Ymagis Group Announces its Fourth Quarter 2015 Revenue: €51.6M, +20.7%
YMAGIS (ISIN: FR0011471291, TICKER: MAGIS), the specialist in digital technologies for the motion picture industry, today reported its consolidated revenue figures for the fourth quarter of 2015. For the quarter, the Group’s revenue amounted to €51.6m, an increase of 20.7% compared to the fourth quarter of 2014. For the 2015 fiscal year, the company generated cumulated revenue of €157.7m, an increase of 86.4% over the prior year period on a reported basis, and an increase of 4.8% over the 2014 fiscal year pro forma (1).
As a reminder, as of 1 August 2015 YMAGIS has taken over Eclair Group’s businesses and certain assets following a decision by the Nanterre Commercial Court and as part of Éclair Group’s rehabilitation proceeding. This operation gave YMAGIS the opportunity to reorganize the Content Services business unit into three different operating divisions for better readability: (1) Distribution Services/Preservation, (2) Post production and Restoration, and (3) Localization. Revenue for Eclair has been consolidated since 1 August 2015 and has contributed significantly to the Group’s revenue growth for the fourth quarter of 2015.
The Group also wishes to remind that the 2014 fiscal year was marked by the acquisition of the Belgian group dcinex SA, which is included in the Group’s consolidated financial statements as of 1 October 2014. In order to provide a better comparison basis for activity during the 2015 fiscal year, pro forma (1) revenues are indicated in the following chart and upon which the analysis mentioned below is based. 2015’s 12-month revenue comparison with the 2014 figures published, including dcinex as of 1 October 2014, is presented at the end of this document.
VPF (2): penalized by two unfavorable effects
The VPF division recorded fourth-quarter revenue of €18.7m, a decrease of 8.5% compared to the fourth quarter of 2014. Over the period, revenue performance was penalized by two factors. Firstly, the end of this financial model in Austria (268 screens), which marked the first VPF recoupment. Secondly, a greater number of films theatrically released during the fourth quarter of 2014.
However, revenues related to this activity are up +3.2% for 2015 thanks to the contracts signed in new territories in 2014 (Greece and the Balkans) and in April 2015 (Turkey).
As at 31 December 2015, the total number of screens deployed under VPF contracts by the Group is at 6,127 in 18 European countries compared to 6,027 for the prior year period.
Exhibitor Services: positive uptrend thanks to the equipment of new cinema builds and exhibitors’ investments in new technologies
With resilient sales in the previous quarters, the Group’s revenue from the Equipment Sales and Installation business, primarily driven by the digital transition of cinemas in Europe, experienced a positive uptrend in the fourth quarter, resulting in a 16.7% increase at €18.8m.
The business was positively impacted by the following cumulative factors:
- Continued equipment sales to new cinema builds across Europe
- Investments made by cinema owners in new image and sound technologies, which also illustrate the increased profitability of digital cinema exhibition when embracing digital technologies
- Revenue generated by R2D1 and Proyecson, acquired in June and October, respectively.
Online/Support business revenue amounted to €2.6m in the fourth quarter, an increase of 7.1% over the prior year period with the inclusion of the services contracts under Proyecson, the leading cinema integrator specializing in the installation and maintenance of cinema equipment in Spain.
All in all, buoyed by strong Equipment Sales and Installation revenues during the period, revenue for the Exhibitor Services business unit increased by 15.7% to €21.7m in the fourth quarter of 2015. Thanks to the positive performance during the last quarter, cumulative total revenue for the business is down by only 10.4% for the 2015 fiscal year. Excluding the unfavorable base effect of the 2014 refinancing of equipment to leasing companies under VPF contracts signed with cinema owners, which amounted to €12.2m, revenue is up 9.8%.
Content Services: strong growth driven by the take-over of Eclair Group
The Content Delivery business has consolidated since 1 August 2015 the main activities of Eclair Group, contributing to fourth quarter revenue at €6.9m and a cumulative total of €10.5m for the fiscal year according to the new reporting operating divisions.
The Distribution Services and Preservation (3) divisions posted revenues for the fourth quarter at €4.9 million, up 88.8%, €2.6m of which were generated by Eclair. For 2015, revenue is up 53.6% at €13.5m (€3.5m from Eclair).
For the 2015 fiscal year, the number of connected cinemas under contract, net of all overlaps between the Smartjog and Arqiva networks, is approximately 2,600, remaining stable compared to 2014 with the priority given to the operational merger of these networks. As a reminder, these numbers do not include revenue generated by DSAT Cinema, the European network for content delivery via satellite, consolidated by equity method and for which YMAGIS has a purchase option on its outstanding capital exercisable in September 2016.
