Published: July 29, 2010
TECHNICOLOR : First Half 2010 Results (unaudited)
PRESS RELEASE
First Half 2010 Results (unaudited)
- Q2 2010 revenues at €776 million, down (12.4)% vs. Q2 2009, or
(9.5)% excluding retail telephony, with improved trends and signs of
recovery across most activities
o In Q2 2010, the Group recorded sustained revenue growth in all digital
Entertainment Services activities and a slight increase in Licensing
revenues at constant rates
o In line with market trends, volume pressure in DVD continued to ease in
Q2 2010. Volumes in Digital Home Products remained under pressure in Q2
2010 but showed some signs of recovery
- H1 2010 revenues at €1,468 million, down (18.5)% vs. H1 2009, or
(15.3)% excluding retail telephony
- The Group reiterates it expects to deliver revenue growth in H2 2010 vs.
H2 2009, driven by new customer wins in Entertainment Services and in
Digital Delivery[1]
o Announcement of two agreements with Verizon for broadband gateways and
DirecTV for set-top boxes
- H1 2010 adjusted EBITDA[2] at €135 million or 9.2% of revenues
o Down 2.2 points vs. H1 2009 as a direct consequence of lower DVD and
Connect volumes
- H1 2010 Group net profit of €96 million compared with a loss of
€(325) million in H1 2009
o H1 2010 net profit from continuing activities of €213 million,
resulting from EBIT of €15 million, financial result of €212
million including a positive accounting impact related to the Group
restructuring in Q2 2010, and from a €(14) million tax charge
o Net loss from discontinued operations of €(117) million in H1 2010,
including restructuring costs of €(54) million and an impairment loss
of €(40) million
- Net debt as per financial statements of €1,016 million on 30 June
2010 excluding Disposal Proceeds Notes (DPN)
o Free Cash Flow[3] from continuing activities of €(105) million in H1
2010 including €(140) million cash out related to the closing of the
balance sheet restructuring and currency hedging instruments
o Reduction of Free Cash Flow used by discontinued operations from
€(67) million in H1 2009 to €(12) million in H1 2010
o Gross debt as per financial statements at €1,432 million excluding
the DPN maturing in December 2010, a reduction of €1,311 million
compared with a gross debt of €2,743 million at 31 December 2009
o Cash position of €416 million at 30 June 2010
- Disposal process showing progress
o As announced on 26 July, the Group has received a fully documented
binding offer from Francisco Partners for the acquisition of the Grass
Valley Broadcast business
o Progress is expected before year end for the disposal of the remaining
non-strategic activities
Paris (France), 29 July 2010 The Board of Directors of Technicolor
(Euronext Paris: FR0010918292; NYSE: TCH) met yesterday to review the
Group's first half of 2010 results.
Comment by Frederic Rose, CEO
"With the conclusion of our financial restructuring, we have started to
regain customer intimacy. I am extremely pleased with the Verizon and
DirecTV agreements announced today, which confirm our technological
credibility and gives me confidence that we are poised to return to growth
as early as in the second half."
Summary of consolidated first half 2010 results (unaudited)
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 vs. first half 2009, a set of adjusted indicators which exclude
the following items as per the income statement of our financial
statements:
- Restructuring charges
- Impairment charges
- Other income and expenses (other non-current items)
These adjustments, the reconciliation of which is presented in the
appendix, amount to an impact on Group EBITDA and EBIT from continuing
activities of €(11) million for the first half of 2010, compared to an
impact of €(39) million for the first half of 2009.
+-------------------------+------+------------+---------+-----------------+
|In € million | | First Half| | |
+-------------------------+------+------------+---------+-----------------+
| | 2009| | 2010| Change, reported|
+-------------------------+------+------------+---------+-----------------+
|Group revenues from | | 1,801 | 1,468 | (18.5)%|
|continuing activities | | | | |
+-------------------------+------+------------+---------+-----------------+
|Change at constant rates | | | (20.7)%| |
+-------------------------+------+------------+---------+-----------------+
|EBITDA from continuing | | 166 | 124 | (25.7)%|
|activities | | | | |
+-------------------------+------+------------+---------+-----------------+
|as a % of revenues | | 9.2%| 8.4%| (0.8) pt|
+-------------------------+------+------------+---------+-----------------+
|Adjusted EBITDA from | | 205 | 135 | (34.4)%|
|continuing activities | | | | |
+-------------------------+------+------------+---------+-----------------+
|as a % of revenues | | 11.4%| 9.2%| (2.2) pt|
+-------------------------+------+------------+---------+-----------------+
|EBIT from continuing | | 51 | 15 | (70.9)%|
|activities | | | | |
+-------------------------+------+------------+---------+-----------------+
|as a % of revenues | | 2.8%| 1.0%| (1.8) pt|
+-------------------------+------+------------+---------+-----------------+
|Adjusted EBIT from | | 90 | 26 | (71.1)%|
|continuing activities | | | | |
+-------------------------+------+------------+---------+-----------------+
|as a % of revenues | | 5.0%| 1.8%| (3.2) pt|
+-------------------------+------+------------+---------+-----------------+
|Financial result | | (10)| 212 | +222|
+-------------------------+------+------------+---------+-----------------+
|Share of profit/(loss) | | (1)| (0)| +1|
|from associates | | | | |
+-------------------------+------+------------+---------+-----------------+
|Income tax | | (36)| (14)| +22|
+-------------------------+------+------------+---------+-----------------+
|Profit/(loss) from | | 4 | 213 | +209|
|continuing activities | | | | |
+-------------------------+------+------------+---------+-----------------+
|Loss from discontinued | | (329)| (117)| +212|
|operations | | | | |
+-------------------------+------+------------+---------+-----------------+
|Net income, Group share | | (325)| 96 | +421|
+-------------------------+------+------------+---------+-----------------+
|Operating cash flow from | | 78 | 40 | (38)|
|continuing activities[4] | | | | |
+-------------------------+------+------------+---------+-----------------+
|Group free cash flow | | (239)| (117)| +122|
+-------------------------+------+------------+---------+-----------------+
|Net financial debt | | 2,311| 1,276 | (1,035)|
+-------------------------+------+------------+---------+-----------------+
|of which DPN | | | 260| |
+-------------------------+------+------------+---------+-----------------+
Summary of first half 2010 divisional indicators (unaudited)
In the second quarter of 2010, the Group decided to create a new division
-Digital Delivery— to provide a strong focus on the main areas of
revenue and profit growth for Technicolor over the next five years. It
brings together the Connect division, one of the world's leading suppliers
of set top boxes and broadband gateway products, with the Digital Content
Delivery Services division, which today plays out over 320 TV channels
globally whilst also providing media and library services for the
management of premium content with an orientation to enable living room
based consumption for our content owner customers.
