February 18, 2016

Technicolor: Full Year 2015 Results

Upgrade of Drive 2020 objectives.

Upgrade of Drive 2020 objectives

  • Successful transformation of the Company around three leading Operating businesses and a core Licensing business thereby significantly increasing the Drive 2020 financial objectives;
  • Strong Q4 2015 revenues at €1,154 million, up 15% YoY[1], due to increase in sales of Operating businesses[2] of 22% YoY1, resulting from solid organic growth and the addition of recent acquisitions;
  • Solid FY 2015 financial results, with a strong Group free cash flow generation of €256 million, up 22% YoY[3], bolstered by an Adjusted EBITDA of €565 million, up 3% YoY3;
  • Positive net income of €78 million;
  • Increased dividend of €0.06 per share, up 20% versus last year, to be proposed to the General Meeting of Shareholders.


Paris (France), 18 February 2016 – Technicolor (Euronext Paris: TCH; OTCQX: TCLRY) announces today its results for the full year 2015.

Frederic Rose, Chief Executive Officer of Technicolor, stated:

“In 2015, our teams closed successfully, and in parallel, a number of large acquisitions, while remaining focused on delivering a very strong free cash flow. Moving forward, Technicolor is a much more balanced company built on three leading Operating businesses and a core Licensing business underpinning our material upgrade of Drive 2020 objectives.”

Key points

  • Technicolor raises its Drive 2020 objectives with Adjusted EBITDA for 2020 above €750 million (vs. €500 million previously) and free cash flow in excess of €350 million (vs. €250 million previously);
  • As expected, Connected Home resumed growth in the fourth quarter on a standalone basis and started integration of Cisco Connected Devices, while building a solid commercial pipeline for 2016;
  • Production Services delivered again a strong performance in the fourth quarter, resulting in organic revenue growth in excess of 20% for the full year; integration of acquisitions are on-track, which will accelerate growth in 2016;
  • DVD Services benefited from a strong slate of releases in the second half and from the addition of new customers both in Europe and in North America, which generated revenue growth of 9% in H2 2015;
  • Overall growth in the Technology segment reflecting strong revenues from direct licensing programs in the first half and a higher contribution of the MPEG LA patent pool for the full year;
  • Reinforced global leadership of each of the Group’s Operating businesses (Connected Home and Entertainment Services) that will all benefit from their larger scale in 2016:
    • Connected Home expected to generate synergies in excess of €130 million by 2018 versus initial guidance of €100 million;
    • Production Services’ strong portfolio of brands and unquestionable global leadership will support continued growth, particularly in the Advertising, Gaming and Animation markets;
    • DVD Services expected to achieve its best year ever in terms of volumes, driven by new customer additions and continued growth in Blu-rayTM.
  • Technology segment on good track to resume growth beyond 2017:
    • Key milestones in Patent Licensing such as the joint-licensing agreement with Sony for Digital TV program are expected to generate material revenue from 2018; whilst the first HEVC license agreement highlights the strength of the video coding portfolio;
    • Technology Licensing progressing in HDR (High Dynamic Range) initiative.
  • Strong innovation and standardization pipeline: sustained development of Virtual Reality content and related technologies as well as numerous high quality technical contributions to next generation video standards;
  • Gross debt increase related to the acquisitions mitigated by a strong cash position; leverage ratio (Net Debt to Adjusted EBITDA) of 1.74x at end December 2015 notwithstanding a very small contribution from the acquisitions in 2015;
  • Significant increase of the dividend to be proposed to the General Meeting of Shareholders reflecting Group’s confidence in its cash flow generation going forward.



2016 objectives

  • Free cash flow in excess of €240 million;
  • Adjusted EBITDA in the range of €600 million to €630 million, reflecting:
    • An Adjusted EBITDA in excess of €475 million for the Operating businesses versus €266 million in 2015;
    • For Technology, an Adjusted EBITDA in excess of €200 million versus €389 million in 2015, based on the contribution of licensing agreements already signed by the Group. This includes an expected final €60 million of Adjusted EBITDA generated by the MPEG LA patent pool compared to €288 million in 2015;
    • Corporate and Other Adjusted EBITDA for an amount at around €(80) million.
  • Leverage ratio inferior to 1.4x at end December 2016 compared to a ratio of 1.74x at end December 2015.

Update on Drive 2020

In the second half of 2015, Technicolor completed two strategic acquisitions that cemented the Group’s position as foremost a leading operating company serving the Media and Entertainment industry. In addition, the Group also acquired additional large studio customers in DVD Services and signed a major partnership in Technology with Sony. Thus, the Group benefits moving forward from a strengthened operating financial profile and is now focused on extracting the full benefits of this change in scale in its Operating businesses.

