Q2 and H1 2013: continued strong progress

Paris (France), 26 July 2013 – The Board of Directors of Technicolor (Euronext Paris: TCH) met yesterday to review the Group’s results for the first half of 2013 (unaudited).

H1 2013 highlights

• Revenue growth at constant scope and currency: up 3.1% at €1.6 billion, driven by solid performances of Connected Home and Entertainment Services (excluding legacy activities) segments..
• Adjusted EBITDA at €207 million, up 11% year-on-year at constant scope. Margin increase of 1.0 point compared to the first half of 2012.
• Net profit of €6 million, up from a net loss of €26 million in the first half of 2012.
• Group Free cash flow of €24 million, despite legacy litigation costs (EU antitrust fine in particular).
• Net debt at nominal value (non IFRS) of €837 million at end June 2013, a reduction of €2 million compared to end December 2012. Refinancing successfully completed in July 2013.
   

Q2 2013 revenue highlights

In the second quarter of 2013, Group revenues from continuing operations amounted to €814 million, up 0.9% at constant scope and current currency and up 4.0% at constant scope and currency compared to the second quarter of 2012.

• Technology: Another quarter of revenues above €100 million, driven by the breadth and the strength of Technicolor’s licensing programs.
• Entertainment Services: Increased revenues year-on-year excluding legacy activities, reflecting the return to growth of Digital Production and a sustained performance of DVD Services.
• Connected Home: Fifth consecutive quarter of double-digit year-on-year growth in revenues, driven by continued momentum in the emerging markets and further improvement in overall product mix.
   

Update on Amplify 2015

• Technology launched several new initiatives to expand its licensing activities, notably in the field of smartphones. The agreement with Sony in that area significantly reinforces Technicolor's ability to monetize its extensive IP portfolio for key technologies used in mobile devices. In addition, the pace of contributions to standards was strong in the first half of 2013, in particular for MPEG HEVC and MPEG-H audio standards.
• Entertainment Services recorded good performance across its core activities and continued to improve its operating margin through ongoing cost initiatives and efficiency improvement programs.
• Connected Home pursued its focus on customer wins and market share gains strengthening its sales pipeline, in particular in EMEA, while further demonstrating its leading technological edge in Wi-Fi, Ultra Broadband and Vectoring.
• Further improvement of the financial structure through a successful refinancing
   

Technicolor successfully completed its refinancing transaction on 12 July allowing the Group to borrow new funds at a lower interest rate, effectively extend its debt maturity and significantly increase its financial flexibility. The implementation of this new debt structure is another important step in the improvement of the Group’s financial structure. 

The Group put in place a new €100 million 5-year revolving credit facility as part of the refinancing transaction.
 

2013 objectives confirmed

• Growth of adjusted EBITDA between 5% to 10% compared to FY 2012 adjusted EBITDA at constant scope (€498 million):
  • Licensing adjusted EBITDA broadly stable vs. FY 2012 assuming another year of strong contracts;
  • Continued improvement of Connected Home adjusted EBITDA and return to positive free cash flow generation;
  • Improved profitability in Entertainment Services, reflecting cost actions implemented in H2 2012;
• Strong growth in Free Cash Flow, above 30%, before one-off payments for legacy litigations (in particular the EU antitrust fine for €38.6 million).
   

Net debt to adjusted EBITDA ratio objective

• Given the refinancing impact on the IFRS adjustment and the transaction costs, the net debt (IFRS) to adjusted EBITDA ratio target announced in February (below 1.25x) is no longer relevant. The Group has therefore decided to shift to a nominal value based ratio going forward, given that both the financial covenant in the Group’s new debt and its Amplify 2015 goals are based on nominal debt ratios.
• The Group expects to achieve a net debt (at nominal value) to adjusted EBITDA ratio below 1.6x at the end of December 2013. With respect to Amplify 2015, the Group now targets to achieve a net debt to adjusted EBITDA ratio below 1.0x at the end of December 2015 (versus 1.1x previously), taking into account the positive impact of the refinancing on its free cash flow generation.
   

Frederic Rose, Chief Executive Officer of Technicolor, stated:

“Technicolor continued to show strong progress across all activities in the first half of 2013, combining revenue growth, improved profitability and solid cash flow generation. This performance is reinforced by the refinancing transaction recently completed, which further strengthens the Group’s financial structure. Technicolor continues to deliver on its Amplify 2015 strategic roadmap, dynamized notably by another good performance of Connected Home, by a strong performance across Entertainment Services activities and by the enhancement of its intellectual property portfolio as illustrated by the significant agreement announced with Sony for smartphones.”

***

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   •   www.technicolor.com

Contacts
 

Press:

+33 1 41 86 53 93
technicolorpressoffice@technicolor.com
 

Investor relations:

+33 1 41 86 55 95
investor.relations@technicolor.com