+-------------------------+--------------------+------+----------------+
|In EUR million | | | Second Quarter|
+-------------------------+--------------------+------+----------------+
| | | 2009| 2010|
+-------------------------+--------------------+------+----------------+
|Group revenues from | | | 886|
|continuing activities | | | |
+-------------------------+--------------------+------+----------------+
|Change at constant rates | | | |
+-------------------------+--------------------+------+----------------+
|of which: |Entertainment | | 335|
| |Services* | | |
+-------------------------+--------------------+------+----------------+
| |Change at constant | | |
| |rates | | |
+-------------------------+--------------------+------+----------------+
| |Digital Delivery | | 417|
+-------------------------+--------------------+------+----------------+
| |Change at constant | | |
| |rates | | |
+-------------------------+--------------------+------+----------------+
| | Technology| | 102|
+-------------------------+--------------------+------+----------------+
| |Change at constant | | |
| |rates | | |
+-------------------------+--------------------+------+----------------+
|Adjusted EBITDA from | | | |
|continuing activities | | | |
+-------------------------+--------------------+------+----------------+
|as a % of revenues | | | |
+-------------------------+--------------------+------+----------------+
|of which: |Entertainment | | |
| |Services* | | |
+-------------------------+--------------------+------+----------------+
| | as a % of revenues| | |
+-------------------------+--------------------+------+----------------+
| |Digital Delivery | | |
+-------------------------+--------------------+------+----------------+
| | as a % of revenues| | |
+-------------------------+--------------------+------+----------------+
| | Technology| | |
+-------------------------+--------------------+------+----------------+
| | as a % of revenues| | |
+-------------------------+--------------------+------+----------------+
|Adjusted EBIT from | | | |
|continuing activities | | | |
+-------------------------+--------------------+------+----------------+
|as a % of revenues | | | |
+-------------------------+--------------------+------+----------------+
|of which: |Entertainment | | |
| |Services* | | |
+-------------------------+--------------------+------+----------------+
| | as a % of revenues| | |
+-------------------------+--------------------+------+----------------+
| |Digital Delivery | | |
+-------------------------+--------------------+------+----------------+
| | as a % of revenues| | |
+-------------------------+--------------------+------+----------------+
| | Technology| | |
+-------------------------+--------------------+------+----------------+
| | as a % of revenues| | |
+-------------------------+--------------------+------+----------------+
+-------------------------+----------------+-------+------+------------+
|In EUR million | | | | First Half|
+-------------------------+----------------+-------+------+------------+
| |Change, reported| | 2009| 2010|
+-------------------------+----------------+-------+------+------------+
|Group revenues from | 776| (109)| | 1,801|
|continuing activities | | | | |
+-------------------------+----------------+-------+------+------------+
|Change at constant rates | (16.3)%|(12.4)%| | |
+-------------------------+----------------+-------+------+------------+
|of which: | 323| (12)| | 690|
| | | | | |
+-------------------------+----------------+-------+------+------------+
| | (11.2)%| (3.6)%| | |
| | | | | |
+-------------------------+----------------+-------+------+------------+
| | 358| (60)| | 841|
+-------------------------+----------------+-------+------+------------+
| | (18.5)%|(14.3)%| | |
| | | | | |
+-------------------------+----------------+-------+------+------------+
| | 95| (7)| | 195|
+-------------------------+----------------+-------+------+------------+
| | +1.2%| (7.1)%| | |
| | | | | |
+-------------------------+----------------+-------+------+------------+
|Adjusted EBITDA from | | | | 205|
|continuing activities | | | | |
+-------------------------+----------------+-------+------+------------+
|as a % of revenues | | | | 11.4%|
+-------------------------+----------------+-------+------+------------+
|of which: | | | | 61|
| | | | | |
+-------------------------+----------------+-------+------+------------+
| | | | | 8.8%|
+-------------------------+----------------+-------+------+------------+
| | | | | 60|
+-------------------------+----------------+-------+------+------------+
| | | | | 7.1%|
+-------------------------+----------------+-------+------+------------+
| | | | | 139|
+-------------------------+----------------+-------+------+------------+
| | | | | 71.5%|
+-------------------------+----------------+-------+------+------------+
|Adjusted EBIT from | | | | 90|
|continuing activities | | | | |
+-------------------------+----------------+-------+------+------------+
|as a % of revenues | | | | 5.0%|
+-------------------------+----------------+-------+------+------------+
|of which: | | | | 4|
| | | | | |
+-------------------------+----------------+-------+------+------------+
| | | | | 0.5%|
+-------------------------+----------------+-------+------+------------+
| | | | | 7|
+-------------------------+----------------+-------+------+------------+
| | | | | 0.8%|
+-------------------------+----------------+-------+------+------------+
| | | | | 132|
+-------------------------+----------------+-------+------+------------+
| | | | | 67.6%|
+-------------------------+----------------+-------+------+------------+
+-------------------------+------------------+---------+-+-++
|In EUR million | | | | ||
+-------------------------+------------------+---------+-+-++
| | Change, reported| | | ||
+-------------------------+------------------+---------+-+-++
|Group revenues from | 1,468| (333)| | ||
|continuing activities | | | | ||
+-------------------------+------------------+---------+-+-++
|Change at constant rates | (20.7)%| (18.5)%| | ||
+-------------------------+------------------+---------+-+-++
|of which: | 636| (54)| | ||
| | | | | ||
+-------------------------+------------------+---------+-+-++
| | (11.4)%| (7.8)%| | ||
| | | | | ||
+-------------------------+------------------+---------+-+-++
| | 641| (199)| | ||
+-------------------------+------------------+---------+-+-++
| | (26.3)%| (23.7)%| | ||
| | | | | ||
+-------------------------+------------------+---------+-+-++
| | 188| (7)| | ||
+-------------------------+------------------+---------+-+-++
| | (0.2)%| (3.7)%| | ||
| | | | | ||
+-------------------------+------------------+---------+-+-++
|Adjusted EBITDA from | 135| (70)| | ||
|continuing activities | | | | ||
+-------------------------+------------------+---------+-+-++
|as a % of revenues | 9.2%| (2.2)pt| | ||
+-------------------------+------------------+---------+-+-++
|of which: | 52| (9)| | ||
| | | | | ||
+-------------------------+------------------+---------+-+-++
| | 8.2%| (0.6)pt| | ||
+-------------------------+------------------+---------+-+-++
| | 4| (56)| | ||
+-------------------------+------------------+---------+-+-++
| | 0.6%| (6.6)pt| | ||
+-------------------------+------------------+---------+-+-++
| | 132| (8)| | ||
+-------------------------+------------------+---------+-+-++
| | 70.2%| (1.3)pt| | ||
+-------------------------+------------------+---------+-+-++
|Adjusted EBIT from | 26| (64)| | ||
|continuing activities | | | | ||
+-------------------------+------------------+---------+-+-++
|as a % of revenues | 1.8%| (3.2)pt| | ||
+-------------------------+------------------+---------+-+-++
|of which: | (15)| (19)| | ||
| | | | | ||
+-------------------------+------------------+---------+-+-++
| | (2.3)%| (2.8)pt| | ||
+-------------------------+------------------+---------+-+-++
| | (32)| (39)| | ||
+-------------------------+------------------+---------+-+-++
| | (5.0)%| (5.8)pt| | ||
+-------------------------+------------------+---------+-+-++
| | 126| (6)| | ||
+-------------------------+------------------+---------+-+-++
| | 67.1%| (0.5)pt| | ||
+-------------------------+------------------+---------+-+-++
* excluding Digital Content Delivery Services, now reported within Digital
Delivery
Key highlights
Q2 and H1 2010 revenues and H2 2010 trend
- In the first half of 2010, Group revenues from continuing activities
amounted to €1,468 million, down 18.5% at current currency compared
with the first half of 2009, and down 20.7% at constant currency. Excluding
the retail telephony business, from which the Group concluded its exit at
the end of 2009, revenues declined by 15.3% at current currency in the
second quarter of 2010 and by 17.6% at constant currency.
- In the second quarter of 2010, Group revenues from continuing activities
amounted to €776 million, down 12.4% at current currency compared with
the second quarter of 2009, and down 16.3% at constant currency. Excluding
the retail telephony business, revenues declined by 9.5% at current
currency in the second quarter of 2010 and by 13.6% at constant currency.
- Entertainment Services revenues were down 3.6% at current currency and
11.2% at constant currency compared with the second quarter of 2009. All
digital activities continued to benefit from sustained growth. The pressure
on SD-DVD volumes continued to ease compared to the trend seen last year,
in line with the overall market.
- Digital Delivery revenues were down 14.3% at current rates and 18.5% at
constant rates compared with the second quarter of 2009. All activities
within Digital Delivery showed signs of improvement compared with the
previous quarter. Pressure on volumes in Digital Home Products eased and
Broadcast Services maintained stable activity levels.
- Technology revenues were slightly higher compared to the second quarter
of 2009 at constant currency as Licensing activities benefited from a
stable revenue stream from the MPEG-LA pool and from the sustained
performance of the other licensing programs. However, due to currency
hedging effects, second quarter 2010 revenues were below last year at
current currency.
- Significant contract wins announced today
- The Group is announcing that it has been selected by Verizon as one of
its suppliers to provide its next-generation FiOS broadband home routers to
enhance the experience of residential customers served by its advanced
fiber-to-the-home access network. The Group expects this agreement to start
contributing to revenues in H1 2011.
- The Group is announcing the signing of a three year contract extension to
provide a wide range of SD and HD set-top boxes to DIRECTV, the world's
most popular video service. Technicolor is also the preferred provider of
3D services, enabling the launch of DIRECTV's first 3D VOD service.
- The Group reiterates it expects to deliver revenue growth in the second
half of 2010 compared with the second half of 2009, driven by new customer
wins in Entertainement Services and in Digital Delivery.
Operating profitability
- EBITDA from continuing activities amounted to €124 million in the
first half of 2010 compared with €166 million in the first half of
2009. Restructuring charges amounted to €15 million in the first half
of 2010 (€3 million in first half of 2009).
Adjusted EBITDA from continuing activities amounted to €135 million in
the first half of 2010, or 9.2% of revenues, a decrease of 2.2 percentage
points compared with the first half of 2009, mainly due to a decline in
Digital Delivery margin as a direct consequence of the first half of 2010
revenue decrease. Notwithstanding the drop in revenue, the division decided
to maintain its investments in R&D and sales to drive growth in the second
half of 2010.
