ISSY-LES-MOULINEAUX CEDEX, FRANCE--(Marketwire - Feb 22, 2013) -
2012: A robust performance
* Revenue growth driven by Technology and Connected Home
* Adj. EBITDA and Free Cash Flow generation exceeding objectives and up
vs.
2011
* Significant deleveraging and sharp reduction in net debt
* Return to net profit in H2 2012
FY 2012 Financial Highlights
· Revenue growth at constant scope[1] and currency: up 2.2% at
EUR3.5 billion,
driven by Connected Home and Technology.
· Adjusted EBITDA[2] at EUR512 million, exceeding objectives.
· Net profit of EUR17 million excluding EU antitrust fine; net
loss of EUR22 million including EUR38.6 million EU antitrust fine.
· Group Free cash flow[3] up 31% at EUR106 million, exceeding
objectives.
· Net debt at nominal value (non IFRS) at EUR839 million
at December
31, 2012, a reduction of EUR291 million compared to end December 2011.
H2 2012 Financial Highlights
· Group revenues up 3.4% at constant scope and currency.
Excluding legacy
activities[4] which affected Entertainment Services performance, revenues
were
up 7.2% at constant rate.
· Adjusted EBITDA at EUR314 million.
· Net profit of EUR4 million including the EUR38.6 million EU
antitrust fine.
· Group Free Cash Flow more than doubled at EUR104 million.
+----------------+ +----------------------------+ +-----------------------+
|In EUR million | | Second Half | | Full Year |
+----------------+ +-----+------+---------------+ +-----+------+----------+
| | |2011 | 2012 | Change, | |2011 | 2012 | Change, |
| | | | | reported | | | | reported |
+----------------+ +-----+------+---------------+ +-----+------+----------+
|Group revenues | | | | | | | | |
|from continuing | | | | | | | | |
|operations | |1,891| 1,934| +2.2%| |3,450| 3,580| +3.8%|
| | | | | | | | | |
|Change at | | | | | | | | |
|constant | | | | | | | | |
|currency | | | | | | | | |
|(%) | | |(0.8)%| | | |(0.2)%| |
| | | | | | | | | |
|Change at | | | | | | | | |
|constant rate | | | | | | | | |
|and scope | | | +3.4%| | | | +2.2%| |
+----------------+ +-----+------+---------------+ +-----+------+----------+
|Adjusted EBITDA | | | | | | | | |
|from continuing | | | | | | | | |
|operations | | 308| 314| +2.0%| | 475| 512| +7.8%|
| | | | | | | | | |
|As a % of | | | | | | | | |
|revenues | |16.3%| 16.2%| (0.1)pt| |13.8%| 14.3%| +0.5pt|
+----------------+ +-----+------+---------------+ +-----+------+----------+
|Net Income | |(212)| 4| +217| |(324)| (22)| +302|
+----------------+ +-----+------+---------------+ +-----+------+----------+
|Group Free cash | | | | | | | | |
|flow | | 49| 104| +55| | 81| 106| +25|
+----------------+ +-----+------+---------------+ +-----+------+----------+
|Cash position at| | | | | | | | |
|31 December | | | | | | 370| 397| +7.3%|
| | | | | | | | | |
|Net Debt IFRS at| | | | | | | | |
|31 December | | | | | | 957| 718| (24.9)%|
| | | | | | | | | |
|Net Debt non | | | | | | | | |
|IFRS at 31 | | | | | | | | |
|December | | | | | |1,130| 839| (25.8)%|
+----------------+ +-----+------+---------------+ +-----+------+----------+
Technicolor, on track to deliver on Amplify 2015
A strong 2012 business performance
* Technology: Solid growth in revenues driven particularly by the record
performance of patent licensing programs and sustained MPEG LA
revenues;
* Entertainment Services: Resiliency of DVD activities, which
outperformed the
market in 2012; strong reduction in exposure to legacy activities;
growth in
Digital Creative Services despite some softness in H2;
* Connected Home: Strong revenue growth driven by emerging markets;
turnaround
plan on track with a return to adjusted EBITDA positive in second half
of
2012 and breakeven in FY 2012.
A strengthened financial position
* Technicolor's financial structure significantly improved in the second
half
of 2012 as a result of the capital increases completed in the third
quarter
and the significant positive free cash flow generation achieved by the
Group
in 2012.
* Nominal gross debt (non IFRS) reduced by EUR264 million;
* Increase of the Group's cash position to EUR397 million at end
December
2012 compared to EUR370 million at end December 2011;
* Net debt at nominal value (non IFRS) reduced by EUR291 million.
* Technicolor significantly deleveraged its balance sheet in 2012 with
Net
Debt to adjusted EBITDA ratio (as per Group's covenants) strongly
improved
to 1.41x versus 1.97x the previous year.
Ramping up new growth areas in 2012
* Sustained pace of Intellectual Property production and continued
contribution to standards;
* Launch of Color and Image Certification programs in Technology
licensing and
development of the Cinestyle offer to target prosumers, leveraging on
Technicolor's technology expertise in color fidelity and image
enhancement
and its Hollywood name recognition;
* Launch of innovative solutions to address expanding digital markets and
more
specifically M-GO, the Group's digital initiative which aims at
becoming
consumers' first stop to find and watch satisfying entertainment
content,
and Magic Ruby, the Group's second-screen initiative, offering
broadcasters
and advertisers new monetization solutions;
* Launch of several new added value services for content creators, in
particular on-set services and Cineglass, an end-to-end digital
solution
platform for content creators and distributors.
2013 objectives
· Growth of adj. EBITDA between 5% to 10% compared to FY 2012 adj.
EBITDA at
constant scope[5] (EUR498 million):
o Licensing adj. EBITDA broadly stable vs. FY 2012 assuming another
year of
strong contracts;
o Continued improvement of Connected Home adj. EBITDA and return to
positive
free cash flow generation in this segment;
o Improved profitability in Entertainment Services reflecting cost
actions
implemented in H2 2012;
o Continued increase in operating expenses for M-GO and new
growth
initiatives.
· Strong growth in Free Cash Flow, above 30%, before one-off
payments for
legacy litigation (mainly the EU antitrust fine for EUR38.6 million).
· Net debt to adj. EBITDA ratio (as per Group's covenants)
below 1.25x at
end December 2013.
Confirmed value of Technicolor's Intellectual Property portfolio:
* Technicolor SA has increased its statutory shareholders' equity in
December
2012, ahead of its legal obligation, through the intra-group transfer
of
Thomson Licensing SAS, the owner of all Technicolor patents. The sale
by
Technicolor SA to a fully-owned subsidiary at market value resulted in
a
material non cash profit as the shares were previously registered at
their
historical value of EUR40 million.
* Technicolor chose NERA Economic Consulting, a division of Marsh &
McLennan
Group, as an independent firm to value Thomson Licensing SAS. NERA
performed
the valuation using the DCF approach as the principal method, backed-up
by a
Market Multiple approach and achieved an average value of Thomson
Licensing
SAS of EUR2.2 billion.
* Consequently, the statutory equity of Technicolor SA amounted to EUR2.0
billion at the end of 2012. This intra-group transaction had no impact
on
the Group's consolidated financial statements.
Frederic Rose, Chief Executive Officer of Technicolor, stated:
"Our 2012 results demonstrate that Technicolor is fully on track to achieve
its
Amplify 2015 strategic roadmap and capture new opportunities to
deliver an
enhanced media experience to consumers and prosumers. With higher
sales,
improved profitability, free cash-flow above our targets and a
strengthened
balance sheet, 2012 was a year of significant financial and
strategic
achievements for Technicolor. Our strong operational performance
demonstrates
the robustness of our business model and our capacity to innovate".
