TECHNICOLOR : FIRST HALF 2016 RESULTS
(Thomson Reuters ONE) -
Strong operational performance and integration of acquisitions ahead
2016 objectives confirmed and accelerated deleveraging
Paris (France), 27 July 2016 - Technicolor (Euronext Paris: TCH; OTCQX: TCLRY)
announces today its results for the first half of 2016.
Frederic Rose, Chief Executive Officer of Technicolor, stated:
"The integration of our 2015 acquisitions is progressing very well and our
second half will see material operating margin improvement in Entertainment
Services and further improvement of the operating margin in Connected Home."
Key points
* Revenue growth driven by the larger scale of the Group's Operating
businesses (Connected Home and Entertainment Services) and strong organic
growth in Connected Home and Production Services;
* Adjusted EBITDA of the Operating businesses at ?177 million, up by
?95 million year-over-year at constant currency;
* Strong free cash flow generation resulting from the good performance
achieved by the Operating businesses;
* Adjusted EBITDA margin of Connected Home at 7.7%, up by 3.4 points year-on-
year as the integration process is ahead of plan;
* The strong increase in Production Services Adjusted EBITDA more than offset
a negative contribution in DVD Services of the North American assets of
Cinram, which are expected to perform at Group's standards in the second
half of 2016;
* The strong performance of Licensing activities partially offset the sharp
decline in MPEG LA revenues;
* The Company will prepay ?100 million of senior debt this week as a result of
its good free cash flow generation in the first half of 2016.
*
2016 objectives confirmed
Technicolor confirms its 2016 objectives of a free cash flow in excess of
?240 million, and an Adjusted EBITDA in the range of ?600 million to
?630 million.
The Adjusted EBITDA objective consisting of:
* An Adjusted EBITDA in excess of ?475 million for the Operating businesses
versus ?266 million in 2015, reflecting:
* For Connected Home: revenues in the second half of 2016 at a similar
level to that of the first half of 2016, with continued focus on
operating improvement;
* For Entertainment Services: an Adjusted EBITDA margin expected to grow
materially in the second half of 2016, driven by continued revenue
growth and synergies in Production Services, and favorable seasonality
and payback from cost initiatives executed in the first half of 2016 for
DVD Services;
* An Adjusted EBITDA for the Technology segment in excess of ?200 million
versus ?396 million in 2015[1], based on the contribution of new licensing
agreements. This notwithstanding a much lower contribution than expected
from MPEG LA;
* Corporate and Other Adjusted EBITDA for an amount of around ?(80) million.
Leverage ratio inferior to 1.4x at end December 2016 compared to a ratio of
1.74x at end December 2015.
Summary of consolidated results for the first half of 2016 (unaudited)
Key financial indicators
First Half| Change YoY
| | |
In ? million 2015| 2016|Reported|At constant rate
----------------------------------------------+-----+--------+-----------------
Group revenues from continuing 1,621|2,420| +49.3%| +51.6%
operations | | |
| | |
Group revenues excluding exited 1,561|2,418| +54.9%| +57.3%
activities[2] | | |
----------------------------------------------+-----+--------+-----------------
Adjusted EBITDA from continuing 250| 265| +6.1%| +8.4%
operations | | |
| | |
As a % of revenues 15.4%|11.0%|(4.4)pts|
----------------------------------------------+-----+--------+-----------------
Adjusted EBIT before PPA[3] amortization 159| 171| +7.5%| +10.4%
| | |
As a % of revenues 9.8%| 7.1%|(2.7)pts|
----------------------------------------------+-----+--------+-----------------
Adjusted EBIT from continuing operations 159| 154| (3.5)%| (0.8)%
| | |
As a % of revenues 9.8%| 6.4%|(3.4)pts|
----------------------------------------------+-----+--------+-----------------
EBIT from continuing operations 132| 95| (27.8)%| (25.2)%
| | |
As a % of revenues 8.1%| 3.9%|(4.2)pts|
----------------------------------------------+-----+--------+-----------------
Financial result (44)| (73)| (29)|
| | |
Income tax (29)| (30)| (1)|
| | |
Share of profit/(loss) from associates 1| 0| (1)|
----------------------------------------------+-----+--------+-----------------
Profit/(loss) from continuing operations 60| (8)| (68)|
----------------------------------------------+-----+--------+-----------------
Profit/(loss) from discontinued (12)| (44)| (32)|
operations | | |
| | |
Net income 48| (52)| (100)|
----------------------------------------------+-----+--------+-----------------
Group free cash flow 117| 98| (19)|
----------------------------------------------+-----+--------+-----------------
Net financial debt at nominal value 628| 896| +268|
(non-IFRS) | | |
| | |
Net financial debt (IFRS) 563| 829| +266|
| | |
Group revenues from continuing operations totaled ?2,420 million in the first
half of 2016, up by more than 50% at constant currency compared to the first
half of 2015, resulting from the strong performance of the Operating businesses,
namely Connected Home and Entertainment Services. This performance reflected the
contribution of the acquisitions and customer wins in DVD Services completed in
2015, as well as solid organic growth in Connected Home and double-digit organic
growth in Production Services. In Licensing, the sharp decline of the MPEG LA
contribution, which was higher than anticipated, was partially offset by a 58%
revenue growth across other Licensing activities.