- EBIT from continuing activities amounted to €15 million in the first
half of 2010, compared with €51 million in the first half of 2009,
including restructuring charges of €15 million (€3 million in
first half of 2009).
Net income
- The financial result amounted to €212 million in the first half of
2010, including:
- Net interest charges of €41 million in the first half of 2010
compared with €29 million in the same period last year
- Other financial income of €253 million resulting mainly from:
(i) a gain of €150 million linked to the recognition —as per
IFRIC 19 accounting interpretation— of the difference between the
carrying value of debt converted into equity and the fair value of the
equity instruments issued (new shares and NRS) on 26 May 2010;
(ii) a gain of €229 million resulting from the recognition —as
per IAS 39 accounting standards— of the new financial debt at fair
value on 26 May 2010;
(iii) a foreign exchange loss of €(61) million resulting mainly from
the revaluation of debt denominated in US dollar;
(iv) costs linked to the debt restructuring not recognized in Equity for
€(32) million.
- Income tax charge amounted to €14 million compared with €36
million in the first half of 2009.
- Net income from continuing activities amounted to €213 million in
first half of 2010.
- Net loss from discontinued operations (mainly Grass Valley, PRN and
Screenvision) reduced to €(117) million in the first half of 2010
compared to €(329) million in the first half of 2009 (which included a
€276 million impairment loss). The first half 2010 loss included
restructuring costs for €54 million and an impairment loss of €40
million.
- Net income (Group share) amounted to a profit of €96 million in the
first half of 2010 compared to a loss of €325 million in the first
half of 2009.
Operating Cash Flow from continuing activities
- Operating cash flow from continuing activities amounted to €40
million in the first half of 2010 compared with €78 million in the
first half of 2009. This decrease resulted from the lower level of adjusted
EBITDA, partially offset by lower capex and restructuring cash outflow:
- In the first half of 2010, cash outflow for net capital expenditures
amounted to €76 million, a €21 million decrease compared to first
half of 2009. The decrease in capex was mainly driven by lower requirement
in DVD Services notwithstanding ramp up attributable to the Warner Bros.
agreement. The Group is maintaining tight control over investments to
ensure efficient allocation of resources.
- Cash outflow related to restructuring of €18 million compared with
€29 million in the first half of 2009.
Free cash flow
- Free cash flow from continuing activities amounted to €(105) million
in first half of 2010, including the one-time impact of €(86) million
related to the closing of the balance sheet restructuring, and €54
million cash outflows for margin calls related to currency hedge
instruments, mainly due to sharp strengthening of the US Dollar vs. the
Euro during the first half of 2010.
- Free cash flow from discontinued operations amounted to €(12)
million in the first half of 2010, compared with €(67) million in the
first half of 2009, an improvement mainly driven by working capital
variations in Grass Valley activities.
Cash position and financial debt
- Cash position amounted to €416 million at 30 June 2010, compared
with €569 at 31 December 2009 and with €586 million at 31 March
2010 (estimated). Cash outflows related to the closing of the balance sheet
restructuring amounted to €189 million (of which €86 million
included in free cash flow from continuing activities), in line with
previously stated estimates.
- Gross debt as per financial statements amounted to €1,432 million on
30 June 2010 excluding the DPN maturing in December 2010, a reduction of
€1,311 million compared with a gross debt of €2,743 million at 31
December 2009 as a result of the debt restructuring and of the accounting
impact of fair market value adjustment on 26 May 2010.
- Net debt as per financial statements amounted to €1,276 million on
30 June 2010 —including the Group's Disposal Proceeds notes for
€260 million maturing in December 2010 — compared to €2,174
million at 31 December 2009 and to €2,280 million at 31 March 2010
(estimated).
Financial covenants
- On 30 June 2010, the Group met all the financial covenants contained in
its Credit Agreement.
+----------------------+--------------------+--------------------+
| Covenant | |Ratio on 30 June |
| | |2010 |
+----------------------+--------------------+--------------------+
| Interest cover: |EBITDA/Financial | 3.34|
| |Interests above 2.55| |
+----------------------+--------------------+--------------------+
| Leverage: |Net debt/EBITDA | 2.25|
| |below 3.85 | |
+----------------------+--------------------+--------------------+
| Capital expenditure:| |N/A (tested at FY |
| | |year end) |
+----------------------+--------------------+--------------------+
Disposals
- As announced on 26 July, the Group has received a fully documented
binding offer from Francisco Partners for the acquisition of the Grass
Valley Broadcast business. The transaction is expected to close before the
end of 2010, subject to the relevant customary regulatory administrative
approvals and consultations.
- Progress is expected before year end for the disposal of the remaining
non-strategic activities.
Second quarter and first half 2010 divisional review
Entertainment Services
First Half 2010 Overview
In the second quarter of 2010, Entertainment Services revenues were down
3.6% at current currency and 11.2% at constant currency compared with the
second quarter of 2009. Digital Production continued to benefit from
increased levels of activity. The pressure on SD-DVD volumes continued to
ease in the second quarter compared to the trend seen last year in line
with the overall market.
In the first half of 2010, Entertainment Services revenues were down 7.8%
at current currency and 11.4% at constant currency compared with the first
half of 2009.
Adjusted EBITDA of the division reached €52 million in the first half,
or 8.2% of revenues, a decline of 0.6 points compared with the first half
of 2009. This slight decline in adjusted EBITDA margin was related to the
impact of lower DVD volumes and ramp up costs for the Warner Bros.
agreement. This was partly compensated by ongoing cost reductions in DVD
and by margin improvements across all other activities, driven by revenue
growth in Digital Production and Digital Cinema, alignment of the cost base
with market volumes in Postproduction, and continuing focus on operating
efficiencies in Film.
Entertainment Services financial indicators
Following the creation in the second quarter of 2010 of the new Digital
Delivery division, Digital Content Delivery Services revenues and
associated costs are now excluded from Entertainment Services and are now
reported together with the Connect activities. Quarterly pro-forma
divisional indicators for 2009 and for the first quarter of 2010 are
presented in appendix.
+-------------------------+--+--------+----------+--+----------+----------+
|In EUR million | |2Q 2009*| 2Q 2010*| | 1H 2009*| 1H 2010*|
+-------------------------+--+--------+----------+--+----------+----------+
|Revenues | | 335 | 323 | | 690 | 636 |
+-------------------------+--+--------+----------+--+----------+----------+
|Change, as reported (%) | | | (3.6)%| | | (7.8)%|
+-------------------------+--+--------+----------+--+----------+----------+
|Change at constant | | | (11.2)%| | | (11.4)%|
|currency (%) | | | | | | |
+-------------------------+--+--------+----------+--+----------+----------+
|EBITDA | | | | | 48 | 46 |
+-------------------------+--+--------+----------+--+----------+----------+
|Change, as reported (%) | | | | | | (3.8)%|
+-------------------------+--+--------+----------+--+----------+----------+
|EBITDA margin (%) | | | | | 6.9%| 7.2%|
+-------------------------+--+--------+----------+--+----------+----------+
|Adjusted EBITDA | | | | | 61 | 52 |
+-------------------------+--+--------+----------+--+----------+----------+
|Change, as reported (%) | | | | | | (14.2)%|
+-------------------------+--+--------+----------+--+----------+----------+
|Adjusted EBITDA margin | | | | | 8.8%| 8.2%|
|(%) | | | | | | |
+-------------------------+--+--------+----------+--+----------+----------+
|EBIT | | | | | (9)| (21)|
+-------------------------+--+--------+----------+--+----------+----------+
|EBIT margin (%) | | | | | (1.4)%| (3.3)%|
+-------------------------+--+--------+----------+--+----------+----------+
|Adjusted EBIT | | | | | 4 | (15)|
+-------------------------+--+--------+----------+--+----------+----------+
|Adjusted EBIT margin (%) | | | | | 0.5%| (2.3)%|
+-------------------------+--+--------+----------+--+----------+----------+
* excluding Digital Content Delivery Services, now reported within Digital
Delivery
Creation and Theatrical Services
- Creation Services
o Visual Effects (VFX) benefited from increased activity from high-end
theatrical releases (Narnia and Harry Potter 7) and recovery of the
advertising market leading to increased market share gains in commercials.
Given the rapid growth in this market, we have continued to expand our
presence in India and Vancouver in the first half and expect to be
operational in New York in the fourth quarter of 2010.
o Helped by continued growth in our Indian operations, Technicolor's
animation capacity utilization increased in the first half of 2010, driving
revenue growth. During the first half, Technicolor also launched its 3D
animation capabilities (Lego and Madame Tussauds projects).
o In Post Production, revenues were near stable in the first half of 2010
compared with last year. However, second quarter 2010 revenues were
slightly higher compared to the same period last year, reflecting stable
market share. As access to funding for feature film production remains
limited, the Group is continuing to align its cost structure with lower
market activity.
