July 25, 2012

Solid revenue growth in Q2 2012 Improved Adjusted EBITDA in H1 2012

The Board of Directors of Technicolor met yesterday to review the Group’s first half 2012 results

Paris (France), July 25, 2012 – The Board of Directors of Technicolor (Euronext Paris: TCH) met yesterday to review the Group’s first half 2012 results.

H1 2012 highlights

    Group revenues up 5.6% at current currency compared to H1 2011, and up 0.6% at constant currency. Growth in Technology revenues driven by a strong Q2 2012 and the confirmed recovery of Connected Home fully offset the decline in Entertainment Services revenues;
    Adjusted EBITDA up 18.5% at €198 million, or 12% of revenues, an increase of 1.3 point compared with H1 2011 resulting from a strong performance in Technology, a broadly stable contribution of Entertainment Services and the ongoing turnaround of Connected Home;
    Significant reduction in Group net loss at €(26) million compared to a loss of €(112) million in H1 2011;
    Positive Group Free Cash Flow at €2 million, reflecting the control on working capital despite the strong recovery of Connected Home. Net debt at nominal value (non IFRS) amounting to €1,161 million at June 30, 2012.

Q2 2012 revenues highlights

Group revenues from continuing operations amounted to €846 million in Q2 2012, up 13.3% at current currency and up 5.9% at constant currency compared to Q2 2011.

    Technology: Licensing revenues recorded strong growth of 20.7% at constant currency, reflecting continuing strength of MPEG LA revenues and good performances across its programs, in particular in Digital TV and Set Top Boxes;
    Entertainment Services: Revenues were down 13.1% at constant currency and down only 6.1% excluding photochemical film activities which are at end of life. DVD Services reported an improvement compared with the first quarter of 2012 with volume growth in North America and softer volume decrease in Europe. Creation Services recorded another quarter of revenue growth;
    Digital Delivery: Confirmed recovery of Connected Home, with revenues up 34.7% at constant currency, reflecting a strong recovery in volumes and product mix. This recovery was also confirmed by additional customer wins for new solutions and services across Americas, EMEA and APAC.

A strengthened financial structure

    The financial structure will be strengthened in the second half of 2012 with the completion of the Broadcast Services disposal on July 2 and the ongoing capital increases that will lead to Vector Capital (“Vector”), through its private equity funds and the Luxembourg company Petalite Investment S.à r.l. (“Petalite”), becoming a significant shareholder of Technicolor.
    The €17.5 million of net proceeds resulting from the disposal of Broadcast Services will be fully applied to debt reduction, as well as 80% of total net proceeds of the two capital increases in accordance with the credit agreements.
    These capital increases, of an amount comprised between €167 million and €191 million, will allow Technicolor to strengthen its balance sheet and enhance its capabilities to implement its “Amplify 2015” strategic roadmap.
    A supplemental note to the note d’opération (the “Supplemental Note”), which principally includes the first half 2012 financial statements, is being filed with the Autorité des Marchés Financiers (“AMF”) with a visa expected on July 26, 2012. In accordance with the law, a withdrawal period for investors who have exercised their rights and subscribed to new shares prior the publication of the Supplemental Note will open from July 27 to July 30, 2012. The Rights issue is open until August 2, 2012 post market opening hours.
    As a result of the settlement and delivery on July 16 of the reserved capital increase to Petalite, Technicolor has already received gross proceeds of €95 million. The Rights Issue that is ongoing will be closed on August 2 with a settlement on August 14 and will generate between €72million and €96million of gross proceeds.
    On a proforma basis, calculated in relation to the debt level at June 30, 2012, net debt at nominal value (non IFRS) would have been comprised between €960 million and €984 million at June 30, 2012 upon completion of the two transactions. Net debt as per consolidated financial statements would have been comprised between €821 million and €844 million at June 30, 2012.

Amplify 2015 recent developments

As part of its Amplify 2015 roadmap announced in February 2012, several initiatives have already been identified, with offers being designed for a potential market launch over the next 12 to 18 months. They include:

    M-Go, the innovative platform aiming at helping consumer discover, access and share effortless its media, which entered at the beginning of the summer 2012 in closed beta launch and is planned to be rolled-out mainstream before year-end;
    Innovative services to content creators such as on-set digital capture services successfully launched in the second quarter of 2012 with major project wins with Fox and other studios, digital production workflow management services and value-added content distribution services;
    Roll-out of the Technology licensing model to proactively disseminate content-based innovations around Color and Sound to the consumer electronic industry and digital platforms;
    A new venture set-up with digital advertising entrepreneurs to accelerate the development of advertising and content enrichment services based on Technicolor innovations for “second-screen”.

Confirmation of 2012 objectives

Based on H1 2012 achievements, Technicolor confirms its 2012 objectives:

    Adjusted EBITDA in the range of €475-500 million.
    Positive free cash flow generation despite higher restructuring expenses and investments in growth businesses.
    Operate within the financial covenants of credit agreements.

Frederic Rose, Chief Executive Officer of Technicolor, stated:

 “Our solid first semester results in a difficult market environment are a good result, especially with regard to the confirmed recovery of the Connected Home business. These results demonstrate that we are on track to achieve the guidance provided earlier this year. The growth of our revenues, the improvement of our EBITDA and our positive Free Cash Flow, combined with the strengthening of our financial structure in the second half of 2012,  are encouraging signs for the future”.


Warning: Forward Looking Statements

“This press release contains certain statements that constitute "forward-looking statements", including but not limited to statements that are predictions or indications of 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.”

Important notice

This communication does not constitute an advertisement, offer of or invitation to acquire any securities of Technicolor in the United States or any other jurisdiction.

The securities referenced herein have not been, and will not, be registered under the US Securities Act of 1933, as amended, or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered, exercised or sold, directly or indirectly, in the United States absent registration with the Securities and Exchange Commission (SEC) or an exemption from such registration. Technicolor does not intend to register any offering of securities in the United States or to conduct a public offering in the United States.   

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


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