Adjusted EBITDA from continuing operations amounted to ?265 million in the first
half of 2016, up 8.4% at constant currency compared to the first half of 2015.
The Operating businesses generated ?177 million of Adjusted EBITDA, up by
?95 million year-on-year at constant currency, and represented 67% of the
Group's Adjusted EBITDA. The strong increase in Adjusted EBITDA for the
Connected Home segment, driven by its change of scale and associated synergies,
fully offset the ?79 million decline recorded by the Technology segment. In the
Entertainment Services segment, the significant growth in Adjusted EBITDA of
Production Services was in part offset by an adverse performance in DVD Services
as the North American assets of Cinram, acquired end 2015, were not breakeven in
the first half. Technicolor launched significant cost cutting measures to bring
these assets to its profitability standards in the second half of 2016 and
recorded some improvement at the end of the first half. In Production Services,
Adjusted EBITDA grew as fast as revenues, with margin starting to benefit from
synergies in the second quarter of 2016.
Adjusted EBIT from continuing operations reached ?154 million in the first half
of 2016, relatively stable at constant currency compared to the first half of
2015. During the first half of 2016, Technicolor performed the purchase price
allocations ("PPA") of the acquisitions made in the second half of 2015 and
recorded a ?18 million of amortization in the first half of 2016. Excluding this
impact, Adjusted EBIT was up 7.5% year-on-year. Technicolor estimates the
amortization of the purchase price allocations at around ?40 million in 2016.
EBIT from continuing operations totaled ?95 million in the first half of 2016,
down 27.8% compared to the first half of 2015. This decrease was mostly due to
?20 million of non-current items, out of which ?8 million of research and
development write-offs and ?8 million of integration costs related to the
acquisition of Cisco Connected Devices, that both impacted the Connected Home
segment. In addition, restructuring costs were ?8 million higher year-on-year,
resulting principally from cost initiatives executed in the first half in the
Technology segment, including the shutdown of the Hannover facility.
The Group's financial result amounted to ?(73) million in the first half of
2016 compared to ?(44) million in the first half of 2015, reflecting:
* Interest costs were ?45 million in the first half of 2016, reflecting an
increase in borrowing costs of ?12 million, mainly due to the issuance of
new Term Loan Debt to finance the acquisitions of The Mill and Cisco
Connected Devices in September and November 2015;
* Other financial charges amounted to ?29 million in the first half of 2016
compared to ?17 million in the first half of 2015. This increase resulted
primarily from the 22% appreciation of the Brazilian real that led to a non-
cash revaluation of Technicolor's US dollar assets in Brazil.
Income tax increased slightly as a result of the Group's Operating businesses
getting stronger, in particular outside France.
As of the end of June 2016, Technicolor has settled with all plaintiffs in the
Cathode-Ray Tube ("CRT") litigation case in the US, except Sharp and a second
group of plaintiffs with smaller claims. Technicolor recognized a non-current
expense amounting to ?50 million in the first half of 2016 corresponding to the
amount of these settlements and to an accrual for the remaining claims. The cash
impact will be ?46 million in 2016, up by ?10 million compared to the amount of
?36 million previously announced in February 2016.
Net income was a loss of ?52 million in the first half of 2016 compared to a
profit of ?48 million in the first half of 2015.
Statement of financial position and cash position
First Half | Change YoY
| |
In ? million 2015 | 2016 | Reported
-----------------------------------------------------------+-------+------------
Operating cash flow from continuing operations 208 | 224 | +7.3%
| |
Group free cash flow 117 | 98 | (16.2)%
-----------------------------------------------------------+-------+------------
Nominal gross debt 1,370[4] | 1,330 | (40)
| |
Cash position 385(4) | 434 | +49
| |
Net financial debt at nominal value (non IFRS) 985(4) | 896 | (89)
-----------------------------------------------------------+-------+------------
IFRS adjustment (77)(4) | (67) | +10
| |
Net financial debt (IFRS) 908(4) | 829 | (79)
| |
Operating cash flow from continuing operations, which is defined as Adjusted
EBITDA less net capital expenditures, restructuring cash out and working capital
& other assets and liabilities variation to facilitate reconciliation with the
IFRS statement of cash flow, amounted to ?224 million in the first half of
2016, up by ?16 million compared to first half of 2015, including:
* Capital expenditures amounted to ?74 million, up by ?31 million year-on-
year, due to higher capitalized R&D in the Connected Home segment following
the acquisition of Cisco Connected Devices and capacity expansion in the
Production Services division, as Technicolor added new capacity in India,
Canada, London (UK) and Paris (France) to support the execution of its
strong order backlog;
* Cash outflow for restructuring totaled ?33 million in the first half of
2016, up by ?5 million year-on-year, resulting from higher restructuring
costs in the Technology segment and in the DVD Services division;
* The variation of working capital & other assets and liabilities was positive
?66 million in the first half of 2016, as the Connected Home segment
succeeded in absorbing the Cisco Connected Devices acquisition through
rigorous inventory management.