- Theatrical Services
o Digital Cinema distribution activities continued to grow during the first
half of 2010 over the same period last year at constant rates. In the first
half, our satellite distribution network passed 600 sites in the United
States by year end, giving Technicolor the largest electronic distribution
footprint for films, trailers, and commercials to theatres. This reinforces
Technicolor as the market leader in digital cinema and positions us
favorably as the theatrical market transitions from photochemical film to
digital distribution.
o Photochemical Film footage declined by just under 10% in the first half
compared to last year, mainly due to a lower number of film releases and
the increase in digital cinema penetration - driven particularly by 3D
releases. Consequently, film recorded slightly lower revenues compared to
the first half of 2009. However, our market position remained stable over
the period. In addition, the first half witnessed the launch of
Technicolor's innovative film 3D solution targeted at small and medium
exhibitors, allowing studios to reap the benefits from 3D features in non-
digital locations. Technicolor and Deluxe consolidated their labs in
Vancouver and film distribution operations in Canada to achieve operational
efficiencies in the second half of 2010.
Photochemical Film footage
+------------------------+--+---------+---------+--+---------+---------+
| | | Q2 2009| Q2 2010| | H1 2009| H1 2010|
+------------------------+--+---------+---------+--+---------+---------+
| Film footage (bn feet)| | 1.0| 0.8| | 1.8| 1.7|
+------------------------+--+---------+---------+--+---------+---------+
| Change (%) | | | (19)%| | | (8)%|
+------------------------+--+---------+---------+--+---------+---------+
+------------------------+--+---------+---------+--+---------+---------+
DVD Services
The year-on-year decline rate in overall DVD volumes eased in the first
half of 2010 versus last year, in line with overall market trends. Over the
first half of 2010, Blu-ray™ volumes continued to grow. The lower rate
of decline in SD DVD was principally attributable to improved trends across
both major studio new release and catalog volumes. Margins in the first
half of 2010 were mainly affected by both the overall volume decline and by
the ramp up for the Warner Bros. DVD agreement which will generate material
revenue starting in the third quarter of 2010.
Leveraging its market leading supply chain capabilities for the
entertainment industry, Technicolor signed a long-term agreement with major
UK retailer Sainsbury's for the distribution of home entertainment
products, including DVD and games. Technicolor continued its innovation by
replicating the first-ever 3D Blu-ray™ full feature film (DreamWorks
Animation's Monsters vs. Aliens).
DVD volumes
+-----------------------+--+-------+---------+--+---------+---------+
| | |Q2 2009| Q2 2010| | H1 2009| H1 2010|
+-----------------------+--+-------+---------+--+---------+---------+
|DVD volumes (million | | 218| 181| | 464| 397|
|units) | | | | | | |
+-----------------------+--+-------+---------+--+---------+---------+
|Change (%) | | | (17)%| | | (15)%|
+-----------------------+--+-------+---------+--+---------+---------+
|o/w SD DVD | | 175| 149| | 383| 340|
+-----------------------+--+-------+---------+--+---------+---------+
|Change (%) | | | (15)%| | | (11)%|
+-----------------------+--+-------+---------+--+---------+---------+
|o/w Blu-ray™ | | 9| 14| | 15| 21|
+-----------------------+--+-------+---------+--+---------+---------+
|Change (%) | | | +59%| | | +37%|
+-----------------------+--+-------+---------+--+---------+---------+
|o/w Games and Kiosk | | 35| 18| | 66| 36|
+-----------------------+--+-------+---------+--+---------+---------+
|Change (%) | | | (48)%| | | (46)%|
+-----------------------+--+-------+---------+--+---------+---------+
Digital Delivery
First Half 2010 Overview
In the second quarter of 2010, the Group established a new division
—Digital Delivery— to increase its capability to capture the
growth resulting from the shift to digital distribution. In addition to
Digital Home Products, this division provides content preparation and
management services, enabling its customers to deliver an improved end-user
entertainment experience.
The Digital Delivery business group brings together the Connect division,
the world's largest supplier of broadband gateway products and the world's
third largest supplier of set top boxes; with the Digital Content Delivery
Services activity, which today plays out over 320 TV channels globally and
provides media and library services for the management of premium content.
In the second quarter, Digital Delivery revenues were down 14.3% at current
currency and 18.5% at constant currency compared with the second quarter of
2009. All activities within Digital Delivery showed signs of improvement
compared with the previous quarter trend. Pressure on volumes in Digital
Home Products eased in the second quarter while Broadcast Services
maintained stable activity levels. In the first half of 2010, Digital
delivery revenues were down 23.7% at current currency and 26.3% at constant
currency compared with the first half of 2009.
The sharp decline in revenue in the first half of 2010 led to a significant
drop in adjusted EBITDA. Digital Delivery was however able to maintain its
margin before SG&A and R&D. Notwithstanding the drop in revenue, the group
maintained its investments in R&D and sales to drive strong expected growth
for the second half of 2010.
Digital Delivery financial indicators
Digital Content Delivery Services revenues and associated costs are now
excluded from Entertainment Services and are now reported together within
the Digital Delivery division. Quarterly pro-forma divisional indicators
for 2009 and for the first quarter of 2010 are presented in appendix.
+-------------------------+--+--------+----------+--+----------+----------+
|In EUR million | |2Q 2009*| 2Q 2010*| | 1H 2009*| 1H 2010*|
+-------------------------+--+--------+----------+--+----------+----------+
|Revenues | | 417 | 358 | | 841 | 641 |
+-------------------------+--+--------+----------+--+----------+----------+
|Change, as reported (%) | | | (14.3)%| | | (23.7)%|
+-------------------------+--+--------+----------+--+----------+----------+
|Change at constant | | | (18.5)%| | | (26.3)%|
|currency (%) | | | | | | |
+-------------------------+--+--------+----------+--+----------+----------+
|EBITDA | | | | | 56 | 3 |
+-------------------------+--+--------+----------+--+----------+----------+
|Change, as reported (%) | | | | | | (94.8)%|
+-------------------------+--+--------+----------+--+----------+----------+
|EBITDA margin (%) | | | | | 6.7%| 0.5%|
+-------------------------+--+--------+----------+--+----------+----------+
|Adjusted EBITDA | | | | | 60 | 4 |
+-------------------------+--+--------+----------+--+----------+----------+
|Change, as reported (%) | | | | | | (93.2)%|
+-------------------------+--+--------+----------+--+----------+----------+
|Adjusted EBITDA margin | | | | | 7.1%| 0.6%|
|(%) | | | | | | |
+-------------------------+--+--------+----------+--+----------+----------+
|EBIT | | | | | 3 | (33)|
+-------------------------+--+--------+----------+--+----------+----------+
|EBIT margin (%) | | | | | 0.4%| (5.2)%|
+-------------------------+--+--------+----------+--+----------+----------+
|Adjusted EBIT | | | | | 7 | (32)|
+-------------------------+--+--------+----------+--+----------+----------+
|Adjusted EBIT margin (%) | | | | | 0.8%| (5.0)%|
+-------------------------+--+--------+----------+--+----------+----------+
* including Digital Content Delivery Services, now reported within Digital
Delivery
Connect
The pressure on Digital Home Products volumes eased in the second quarter
of 2010 on a sequential basis, although volumes decreased compared to the
same period of last year:
In the Satellite market, volumes continued to be impacted by lower orders
for set-top boxes in North America, due to increased levels of returns and
refurbishments of previously-deployed products. This negative impact was
partly offset by the introduction of a third product line for DirecTV,
where Technicolor is the major supplier, the first deliveries of a HD-PVR
product to a European customer, as well as robust growth in South America.
In line with the trend of the first quarter of 2010, the Satellite set-top
box backlog continued to firm up during the second quarter of 2010, while
overall market positions were stable.
In the Cable market, volumes grew substantially in the second quarter of
2010 compared to the same period of last year, driven by the first
deliveries of a second-generation digital-to-analog adaptor to Comcast, as
well as continued growth in shipments of cable modems, notably in South
America. Overall cable product mix was however less favorable year-on-year.
In the Telecom market, in line with the trend seen in the first quarter of
2010, we continued to reinforce or win back market share with some European
customers, mainly as a result of the positive effects of measures aiming at
improving software development. The decrease in volumes was largely related
to lower shipments of DSL modems, while shipments of broadband gateways
increased slightly compared to the same period of last year.