Technicolor expects to generate a free cash flow of at least €300 million in 2018, bolstered by an adjusted EBITDA of at least €660 million reflecting a strong margin improvement in the Operating businesses and an adjusted EBITDA of the Technology segment at €150 million. This is based on:

  • Annual cost synergies above €130 million per annum on a run-rate basis in 2018 for the Connected Home segment;
  • Further revenue growth in Production Services with sales above €800 million in 2018, while DVD Services should be around €1 billion, reflecting a 9% decline per annum from its high point of 2016, resulting in Production Services representing in excess of 50% of Entertainment Services adjusted EBITDA;
  • Licensing revenues to recover from their low point in 2017, driven by the ramp up of the Digital TV program following the joint licensing agreement with Sony. These figures exclude any potential HEVC license revenues and material mobile devices license agreements.

Technicolor will use its cash to reduce its current level of indebtness as the Group aims to reach a Net Debt to Adjusted EBITDA ratio below 0.8x in 2018 and to subsequently increase return to shareholders through a mix of share buyback and dividend.

Technicolor has the ambition to reach an Adjusted EBITDA above €750 million and a free cash flow in excess of €350 million by 2020.

All objectives are at constant rate and perimeter.


Proposed dividend

The Board of Directors of Technicolor has decided to propose to the 2016 Annual General Meeting of Shareholders the payment of a cash dividend of €0.06 per share in relation with the 2015 financial year, which represents an increase of 20% compared to last year’s dividend. Subject to shareholders’ approval, the time schedule for the dividend payment will be as follows:

  • Ex-dividend date: 24 May 2016;
  • Dividend record date: 25 May 2016;
  • Payment date of dividend: 26 May 2016.

Technicolor shares will trade ex-dividend as from the beginning of the trading session on May 24, 2016. Holders of Technicolor shares on 23 May 2016 selling their shares as from such date will keep their right to the dividend.



Summary of consolidated results for the full year of 2015 (unaudited)



Key financial indicators


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 Change YoY

In € million




At constant rate


Group revenues






Group revenues excluding exited activities






Adjusted EBITDA






As a % of revenues






Adjusted EBIT






As a % of revenues






EBIT from continuing operations






As a % of revenues






Financial result






Income tax






Share of profit/(loss) from associates






Profit/(loss) from continuing operations






Profit/(loss) from discontinued operations






Net income






Group free cash flow






Net financial debt at nominal value (non IFRS)






Net financial debt (IFRS)








Excluding exited activities, revenues increased 12.0% at current currency and 4.7% at constant currency, reflecting solid growth across the Entertainment Services and Technology segments and broadly stable Connected Home revenues. In Entertainment Services, revenues increased double-digits year-on-year at constant currency, as a result of strong organic growth and the contribution from recent acquisitions in Production Services, as well as resilient volume trends in DVD Services, due to a strong slate of new releases in the second half and the addition of new customers both in Europe and in North America. In Technology, revenues primarily benefited from an increased full year contribution from the MPEG LA patent pool, combined with a solid performance of the Group’s direct licensing programs in the first half. In Connected Home, despite adverse business conditions in both North and Latin America, revenues remained almost stable year-over-year, driven by a material improvement in overall product mix across most regions and the inclusion of revenues related to the Cisco Connected Devices acquisition.




Adjusted EBITDA from continuing operations reached €565 million in 2015, up 3.1% at constant currency compared to 2014, representing a margin of 15.5%, down by 1 point year-on-year. The Adjusted EBITDA increase reflected a solid Licensing revenue performance, combined with strong organic growth in Production Services, partially offset by a weak DVD Services performance in the first half, the impact of unfavorable €/US$ exchange rate fluctuations on procurements for Connected Home in the second half, as well as a lower contribution from exited activities.

Adjusted EBIT from continuing operations amounted to €374 million in 2015, up 8.0% at constant currency compared to 2014, representing a margin of 10.2%, down by 0.8 point year-over-year. The Adjusted EBIT increase was the result of higher Adjusted EBITDA, partially offset by increased D&A expenses.

EBIT from continuing operations totaled €264 million in 2015, down 0.9% at constant currency compared to 2014. The Adjusted EBIT increase was fully offset by the impact of non-current items, including notably €(53) million of non-current items related to the Connected Home segment, of which M&A and integration costs related to the acquisition of Cisco Connected Devices for €24 million. The other non-current items that impacted the Connected Home segment included R&D write-offs and a settlement for a total of €(29) million. Other non-current items of the Group, including the restructuring costs, were related to the exited businesses in the Entertainment Services segment and the disposal of M-GO.