Group free cash flow amounted to ?98 million in the first half of 2016,
including:
* Financial charges were ?47 million, up by ?6 million year-on-year, due to
the issuance of a new Term loan in the second half of 2015 to finance the
acquisitions of Cisco Connected Devices and The Mill;
* Tax cash outflow was ?40 million, up by ?7 million year-on-year, due to
stronger Operating businesses;
* Other cash charges reached ?21 million, mainly reflecting pensions for
?12 million and Connected Home integration cash outflow for ?6 million.
Nominal gross debt totaled ?1,330 million at end June 2016, down ?40 million
versus end December 2015, after a Term Loan debt repayment of ?34 million and
other debt reimbursement for ?6 million.
The Group's cash position amounted to ?434 million at end June 2016, up by
?49 million compared to end December 2015, due primarily to the solid free cash
flow generation.
Net debt at nominal value amounted to ?896 million at end June 2016, down by
?89 million compared to end December 2015.
Segment review - H1 2016 result highlights[5]
Connected Home
H1 2015 | H1 2016 | Change YoY
| | | | |
In ?| As a % of| In ?| As a % of|Reported|At constant
million| revenues| million| revenues| | rate
------------------------+-----------+----------+-----------+--------+-----------
Revenues 652| | 1,378| | +111.4%| +114.0%
| | | | |
Revenues 652| | 670| | +2.7%| +4.8%
excl. CCD[6] | | | | |
------------------------+-----------+----------+-----------+--------+-----------
Adj. EBITDA 28| 4.3%| 106| 7.7%| ns| ns
| | | | |
Connected Home revenues totaled ?1,378 million in the first half of 2016.
Excluding Cisco Connected Devices, Connected Home recorded above-market revenue
growth of almost 5% at constant currency compared to the first half of 2015,
mainly due to a sustained level of activity in Europe, Middle-East and Africa
("EMEA") and Asia-Pacific ("APAC"), resulting from new customer wins and awards
secured in the course of 2015, which helped to offset a lower revenue level in
North America in the second quarter of 2016, primarily due to the seasonality of
one product category for a large US customer. Excluding Latin America, affected
by the severe economic downturn in Brazil in the first half of 2016, Connected
Home revenues in North America, EMEA and APAC were up almost 22% year-over-year
at constant currency.
In the first half of 2016, Technicolor secured a number of new major awards and
customer wins across all regions, particularly for next generation devices. In
North America, the Group recorded several new contracts for the supply of both
broadband gateways and video set top boxes to major Network Service Providers,
particularly to the three largest US operators. Technicolor also added in the
second quarter of 2016 a large US operator as a new customer for the delivery of
Over-the-Top ("OTT") devices. In EMEA, Technicolor's commercial activity was
very strong, as reflected by several new awards and customer wins secured in the
first half, especially for next generation broadband and OTT devices. In APAC,
the Group continued to expand its business with several leading operators in the
region, securing a number of new awards for broadband products in the period,
particularly in China and Australia.
Gross margin stood at 16.4% in the first half of 2016, up by 0.6 point compared
to the first half of 2015. Adjusted EBITDA amounted to ?106 million in the first
half of 2016, up from ?28 million in the first half of 2015, reflecting an
increased Adjusted EBITDA margin of 7.7%, up by 3.4 points year-over-year. This
strong performance resulted from continued solid operating execution and
efficiency across the business, as well as from the positive impact of the
integration of Cisco Connected Devices and associated cost synergies, which
progressed very well in the period. In the first half, Connected Home focused in
particular on the migration of the Cisco supply chain to the Technicolor supply
chain, successfully completed in July.
Entertainment Services
H1 2015 | H1 2016 | Change YoY
| | | | |
In ?| As a % of| In ?| As a % of|Reported| At
million| revenues| million| revenues| | constant
| | | | | rate
----------------------------+----------+---------+----------+--------+----------
Revenues 651| | 863| | +32.6%| +35.4%
| | | | |
o/w Production 249| | 369| | +48.0%| +53.8%
Services | | | | |
| | | | |
DVD Services 402| | 494| | +23.0%| +24.0%
----------------------------+----------+---------+----------+--------+----------
Adj. EBITDA 60| 9.2%| 71| 8.2%| +18.3%| +23.5%
| | | | |
Entertainment Services revenues amounted to ?863 million in the first half of
2016, up 35.4% at constant currency compared to the first half of 2015, as a
result of strong organic growth and the addition of Mikros Image and The Mill in
Production Services, combined with new customer additions and the performance of
selected key titles in DVD Services.
* Production Services revenues amounted to ?369 million in the first half of
2016, up 53.8% at constant currency compared to the first half of 2015,
driven by double-digit organic growth and the additions of Mikros Image and
The Mill. Technicolor reported strong organic growth, with a record level of
activity in Visual Effects ("VFX") for TV series and sustained growth across
VFX for Advertising, Animation and Games activities. After a broadly stable
first quarter, revenues in VFX for feature films rebounded in the second
quarter of 2016, as the workload on large-scale projects increased. In
addition, the Group won several awards during the first half of 2016 across
its different activities, building a very solid pipeline.
