July 25, 2014

H1 2014 results: improved profitability and strong cash generation

Technicolor today announces its results for the first half of 2014.

H1 2014 results: improved profitability
and strong cash generation

  • Revenues:€1,505 million, +1.7% at constant rate and scope [1] and excl. legacy
  • Adjusted EBITDA:€213 million, +6.3% at constant rate and scope
  • Group free cash flow: €129 million, up €105 million versus H1 2013
  • Strong deleveraging: netnominal debt at €671 million, down €166 million versus H1 2013


Paris (France), 25 July 2014 – Technicolor (Euronext Paris: TCH; OTCQX: TCLRY) today announces its results for the firsthalf of 2014.


Frederic Rose, Chief Executive Officer of Technicolor, stated:

“We are well on track to achieve our 2014 objectives and to exceed our prior guidance on free cash flow generation. Our performance continues to be fueled by profitable growth in Connected Home, the signature of new license agreements and the very strong growth in visual effects.”


Key points

  • Improved profitability:Adjusted EBITDA margin at 14.2% (up 1.2 point)and Adjusted EBITat 8.4% (up 1.4 point).
  • Strong cash generation with Group free cash flow of €129 million, driven by improvement in profitability and financial charges and a particularly strong working capital performance.
  • Positive net income of €27 million, despite €19 million negative impact related to accelerated debt repayments.
  • Progress in innovation,in particulararound immersive technologiesacross the Group.
  • Strengthening market positions by sustained organic growth in Connected Home and Production Services. Connected Home expanded again much faster than the market and Visual Effects activities grew double-digit across facilities.
  • Seizing selected external growth opportunities with the announced acquisition of Mr. X, expected to be completed in the third quarter, following the acquisition of Thales display IP portfolio in February 2014.




2014 guidance

  • Technicolor confirms its objective to reach an Adjusted EBITDA between €550 million and €575 million;
  • Expects to exceed the upper range of its free cash flow objective of €180 million to €200 million, despitethe impact of higher cash restructuring charges compared with 2013;
  • Expects apositive net income;
  • Confirms its objective to reach a Net Debt to Adjusted EBITDA ratio below 1.2x at end December 2014.



  • In the first half of 2014, Technicolor reinforced its IP portfolio both organically and through selected IP acquisitions. The Group continued to expand its offering of patents related to standards, specifically in Blu-rayTM and HDMI standards. Technicolor participates in patent pools for both of these standards and in the first half 2014 added 52 essential patents to the Premier BD patent pool and 4 essential patents to the HDMI pool. To complement its organic development efforts, Technicolor also completed the acquisition of more than 120 patents and applications relevant to the LTE standard, which further reinforced the added value for the industry of its mobile devices licensing programs.
  • Technicolor continued to be active around immersive technologies including those designed to upscale images and to help create an immersive Hollywood grade experience at home, through the development and deployment of the latest advancements in HDR, 4K and Wide Color Gamut, across its businesses. With an eye on providing the best image quality to consumers, the Technology segment embedded its research algorithms in content producing the best viewing experience regardless of hardware limitations. Technicolor signed with HP a Color Certification program to offer by the third quarter of 2014 HP Envy and HP Pavilion monitors ensuring that consumers are getting color accuracy online. Operating businesses also reached important milestones in immersive technologies.The 4K streaming service offered by M-GO in partnership with Samsung will be available in the third quarter of 2014. Production Services started work on a number of Ultra HD TV shows to be delivered by the end of 2014 and the Connected Home segment has been selected to deliver 4K set-top boxes in volume to Tata Sky from early 2015.
  • The Connected Home segment had a particularly strong pace of innovation that resulted in several contract wins in Europe, Middle East & Africa with Telecom and Cable operators. It is also developing additional software features on top of Qeo and its own middleware, and is rolling out its roadmap to ensure the widespread use of Qeo on connected devices.

Summary of consolidated results for the first half of 2014 (unaudited)


Key financial indicators and analysis at constant scope[2]


 First Half

 Change YoY

In € million




At constant rate

Group revenues





Group revenues (excl. legacy activities)





Adjusted EBITDA





As a % of revenues





Adjusted EBIT





As a % of revenues





EBIT from continuing operations





Financial result





Share of profit/(loss) from associates





Income tax





Profit/(loss) from continuing operations





Profit (loss) from discontinued operations





Net income





Net income excl. costs due to debt prepayments





Group Free cash flow





Net financial debt at nominal value (non IFRS)





Revenues from continuing operations amounted to €1,505 million in first half of 2014, including a negative forex impact of €69 million. Revenue growth was 1.7% at constant rate and scope (excl. legacy activities), reflecting solid performances in Production Services, particularly Visual Effects, and in the Connected Home segment, which reinforced its market leadership and benefited from a number of customer wins and new awards, as well as continued resiliency in DVD Services, despite a challenging year-on-year comparison. In the Technology segment, the revenue decrease reflected weaker contribution from MPEG LA, due to a one-off adjustment in the first quarter and ongoing softness in optical disc drive demand from PC makers, partly offset by double-digit growth in revenues generated by direct licensing programs, driven by a good level of new contracts and renewals, with notably the contribution of an LG smartphone licensing agreement and successful renewals with two major US digital TV providers during the period.