Software Services Platform revenues continued to benefit in the second
quarter of 2010 from the progressive recovery of the European VoIP market
and market share gains.
Digital Home Products Indicators
+-------------------------+--+---------+---------++---------+---------+
|KPIs | | Q2 2009| Q2 2010|| H1 2009| H1 2010|
+-------------------------+--+---------+---------++---------+---------+
|Cable (m) | | 1.3| 1.7|| 2.7| 2.8|
+-------------------------+--+---------+---------++---------+---------+
|Satellite (m) | | 2.4| 1.9|| 4.7| 3.4|
+-------------------------+--+---------+---------++---------+---------+
|Telecom (m) | | 3.0| 2.4|| 5.9| 4.5|
+-------------------------+--+---------+---------++---------+---------+
|Total Digital Home | | 6.8| 6.0|| 13.2| 10.8|
|Products (m) | | | || | |
+-------------------------+--+---------+---------++---------+---------+
|Change | | | (11)%|| | (19)%|
+-------------------------+--+---------+---------++---------+---------+
Digital Content Delivery Services
- Media Management Services revenues were affected by lower market activity
in the first half of 2010 due to fewer productions and reduced customer
catalog activities. The Group estimates that it has maintained its market
position in this business over the first half of 2010 and is well poised
for the anticipated market recovery in the second half. With the support of
its Corporate Research resources, Technicolor developed a 3D authoring
solution for Blu-ray™ discs resulting in authoring the first full
feature Blu-ray™ 3D ever made (DreamWorks Animation's Monsters vs.
Aliens). Additionally, Technicolor is providing 3D VOD encoding services
powering DirecTV's 3D VOD service.
- Broadcast Services revenues were stable compared with the first half of
2009. The trend for migration of channels to HD (High Definition) continued
and the Group secured some key contract renewals. Technicolor continued to
demonstrate its leadership and innovation in broadcast services by
providing 3D broadcast play out services to Canal+ during the FIFA World
Cup.
Technology
First Half 2010 Overview
In the first half of 2010, Licensing activities benefited from a stable
revenue stream from the MPEG-LA pool and from the sustained performance of
the other licensing programs. Second quarter 2010 revenues from Licensing
were stable compared with the previous quarter, and slightly higher
compared with the second quarter of 2009 at constant currency. However, due
to currency hedging effects, second quarter 2010 revenues were below last
year at current currency.
Adjusted EBITDA margin in the first half of 2010 for the Technology
business was down 1.3 points of revenues, resulting from a stable EBITDA
margin as a percentage of revenues in Licensing partly offset by higher
expenses in Corporate Research, mainly related to investment in advanced
design capabilities.
During the first half of 2010, Corporate Research continued to demonstrate
thought leadership and to contribute to Technicolor's businesses
technology, including Licensing, in areas such as 3D subtitling, user
adjustable 3D, and intelligent video reframing. In the second quarter of
2010, the Group announced the opening of a new research lab dedicated to
personalization of digitally delivered content and services in Palo Alto,
California.
Technology financial indicators
First half 2010 revenues from the Technology business were impacted by the
sale of the Software and Technology Solutions (STS) business to Civolution
in July 2009. The STS business generated revenues of about 2 million in the
second quarter of 2009, and 3 million in the first half of 2009.
+-------------------------+--+---------+---------+---+---------+---------+
|In EUR million | | 2Q 2009| 2Q 2010| | 1H 2009| 1H 2010|
+-------------------------+--+---------+---------+---+---------+---------+
|Revenues | | 102 | 95 | | 195 | 188 |
+-------------------------+--+---------+---------+---+---------+---------+
|Change, as reported (%) | | | (7.1)%| | | (3.7)%|
+-------------------------+--+---------+---------+---+---------+---------+
|Change at constant | | | 1.2%| | | (0.2)%|
|currency (%) | | | | | | |
+-------------------------+--+---------+---------+---+---------+---------+
|Of which Licensing | | 100 | 94 | | 192 | 187 |
|revenues | | | | | | |
+-------------------------+--+---------+---------+---+---------+---------+
|Change, as reported (%) | | | (6.1)%| | | (2.6)%|
+-------------------------+--+---------+---------+---+---------+---------+
|Change at constant | | | 2.3%| | | 1.0%|
|currency (%) | | | | | | |
+-------------------------+--+---------+---------+---+---------+---------+
|EBITDA | | | | | 124 | 129 |
+-------------------------+--+---------+---------+---+---------+---------+
|Change, as reported (%) | | | | | | 3.2%|
+-------------------------+--+---------+---------+---+---------+---------+
|EBITDA margin (%) | | | | | 63.6%| 68.1%|
+-------------------------+--+---------+---------+---+---------+---------+
|Adjusted EBITDA | | | | | 139 | 132 |
+-------------------------+--+---------+---------+---+---------+---------+
|Change, as reported (%) | | | | | | (5.5)%|
+-------------------------+--+---------+---------+---+---------+---------+
|Adjusted EBITDA margin | | | | | 71.5%| 70.2%|
|(%) | | | | | | |
+-------------------------+--+---------+---------+---+---------+---------+
|EBIT | | | | | 116 | 123 |
+-------------------------+--+---------+---------+---+---------+---------+
|EBIT margin (%) | | | | | 59.5%| 65.4%|
+-------------------------+--+---------+---------+---+---------+---------+
|Adjusted EBIT | | | | | 132 | 126 |
+-------------------------+--+---------+---------+---+---------+---------+
|Adjusted EBIT margin (%) | | | | | 67.7%| 67.0%|
+-------------------------+--+---------+---------+---+---------+---------+
Other continuing activities
Total EBIT from other continuing activities, largely related to expenses
related to activities being exited, amounted to €(1) million in the
first half of 2010 compared to €(6) million in the first half of 2009.
Discontinued operations
Total EBIT from discontinued operations amounted to €(109) million in
the first half of 2010. This EBIT loss was mostly related to losses in
Grass Valley.
An analyst conference call hosted by Frederic Rose, CEO and Stephane
Rougeot, CFO will be held today at 15:00 CET. The presentation document
will be made available on the Technicolor website prior to the call.
***
Technicolor is a company listed on NYSE Euronext Paris and NYSE stock
exchanges, and this press release contains certain statements that
constitute "forward-looking statements" within the meaning of the "safe
harbor" of the U.S. Private Securities Litigation Reform Act of 1995. 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 U.S. Securities and Exchange Commission
and its filings with the French Autorité des marchés financiers.
***
About Technicolor
With more than 95 years of experience in technological innovation,
Technicolor is a leading provider is a leading provider of production,
postproduction, and distribution services to content creators and
distributors. Technicolor is one of the world's largest film processors;
the largest independent manufacturer and distributor of DVDs (including
Blu-ray™ Disc); and a leading global supplier of set-top boxes and
gateways. The company also operates an Intellectual Property and Licensing
business. For more information: www.technicolor.com
APPENDICES
PRO FORMA DIVISIONAL INDICATORS
Following the creation in the second quarter of 2010 of the new Digital
Delivery division, Digital Content Delivery Services revenues and
associated costs are now reported together with the Connect activities.
Quarterly pro-forma divisional indicators for 2009 and for the first
quarter of 2010 are presented in below.