In the first half of 2016, Technicolor confirmed its leadership in Production
Services and fully benefited from its multi-segment strategy. In this context,
the Group further expanded its operational platform by adding new capacity,
notably in the UK, Canada and India, and is poised to capture additional growth
across its different market segments. In addition, Technicolor demonstrated its
expertise in managing highly-complex projects, developing new visual
experiences, including promising Virtual Reality ("VR") experiences, while
deepening its relationships with all major content creators.
* DVD Services revenues reached ?494 million in the first half of 2016, up
24.0% at constant currency compared to the first half of 2015. Revenue
growth was primarily driven by a year-on-year increase in total combined
disc volumes of c.22%, which were supported by new customer additions
secured in 2015, as well as selected key new release Theatrical titles
produced in the first half of 2016. During the period, DVD volumes increased
by c.7%, while Blu-ray(TM) disc volumes were up c.30% compared to the first
half of 2015. Overall Games volumes grew by c.19% year-over-year, driven by
ongoing growth of Xbox One demand. CD volumes also increased substantially
year-on-year, due primarily to last year's new customer additions.
Adjusted EBITDA reached ?71 million in the first half of 2016, up 23.5% at
constant currency compared to the first half of 2015, as a much stronger
contribution of Production Services fully offset an adverse DVD Services
performance resulting from the integration of the North American assets of
Cinram.
* In Production Services, Adjusted EBITDA was sharply higher in the first half
of 2016 compared to the first half of 2015, due to the incremental
contribution from acquisitions and increased levels of activity in VFX
activities.
* Before integration of the North American assets of Cinram, DVD Services
recorded an improved performance year-on-year. These assets are expected to
perform at the Group's standards in the second half of 2016 following the
cost reduction program executed during the first half.
###
Technology
H1 2015 | H1 2016 | Change YoY
| | | | |
In ?| As a % of| In ?| As a % of|Reported| At
million| revenues| million| revenues| | constant
| | | | | rate
---------------------------+-----------+---------+----------+--------+----------
Revenues 258| | 177| | (31.5)%| (30.6)%
| | | | |
o/w Licensing 100| | 158| | +58.3%|
| | | | |
MPEG LA 158| | 18| | (88.5)%|
---------------------------+-----------+---------+----------+--------+----------
Adj. EBITDA 209| 81.2%| 130| 73.9%| (37.7)%| (37.8)%
| | | | |
o/w Licensing & 51| | 112| | +117.9%|
R&I[7] | | | | |
| | | | |
MPEG LA 158| | 18| | (88.5)%|
| | | | |
Technology revenues amounted to ?177 million in the first half of 2016, down
30.6% at constant currency compared to the first half of 2015, driven by a sharp
decline of MPEG LA. Excluding MPEG LA, revenues were up 58.3%, reflecting a
strong level of activity in Patent Licensing and sustained Trademark Licensing
performance. MPEG LA revenues were only ?18 million in the first half of 2016,
much less than had been anticipated. However, Technicolor still expects to
generate at least ?200 million of Adjusted EBITDA for its Technology segment in
2016.
In the first half of 2016, Technicolor has been particularly active in Patent
Licensing, signing non-exclusive agreements in both Video Coding and Digital TV
in the first quarter, and in Set Top Box during the second quarter, while
continuing discussions in the Mobile space. The Group has started implementing a
reduction in the size of its very large portfolio, which includes patents that
no longer fit its strategy and are costly to maintain. In the first half of
2016, Technicolor also increased its Trademark Licensing revenues.
Adjusted EBITDA reached ?130 million in the first half of 2016, or a margin of
73.9%, including ?18 million generated by MPEG LA. This good performance, in the
context of a minor MPEG LA contribution, was driven by a strong level of
activity in Patent Licensing and growing Trademark Licensing revenues. During
the first half, Technicolor also launched cost improvement initiatives,
including a revised filing policy and the shutdown of the Group's research lab
in Hannover. These actions are expected to generate cost savings in 2017 with a
limited impact in the second half of 2016.
Segment review - Q2 2016 revenue highlights[8]
Group revenues by segment
| Second Quarter | Change YoY
| | | |
In ? million | 2015 | 2016 | Reported | At Constant rate
--------------------------------+------+----------+----------+------------------
Connected Home | 335 | 680 | +102.9% | +106.7%
| | | | |
o/w Connected Home excl. CCD | 335 | 367 | +9.6% | +11.8%
| | | | |
Entertainment Services | 313 | 413 | +31.9% | +36.3%
| | | |
o/w Production Services | 128 | 190 | +48.6% | +56.0%
| | | |
DVD Services | 185 | 223 | +20.3% | +22.7%
| | | |
Technology | 140 | 65 | (53.9)% | (54.1)%
--------------------------------+------+----------+----------+------------------
Group revenues | 789 | 1,158 | +46.8% | +50.2%
| | | |
Connected Home revenues were ?680 million in the second quarter of 2016.