Adjusted EBITDA from continuing operations amounted to €213 million in the first half of 2014, including a negative forex impact of €7 million compared to the first half of 2013. Adjusted EBITDA margin was 14.2%, up by 1.2 points year-on-year, reflecting significant margin improvement in Connected Home, driven by higher shipments and better mix, stable margin in Entertainment Services, due to strong performance in Production Services and continued operating efficiencies in DVD Services, and lower corporate costs, mostly related to transversal functions.


Technicolor remained focused during the first half on optimizing its cost base and generating efficiencies across its businesses and at corporate level. Total operating expenses decreased year-on-year, driven by a sharp reduction in the Entertainment Services segment, with operating expenses down 17% at constant rate, and material declines for the Connected Home segment and at corporate level.


Adjusted EBIT from continuing operations amounted to €127 million in the first half of 2014, up 17.3% at constant currency compared to the first half of 2013, with margin of 8.4%, up by 1.4 points year-on-year, resulting from the growth in Adjusted EBITDA and lower D&A expenses.


EBIT from continuing operations totaled €122 million in the first half of 2014, up 42% at constant currency compared to the first half of 2013, with margin of 8.1%, up by 2.6 points year-on-year, due to the increase in Adjusted EBIT, lower restructuring costs and a gain on disposal of available-for-sale financial assets.


The Group’s financial result amounted to €(74) million, broadly stable year-on-year, reflecting the following:

  • Net interest costs amounted to €39 million in the first half of 2014, a significant reduction compared to €63 million in the first half of 2013, reflecting reduced borrowing costs stemming from the refinancing and repricing transactions and from the material decrease in gross debt during the period.
  • Other financial charges amounted to €35 million in the first half of 2014, including costs related to the refinancing and repricing transactions for €25 million, including an IFRS reversal recognized as a non-cash charge for €19 million due to the debt prepayments done in 2014 and repricing transaction costs.

Net income was a profit of €27 million in the first half of 2014, increasing from a profit of €6 million in the first half of 2013. Restated from refinancing and repricing charges, net income was a profit of €46 million.


An analyst conference call hosted by Frederic Rose, CEO, and Stéphane Rougeot, CFO, will be held on Friday, 25 July 2014 at 3:00pm CEST.


Financial Calendar

Q3 2014 revenues

22 October 2014

FY 2014 results

19 February 2015


Warning: Forward Looking Statements

This press release contains certain statements that constitute "forward-looking statements", including but not limited to statements that are predictions of or indicate future events, trends, plans or objectives, based on certain assumptions or which do not directly relate to historical or current facts. Such forward-looking statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the future results expressed, forecasted or implied by such forward-looking statements. For a more complete list and description of such risks and uncertainties, refer to Technicolor’s filings with the French Autorité des marchés financiers.



About Technicolor

Technicolor, a worldwide technology leader in the media and entertainment sector, is at the forefront of digital innovation. Our world class research and innovation laboratories enable us to lead the market in delivering advanced video services to content creators and distributors. We also benefit from an extensive intellectual property portfolio focused on imaging and sound technologies, based on a thriving licensing business. Our commitment: supporting the delivery of exciting new experiences for consumers in theaters, homes and on-the-go.www.technicolor.com
Follow us: @Technicolor - linkedin.com/company/technicolor

Technicolor shares are on the NYSE Euronext Paris exchange (TCH) and traded in the USA on the OTCQX marketplace (OTCQX: TCLRY).



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[1] Excluding the Cirpack softswitch operations, sold in 2013.


[2] H1 2013 figures have been restated to exclude the impact on key business indicators (from Revenues to EBIT) of the Cirpack softswitch operations, sold in 2013. Other key indicators for H1 2013 are presented as reported. Perimeter impacts for H1 2013 are as follows: not material on revenues, Adjusted EBITDA and Adjusted EBIT, and €2 million on EBIT due to write-offs on the sold activities. The perimeter impact for H1 2014 is not material.