An analyst conference call hosted by Frederic Rose, CEO, and
Stéphane Rougeot,
CFO and SEVP Strategy, will be held on Friday, February 22, 2013 at 3:00 pm
CET.
Financial Calendar
+------------------+-----------------+
| Q1 2013 Revenues | April 26, 2013 |
+------------------+-----------------+
| AGM 2013 | May 23 2013 |
+------------------+-----------------+
| H1 2013 Results | July 26 2013 |
+------------------+-----------------+
| Q3 2013 | 25 October 2013 |
+------------------+-----------------+
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, based on a thriving licensing business. Our commitment:
supporting
the delivery of exciting new experiences for consumers in theaters,
homes and
on-the-go. Euronext Paris: TCH Ÿ www.technicolor.com
Fourth quarter and second half of 2012 financial highlights
Paris (France), 22 February 2013 - The Board of Directors of
Technicolor
(Euronext Paris: TCH) met yesterday to review the Group's full year
2012
results.
Summary of consolidated results for the second half and full year of
2012
(unaudited)
All figures are preliminary and subject to final completion of review
procedures.
Technicolor is presenting, in addition to published results and with the
aim to
provide a more comparable view of the evolution of its operating
performance
compared with 2011, a set of adjusted indicators which exclude the
following
items as per the statement of operations of our consolidated
financial
statements:
· Restructuring charges;
· Net impairment charges;
· Other income and expenses (other non-current items).
These adjustments, the reconciliation of which is detailed on page 23,
amounted
to an impact on Group EBIT from continuing operations of EUR(58) million
in the
second half of 2012 (EUR(240) million in H2 2011).
+-------------------+ +-------------------------+ +-----------------------+
|In EUR million | | Second Half | | Full Year |
+-------------------+ +-----+------+------------+ +-----+------+----------+
| | |2011 | 2012 | Change, | |2011 | 2012 | Change, |
| | | | | reported | | | | reported |
+-------------------+ +-----+------+------------+ +-----+------+----------+
|Group revenues from| | | | | | | | |
|continuing | | | | | | | | |
|operations | |1,891| 1,933| +2.2%| |3,450| 3,580| +3.8%|
| | | | | | | | | |
|Change at constant | | | | | | | | |
|currency (%) | | |(0.8)%| | | |(0.2)%| |
+-------------------+ +-----+------+------------+ +-----+------+----------+
|Group gross margin | | 436| 476| +9.0%| | 736| 830| +12.8%|
| | | | | | | | | |
|As a % of revenues | |23.1%| 24.6%| +1.5pt| |21.3%| 23.2%| +1.9pt|
+-------------------+ +-----+------+------------+ +-----+------+----------+
|Adjusted EBITDA | | | | | | | | |
|from continuing | | | | | | | | |
|operations | | 308| 314| +2.0%| | 475| 512| +7.8%|
| | | | | | | | | |
|As a % of revenues | |16.3%| 16.2%| (0.1)pt| |13.8%| 14.3%| +0.5pt|
+-------------------+ +-----+------+------------+ +-----+------+----------+
|Adjusted EBIT from | | | | | | | | |
|continuing | | | | | | | | |
|operations | | 195| 207| +6.3%| | 232| 301| +29.5%|
| | | | | | | | | |
|As a % of revenues | |10.3%| 10.7%| +0.4pt| | 6.7%| 8.4%| +1.7pt|
+-------------------+ +-----+------+------------+ +-----+------+----------+
|EBIT from | | | | | | | | |
|continuing | | | | | | | | |
|operations | | (45)| 149| +194| | (33)| 264| +296|
| | | | | | | | | |
|Financial result | | (95)| (81)| +14| |(187)| (197)| (9)|
| | | | | | | | | |
|Share of | | | | | | | | |
|profit/(loss) from | | | | | | | | |
|associates | | 1| (1)| (2)| | 0| (5)| (6)|
| | | | | | | | | |
|Income tax | | (70)| (27)| +43| | (83)| (49)| +34|
+-------------------+ +-----+------+------------+ +-----+------+----------+
|Profit/(loss) from | | | | | | | | |
|continuing | | | | | | | | |
|operations | |(209)| 40| +249| |(303)| 13| +316|
+-------------------+ +-----+------+------------+ +-----+------+----------+
|Loss from | | | | | | | | |
|discontinued | | | | | | | | |
|operations | | (3)| (35)| (32)| | (21)| (35)| (14)|
| | | | | | | | | |
|Net income | |(212)| 4| +217| |(324)| (22)| +302|
+-------------------+ +-----+------+------------+ +-----+------+----------+
|Operating cash flow| | | | | | | | |
|from continuing | | | | | | | | |
|operations[6] | | 199| 211| +12| | 261| 312| +51|
| | | | | | | | | |
|Group Free cash | | | | | | | | |
|flow | | 49| 104| +54| | 81| 106| +25|
+-------------------+ +-----+------+------------+ +-----+------+----------+
|Net financial debt | | | | |
|(IFRS) | | 957| 718| (239)|
| | | | | |
|Net financial debt | | | | |
|at nominal value | | | | |
|(non IFRS) | |1,130| 839| (291)|
+-------------------+ +-----+------+----------+
Stable operating profitability in H2 2012
· In the second half of 2012, revenues from continuing
operations amounted
to EUR1,933 million compared with EUR1,891 million in the second half
of 2011, a
2.2% increase at current currency but a 0.8% decrease at constant
currency. At
constant scope and currency, revenues were up 3.4%.
· In the second half of 2012, gross margin amounted to EUR476
million, up 9%
at current currency, and represented 24.6% of revenues, an improvement of
1.5
points year-on-year.
· Adjusted EBITDA from continuing operations amounted to EUR314
million in the
second half of 2012 compared with EUR308 million in the second half of
2011, a
2.0% increase year-on-year at current currency, with adjusted EBITDA
margin of
16.2% of revenues, broadly stable.
· This improvement in adjusted EBITDA was driven by increased
Technology
profitability generated by strong Licensing performance and the
return of
Connected Home to positive adjusted EBITDA, which offset the weaker
performance
in Entertainment Services. Corporate costs increased year-on-year,
as the
reduction in costs of transversal functions was offset by higher
incentive
program costs related to the strong financial improvement recorded
year-on-year, increased costs for growth initiatives and a negative
comparison base versus.
2011 that included several positive non-recurring impacts.
Positive net result in H2 2012, despite the European Union antitrust fine
· In the second half of 2012, adjusted EBIT from continuing
operations
amounted to EUR207 million compared to EUR195 million in the second half of
2011, an
increase in margin of 0.4 point driven by lower depreciation &
amortization
expenses.
· EBIT from continuing operations totaled EUR149 million in the
second half of
2012 compared with a loss of EUR45 million in the second half of 2011.
EBIT from
continuing operations included in the second half of 2012 a provision
related to
litigation with a third party for EUR17 million and restructuring costs
(including
the closure of Thomson Angers operations) just above 1% of revenues, down
from
3.8% of revenues in the second half of 2011.
· In the second half of 2012, the Group's financial result
amounted to EUR(81)
million compared to EUR(95) million in the second half of 2011. The
financial
result included net interest charges of EUR69 million in the second half of
2012,
compared to EUR75 million in the second half of 2011.
· Net result was a profit of EUR4 million in the second half of
2012, compared
to a loss of EUR212 million in the second half of 2011. This figure
includes the
EUR38.6 million antitrust fine imposed by the European Commission,
classified as a
"Net loss from discontinued operations", as it related to a
business
discontinued by the Group in 2005, and the EUR17 million litigation
provision
mentioned above.