Excluding Cisco Connected Devices, Connected Home revenues reached ?367 million
and were up almost 12% at constant currency compared to the second quarter of
2015, continuing to outperform the global CPE ("Consumer Premises Equipment")
market. This performance reflected a strong level of activity across Europe,
Middle-East and Africa and Asia-Pacific, improved overall revenue trend in Latin
America compared to the first quarter of 2016, driven by Mexico, and ongoing
solid momentum with the three largest operators in North America, which helped
to offset some pockets of weakness in the period, particularly in Brazil and
Canada.
* In North America (50% of sales), Connected Home revenues grew c.216% at
constant currency in the second quarter of 2016 compared to the second
quarter of 2015, mainly reflecting the addition of Cisco Connected Devices.
Technicolor continued to gain traction with the region's three largest
operators, as reflected by several new awards secured during the period,
particularly for video products, while it also added a large operator as a
new customer for the delivery of OTT set top boxes. The level of activity in
the region was however affected by the consumption pattern of some customers
in the US, notably for Connected Life devices and services, as well as by
lower overall customer demand in Canada.
* In Europe, Middle East and Africa (20% of sales), Connected Home posted
revenue growth of c.71% at constant currency in the second quarter of 2016
compared to the second quarter of 2015, driven by the addition of Cisco
Connected Devices and the benefit of new customer wins and awards secured by
both Technicolor and Cisco Connected Devices in 2015. During the period,
Connected Home benefited from a strong customer demand for cable and telecom
broadband devices and ongoing deployments of new products launched in the
second half of 2015, particularly OTT set top boxes.
* In Latin America (20% of sales), Connected Home revenues grew c.27% at
constant currency in the second quarter of 2016 compared to the second
quarter of 2015. While overall market conditions remained difficult in
Brazil, due to the severe economic downturn, the level of activity was
particularly strong in Mexico, reflecting a sustained customer demand for
all product categories.
* In Asia-Pacific (10% of sales), Connected Home revenues more than doubled in
the second quarter of 2016 compared to the second quarter of 2015,
reflecting a strong increase in set top box shipments to Indian customers,
driven by the ongoing digitization program in the country, as well as higher
deliveries of broadband telecom devices during the period, particularly in
Australia.
Revenue breakdown for Connected Home
Second Quarter | First Half
| | | | |
In ? million 2015|2016|Change[9]|2015| 2016|Change(9)
--------------------------------------------+----+---------+----+-----+---------
Total revenues 335| 680| +106.7%| 652|1,378| +114.0%
--------------------------------------------+----+---------+----+-----+---------
By region North America 109| 338| +216.1%| 202| 724| +260.4%
| | | | |
Europe, Middle-East and 80| 136| +70.8%| 148| 316| +113.1%
Africa | | | | |
| | | | |
Latin America 111| 135| +26.6%| 242| 228| (1.6)%
| | | | |
Asia-Pacific 36| 71| +102.7%| 60| 110| +87.7%
--------------------------------------------+----+---------+----+-----+---------
By product Video 142| 361| +158.1%| 295| 790| +161.9%
| | | | |
Broadband[10] 193| 319| +68.8%| 357| 588| +74.4%
| | | | |
###
Entertainment Services revenues amounted to ?413 million in the second quarter
of 2016, up 36.3% at constant currency compared to the second quarter of 2015,
due to strong organic growth and the addition of Mikros Image and The Mill in
Production Services, as well as new customer additions in DVD Services.
* Production Services revenues totaled ?190 million in the second quarter of
2016, up 56.0% at constant currency compared to the second quarter of 2015.
This strong performance reflected another quarter of double-digit organic
growth, as well as the additions of Mikros Image and The Mill.
The level of activity in VFX for feature films rebounded year-over-year, with
several large-scale projects progressing in the quarter. Technicolor
successfully secured additional awards in the period and further strengthened
its strong project pipeline. In the second quarter, VFX teams continued work on
several Theatrical titles, including Ghost in the Shell (Paramount), Pirates of
the Caribbean: Dead Men Tell No Tales (Disney) and Passengers (Sony), while
starting to ramp up work on Alien: The Covenant (Fox) and The Mummy (Universal).
VFX teams also completed work on projects such as X-Men: Apocalypse (Fox),
Suicide Squad (Warner), Ghostbusters (Sony) and Independence Day: Resurgence
(Fox).
In VFX for TV series, Technicolor recorded another quarter of strong double-
digit revenue growth, with Mr. X having progressed at a very rapid pace since it
was added to the Group's brand portfolio. During the quarter, VFX teams started
work on Netflix's Godless, while continuing work on the new seasons of History's
Vikings, Amazon's Goliath and FX's The Strain, among others. In addition,
Mr. X's work on Penny Dreadful season 3 (Showtime) and Vikings season 4 has been
nominated for 2 Emmys Awards in the Outstanding Special Visual Effects Category.
