Ymagis Reports First Half-Year 2015 Revenue at EUR 68.3 M

4 August 2015

YMAGIS (ISIN: FR0011471291, TICKER: MAGIS), the specialist in digital technologies for the motion picture industry, today reported its consolidated revenue figures for the first half year of 2015. In the second quarter of 2015, the Group’s revenue amounted to €36.4m, an increase of 200% compared to the second quarter of 2014 on a reported basis and an increase of 6.5% compared to the second quarter of 2014 pro forma (1).

During the first six months of this year, the company generated revenue of €68.3m, an increase of 127.7% compared with the first half year of 2014 and a decrease of 7.4% compared to the first half year 2014 pro forma (1). Excluding the negative base effect of equipment sales related to VPF contracts in the first quarter of 2014, revenue in this first half year is up by 2.6% compared to the first half year 2014 pro forma (1).

As a reminder, the 2014 fiscal year was marked by the merger of the Group with Belgium-based company dcinex, and included in the Group’s consolidated financial statements as of 1st October 2014. In order to provide a better comparison basis for activity in the first half of 2015, pro forma (1) revenues are indicated in the following chart and upon which the following analysis is based. 2015 half-year revenue comparison with last year’s published figures, i.e. excluding dcinex, is presented at the end of this document.

Revenue – Breakdown by Business Activity

Half year table 2015

VPF (2): growth sustained by latest signed agreements

The VPF division recorded second quarter revenue of €18.7m, an organic increase of 9.1% compared to the second quarter of 2014. Cumulative second quarter 2015 growth is 8.9%. Over the period, VPF notably benefited from new agreements (third-party collector model) signed in the fourth quarter of 2014 in Greece and in the Balkans, as well as contracts executed during this second quarter with six Turkish movie exhibitors representing a total of over 400 screens. These final agreements mark the end of the roll-out of this specific business model introduced in Europe in 2008.

As of 30 June 2015, the total number of VPF screens rolled out by the Group amounted to 6,401 in 19 European countries compared to 5,784 in the prior year period.

Exhibitor Services: Resilience despite the end of the digital conversion

In the first half year of 2015, the Group’s has seen a decrease of its revenue from the Equipment Sales and Installation business, which were driven by the digital transition of cinemas in Europe that is now complete. However, the €11.6m revenue generated by this activity in the second quarter remains in line with the prior year period, evidencing the resilience of this activity. The business was positively impacted by the opening of new cinemas across Europe and investments in immersive sound technology, areas in which the Group’s teams have developed a renowned expertise.

Online/Support business revenue amounted to €2.5m in the second quarter, an increase of 6.5% compared to the second quarter of 2014. Its first half-year revenue was up 8.2% at €5.1m.

All in all, revenues for the Exhibitor Services division increased by 3.9% to €14.3m in the second quarter of 2015. Half-year revenues were down 26.7%. Excluding the €7.2m decrease in revenue linked to the sale of equipment to leasing companies under VPF contracts signed with exhibitors in Spain and Germany, revenues declined by 2% only.

Content Services: +11.1% growth driven by the Content Delivery business

The Content Delivery business recorded second quarter growth of 28.0% to €2.6m. Its first half-year revenue is up 32.6% at €5.1m. This sector benefits over the period from the revenue generated by Arqiva's network of connected cinemas, consolidated as of 1 April 2014, and the organic growth of the existing network. Excluding DSAT Cinema, the number of connected cinemas, net of overlaps between the SmartJog/Ymagis and Arqiva networks, amounted to around 2,600 cinemas as at 30 June 2015 against 2,500 in the prior year period.

As a reminder, these figures do not include revenue generated by DSAT Cinema, the satellite content provider consolidated by the equity method and for which Ymagis has a purchase option on its outstanding capital in 2016.

The Post-production division recorded a 34.4% decrease in revenue at €0.5m in the second quarter of 2015 due to a lack of large projects compared to the prior year period. For the half year, it was also down 29.3% at €1.1m.

As a whole, the Content Services division recorded second quarter growth of 3.6% at €3.3m. For the half year, the business was up by 11.1% at €6.6m.

Financial position as at 30 June 2015

As at 30 June 2015, the cash position of the Group stood at €21.5m, of which €5m is assigned primarily to future repayments of bank loans and leases related to the VPF business according to the terms of the agreements entered into by the Group with its banks. This position integrates €3.5m bond added in April to the existing bond in private placement raised in February 2015, the repurchase of dcinex’s subordinated debt of €14.3m and the full repayment of the bonds (OBSA) issued in October 2014 and subscribed by dcinex stakeholders for €15.4m.

Outlook

As expected, the first half of 2015 marks the end of the digital transition in Europe. However, the resilience of the Equipment Sales and Installation business suggests that the growth drivers identified by the Group will generate new revenue to partially offset the slowdown of the “Exhibitor Services” division related to the end of digital conversation. In the coming years, exhibitors will progressively replace their first generation digital projection equipment. This replacement market, which has slowly started, should contribute as from 2016. In the short term, the Group expects to see an expansion of its exhibitor services in Spain with the conclusion of its acquisition of a majority stake in cinema integrator Proyecson by the end of the third quarter.

Thanks to the strategic and commercial agreements signed with Eutelsat in June, the Group will be able to accelerate its efforts to streamline the Content Delivery business undertaken since the beginning of the year, which should improve the profitability of this activity. Thanks to the recent purchase of the Eclair Group’s activities, the “Content Services” division will see a tremendous expansion in its product and service portfolio for film content providers as well as those in video distribution (television broadcasters, VOD platforms, etc.). As a result, the revenues of this segment should significantly grow in the second half of 2015.

The merger with dcinex, which is now fully integrated and the takeover of Eclair Group’s businesses will allow Ymagis Group to confirm its position as a European leader in its industry.

Below are the revenues published by YMAGIS for the second quarter and first half-year of 2014. These therefore do not include the contribution of dcinex, which was consolidated from 1 October 2014.

Published revenue – Breakdown by business activity

Half year table 2015