The Group’s financial result totaled €(87) million in 2015 compared to €(117) million in 2014, reflecting:

  • Net interest costs amounted to €63 million in 2015, a slight improvement year-on-year. The reduction in borrowing costs stemming from the refinancing and repricing transaction done in 2014 was partially offset by higher interest expense in the second half of 2015 due to the issuance of new Term Loan Debt to finance the acquisitions of Cisco Connected Devices and The Mill;
  • Other financial charges amounted to €24 million in 2015, a significant improvement compared to 2014, which included an IFRS reversal recognized as a non-cash charge for €20 million due to the debt prepayments done during the year.

The Cathode-Ray Tube (“CRT”) litigation case in the US, mentioned as a risk factor in the annual report, strongly accelerated in the course of 2015, particularly at the end of the year. Technicolor believes that there was renewed interest for the plaintiffs in involving it in the ongoing litigations as a result of the improvement of its financials. In 2015 and in early 2016, the Group has succeeded in entering into settlement agreements with the direct purchasers class, the indirect purchasers class and a number of major direct action plaintiffs. The amount of these settlements has been taken into account as an exceptional charge in 2015 for €49 million, out of which €36 million will be paid in 2016.

Net income was a profit of €78 million in 2015 compared to a profit of €128 million in 2014. Excluding the aforementioned CRT settlement, net income was stable year-on-year.



Statement of financial position and cash position


 Full Year

Change YoY

In € million




Operating cash flow from continuing operations




Group free cash flow




Nominal gross debt




Cash position




Net financial debt at nominal value (non IFRS)




IFRS adjustment




Net financial debt (IFRS)






Operating cash flow from continuing operations, which is defined as Adjusted EBITDA less net capital expenditures and restructuring cash out, amounted to €410 million in 2015, up by €12 million compared to 2014. Operating cash flow represented 11.2% of total revenues, down by 0.8 point year-over-year, mostly reflecting lower Adjusted EBITDA margin. Capital expenditures amounted to €106 million in 2015, broadly stable year-on-year, as the Group continued to carefully manage spending. Cash outflow for restructuring totaled €48 million in 2015, up by €3 million year-on-year, reflecting the impact of exited activities, as well as continued cost optimization actions across the Group’s businesses and at corporate level.

Group free cash flow amounted to €256 million in 2015, up by 22.1% at constant currency compared to 2014. Cash financial charges were €72 million in 2015, up from €67 million in 2014, due to higher interest costs in the second half of 2015 related to the issuance of new Term Loan Debt to finance the acquisitions of Cisco Connected Devices and The Mill. Working capital variation was positive €29 million, resulting from a favorable phasing of Licensing programs. Other cash charges, principally related to tax and pensions, amounted to €89 million in 2015, up from €72 million in 2014, primarily due to M&A and integration costs related to the acquisition of Cisco Connected Devices.

Nominal gross debt amounted to €1,370 million at end December 2015, up by €397 million compared to €973 million at end December 2014, primarily reflecting the issuance of €374 million incremental Term Loan Debt to finance the acquisitions of Cisco Connected Devices and The Mill. Other impacts included in particular a negative currency impact of €79 million mostly due to the appreciation of the US dollar against the euro, offset in part by mandatory Term Loan Debt repayments for €55 million.

The Group’s cash position amounted to €385 million at end December 2015, up by €57 million compared to €328 million at end December 2014, due primarily to a strong free cash flow generation.

Net debt at nominal value amounted to €985 million at end December 2015, up by €340 million compared to €645 million at end December 2014, resulting in a nominal net debt to Adjusted EBITDA ratio of 1.74x at end December 2015 compared to 1.17x at end December 2014.


An analyst conference call hosted by Frederic Rose, CEO, and Esther Gaide, CFO, will be held on Friday, 19 February 2016 at 9:30am CET.


Financial calendar

Q1 2016 revenues

29 April 2016

H1 2016 results

28 July 2016




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. Our commitment: supporting the delivery of exciting new experiences for consumers in theaters, homes and on-the-go.

www.technicolor.com – Follow us: @Technicolorlinkedin.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] Change at constant currency excluding exited activities (Digital Cinema and Distribution Services, and IZ-ON)

[2] Comprising Entertainment Services excluding exited activities and Connected Home.

[3] Change at constant currency in FY 2015 compared to FY 2014.