In VFX for Advertising, revenues continued to be particularly strong during
the period, with high double-digit organic growth and the addition of The Mill.
During the quarter, Technicolor further demonstrated its expertise in managing
highly complex projects, completing new epic visual spots such as the Yes, I can
campaign to support UK Channel 4's coverage of the 2016 Paralympic Games, the
artistic campaign realized for the launch of Google's Tilt Brush app, the spot
introducing Kenny, the new Koala mascot for Cushelle. In addition, VFX teams
also completed a fully-immersive 360-degree virtual reality project for Jack
Daniels and brought back to life The Flinstones in a campaign for Halifax.
In Animation, revenues also grew double-digit in the second quarter,
reflecting a high level of activity in TV animation. During the quarter, Mikros
Image continued work on Captain Underpants (DreamWorks Animation), while just
starting work at the end of the second quarter on Sherlock Gnomes (Rocket/
Paramount) and Asterix (M6). In addition, two animated series from Technicolor's
Creative group, The Deep and Atomic Puppet, premiered in the US, the UK and
other territories during the quarter.
In Games, revenues continued to grow rapidly, driven by the extension of the
team dedicated to Rockstar Games. During the quarter, Games teams also completed
work on a high profile mobile game another major Games publisher.
In Postproduction, revenues were stable in the second quarter of 2016, with a
strong level of activity with OTT service providers and TV broadcasters. During
the quarter, Postproduction teams also received three Emmy Awards nominations in
the Outstanding Sound Mixing and Editing Categories.
* DVD Services revenues amounted to ?223 million in the second quarter of
2016, up 22.7% at constant currency compared to the second quarter of 2015,
primarily driven by a year-over-year increase in total combined disc volumes
of c.19%. During the period, DVD volumes were up c.1%, while Blu-ray(TM)
disc volumes increased by c.36% compared to the second quarter of 2015.
Games volumes were up c.39% year-on-year, while CD volumes were also
substantially higher, due to last year's customer additions.
Key theatrical titles produced in the second quarter included Zootopia
(Disney), Batman vs. Superman: Dawn of Justice (Warner), Deadpool (Fox) and The
Divergent Series: Allegiant (Lionsgate), while key games titles included Doom
(Bethesda Softworks) and Overwatch (Activision).
Volume data for DVD Services
Second Quarter | First Half
| | | | |
In million units 2015| 2016| Change| 2015| 2016| Change
-------------------------------------+-----+-------+-----+-----+-------
Total combined volumes 228.8|272.3| +19.0%|499.8|609.9| +22.0%
-------------------------------------+-----+-------+-----+-----+-------
By format DVD 185.1|187.5| +1.3%|396.1|424.7| +7.2%
| | | | |
Blu-ray(TM) 41.4| 56.3| +36.0%|100.0|130.2| +30.2%
| | | | |
CD 2.3| 28.5| ns| 3.7| 55.0| ns
-------------------------------------+-----+-------+-----+-----+-------
By segment Theatrical/Broadcast 213.8|230.8| +7.9%|466.3|527.1| +13.0%
| | | | |
Games 5.9| 8.2| +39.1%| 15.5| 18.4| +18.8%
| | | | |
Software & Kiosk 6.7| 4.8|(29.4)%| 14.3| 9.4|(34.5)%
| | | | |
Music & Audio 2.3| 28.5| ns| 3.7| 55.0| ns
| | | | |
Technology revenues amounted to ?65 million in the second quarter of 2016, down
54.1% at constant currency compared to the second quarter of 2015, driven by a
?78 million decline in MPEG LA revenues. MPEG LA revenues were particularly high
and represented around 64% of total Licensing revenues in the second quarter of
2015. Excluding MPEG LA, Licensing revenues increased almost 5% compared to the
second quarter of 2015. This solid performance was largely driven by Patent
Licensing, with the signature of an agreement in Set Top Box with a South Asian
manufacturer and the disposal of non-strategic audio patents. As part of its new
strategy to focus around 4 key pillars, Technicolor decided to monetize patents
through non-exclusive licensing agreements as it has always done, and also
through the sale of patents that no longer fit its strategy.
In the second quarter of 2016, Trademark Licensing revenues were broadly stable
year-on-year, while the Group reached new milestones in the dissemination and
deployment of its High Dynamic Range ("HDR") technology.
An analyst conference call hosted by Frederic Rose, CEO, and Esther Gaide, CFO,
will be held on Wednesday, 27 July 2016 at 6:30pm CEST.
Financial calendar
+------------------+-----------------+
| Q3 2016 revenues | 21 October 2016 |
+------------------+-----------------+
###
Warning: Forward Looking Statements
This press release contains certain statements that constitute "forward-looking
statements", including but not limited to statements that are predictions of or
indicate future events, trends, plans or objectives, based on certain
assumptions or which do not directly relate to historical or current facts. Such
forward-looking statements are based on management's current expectations and
beliefs and are subject to a number of risks and uncertainties that could cause
actual results to differ materially from the future results expressed,
forecasted or implied by such forward-looking statements. For a more complete
list and description of such risks and uncertainties, refer to Technicolor's
filings with the French Autorité des marchés financiers.