+---------------------+--------------------++---------+---------+---------+
|In EUR million | || Q1 2009| Q2 2009| H1 2009|
+---------------------+--------------------++---------+---------+---------+
|Group revenues from | || 915| 886| 1,801|
|continuing activities| || | | |
+---------------------+--------------------++---------+---------+---------+
|of which: |Entertainment || 355| 335| 690|
| |Services || | | |
+---------------------+--------------------++---------+---------+---------+
| |Digital Delivery || 423| 417| 840|
+---------------------+--------------------++---------+---------+---------+
| | Technology|| 93| 102| 195|
+---------------------+--------------------++---------+---------+---------+
|Adjusted EBITDA from | || | | 205|
|continuing activities| || | | |
+---------------------+--------------------++---------+---------+---------+
|of which: |Entertainment || | | 61|
| |Services || | | |
+---------------------+--------------------++---------+---------+---------+
| |Digital Delivery || | | 60|
+---------------------+--------------------++---------+---------+---------+
| | Technology|| | | 139|
+---------------------+--------------------++---------+---------+---------+
|EBITDA from continuing || | | 166|
|activities | || | | |
+---------------------+--------------------++---------+---------+---------+
|of which: |Entertainment || | | 48|
| |Services || | | |
+---------------------+--------------------++---------+---------+---------+
| |Digital Delivery || | | 56|
+---------------------+--------------------++---------+---------+---------+
| | Technology|| | | 124|
+---------------------+--------------------++---------+---------+---------+
|Adjusted EBIT from | || | | 90|
|continuing activities| || | | |
+---------------------+--------------------++---------+---------+---------+
|of which: |Entertainment || | | 4|
| |Services || | | |
+---------------------+--------------------++---------+---------+---------+
| |Digital Delivery || | | 7|
+---------------------+--------------------++---------+---------+---------+
| | Technology|| | | 132|
+---------------------+--------------------++---------+---------+---------+
|EBIT from continuing | || | | 51|
|activities | || | | |
+---------------------+--------------------++---------+---------+---------+
|of which: |Entertainment || | | (9)|
| |Services || | | |
+---------------------+--------------------++---------+---------+---------+
| |Digital Delivery || | | 3|
+---------------------+--------------------++---------+---------+---------+
| | Technology|| | | 116|
+---------------------+--------------------++---------+---------+---------+
+---------------------+---------+---------+---------+---------+---------+
|In EUR million | Q3 2009| Q4 2009| H2 2009| FY 2009| Q1 2010|
+---------------------+---------+---------+---------+---------+---------+
|Group revenues from | 803| 926| 1,728| 3,529| 691|
|continuing activities| | | | | |
+---------------------+---------+---------+---------+---------+---------+
|of which: | 374| 438| 813| 1,503| 313|
| | | | | | |
+---------------------+---------+---------+---------+---------+---------+
| | 314| 376| 690| 1,530| 283|
+---------------------+---------+---------+---------+---------+---------+
| | 98| 97| 195| 390| 93|
+---------------------+---------+---------+---------+---------+---------+
|Adjusted EBITDA from | | | 281| 486| |
|continuing activities| | | | | |
+---------------------+---------+---------+---------+---------+---------+
|of which: | | | 146| 207| |
| | | | | | |
+---------------------+---------+---------+---------+---------+---------+
| | | | 57| 117| |
+---------------------+---------+---------+---------+---------+---------+
| | | | 143| 283| |
+---------------------+---------+---------+---------+---------+---------+
|EBITDA from continuing | | 209| 375| |
|activities | | | | | |
+---------------------+---------+---------+---------+---------+---------+
|of which: | | | 98| 146| |
| | | | | | |
+---------------------+---------+---------+---------+---------+---------+
| | | | 49| 105| |
+---------------------+---------+---------+---------+---------+---------+
| | | | 120| 244| |
+---------------------+---------+---------+---------+---------+---------+
|Adjusted EBIT from | | | 157| 247| |
|continuing activities| | | | | |
+---------------------+---------+---------+---------+---------+---------+
|of which: | | | 61| 64| |
| | | | | | |
+---------------------+---------+---------+---------+---------+---------+
| | | | 22| 29| |
+---------------------+---------+---------+---------+---------+---------+
| | | | 134| 266| |
+---------------------+---------+---------+---------+---------+---------+
|EBIT from continuing | | | 85| 136| |
|activities | | | | | |
+---------------------+---------+---------+---------+---------+---------+
|of which: | | | 13| 3| |
| | | | | | |
+---------------------+---------+---------+---------+---------+---------+
| | | | 14| 17| |
+---------------------+---------+---------+---------+---------+---------+
| | | | 111| 227| |
+---------------------+---------+---------+---------+---------+---------+
+-----------------------+---------+---------+-++
|In EUR million | Q2 2010| H1 2010| ||
+-----------------------+---------+---------+-++
|Group revenues from | 776| 1,468| ||
|continuing activities | | | ||
+-----------------------+---------+---------+-++
|of which: | 323| 636| ||
| | | | ||
+-----------------------+---------+---------+-++
| | 358| 641| ||
+-----------------------+---------+---------+-++
| | 95| 188| ||
+-----------------------+---------+---------+-++
|Adjusted EBITDA from | | 135| ||
|continuing activities | | | ||
+-----------------------+---------+---------+-++
|of which: | | 52| ||
| | | | ||
+-----------------------+---------+---------+-++
| | | 4| ||
+-----------------------+---------+---------+-++
| | | 132| ||
+-----------------------+---------+---------+-++
|EBITDA from continuing | | 124| ||
|activities | | | ||
+-----------------------+---------+---------+-++
|of which: | | 46| ||
| | | | ||
+-----------------------+---------+---------+-++
| | | 3| ||
+-----------------------+---------+---------+-++
| | | 129| ||
+-----------------------+---------+---------+-++
|Adjusted EBIT from | | 26| ||
|continuing activities | | | ||
+-----------------------+---------+---------+-++
|of which: | | (15)| ||
| | | | ||
+-----------------------+---------+---------+-++
| | | (32)| ||
+-----------------------+---------+---------+-++
| | | 126| ||
+-----------------------+---------+---------+-++
|EBIT from continuing | | 15| ||
|activities | | | ||
+-----------------------+---------+---------+-++
|of which: | | (21)| ||
| | | | ||
+-----------------------+---------+---------+-++
| | | (33)| ||
+-----------------------+---------+---------+-++
| | | 123| ||
+-----------------------+---------+---------+-++
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
+----------------------+--------------------+--+--------------------+--+--+
| | | |Six months ended | | |
| | | |June 30, | | |
+----------------------+--------------------+--+--------------------+--+--+
|(EUR in millions) |(in euro, except | | | | |
| |number of shares) | | | | |
+----------------------+--------------------+--+--------------------+--+--+
| | | | | | |
+----------------------+--------------------+--+--------------------+--+--+
|Continuing operations | | | | | |
+----------------------+--------------------+--+--------------------+--+--+
|Revenues | | | 1,468| | |
+----------------------+--------------------+--+--------------------+--+--+
|Cost of sales | | | (1,174)| | |
+----------------------+--------------------+--+--------------------+--+--+
|Gross margin | | | 294| | |
+----------------------+--------------------+--+--------------------+--+--+
|Selling and | | | (192)| | |
|administrative expenses | | | | |
+----------------------+--------------------+--+--------------------+--+--+
|Research and development | | (76)| | |
|expenses | | | | | |
+----------------------+--------------------+--+--------------------+--+--+
|Other income (expense)| | | (11)| | |
+----------------------+--------------------+--+--------------------+--+--+
|Profit (loss) from | | | 15| | |
|continuing operations | | | | | |
|before tax and net | | | | | |
|finance costs | | | | | |
+----------------------+--------------------+--+--------------------+--+--+
|Interest income | | | 3| | |
+----------------------+--------------------+--+--------------------+--+--+
|Interest expense | | | (44)| | |
+----------------------+--------------------+--+--------------------+--+--+
|Gain on Technicolor's | | 381| | |
|debt restructuring on May | | | | |
|26, 2010 | | | | |
+----------------------+--------------------+--+--------------------+--+--+
|Other financial income| | | (128)| | |
|(expense) | | | | | |
+----------------------+--------------------+--+--------------------+--+--+
|Net finance costs | | | 212| | |
+----------------------+--------------------+--+--------------------+--+--+
|Share of profit (loss)| | | -| | |
|from associates | | | | | |
+----------------------+--------------------+--+--------------------+--+--+
|Income tax | | | (14)| | |
+----------------------+--------------------+--+--------------------+--+--+
|Profit (loss) from | | | 213| | |
|continuing operations | | | | | |
+----------------------+--------------------+--+--------------------+--+--+
|Discontinued operations | | | | |
+----------------------+--------------------+--+--------------------+--+--+
|Net loss from | | | (117)| | |
|discontinued operations | | | | |
+----------------------+--------------------+--+--------------------+--+--+
|Net income (loss) | | | 96| | |
+----------------------+--------------------+--+--------------------+--+--+
|Attributable to: | | | | | |
+----------------------+--------------------+--+--------------------+--+--+
|- Equity Holders | | | 96| | |
+----------------------+--------------------+--+--------------------+--+--+
|- Non-controlling | | | -| | |
|interests | | | | | |
+----------------------+--------------------+--+--------------------+--+--+
| | | |Six months ended | | |
| | | |June 30, | | |
+----------------------+--------------------+--+--------------------+--+--+
|(EUR in millions) |(in euro, except | | | | |
| |number of shares) | | | | |
+----------------------+--------------------+--+--------------------+--+--+
| | | | | | |
+----------------------+--------------------+--+--------------------+--+--+
|Weighted average number | | 51,657,743| | |
|of shares outstanding | | | | | |
|(basic net of treasury| | | | | |
|stock) | | | | | |
+----------------------+--------------------+--+--------------------+--+--+
|Earnings (loss) per share | | | | |
|from continuing | | | | |
|operations (**) | | | | | |