Sustained Operating Cash Flow from continuing operations in H2 2012
· Operating cash flow from continuing operations amounted to
EUR211 million in
the second half of 2012, an increase of EUR12 million compared with the
second
half of 2011, and represented 10.9% of revenues, a year-on-year increase of
0.4
point. In the second half of 2012, cash outflow for net capital
expenditures
amounted to EUR73 million, a EUR8.5 million year-on-year decrease
resulting mostly
from a decrease in capital expenditure in Creative Services,
reflecting the
completion of sizeable investments. Cash outflow related to
restructuring
amounted to EUR31 million, or 1.6% of revenues, broadly stable compared
to the
second half of 2011.
Group Free Cash Flow above EUR100 million in H2 2012
· Group Free Cash Flow amounted to EUR104 million in H2 2012,
compared to EUR49
million in H2 2011.
· Main impacts on Group Free Cash Flow are as follows:
* Cash financial charges amounted to EUR56 million in H2 2012;
* Other cash charges, mainly related to tax, pensions and non-current
items
amounted to EUR49 million in H2 2012;
* Free Cash Flow from continuing operations amounted to EUR106 million,
while
Free Cash Flow from discontinued operations resulted in a cash charge
of EUR2
million.
Significant net debt reduction
· Nominal gross debt (non IFRS) amounted to EUR1,236 million
(EUR1,115 million
IFRS) at end December 2012 compared to EUR1,500 million (EUR1,327 million
IFRS) at
end December 2011, a reduction of EUR264 million. This improvement
reflected
prepayments of EUR162 million related to the capital increases and
Broadcast
disposal, scheduled senior debt repayments of EUR58 million, other
net debt
repayments of EUR8 million, excess free cash flow of EUR25 million in
2011 and a
foreign exchange impact of EUR11 million.
· The Group's cash position also improved and amounted to
EUR397 million at
end December 2012 compared to EUR370 million at end December 2011
reflecting
strong free cash flow generation of EUR106 million in 2012, positive
contribution
of the capital increases of EUR179 million, debt reimbursement for
EUR(253) million
(nominal basis) and others for EUR(5) million.
· Net debt at nominal value (non IFRS) amounted to
EUR839 million at
end December 2012 compared to EUR1,130 million at end December 2011, a
decrease of
EUR291 million.
· Net debt as per consolidated financial statements (IFRS)
amounted to
EUR718 million at end December 2012 compared to EUR957 million at end
December
2011, a decrease of EUR239 million.
· Technicolor has received a firm offer for a new EUR50 million
receivables
backed credit facility replacing the existing EUR100m facility which
expires in
April 2013. The replacement facility, at improved terms versus the existing
one,
is currently under negotiation. Technicolor's other receivables backed
credit
facility, a $125 million facility with Wells Fargo in the U.S, was amended
in Q1
2012, extending the maturity to 2016 and improving the terms and
conditions.
Financial covenants
As of December 31, 2012, the Group met its financial covenants.
+---------------------------------------------+---------------------------+
|Covenants* |Actual on 31 December, 2012|
+---------------------------------------------+---------------------------+
|Interest cover EBITDA/Financial Interests | 4.53x |
| above 3.65x | |
+---------------------------------------------+---------------------------+
|Leverage Net debt/EBITDA below 2.25x | 1.41x |
+---------------------------------------------+---------------------------+
|Capital expenditure (in EUR million) | 140 |
+---------------------------------------------+---------------------------+
* For the calculation of covenants, the definition of EBITDA as per the
credit
agreements is the same as the definition of adjusted EBITDA detailed in
appendix
on page 23.
Fourth quarter, second half and full year of 2012 segment review
Summary of Group financial indicators by segment (unaudited)
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|In EUR million | |Q4 2011|Q4 2012| |H2 2011|H2 2012| |FY 2011|FY 2012|
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|Group revenues* | | 1,054| 1,005| | 1,891| 1,933| | 3,450| 3,580|
| | | | | | | | | | |
|Change as reported | | | | | | | | | |
|(%) | | | (4.7)%| | | +2.2%| | | +3.8%|
| | | | | | | | | | |
|Change at constant | | | (6.2)%| | | (0.8)%| | | (0.2)%|
|currency (%) | | | | | | | | | |
| | | | | | | | | | |
|o/w Technology | | 130| 150| | 237| 279| | 456| 515|
| | | | | | | | | | |
|Change as reported | | | | | | | | | |
|(%) | | | +15.7%| | | +17.6%| | | +12.9%|
| | | | | | | | | | |
|Change at constant | | | +20.0%| | | +23.3%| | | +13.5%|
|currency (%) | | | | | | | | | |
| | | | | | | | | | |
|o/w Entertainment | | 594| 524| | 1,048| 973| | 1,832| 1,730|
|Services | | | | | | | | | |
| | | | | | | | | | |
|Change as reported | | | | | | | | | |
|(%) | | |(11.8)%| | | (7.2)%| | | (5.6)%|
| | | | | | | | | | |
|Change at constant | | |(15.1)%| | |(12.4)%| | |(11.0)%|
|currency (%) | | | | | | | | | |
| | | | | | | | | | |
|o/w Digital | | | | | | | | | |
|Delivery | | 329| 330| | 604| 681| | 1,157| 1,334|
| | | | | | | | | | |
|Change as reported | | | | | | | | | |
|(%) | | | +0.3%| | | +12.8%| | | +15.3%|
| | | | | | | | | | |
|Change at constant | | | (0.4)%| | | +10.0%| | | +12.0%|
|currency (%) | | | | | | | | | |
| | | | | | | | | | |
|o/w Connected Home | | 283| 326| | 517| 671| | 989| 1,244|
| | | | | | | | | | |
|Change as reported | | | | | | | | | |
|(%) | | | +15.1%| | | +29.9%| | | +25.7%|
| | | | | | | | | | |
|Change at constant | | | +14.2%| | | +26.6%| | | +22.0%|
|currency (%) | | | | | | | | | |
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|Adjusted EBITDA* | | | | | 308| 314| | 475| 512|
| | | | | | | | | | |
|Change as reported | | | | | | | | | |
|(%) | | | | | | +2.0%| | | +7.8%|
| | | | | | | | | | |
|As % of revenues | | | | | 16.3%| 16.2%| | 13.8%| 14.3%|
| | | | | | | | | | |
|o/w Technology | | | | | 183| 222| | 346| 400|
| | | | | | | | | | |
|Change as reported | | | | | | | | | |
|(%) | | | | | | +21.7%| | | +15.7%|
| | | | | | | | | | |
|As % of revenues | | | | | 77.2%| 79.8%| | 75.9%| 77.8%|
| | | | | | | | | | |
|o/w Entertainment | | | | | 163| 132| | 230| 199|
|Services | | | | | | | | | |
| | | | | | | | | | |
|Change as reported | | | | | | | | | |
|(%) | | | | | |(18.8)%| | |(13.3)%|
| | | | | | | | | | |
|As % of revenues | | | | | 15.6%| 13.6%| | 12.5%| 11.5%|
| | | | | | | | | | |
|o/w Digital | | | | | | | | | |
|Delivery | | | | | (2)| 15| | (20)| 14|
| | | | | | | | | | |
|Change as reported | | | | | | | | | |
|(%) | | | | | | nm| | | nm|
| | | | | | | | | | |
|As % of revenues | | | | | (0.4)%| 2.1%| | (1.7)%| 1.1%|
| | | | | | | | | | |
|o/w Connected Home | | | | | (17)| 12| | (43)| 1|
| | | | | | | | | | |
|Change as reported | | | | | | | | | |
|(%) | | | | | | nm| | | nm|
| | | | | | | | | | |
|As % of revenues | | | | | (3.4)%| 1.8%| | (4.4)%| 0.1%|
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|Adjusted EBIT* | | | | | 195| 207| | 232| 301|
| | | | | | | | | | |
|As % of revenues | | | | | 10.3%| 10.7%| | 6.7%| 8.4%|
| | | | | | | | | | |
|o/w Technology | | | | | 180| 225| | 337| 400|
| | | | | | | | | | |
|As % of revenues | | | | | 76.1%| 80.7%| | 73.9%| 77.8%|
| | | | | | | | | | |
|o/w Entertainment | | | | | 75| 39| | 53| 26|
|Services | | | | | | | | | |
| | | | | | | | | | |
|As % of revenues | | | | | 7.1%| 4.0%| | 2.9%| 1.5%|
| | | | | | | | | | |
|o/w Digital | | | | | | | | | |
|Delivery | | | | | (23)| (0)| | (73)| (20)|
| | | | | | | | | | |
|As % of revenues | | | | | (3.9)%| 0.0%| | (6.3)%| (1.5)%|
| | | | | | | | | | |
|o/w Connected Home | | | | | (32)| (2)| | (81)| (34)|
| | | | | | | | | | |
|As % of revenues | | | | | (6.2)%| (0.2)%| | (8.2)%| (2.7)%|
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
* Continuing operations.