###
About Technicolor
Technicolor, a worldwide technology leader in the media and entertainment
sector, is at the forefront of digital innovation. Our world class research and
innovation laboratories enable us to lead the market in delivering advanced
video services to content creators and distributors. We also benefit from an
extensive intellectual property portfolio focused on imaging and sound
technologies. Our commitment: supporting the delivery of exciting new
experiences for consumers in theaters, homes and on-the-go. For more information
visit: www.technicolor.com.
Technicolor shares are on the NYSE Euronext Paris exchange (TCH) and traded in
the USA on the OTCQX marketplace (OTCQX: TCLRY).
Media Contact
Lane Cooper: +1 415 646 6592
lane.cooper(at)technicolor.com
Investor Relations
Emilie Megel: +33 1 41 86 61 48
emilie.megel(at)technicolor.com
Laurent Sfaxi: +33 1 41 86 58 83
laurent.sfaxi(at)technicolor.com
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
---------------------------
Six months ended June 30,
---------------------------
2016 2015
(in ? million) Unaudited Unaudited
--------------------------------------------------- ------------- -------------
Continuing operations
Revenues 2,420 1,621
Cost of sales[11] (1,969) (1,227)
--------------------------------------------------- ------------- -------------
Gross margin 451 394
--------------------------------------------------- ------------- -------------
Selling and administrative expenses (204) (166)
Research and development expenses (93) (68)
Restructuring costs (39) (31)
Net impairment losses on non-current operating (8) (9)
assets
Other income (expense) (12) 12
--------------------------------------------------- ------------- -------------
Earnings before interest and tax (EBIT) from 95 132
continuing operations
--------------------------------------------------- ------------- -------------
Interest income 1 6
Interest expense (45) (33)
Other financial income (expense) (29) (17)
--------------------------------------------------- ------------- -------------
Net financial income (expense) (73) (44)
--------------------------------------------------- ------------- -------------
Share of loss from associates - 1
Income tax (30) (29)
--------------------------------------------------- ------------- -------------
Profit (loss) from continuing operations (8) 60
--------------------------------------------------- ------------- -------------
Discontinued operations
Net gain (loss) from discontinued operations (44) (12)
--------------------------------------------------- ------------- -------------
Net income (loss) (52) 48
--------------------------------------------------- ------------- -------------
Attributable to:
- Equity holders (52) 50
- Non-controlling interest - (2)
---------------------------
Six months ended June 30,
---------------------------
(in euro, except number of shares) 2016 2015
Unaudited Unaudited
--------------------------------------------------- ------------- -------------
Weighted average number of shares outstanding 411,485,478 348,259,537
(basic net of treasury shares held)
--------------------------------------------------- ------------- -------------
Earnings (losses) per share from continuing
operations
- basic (0.02) 0.17
- diluted (0.02) 0.17
Earnings (losses) per share from discontinued
operations
- basic (0.11) (0.04)
- diluted (0.11) (0.04)
Total earnings (losses) per share
- basic (0.13) 0.13
- diluted (0.13) 0.13
--------------------------------------------------- ------------- -------------
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
June 30, December 31,
2016 2015[12]
(in ? million) Unaudited Audited
---------------------------------------------------- ----------- -------------
ASSETS
Goodwill 991 1,007
Intangible assets 737 763
Property, plant and equipment 290 304
Other operating non-current assets 72 77
---------------------------------------------------- ----------- -------------
Total operating non-current assets 2,090 2,151
---------------------------------------------------- ----------- -------------
Investments and available-for-sale financial assets 18 22
Other non-current financial assets 40 40
---------------------------------------------------- ----------- -------------
Total financial non-current assets 58 62
---------------------------------------------------- ----------- -------------
Investments in associates and joint ventures 14 16
Deferred tax assets 444 455
---------------------------------------------------- ----------- -------------
Total non-current assets 2,606 2,684
---------------------------------------------------- ----------- -------------
Inventories 219 301
Trade accounts and notes receivable 732 709
Other operating current assets 423 294
---------------------------------------------------- ----------- -------------
Total operating current assets 1,374 1,304
---------------------------------------------------- ----------- -------------
Income tax receivable 63 62
Other financial current assets 23 23
Cash and cash equivalents 434 385
Assets classified as held for sale 7 24
---------------------------------------------------- ----------- -------------
Total current assets 1,901 1,798
---------------------------------------------------- ----------- -------------
---------------------------------------------------- ----------- -------------
Total assets 4,507 4,482
---------------------------------------------------- ----------- -------------
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
----------- ----------------------
June 30, December 31, 2015[13]
2016 Audited
(in ? million) Unaudited
--------------------------------------------- ----------- ----------------------
EQUITY AND LIABILITIES
Common stock 412 411
Treasury shares (156) (155)
Subordinated perpetual notes 500 500
Additional paid-in capital & reserves 130 250
Cumulative translation adjustment (271) (284)
--------------------------------------------- ----------- ----------------------