The Post production and Restoration (4) divisions recorded increased revenue at €3.9m, up 459.4% in the fourth quarter of 2015, with €2.1m generated by Eclair. For 2015, cumulative revenue indicates a 136.9% increase at €6.5m (€3.4m from Eclair). This performance is due in large part to an increase in Eclair’s activities, which had slowed down during the Group’s rehabilitation proceedings and translated into occasional late service orders by clients.
Localization (5), a new market segment for which 100% of revenues are generated by Eclair, indicated revenue of €2.3m during the fourth quarter of 2015. Operated from four different sites in Vanves and Strasbourg (France), Karlsruhe (Germany) and Rabat (Morocco), this business is now resuming following the arrival of its new managing director on 1 September 2015. For the 2015 fiscal year, the division posted revenue of €3.7m.
As a whole, the Content Services division recorded fourth quarter growth of 211% at €11.3m. For the 12-month period, the business was up by 93.4% at €24.5m.
Financial position as of 31 December 2015
As at 31 December 2015, the cash position of the Group stood at €19.1m, of which €5.7m is assigned primarily to future repayments of bank loans and leases related to the VPF business. This position integrates €40m in private bond placement raised at the start of the year, the repurchase of dcinex’s subordinated junior debt of €14.3m from lenders and the full repayment of the bonds (OBSA) subscribed by dcinex stakeholders for €15.4m.
Since the takeover of the Eclair Group’s business activities in August, YMAGIS’ teams have been actively working on its recovery and seamless integration into the group.
Specifically, YMAGIS is working on the internationalization of Eclair’s activities, particularly in regard to its Localization (versioning, subtitling, etc.) and Restoration divisions, to bolster its foothold in European cinema industry services.
YMAGIS is also in advanced discussions with numerous rights holders regarding the preservation of their content via a new operating division, Eclair Preservation, which offers a global solution for the archiving and protection of cinema and television assets.
In addition, YMAGIS has set up cost-optimization strategies for Eclair’s operating divisions. With three historical locations (Vanves, Saint-Ouen and Epinay-sur-Seine), all of Eclair’s Parisian activities will be relocated to the newlyrenovated and restructured Vanves site by the end of this first quarter, which is expected to generate a minimum full-year savings of over €2m.
YMAGIS is also committed to the rationalization of its content delivery activities. The rationalization is the result of a number of actions being carried out simultaneously: the migration of satellite delivery services onto a single platform used by the Arqiva and DSAT networks, the migration of certain territories toward dematerialized electronic delivery (ADSL or fibre) and the updating of all receiver terminals to reduce maintenance costs. These measures should allow for the delivery of most content under much more favorable economic conditions, due in large part to the leasing of fewer satellite transponders. One third of cinemas are expected to undergo this migration in the first half of 2016, with an anticipated total migration of all cinemas by the middle of 2017.
Finally, in terms of Exhibitor Services, 2016 is expected to mark the early start of the equipment replacement cycle by cinema exhibitors equipped with first-generation projection systems and the continuation of the wave of new build cinemas as seen last year.
Below are the revenues published by YMAGIS including dcinex, which was consolidated from 1 October 2014.
Published Revenue – Breakdown by Business Activity
(1) Pro-forma revenues are calculated as though the dcinex acquisition were carried out as of 1 January 2014 and exclude all revenue from Eclair, which is consolidated as of 1 August 2015.
(2) VPF or Virtual Print Fee: Fee paid to YMAGIS Group by the supplier of digital content, mainly the distributors of feature-length films, in order to allow the projection of this content in a theater under VPF contract with YMAGIS Group, regardless of the equipment financing model chosen by both parties (Third Party Investors – financing carried out by YMAGIS Group - or Third-party Collector – financing carried out by the exhibitor). The VPF collection makes it possible to cover a significant part of the financing of digital projection equipment, the balance being supported by the exhibitor under contract with YMAGIS Group.
(3) Distribution and Preservation: Following the takeover of Éclair’s primary business activities on 1 August 2015 all content delivery activities have been merged into a new business unit, Distribution and Preservation. These distribution services include content delivery to cinemas as well as to television broadcasters and VOD & web platforms. The preservation services offered include storage, archiving, and restoration of audiovisual content - motion pictures and television programs - in physical or electronic format.
(4) Post production and Restoration: Following the takeover of Eclair’s primary business activities on 1 August 2015 all post production activities have been merged into a new business unit, Post production and Restoration. Post production services include encoding, editing, color grading and mastering of DCPs and contents for television broadcast, VOD platforms and Internet. Restoration services include all activities related to the restoration of all audiovisual work – motion pictures and television programs – on physical or digital media.
(5) Localization: The takeover of Eclair’s primary business activities on 1 August 2015 has led to the creation of a new business unit, Localization. Localization services include all multilingual (foreign language film versioning, dubbing, subtitling) and accessibility activities (audiovisual media – motion pictures and television programs – access services for people suffering from a sensory impairment).