Technology
Technology financial indicators
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|In EUR million | |Q4 2011|Q4 2012| |H2 2011|H2 2012| |FY 2011|FY 2012|
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|Revenues | | 130| 150| | 237| 279| | 456| 515|
| | | | | | | | | | |
|Change as reported | | | | | | | | | |
|(%) | | | 15.7%| | | 17.6%| | | +12.9%|
| | | | | | | | | | |
|Change at constant | | | 20.0%| | | 23.3%| | | +13.5%|
|currency (%) | | | | | | | | | |
| | | | | | | | | | |
|o/w Licensing | | | | | | | | | |
|revenues | | 129| 150| | 234| 278| | 451| 512|
| | | | | | | | | | |
|Change as reported | | | | | | | | | |
|(%) | | | 16.6%| | | 18.4%| | | +13.6%|
| | | | | | | | | | |
|Change at constant | | | 20.9%| | | 24.2%| | | +14.2%|
|currency (%) | | | | | | | | | |
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|Adjusted EBITDA | | | | | 183| 222| | 346| 400|
| | | | | | | | | | |
|Change as reported | | | | | | | | | |
|(%) | | | | | | 21.7%| | | +15.7%|
| | | | | | | | | | |
|As % of revenues | | | | | 77.2%| 79.8%| | 75.9%| 77.8%|
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|Adjusted EBIT | | | | | 180| 225| | 337| 400|
| | | | | | | | | | |
|As % of revenues | | | | | 76.1%| 80.7%| | 73.9%| 77.8%|
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|EBIT | | | | | 186| 225| | 343| 403|
| | | | | | | | | | |
|As % of revenues | | | | | 78.3%| 80.7%| | 75.2%| 78.3%|
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
In the second half of 2012, Technology revenues reached EUR279 million, up
17.6%
at current currency and up 23.3% at constant currency compared to the
second
half of 2011. adjusted EBITDA margin for the Technology segment
increased by
2.6 points year-on-year to 79.8% of revenues, driven by a particularly
strong
performance in Licensing, as well as continuing cost optimization.
For the full year 2012, Technology revenues totaled EUR515 million, up
12.9% at
current currency and up 13.5% at constant currency compared to the full
year
2011, with Licensing revenues recording an all-time high. As a result,
adjusted
EBITDA margin for the Technology segment rose by 1.9 points
year-on-year to 77.8% of revenues.
Q4 2012 Revenue Highlights
In the fourth quarter of 2012, Technology revenues amounted to EUR150
million, up
15.7% at current currency and up 20.0% at constant currency compared
to the
fourth quarter of 2011.
Licensing
In the fourth quarter of 2012, Licensing revenues recorded year-on-year
growth
of 20.9% at constant currency, as a result of the strong performance
of the
Group's non MPEG LA patent Licensing programs. In line with the trends
of the
third quarter of 2012, the patent licensing programs experienced strong
growth,
notably across the Digital TV programs, benefiting from additional new
contracts
and contract renewals, along with good volume performances by some
of the
Group's licensees in the fourth quarter of 2012.
Research and Innovation ("R&I") activities in 2012
In 2012, the Research and Innovation ("R&I") division sustained the pace of
high
quality Intellectual Property production and its contributions in
key
standardization bodies.
Over 2012, R&I significantly increased its contribution to
standards,
representing Technicolor in more than 10 Standardization bodies, including
MPEG,
ATSC, DVB, SMPTE, DVB & VQEG.
R&I focused on areas where Technicolor has strong differentiation,
specifically
in High Efficiency Video Coding ("HEVC") and MPEG/ITU, in coding
sound and
image. HEVC is the next generation video compression standard jointly
developed
between MPEG and ITU-T VCEG. Technicolor has participated from the
outset,
chairing or co-chairing core experiments during development of the
standard and
contributing innovative technologies. Technicolor was instrumental in
the
creation of the Main10 profile for improved video quality, likely to play
a key
role in Ultra-High Definition (UHD). A further extension of the
standard,
Scalable HEVC (SHVC) is at the centre of new activity in R&I,
underlining the
commitment of Technicolor to the evolution of industry standards.
Similarly, R&I
has developed ground-breaking technology to underpin its active
participation in
the MPEG Call for Proposal on 3D Audio Coding. This standard is
envisaged to
deliver a highly immersive audio experience to home theaters and
personal
devices, bringing incomparable quality to the combined Home and
Consumer
Electronic markets.
Technicolor also significantly increased its investment in ATSC 3.0
(Advanced
Television Systems Committee). This project capitalizes on
Technicolor's
existing and developing technologies, in which Technicolor is one
of the
historical participants. Specifically, Technicolor's interests are
focused on
the physical, transport and application layers, including audio/video
coding.
In 2012, Technicolor filed 444 priority applications with respect to
new
inventions. The maintained pace of filings underpins the commitment to
focus on
high quality patents in targeted technology areas (such as Video and
Audio
Compression, Image enhancement, Networking, Content security
&
Privacy), creating long term monetization opportunities for Patent
Licensing
and Technology Licensing. Technicolor was also granted 2,300 patents in
2012
compared to 2,000 granted patents on average per year over the 2004-2011
period.
At the end of 2012, over 66% of Technicolor's patent portfolio has a
lifetime of
10 years or more.
R&I significantly raised its scientific excellence and reputation in
2012.
Scientific excellence is measured through publications (that in turn
lead to
strong Intellectual Property differentiation) and collaboration with the
best
academic research institutions worldwide. R&I published in 2012 more
than 40
articles in top tier scientific events (per the international research
community
ranking). Collaborations have been established with four among the
top six
universities (per the Shanghai ranking): Berkeley, Stanford, MIT, and
Cambridge.
In France, the IP agreement with INRIA, a public research institute, has
been
renewed.