+----------------------+--------------------+--+--------------------+--+--+
|- basic | | | 3.81| | |
+----------------------+--------------------+--+--------------------+--+--+
|- diluted | | | 3.08| | |
+----------------------+--------------------+--+--------------------+--+--+
|Earnings (loss) per share | | | | |
|from discontinued | | | | |
|operations | | | | |
+----------------------+--------------------+--+--------------------+--+--+
|- basic | | | (2.26)| | |
+----------------------+--------------------+--+--------------------+--+--+
|- diluted | | | (1.82)| | |
+----------------------+--------------------+--+--------------------+--+--+
|Total earnings (loss) per | | | | |
|share (**) | | | | |
+----------------------+--------------------+--+--------------------+--+--+
|- basic | | | 1.55| | |
+----------------------+--------------------+--+--------------------+--+--+
|- diluted | | | 1.26| | |
+----------------------+--------------------+--+--------------------+--+--+
+----------------------+--------------------+--+--------------------+--+--+
+-------------------------+------------+--------------------+--+-+
| | | | | |
| | | | | |
+-------------------------+------------+--------------------+--+-+
|(EUR in millions) | 2010| 2010 Unaudited (*)| | |
| | | | | |
+-------------------------+------------+--------------------+--+-+
| | Unaudited| | | |
+-------------------------+------------+--------------------+--+-+
|Continuing operations | | | | |
+-------------------------+------------+--------------------+--+-+
|Revenues | 1,801| | | |
+-------------------------+------------+--------------------+--+-+
|Cost of sales | (1,440)| | | |
+-------------------------+------------+--------------------+--+-+
|Gross margin | 361| | | |
+-------------------------+------------+--------------------+--+-+
|Selling and | (193)| | | |
|administrative expenses | | | | |
+-------------------------+------------+--------------------+--+-+
|Research and development | (78)| | | |
|expenses | | | | |
+-------------------------+------------+--------------------+--+-+
|Other income (expense) | (39)| | | |
+-------------------------+------------+--------------------+--+-+
|Profit (loss) from | 51| | | |
|continuing operations | | | | |
|before tax and net | | | | |
|finance costs | | | | |
+-------------------------+------------+--------------------+--+-+
|Interest income | 4| | | |
+-------------------------+------------+--------------------+--+-+
|Interest expense | (33)| | | |
+-------------------------+------------+--------------------+--+-+
|Gain on Technicolor's | -| | | |
|debt restructuring on May| | | | |
|26, 2010 | | | | |
+-------------------------+------------+--------------------+--+-+
|Other financial income | 19| | | |
|(expense) | | | | |
+-------------------------+------------+--------------------+--+-+
|Net finance costs | (10)| | | |
+-------------------------+------------+--------------------+--+-+
|Share of profit (loss) | (1)| | | |
|from associates | | | | |
+-------------------------+------------+--------------------+--+-+
|Income tax | (36)| | | |
+-------------------------+------------+--------------------+--+-+
|Profit (loss) from | 4| | | |
|continuing operations | | | | |
+-------------------------+------------+--------------------+--+-+
|Discontinued operations | | | | |
+-------------------------+------------+--------------------+--+-+
|Net loss from | (329)| | | |
|discontinued operations | | | | |
+-------------------------+------------+--------------------+--+-+
|Net income (loss) | (325)| | | |
+-------------------------+------------+--------------------+--+-+
|Attributable to: | | | | |
+-------------------------+------------+--------------------+--+-+
|- Equity Holders | (325)| | | |
+-------------------------+------------+--------------------+--+-+
|- Non-controlling | -| | | |
|interests | | | | |
+-------------------------+------------+--------------------+--+-+
| | | | | |
| | | | | |
+-------------------------+------------+--------------------+--+-+
|(EUR in millions) | 2010| 2010 Unaudited (*)| | |
| | | | | |
+-------------------------+------------+--------------------+--+-+
| | Unaudited| | | |
+-------------------------+------------+--------------------+--+-+
|Weighted average number | 26,294,722| | | |
|of shares outstanding | | | | |
|(basic net of treasury | | | | |
|stock) | | | | |
+-------------------------+------------+--------------------+--+-+
|Earnings (loss) per share| | | | |
|from continuing | | | | |
|operations (**) | | | | |
+-------------------------+------------+--------------------+--+-+
|- basic | 0.2| | | |
+-------------------------+------------+--------------------+--+-+
|- diluted | 0.2| | | |
+-------------------------+------------+--------------------+--+-+
|Earnings (loss) per share| | | | |
|from discontinued | | | | |
|operations | | | | |
+-------------------------+------------+--------------------+--+-+
|- basic | (12.5)| | | |
+-------------------------+------------+--------------------+--+-+
|- diluted | (12.5)| | | |
+-------------------------+------------+--------------------+--+-+
|Total earnings (loss) per| | | | |
|share (**) | | | | |
+-------------------------+------------+--------------------+--+-+
|- basic | (12.3)| | | |
+-------------------------+------------+--------------------+--+-+
|- diluted | (12.3)| | | |
+-------------------------+------------+--------------------+--+-+
+-------------------------+------------+--------------------+--+-+
(*) The number of shares at end of June 2010 and 2009 was adjusted to
factor in the reverse share split that took place on July 15, 2010.
(**) The payment of interest claims of the TSS holders, since this does not
impact the net result, is taken as a reduction of earnings for the purpose
of calculating the earnings per share.
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
+-------------------------+--------------------+--+--------------------+--+
|(EUR in millions) |June 30, 2010 | |December 31, 2009 | |
| |Unaudited | |Audited | |
+-------------------------+--------------------+--+--------------------+--+
|ASSETS | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Non-current assets: | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Property, plant and | 487| | 431| |
|equipment | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Goodwill | 832| | 746| |
+-------------------------+--------------------+--+--------------------+--+
|Other intangible assets | 542| | 456| |
+-------------------------+--------------------+--+--------------------+--+
|Investments in associates| 6| | 7| |
+-------------------------+--------------------+--+--------------------+--+
|Investments and | 22| | 42| |
|available-for-sale | | | | |
|financial assets | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Derivative financial | 7| | -| |
|instruments | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Contract advances and | 77| | 60| |
|up-front prepaid discount| | | | |
+-------------------------+--------------------+--+--------------------+--+
|Deferred tax assets | 503| | 426| |
+-------------------------+--------------------+--+--------------------+--+
|Income tax receivable | 22| | 20| |
+-------------------------+--------------------+--+--------------------+--+
|Other non-current assets | 39| | 37| |
+-------------------------+--------------------+--+--------------------+--+
|Cash collateral and | 19| | 13| |
|security deposits | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Total non-current assets | 2,556| | 2,238| |
+-------------------------+--------------------+--+--------------------+--+
|Current assets: | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Inventories | 135| | 97| |
+-------------------------+--------------------+--+--------------------+--+
|Trade accounts and notes | 520| | 555| |
|receivable | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Current accounts with | 4| | 5| |
|associates and | | | | |
|joint-ventures | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Derivative financial | 1| | 7| |
|instruments | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Income tax receivable | 21| | 15| |
+-------------------------+--------------------+--+--------------------+--+
|Other current assets | 336| | 316| |
+-------------------------+--------------------+--+--------------------+--+
|Cash collateral and | 63| | 82| |
|security deposits | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Cash and cash equivalents| 416| | 569| |
+-------------------------+--------------------+--+--------------------+--+
|Assets classified as held| 385| | 436| |
|for sale | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Total current assets | 1,881| | 2,082| |
+-------------------------+--------------------+--+--------------------+--+
|Total assets | 4,437| | 4,320| |
+-------------------------+--------------------+--+--------------------+--+
UNAUDITED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
+-------------------------+--------------------+--+--------------------+--+
|(EUR in millions) |June 30, 2010 | |December 31, 2009 | |
| |Unaudited | |Audited | |
+-------------------------+--------------------+--+--------------------+--+
|EQUITY AND LIABILITIES | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Shareholders' equity: | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Common stock (796,498,809| 80| | 1,012| |
|shares at June 30, 2010 | | | | |
|with nominal value of | | | | |
|EUR0.10 per share) | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Treasury shares | (156)| | (156)| |
+-------------------------+--------------------+--+--------------------+--+
|Additional paid in | 267| | 1,643| |
|capital | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Subordinated perpetual | 500| | 500| |
|notes | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Notes redeemable in | 525| | -| |
|shares | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Other reserves | 65| | 112| |
+-------------------------+--------------------+--+--------------------+--+
|Retained earnings | (627)| | (3,340)| |
|(accumulated deficit) | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Cumulative translation | (244)| | (226)| |
|adjustment | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Shareholders' equity | 410| | (455)| |
|(deficit) | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Non-controlling interests| 2| | 2| |
+-------------------------+--------------------+--+--------------------+--+
|Total equity (deficit) | 412| | (453)| |
+-------------------------+--------------------+--+--------------------+--+
|Non-current liabilities: | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Borrowings | 1,366| | 16| |