Shareholders' equity attributable to owners 615 722
of the parent
--------------------------------------------- ----------- ----------------------
Non-controlling interest 2 4
--------------------------------------------- ----------- ----------------------
Total equity 617 726
--------------------------------------------- ----------- ----------------------
Retirement benefits obligations 395 353
Provisions 42 40
Other non-current operating liabilities 182 157
--------------------------------------------- ----------- ----------------------
Total operating non-current liabilities 619 550
--------------------------------------------- ----------- ----------------------
Borrowings 1,177 1,207
Deferred tax liabilities 220 230
--------------------------------------------- ----------- ----------------------
Total non-current liabilities 2,016 1,987
--------------------------------------------- ----------- ----------------------
Retirement benefit obligations 29 29
Provisions 132 125
Trade accounts and notes payable 765 745
Accrued employee expenses 134 166
Other current operating liabilities 684 546
--------------------------------------------- ----------- ----------------------
Total operating current liabilities 1,744 1,611
--------------------------------------------- ----------- ----------------------
Borrowings 86 86
Income tax payable 41 59
Other current financial liabilities 3 1
Liabilities classified as held for sale - 12
--------------------------------------------- ----------- ----------------------
Total current liabilities 1,874 1,769
--------------------------------------------- ----------- ----------------------
--------------------------------------------- ----------- ----------------------
Total liabilities 3,890 3,756
--------------------------------------------- ----------- ----------------------
--------------------------------------------- ----------- ----------------------
Total equity and liabilities 4,507 4,482
--------------------------------------------- ----------- ----------------------
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------
Six months ended June
30,
------------------------
2016 2015
(in ? million) Unaudited Unaudited
------------------------------------------------------ ----------- -----------
Net income (loss) (52) 48
Income (loss) from discontinued activities (44) (12)
Profit (loss) from continuing activities (8) 60
------------------------------------------------------ ----------- -----------
Summary adjustments to reconcile profit from
continuing activities to cash generated from
continuing operations
Depreciation and amortization 104 88
Impairment of assets[14] 8 10
Net changes in provisions 4 (19)
Gain (loss) on asset disposals - (6)
Interest (income) and expense 44 27
Other non-cash items (including tax) 46 36
Changes in working capital and other assets and 67 30
liabilities
Cash generated from continuing activities 265 226
Interest paid (37) (29)
Interest received 2 6
Income tax paid (40) (33)
Net operating cash generated from continuing 190 170
activities
Net operating cash used in discontinued activities (18) (10)
------------------------------------------------------ ----------- -----------
Net cash from operating activities (I) 172 160
------------------------------------------------------ ----------- -----------
Acquisition of subsidiaries, associates and (24) (28)
investments, net of cash acquired
Proceeds from sale of investments, net of cash 18 2
Purchases of property, plant and equipment ("PPE") (35) (20)
Proceeds from sale of PPE and intangible assets 1 -
Purchases of intangible assets including (40) (23)
capitalization of development costs
Cash collateral and security deposits granted to (2) (3)
third parties
Cash collateral and security deposits reimbursed by 7 6
third parties
Loans (granted to) / reimbursed by third parties - -
Net investing cash used in continuing activities (75) (66)
Net investing cash used in discontinued activities - -
------------------------------------------------------ ----------- -----------
Net cash used in investing activities (II) (75) (66)
------------------------------------------------------ ----------- -----------
Increase of Capital 13 4
Proceeds from borrowings - 1
Repayments of borrowings (40) (27)
Fees paid linked to the debt (2) (6)
Dividends and distributions paid to Group's (25) (17)
shareholders
Other 2 (5)
Net financing cash generated used in continuing (52) (50)
activities
Net financing cash used in discontinued activities - -
------------------------------------------------------ ----------- -----------
Net cash used in financing activities (III) (52) (50)
------------------------------------------------------ ----------- -----------
Cash and cash equivalents at beginning of year 385 328
------------------------------------------------------ ----------- -----------
Net increase in cash and cash equivalents (I+II+III) 45 44
------------------------------------------------------ ----------- -----------
Exchange gains/(losses) on cash and cash equivalents 4 9
------------------------------------------------------ ----------- -----------
Cash and cash equivalents at end of year 434 381
------------------------------------------------------ ----------- -----------
Summary of consolidated results as reported (unaudited)
| First Half
| | |
In ? million | 2015| 2016|Change[15]
---------------------------------------------+-----+-------+-----------
Group revenues from continuing operations |1,621| 2,420| +49.3%
| | |
Change at constant currency (%) | | +51.6%|
---------------------------------------------+-----+-------+-----------
o/w Connected Home | 652| 1,378| +111.4%
| | |
Entertainment Services | 687| 863| +25.5%
Unternehmensinformation / Kurzprofil:
Datum: 27.07.2016 - 17:45 Uhr
Sprache: Deutsch
News-ID 485766
Anzahl Zeichen: 65547
contact information:
Town:
Issy-les-Moulineaux Cedex
Kategorie:
Business News
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