Entertainment Services
Entertainment Services include Creative Services, DVD Services and IZ-ON
Media
(formerly PRN). Technicolor has been developing new technology
solutions to
support the transition of its customers to digital and is managing its
digital
creative services business to capture growth opportunities, while
limiting
exposure to fast declining legacy activities. Therefore, Technicolor
is now
presenting the performances of its Creative Services business in two
categories:
Digital Creative Services (Digital Production, Digital Postproduction
and
Distribution, Digital Cinema) and legacy activities (Photochemical
film,
Compression & Authoring, Tape duplication).
Entertainment Services financial indicators
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|In EUR million | |Q4 2011|Q4 2012| |H2 2011|H2 2012| |FY 2011|FY 2012|
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|Revenues | | 594| 524| | 1,048| 973| | 1,832| 1,730|
| | | | | | | | | | |
|Change as reported | | | | | | | | | |
|(%) | | |(11.8)%| | | (7.2)%| | | (5.6)%|
| | | | | | | | | | |
|Change at constant | | |(15.1%)| | |(12.4)%| | |(11.0)%|
|currency (%) | | | | | | | | | |
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|Adjusted EBITDA | | | | | 163| 132| | 230| 199|
| | | | | | | | | | |
|Change as reported | | | | | | | | | |
|(%) | | | | | |(18.8)%| | |(13.3)%|
| | | | | | | | | | |
|As % of revenues | | | | | 15.6%| 13.6%| | 12.5%| 11.5%|
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|Adjusted EBIT | | | | | 75| 39| | 53| 26|
| | | | | | | | | | |
|As % of revenues | | | | | 7.1%| 4.0%| | 2.9%| 1.5%|
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|EBIT | | | | | 10| 29| | (29)| 12|
| | | | | | | | | | |
|As % of revenues | | | | | 0.9%| 3.0%| | (1.6)%| 0.7%|
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
In the second half of 2012, Entertainment Services revenues totaled
EUR973
million, down 7.2% at current currency and down 12.4% at constant
currency.
Excluding legacy activities, revenues were down 2.4% at current
currency and
down 7.9% at constant currency reflecting some softness in Digital
Production
and Digital Cinema and a revenue decrease in DVD Services largely driven
by the
decline in Standard Definition volumes. In the second half of 2012,
combined
Standard Definition DVD and Blu-ray™ volumes decreased by 5%, with
Blu-ray™ growth of 26% and Games growth of 8%. Adjusted EBITDA
amounted to EUR132
million or 13.6% of revenues, down 2.0 points, due to the revenue decline.
In the full year of 2012, Entertainment Services experienced a
decrease in
revenues largely due to legacy activities, which represented in 2012 only
5% of
the Group's total revenues compared to 8% in full year 2011. Excluding
legacy
activities, revenues were flat at current currency and down 5.8% at
constant
currency. Adjusted EBITDA amounted to EUR199 million in full year 2012 or a
margin
of 11.5%, down 1.0 point compared to full year 2011. Performances by
division
are as follows:
* Creative Services experienced a year-on-year decrease in revenues, with
continued weakness in legacy activities partly offset by slight growth
in
Digital Creative Services revenues, despite some softness in the second
half
of the year. The activity of Visual Effects ("VFX") for feature film
recorded a weak performance due to the delay in some sizeable projects,
leading to a particularly low level of VFX activity for feature films
in the
London facilities.
The Group implemented cost reduction measures in its Creative
Services
division in the second half of 2012 to mitigate the impact of lower sales
on its
profitability. Profitability has been progressively restored and in the
fourth
quarter adjusted EBITDA margin recorded a decrease of only 0.5 point
compared to
the fourth quarter of 2011 despite the softness experienced in the quarter.
* In DVD Services, a total of 1.45 billion units were replicated in 2012,
a
6% decrease compared to the full year 2011, which benefited from
several
successful Harry Potter-related releases. Blu-ray™ shipments
accelerated
throughout the year and Standard Definition DVD volumes were resilient
in
the North American market - despite continued pressure in the TV-DVD
category.
For the full year 2012, adjusted EBITDA margin for DVD Services
remained
stable, despite an 8% year-on-year contraction in revenues and a slight
margin
decline in the second half of 2012. This performance was driven by
multiple
factors, including an improved products mix, the positive impact of ongoing
cost
savings initiatives and efficiency improvement programs, and
reduction of
offload, which offset specific customer price reductions. The DVD
Services
division posted solid free cash flow generation in the second half of
2012,
largely due to continuing focus on cost savings and tight management of
working
capital requirements.
* In 2012, IZ-ON Media experienced a decline in revenues resulting from a
weak
US advertising market during the course of the year which has impacted
its
contribution to the adjusted EBITDA margin.
Creative Services - Q4 2012 Revenue Highlights
In the fourth quarter of 2012, Creative Services recorded a year-on-year
decline
in revenues, due to the sharp drop of legacy activities and continued
weakness
in VFX for feature films. The Group continued to take actions to adjust its
cost
base to lower revenues and changing activity mix.
Digital Creative Services
* Digital Production activities recorded a year-on-year decrease in
revenues
in the fourth quarter of 2012, reflecting softness in Visual Effects
("VFX")
for feature films, offset in part by stable revenues in VFX for
commercials.
The softness in feature film VFX activities was due to delays in some
sizeable projects that impacted the London facility, while customer
workload
was ramping up at the Vancouver facility. Commercial VFX activities
recorded
stable revenues following three quarters of strong performance,
especially
at Los Angeles and New York facilities.
In the fourth quarter of 2012, VFX teams completed work on Man of
Steel
(Warner), while continuing work on Maleficent (Disney), The Seventh
Son
(Warner), The Lone Ranger (Disney) and 47 Ronin (Universal). They also
started
work on Percy Jackson: Sea of Monsters (Fox). VFX teams won the BAFTA
award for
Life of Pi (Fox), and have been nominated for Oscars for their
work on
Prometheus (Fox) and Life of Pi. This was another demonstration of
Technicolor's
excellence in servicing its studio customers.
* Digital Postproduction and Distribution Services activities experienced
mixed trends in the fourth quarter of 2012, following several straight
quarters of sustained revenue growth. Sound activities continued to
expand
at a fast pace, thanks to the ramp-up of the Group's new facilities,
notably
in Hollywood, whereas Video activities suffered from market softness.
During
the quarter Hollywood Postproduction teams maintained their leading
position
in Broadcast TV series, and gained market share with tent-pole movies.
Technicolor's excellence in servicing was also demonstrated as the Group
served
19 projects that have received Oscar nominations, including 6 of the 9
films
nominated for the Best Picture Oscar and award nominations for its sound
mixing
team on Skyfall (Sony).
Digital Distribution Services activities delivered another quarter of
strong
year-on-year revenue growth in the fourth quarter of 2012, benefiting
from
continued work on the catalogs of titles of major Over-the-Top and
Video-on-Demand players, as well as initial work on new delivery formats
for
in-flight entertainment.
* Digital Cinema activities reported a slight year-on-year revenue
decline in
the fourth quarter of 2012, with a significant rebound in volume offset
by
specific customer price reductions given early in the year. At the end
of
December 2012, digital screen penetration was 84% in North America and
70%
in Europe.
Legacy activities
As expected, legacy activities continued to decline sharply in the
fourth
quarter of 2012, in particular photochemical film activities with
photochemical
film footage down 59% and revenues down 40% year-on-year. Technicolor
continued
in the quarter to reduce its exposure to such activities, which
represented
4.3% of Group revenues.
DVD Services - Q4 2012 Revenue Highlights
In the fourth quarter of 2012, combined Standard Definition DVD and
Blu-ray™ volumes decreased by 8% compared to the fourth quarter of 2011.