+-------------------------+--------------------+--+--------------------+--+
|Retirement benefits | 366| | 310| |
|obligations | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Restructuring provisions | 10| | 16| |
+-------------------------+--------------------+--+--------------------+--+
|Other provisions | 91| | 92| |
+-------------------------+--------------------+--+--------------------+--+
|Deferred tax liabilities | 258| | 198| |
+-------------------------+--------------------+--+--------------------+--+
|Other non-current | 67| | 60| |
|liabilities | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Total non-current | 2,158| | 692| |
|liabilities | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Current liabilities : | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Borrowings | 326| | 2,727| |
+-------------------------+--------------------+--+--------------------+--+
|Derivative financial | 1| | 4| |
|instruments | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Retirement benefits | 50| | 60| |
|obligations | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Restructuring provisions | 45| | 48| |
+-------------------------+--------------------+--+--------------------+--+
|Other provisions | 70| | 68| |
+-------------------------+--------------------+--+--------------------+--+
|Trade accounts and notes | 511| | 435| |
|payable | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Accrued employee expenses| 122| | 128| |
+-------------------------+--------------------+--+--------------------+--+
|Income tax payable | 8| | 7| |
+-------------------------+--------------------+--+--------------------+--+
|Other current liabilities| 424| | 345| |
+-------------------------+--------------------+--+--------------------+--+
|Payables on acquisition | -| | 2| |
|of companies | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Liabilities classified as| 310| | 257| |
|held for sale | | | | |
+-------------------------+--------------------+--+--------------------+--+
|Total current liabilities| 1,867| | 4,081| |
+-------------------------+--------------------+--+--------------------+--+
|Total liabilities | 4,025| | 4,773| |
+-------------------------+--------------------+--+--------------------+--+
|Total equity (deficit) | 4,437| | 4,320| |
|and liabilities | | | | |
+-------------------------+--------------------+--+--------------------+--+
CONSOLIDATED STATEMENTS OF CASH FLOWS
+-------------------------+--+--------------------+--+-----------+--+-++
|(EUR in millions) | |Six months ended | | | | ||
| | |June 30, | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
| | | 2010| | 2009| | ||
+-------------------------+--+--------------------+--+-----------+--+-++
| | | Unaudited| | Unaudited| | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Net income (loss) | | 96| | (325)| | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Loss from discontinued | | (117)| | (329)| | ||
|operations | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Profit (loss) from | | 213| | 4| | ||
|continuing operations | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Summary adjustments to | | | | | | ||
|reconcile profit from | | | | | | ||
|continuing operations to | | | | | | ||
|cash generated from | | | | | | ||
|continuing operations | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Depreciation and | | 117| | 120| | ||
|Amortization | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Impairment of assets | | 1| | 30| | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Net changes in provisions| | (11)| | (28)| | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|(Profit) / loss on asset | | (6)| | (3)| | ||
|sales | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Interest (income) and | | 41| | 29| | ||
|expense | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Gain on Technicolor's | | (381)| | -| | ||
|debt restructuring on May| | | | | | ||
|26, 2010 | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Other non cash items | | 52| | 35| | ||
|(including tax) | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Changes in working | | 5| | (212)| | ||
|capital and other assets | | | | | | ||
|and liabilities | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Cash generated from / | | 31| | (25)| | ||
|(used in) continuing | | | | | | ||
|operations | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Interest paid | | (51)| | (38)| | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Interest received | | 3| | 3| | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Income tax paid | | (12)| | (15)| | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Net operating cash | | (29)| | (75)| | ||
|generated from / (used | | | | | | ||
|in) continuing activities| | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Net operating cash used | | (11)| | (58)| | ||
|in discontinued | | | | | | ||
|operations | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Net cash from / (used in)| | (40)| | (133)| | ||
|operating activities (I) | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Acquisition of | | -| | (1)| | ||
|subsidiaries, associates | | | | | | ||
|and investments, net of | | | | | | ||
|cash acquired | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Net cash impact from sale| | 19| | (2)| | ||
|of investments | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Purchases of property, | | (67)| | (84)| | ||
|plant and equipment (PPE)| | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Proceeds from sale of PPE| | 3| | 6| | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Purchases of intangible | | (12)| | (19)| | ||
|assets including | | | | | | ||
|capitalization of | | | | | | ||
|development costs | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Cash collateral and | | (2)| | (19)| | ||
|security deposits granted| | | | | | ||
|to third parties | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Cash collateral and | | 29| | 3| | ||
|security deposits | | | | | | ||
|reimbursed by third | | | | | | ||
|parties | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Loans (granted to) / | | -| | (11)| | ||
|reimbursed by third | | | | | | ||
|parties | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Net investing cash used | | (30)| | (127)| | ||
|in continuing activities | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Net investing cash used | | 3| | (15)| | ||
|in discontinued | | | | | | ||
|operations | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Net cash used in | | (27)| | (142)| | ||
|investing activities (II)| | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Increase of capital | | 203| | -| | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Proceeds from borrowings | | 1| | 49| | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Repayments of borrowings | | (255)| | (51)| | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Fees paid linked to the | | (30)| | -| | ||
|debt and capital | | | | | | ||
|restructuring | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Payment of the interests | | (25)| | -| | ||
|claims of TSS holders | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Net financing cash | | (106)| | (2)| | ||
|generated from/ (used in)| | | | | | ||
|continuing activities | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Net financing cash used | | (2)| | (1)| | ||
|in discontinued | | | | | | ||
|operations | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Net cash provided by / | | (108)| | (3)| | ||
|(used) in financing | | | | | | ||
|activities (III) | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Net (decrease) / increase| | (175)| | (278)| | ||
|in cash and cash | | | | | | ||
|equivalents (I+II+III) | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Cash and cash equivalents| | 569| | 769| | ||
|at beginning of period | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Exchange gain / (losses) | | 22| | 20| | ||
|on cash and cash | | | | | | ||
|equivalents | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
|Cash and cash equivalents| | 416| | 511| | ||
|at end of period | | | | | | ||
+-------------------------+--+--------------------+--+-----------+--+-++
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 vs. the first half of 2009, a set of adjusted indicators which
exclude the following items as per the income statement of our financial
statements:
- Restructuring charges
- Impairment charges
- Other income and expenses (other non-current items)
These adjustments, the reconciliation of which is presented in the
following table, amount to an impact on the Group EBITDA and EBIT from
continuing activities of €(11) million for first half of 2010,
compared to an impact of €(39) million for 2009.
+-------------------------+---------+---------+----------+
|In € million | 1H 2009| 1H 2010| Change |
+-------------------------+---------+---------+----------+
|EBIT from continuing | 51 | 15 | (36)|
|activities | | | |
+-------------------------+---------+---------+----------+
|Restructuring charges, | (3)| (15)| |
|net | | | |
+-------------------------+---------+---------+----------+
|Impairment losses on | (30)| (0)| |
|non-current operating | | | |
|assets | | | |
+-------------------------+---------+---------+----------+
|Other income / (expense) | (6)| 3 | |
+-------------------------+---------+---------+----------+
|Adjusted EBIT from | 90 | 26 | (64)|
|continuing activities | | | |
+-------------------------+---------+---------+----------+
|As a % of revenues | 5.0%| 1.8%| (3.2) pt|
+-------------------------+---------+---------+----------+
|Depreciation and | 115 | 109 | (6)|
|amortization (D&A)* | | | |
+-------------------------+---------+---------+----------+
|Adjusted EBITDA from | 205 | 135 | (70)|
|continuing activities | | | |
+-------------------------+---------+---------+----------+
|As a % of revenues | 11.4%| 9.2%| (2.2) pt|
+-------------------------+---------+---------+----------+
* including impact of provisions for risks, litigations and warranties
[1] Digital Delivery is a newly created division which brings together the
Connect and Digital Content Delivery Services divisions (details on page
10)
[2] EBITDA from continuing activities minus restructuring and impairment
charges, and minus other income and expenses (full details on page 21)
[3] Operating cash flow from continuing activities less change in working
capital and other assets and liabilities, tax, financial and non current
cash out
[4] Operating cash flow from continuing activities is defined as adjusted
EBITDA minus capex and restructuring cash out
This information is provided by HUGIN
Copyright © 2012, MarketWire
Copyright © 2012, NewsBlaze,
Daily News
Search News
Daily News
