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 €3.5 billion, driven by Connected Home and Technology.
• Adjusted EBITDA[2] at €512 million, exceeding objectives.
• Net profit of €17 million excluding EU antitrust fine; net loss of €22 million including €38.6 million EU antitrust fine.
• Group Free cash flow[3] up 31% at €106 million, exceeding objectives.
• Net debt at nominal value (non IFRS) at €839 million at December 31, 2012, a reduction of €291 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 €314 million.
• Net profit of €4 million including the €38.6 million EU antitrust fine.
• Group Free Cash Flow more than doubled at €104 million.

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 €264 million;
  • Increase of the Group’s cash position to €397 million at end December 2012 compared to €370 million at end December 2011;
  • Net debt at nominal value (non IFRS) reduced by €291 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] (€498 million):
  • Licensing adj. EBITDA broadly stable vs. FY 2012 assuming another year of strong contracts; 
  • Continued improvement of Connected Home adj. EBITDA and return to positive free cash flow generation in this segment; 
  •  Improved profitability in Entertainment Services reflecting cost actions implemented in H2 2012; 
  • 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 €38.6 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 €40 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 €2.2 billion.
• Consequently, the statutory equity of Technicolor SA amounted to €2.0 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

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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.

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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

Contacts

Press:

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

Investor relations:

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

[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)