This decline was
driven by a decrease in Standard DVD volumes, attributable to an overall
weaker
title release slate year-on-year, as well as a challenging comparison
base in
Europe, which benefited from the release of multi-disc and special
edition
collector's box-sets for the Harry Potter franchise in the fourth
quarter of
2011.
These factors were partially offset by strengthening growth in Blu-ray™,
with
volumes up 27% in the fourth quarter of 2012 following a 25% increase
in the
third quarter of 2012, as well as stronger Games shipments, driven by
several
major title releases for Microsoft's Xbox video game console. Major
titles
produced in the fourth quarter of 2012 included Brave (Walt Disney), The
Dark
Knight Rises (Warner Bros.), Ted (Universal) and Paranormal
Activity 4
(Paramount).
DVD / Blu-ray™ volumes
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|In million units | |Q4 2011|Q4 2012| |H2 2011|H2 2012| |FY 2011|FY 2012|
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|Total Volumes | | 529| 487| | 947| 895| | 1540| 1,454|
| | | | | | | | | | |
|Change (%) | | | (8)%| | | (5)%| | | (6)%|
| | | | | | | | | | |
|o/w SD-DVD | | | | | | | | | |
|(Standard | | 423| 365| | 772| 691| | 1270| 1,160|
|Definition) | | | | | | | | | |
| | | | | | | | | | |
|Change (%) | | | (14)%| | | (10)%| | | (9)%|
| | | | | | | | | | |
|o/w Blu-ray™ | | 57| 72| | 101| 127| | 152| 182|
| | | | | | | | | | |
|Change (%) | | | +27%| | | +26%| | | +19%|
| | | | | | | | | | |
|Games | | 38| 40| | 57| 62| | 85| 88|
| | | | | | | | | | |
|Change (%) | | | +6%| | | +8%| | | +4%|
| | | | | | | | | | |
|Software and Kiosk | | 10| 9| | 16| 15| | 33| 25|
| | | | | | | | | | |
|Change (%) | | | (9%)| | | (10)%| | | (25)%|
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
Digital Delivery
Following the sale of the Broadcast Services, the SmartVision
(television-over-IP) businesses and the Cirpack softswitch
operations (voice-over-IP), Technicolor has renamed the existing
"Digital Delivery" segment to "Connected
Home". The business review is focused on Connected Home activities.
Digital
Delivery financial indicators are presented for reconciliation purposes.
Digital Delivery financial indicators
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|In EUR million | |Q4 2011|Q4 2012| |H2 2011|H2 2012| |FY 2011|FY 2012|
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|Revenues | | 329| 330| | 604| 681| | 1,157| 1,334|
| | | | | | | | | | |
|Change, as reported| | | | | | | | | |
|(%) | | | 0.3%| | | 12.8%| | | 15.3%|
| | | | | | | | | | |
|Change at constant | | | (0.4)%| | | 10.0%| | | 12.0%|
|currency (%) | | | | | | | | | |
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|Adjusted EBITDA | | | | | (2)| 15| | (20)| 14|
| | | | | | | | | | |
|As % of revenues | | | | | (0.4)%| 2.1%| | (1.7)%| 1.1%|
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
Connected Home financial indicators
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|In EUR million | |Q4 2011|Q4 2012| |H2 2011|H2 2012| |FY 2011|FY 2012|
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|Revenues | | 283| 326| | 517| 671| | 989| 1,244|
| | | | | | | | | | |
|Change, as reported| | | | | | | | | |
| (%) | | | 15.1%| | | 29.9%| | | 25.7%|
| | | | | | | | | | |
|Change at constant | | | 14.2%| | | 26.6%| | | 22.0%|
|currency (%) | | | | | | | | | |
+-------------------+-+-------+-------+-+-------+-------+-+-------+-------+
|Adjusted EBITDA | | | | | (17)| 12| | (43)| 1|
| | | | | | | | | | |
|As % of revenues | | | | | (3.4)%| 1.8%| | (4.4)%| 0.1%|
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|Adjusted EBIT | | | | | (32)| (2)| | (81)| (34)|
| | | | | | | | | | |
|As % of revenues | | | | | (6.2%)| (0.2)%| | (8.2%)| (2.7)%|
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|EBIT | | | | | (183)| (43)| | (242)| (56)|
| | | | | | | | | | |
|As % of revenues | | | | |(35.5)%| (6.5)%| |(24.4)%| (4.5)%|
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
In the second half of 2012, Connected Home revenues totaled EUR671
million, up
29.9% at current currency and up 26.6% at constant currency compared
to the
second half of 2011. This performance was primarily driven by sustained
customer
demand across Latin America, strong growth in the Asia-Pacific region, as
well
as increasing mix of higher-end Cable devices in North America. Connected
Home
adjusted EBITDA amounted to EUR12 million in the second half of 2012
compared to
EUR(17) million in the second half of 2011 and EUR(12) million in the
first half of
2012, due to very strong revenue growth and the benefit of cost
savings
initiatives. Gross margin improved by 3.5 points at 14.5% in the second
half of
2012, driven by Connected Home's new customer wins for solutions and
services
across all regions over the period and cost savings initiatives completed
in the
second half of 2012. Cost savings achieved in full year 2012 amounted
to EUR27
million, a gap of EUR5 million compared to the target announced in
December 2011
and mainly due to some delay in the restructuring in Europe.
For the full year 2012, Connected Home revenues were EUR1,244 million, up
25.7% at
current currency and up 22.0% at constant currency compared to the full
year
2011, driven by record product volumes of more than 30 million units
(+27%), an
all-time high. Connected Home adjusted EBITDA amounted to EUR1 million in
the full
year 2012 compared to EUR(43) million in the full year 2011,
reflecting the
positive outcome of the turnaround plan launched by the Group in December
2011.
This performance was in line with the Group's objective to achieve
adjusted
EBITDA breakeven for the Connected Home segment in 2012. Gross margin
also
improved by 2.6 points year-on-year to 13.0%. Free cash flow was
impacted by
restructuring expenses associated with cost reduction actions initiated as
part
of the turnaround plan of the Connected Home segment and by operating
working
capital needs associated with the significant growth of the business in
2012.
Connected Home - Q4 2012 Revenue Highlights
In the fourth quarter of 2012, Connected Home revenues amounted to EUR326
million,
up 15.1% at current currency and up 14.2% at constant currency compared
to the
fourth quarter of 2011, confirming the solid trend experienced in the
second and
third quarters of 2012 (revenues up in double-digits). This
performance
principally reflected strong customer demand across emerging
markets,
particularly in Latin America and Asia-Pacific, as well as improved
overall
product mix in North America, driven by Cable customers.
* In North America, Connected Home product volumes recorded a
year-on-year decline in the fourth quarter of 2012, reflecting softer
shipments in
Satellite set top boxes and digital-to-analog Cable adaptors. Overall
product mix however significantly improved year-on-year, driven by
growing
contribution from new products introduced in the third quarter of 2012
and
higher-end devices in Cable, partly offset by weaker deliveries of HD
PVRs
in Satellite compared to the prior-year quarter.
* In Latin America, global demand was strong in the fourth quarter of
2012, as
reflected by double-digit year-on-year growth in Connected Home product
volumes, driven by stronger shipments of Satellite set top boxes,
particularly in Brazil, as well as increased deliveries of broadband
gateways to Telecom customers, especially in Mexico. However overall
product
mix was less favorable year-on-year, principally as a result of a
decreased
proportion of HD devices in total volumes compared to the prior-year
quarter.
