.

Subscription and Issue of Equity

In order to fund the cash element of the consideration for the Acquisition, the Company has successfully raised approximately €1.24 million by way of a subscription of 11,485,930 new Ordinary Shares (the "Subscription Shares") with new and existing investors. The Subscription Shares were sold at a price of 9.58 pence per share ("Subscription Price") and represent, in aggregate, approximately 3.37 per cent. of the currently issued share capital of the Company.

The Company also announces that it has issued 1,136,873 new Ordinary Shares at an issue price of 12 pence per Ordinary Share in lieu of fees owed to various consultants who have provided services to the Company (the "Consultancy Shares").

Application has been made for the Subscription Shares and the Consultancy Shares to be admitted to trading on AIM ("Admission") and dealings are expected to commence on 19 January 2018. The Subscription Shares and the Consultancy Shares will rank pari passu with the Company's existing ordinary shares. The total number of Ordinary Shares of Artilium in issue following Admission will be 353,906,558. Accordingly, the figure of 353,906,558 may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure and Transparency Rules.

Bart Weijermars, Chief Executive Officer of Artilium said:

"This is a transformational transaction for Artilium, which significantly increases our presence in not only the German market but worldwide. The IDM acquisition opens up the growing enterprise market and will be immediately earnings accretive.   As separate companies, Artilium and IDM had bright futures but together the opportunity for growth is considerably enhanced." 

"IDM already benefits from a strong and growing customer base, particularly within the enterprise marketplace and has a strong pipeline and momentum.  I am confident that together we will be able to execute on these effectively and develop further opportunities whilst delivering shareholder value." 

-Ends-

For further information please contact: 

About Artilium

Notes to editors

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).