* In Europe, Middle-East and Africa, Connected Home products posted a
slight
year-on-year volume decline in the fourth quarter of 2012, as strong
growth
in shipments of Telecom broadband gateways and Cable modems largely
offset
softer set top box deliveries, due primarily to the phase-out of some
Satellite and Telecom devices. Overall product mix was slightly lower
year-on-year, driven principally by a reduced contribution of HD set top
boxes in
total shipments compared to the prior-year quarter.
* In Asia-Pacific, customer demand remained at a high level across the
region
in the fourth quarter of 2012, as reflected by more than a three-fold
increase in Connected Home product volumes year-on-year, primarily as a
result of a sharp growth in set top box shipments to Satellite
customers,
especially in India and Malaysia and new high-end solutions delivered
to
Telecom customers, in particular in Australia.
Connected Home Product Volumes
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|In million units | |Q4 2011|Q4 2012| |H2 2011|H2 2012| |FY 2011|FY 2012|
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
|Total Connected | | | | | | | | | |
|Home | | 6.4| 7.9| | 11.6| 15.7| | 23.7| 30.1|
| | | | | | | | | | |
|Product Volumes* | | | | | | | | | |
| | | | | | | | | | |
|Change (%) | | | +22%| | | +35%| | | +27%|
| | | | | | | | | | |
|o/w North America | | 1.9| 1.1| | 3.5| 2.8| | 7.7| 6.8|
| | | | | | | | | | |
| Change (%) | | | (39)%| | | (19)%| | | (12)%|
| | | | | | | | | | |
| Latin America | | 2.9| 3.8| | 4.7| 7.6| | 8.9| 13.7|
| | | | | | | | | | |
| Change (%) | | | +31%| | | +63%| | | +53%|
| | | | | | | | | | |
| Europe, | | | | | | | | | |
| Middle-East | | 1.3| 1.3| | 2.4| 2.5| | 4.9| 5.4|
| and Africa | | | | | | | | | |
| | | | | | | | | | |
| Change (%) | | | (2)%| | | +2%| | | +10%|
| | | | | | | | | | |
| Asia-Pacific | | 0.4| 1.7| | 1.0| 2.8| | 2.2| 4.3|
| | | | | | | | | | |
| Change (%) | | | +311%| | | +172%| | | +99%|
+-------------------+ +-------+-------+ +-------+-------+ +-------+-------+
* Including tablets and other connected devices
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------
(in EUR million) Year ended December 31,
-----------------------------
Unaudited 2012 2011
---------------- ------------
Continuing operations
Revenues 3,580 3,450
Cost of sales (2,750) (2,714)
---------------- ------------
Gross margin 830 736
---------------- ------------
Selling and administrative expenses (397) (376)
Research and development expenses (132) (128)
Restructuring costs (29) (83)
Net impairment losses on non-current operating (10) (188)
assets
Other income (expense) 2 6
---------------- ------------
Profit (loss) from continuing operations before 264 (33)
tax and net finance income (expense)
---------------- ------------
Interest income 4 5
Interest expense (149) (154)
Other financial income (expense) (52) (38)
---------------- ------------
Net finance income (expense) (197) (187)
---------------- ------------
Share of loss from associates (5) -
Income tax (49) (83)
---------------- ------------
Profit (loss) from continuing operations 13 (303)
---------------- ------------
Discontinued operations
Net loss from discontinued operations (35) (21)
---------------- ------------
Net income (loss) (22) (324)
---------------- ------------
Attributable to:
- Equity holders (20) (323)
- Non-controlling interests (2) (1)
-----------------------------
Year ended December 31,
----------------------------
-
(in euros, except number of shares) 2012 2011
---------------- ------------
Weighted average number of shares outstanding 275,885,374 211,364,435
(basic net of treasury shares held) (1)
---------------- ------------
Earnings (loss) per share from continuing
operations
- basic 0.05 (1.4)
- diluted 0.05 (1.3)
- basic (0.12) (0.1)
- diluted (0.12) (0.1)
Total earnings (loss) per share
- basic (0.07) (1.5)
- diluted (0.07) (1.4)
---------------- ------------
1. According to IAS 33.26 and IAS 33.27b, the weighted average number of
shares
outstanding was adjusted in 2012 and 2011 to take into account the
share
capital increase with preferential subscription rights that occurred on
August 14, 2012. The 2011 earnings (loss) per share was adjusted
accordingly.
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
----------------------- ------------------
( in EUR million) Unaudited December December 31, 2011
31, 2012
----------------------- ------------------
ASSETS
Non-current assets
Property, plant and equipment 350 401
Goodwill 478 481
Other intangible assets 433 459
Investments in associates and 18 14
joint ventures
Investments and available- 7 7
for-sale financial assets
Derivative financial
instruments - 1
Contract advances and up- 42 49
front prepaid discount
Deferred tax assets 388 394
Income tax receivable 20 20
Other non-current assets 66 67
Cash collateral and security 15 14
deposits
----------------------- ------------------
Total non-current assets 1,817 1,907
----------------------- ------------------
Current assets:
Inventories 112 118
Trade accounts and notes 526 585
receivable
Income tax receivable 12 13
Other current assets 340 325
Cash collateral and security
deposits 29 35
Cash and cash equivalents 397 370
Assets classified as held for 4 66
sale
----------------------- ------------------
Total current assets 1,420 1,512
----------------------- ------------------
----------------------- ------------------
Total assets 3,237 3,419
----------------------- ------------------
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
---------------------- ------------------
(in EUR million) Unaudited December December 31, 2011
31, 2012
---------------------- ------------------
EQUITY AND LIABILITIES
Shareholders' equity:
Common stock (335,543,841
shares at December 31, 2012 335 224
with nominal value of EUR1 per
share)
Treasury shares (156) (156)
Additional paid-in capital 940 857
Subordinated perpetual notes 500 500
Notes redeemable in shares - 13
Other reserves - 60
Retained earnings (accumulated (1,142) (1,122)
deficit)
Cumulative translation (240) (225)
adjustment
---------------------- ------------------
Shareholders' equity 237 151
---------------------- ------------------
Non-controlling interests 4 4
---------------------- ------------------
Total equity 241 155
---------------------- ------------------
Non-current liabilities:
Borrowings 1,019 1,242
Retirement benefits
obligations 353 349
Restructuring provisions 1 2
Other provisions 76 83
Deferred tax liabilities 158 167
Other non-current liabilities 96 97
---------------------- ------------------
Total non-current liabilities 1,703 1,940
---------------------- ------------------
Current liabilities:
Borrowings 96 85
Derivative financial
instruments - 1
Retirement benefits
obligations 35 37
Restructuring provisions 45 79
Other provisions 78 58
Trade accounts and notes
payable 445 499
Accrued employee expenses 164 138
Income tax payable 13 14
Other current liabilities 414 361
Liabilities classified as held
for sale 3 52
---------------------- ------------------
Total current liabilities 1,293 1,324
---------------------- ------------------
Total liabilities 2,996 3,264
---------------------- ------------------
---------------------- ------------------
Total equity and liabilities 3,237 3,419
---------------------- ------------------
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
------------------
(in EUR million) Year ended
December 31
------------------
Unaudited 2012 2011
---------------- ------
Net income (loss) (22) (324)
Loss from discontinued operations (35) (21)
Profit (loss) from continuing operations 13 (303)
---------------- ------
Summary adjustments to reconcile profit from continuing
operations to cash generated from continuing operations
Depreciation and amortization 219 261
Impairment of assets ((1)) 16 191
Net changes in provisions (75) 1
Gain on asset disposals - (8)
Interest (income) and expense 145 149
Other non-cash items (including tax) 77 80
Changes in working capital and other assets and 26 20
liabilities
Cash generated from continuing operations 421 391
Interest paid (117) (124)
Interest received 4 5
Income tax paid (49) (7)
Net operating cash generated from continuing activities 259 265
Net operating cash used in discontinued operations (6) (19)
-------------------------------------------------------- ----------- ------
Net cash from operating activities (I) 253 246
-------------------------------------------------------- ----------- ------
Acquisition of subsidiaries, associates and (10) (12)
investments, net of cash acquired
Net cash impact from sale of investments 17 14
Purchases of property, plant and equipment (PPE) (80) (106)
Proceeds from sale of PPE and intangible assets 2 5
Purchases of intangible assets including capitalization (69) (64)
of development costs
Cash collateral and security deposits granted to third (4) (7)
parties
Cash collateral and security deposits reimbursed by 8 31
third parties
Loans (granted to) / reimbursed by third parties (1) 1
Net investing cash used in continuing activities (137) (138)
Net investing cash used in discontinued operations (5) (20)
-------------------------------------------------------- ----------- ------
Net cash used in investing activities (II) (142) (158)
-------------------------------------------------------- ----------- ------
Increase in capital (net of fees paid) 179 -
Changes in ownership interests with no gain / loss of - 3
control, net of transaction fees
Proceeds from borrowings 2 4
Repayments of borrowings (255) (55)
Fees paid linked to the debt and capital restructuring (1) (9)
Hedge accounting 2 -
Net financing cash generated used in continuing (73) (57)
activities
Net financing cash used in discontinued operations - -
-------------------------------------------------------- ----------- ------
Net cash used in financing activities (III) (73) (57)
-------------------------------------------------------- ----------- ------
Net increase in cash and cash equivalents (I+II+III) 38 31
-------------------------------------------------------- ----------- ------
Cash and cash equivalents at beginning of year 370 332
-------------------------------------------------------- ----------- ------
Exchange gains/(losses) on cash and cash equivalents (11) 7
-------------------------------------------------------- ----------- ------
Cash and cash equivalents at end of year 397 370
-------------------------------------------------------- ----------- ------
(1) Including EUR6 million and EUR3 million of impairment of assets as
part of restructuring plans in 2012 and 2011, respectively.
Summary of consolidated results at constant scope (unaudited)
At constant scope: excluding Broadcast Services activities, sold by the
Group in July 2012, as well as IPTV/VoIP activities.
+----------------+ +---------------------------+ +------------------------+
|In EUR million | | Second Half | | Full Year |
+----------------+ +-----+-----+---------------+ +-----+-----+------------+
| | |2011 |2012 | Change, | |2011 |2012 | Change, |
| | | | | reported | | | | reported |
+----------------+ +-----+-----+---------------+ +-----+-----+------------+
|Group revenues | | | | | | | | |
|from continuing | | | | | | | | |
|operations | |1,804|1,923| +6.6%| |3,282|3,489| +6.3%|
| | | | | | | | | |
|Change at | | | | | | | | |
|constant | | | | | | | | |
|currency (%) | | |+3.4%| | | |+2.2%| |
+----------------+ +-----+-----+---------------+ +-----+-----+------------+
|Group gross | | | | | | | | |
|margin | | 415| 469| +13.0%| | 703| 800| +13.9%|
| | | | | | | | | |
|As a % of | | | | | | | | |
|revenues | |23.0%|24.4%| +1.4pt| |21.4%|22.9%| +1.5pt|
+----------------+ +-----+-----+---------------+ +-----+-----+------------+
|Adjusted EBITDA | | | | | | | | |
|from continuing | | | | | | | | |
|operations | | 293| 312| +6.5%| | 452| 498| +10.3%|
| | | | | | | | | |
|As a % of | | | | | | | | |
|revenues | |16.2%|16.2%| 0.0pt| |13.8%|14.3%| +0.5pt|
+----------------+ +-----+-----+---------------+ +-----+-----+------------+
|Adjusted EBIT | | | | | | | | |
|from | | | | | | | | |
|continuing | | | | | | | | |
|operations | | 186| 206| +10.6%| | 225| 287| +27.8%|
| | | | | | | | | |
|As a % of | | | | | | | | |
|revenues | |10.3%|10.7%| +0.4pt| | 6.8%| 8.2%| +1.4pt|
+----------------+ +-----+-----+---------------+ +-----+-----+------------+
|EBIT from | | | | | | | | |
|continuing | | | | | | | | |
|operations | | (37)| 152| +189| | (23)| 263| +286|
+----------------+ +-----+-----+---------------+ +-----+-----+------------+
Reconciliation of adjusted indicators
Technicolor is presenting, in addition to published results and with the
aim to
provide a more comparable view of the evolution of its operating
performance
compared with 2011, a set of adjusted indicators which exclude the
following
items as per the statement of operations of our consolidated
financial
statements:
· Restructuring charges;
· Net impairment charges;
· Other income and expenses (other non-current items).
These adjustments, the reconciliation of which is detailed in the
following
table, amounted to an impact on the Group EBIT from continuing
operations of
EUR(36) million for the full year of 2012 (EUR(266) million for the
full year of
2011).
+----------------------------------+-----+-----+-------+-----+-----+------+
|In EUR million |H2 11|H2 12| Change|FY 11|FY 12|Change|
+----------------------------------+-----+-----+-------+-----+-----+------+
|EBIT from continuing operations | (45)| 149| +194| (33)| 264| +297|
+----------------------------------+-----+-----+-------+-----+-----+------+
|Restructuring charges, net | (73)| (21)| +52| (83)| (29)| +55|
| | | | | | | |
|Net impairment losses on non- | | | | | | |
|current operating |(175)| (5)| +170|(189)| (10)| +179|
|assets | | | | | | |
| | | | | | | |
|Other income / (expense) | 8| (32)| (40)| 6| 3| (4)|
+----------------------------------+-----+-----+-------+-----+-----+------+
|Adjusted EBIT from continuing | 195| 207| +12| 232| 301| +68|
|operations | | | | | | |
| | | | | | | |
|As a % of revenues |10.3%|10.7%| +0.4pt| 6.7%| 8.4%|+1.7pt|
+----------------------------------+-----+-----+-------+-----+-----+------+
|Depreciation and amortization | | | | | | |
|(D&A)* | 113| 107| (6)| 243| 211| (32)|
+----------------------------------+-----+-----+-------+-----+-----+------+
|Adjusted EBITDA from continuing | 308| 314| +6| 475| 512| +37|
|operations | | | | | | |
| | | | | | | |
|As a % of revenues |16.3%|16.2%|(0.1)pt|13.8%|14.3%|+0.5pt|
+----------------------------------+-----+-----+-------+-----+-----+------+
* Including impact of provisions for risks, litigations and warranties.
---------------------------------------------------------------------------
[1] At constant scope: excluding Broadcast Services and IPTV activities
sold in
2012, and VoIP activities sold in January 2013
[2] EBIT from continuing operations excluding other income (expense), and
Depreciation & Amortization (including impact of provisions for risks,
litigations and warranties)
[3] Free Cash Flow from both continuing operations and discontinued
operations
[4] Legacy activities include photochemical film, compression & authoring
and
tape duplication
[5] Adjusted EBITDA at constant scope excluding Broadcast Services and IPTV
activities sold in 2012, and VoIP activities sold in January 2013 (see
table
page 22)
[6] Operating cash flow from continuing operations is defined as adjusted
EBITDA
minus net capex and restructuring cash out.
Technicolor - 2012: A robust performance:
http://hugin.info/143597/R/1680312/548980.pdf
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Source: TECHNICOLOR via Thomson Reuters ONE
[HUG#1680312]