Ymagis Reports First Quarter 2015 Revenues: EUR 31.9M
YMAGIS (ISIN: FR0011471291, mnemonic: MAGIS), the specialist in digital technologies for the motion picture industry, today reported its consolidated revenue figures for the first quarter ended March 31, 2015.
In the first quarter of 2015, the Group’s revenue amounted to €31.9m, an increase of 77.2% compared with the first quarter of 2014 on a reported basis and a decline of 19.4% compared to the first quarter of 2014 pro forma(1) .
As a reminder, the 2014 fiscal year was marked by the merger of the Group with Belgium-based company dcinex, which was completed in October and included in the Group’s consolidated financial statements as of 1 st October 2014. In order to provide a better comparison basis for activity in the first quarter of 2015, pro forma(1) revenue are indicated in the following chart and upon which the following analysis is based. 2015 Q1 revenue comparison with last year’s published figures, i.e. excluding dcinex, is presented at the end of this document.
Revenue – breakdown by business activities
The year-to-year comparison of the activity is penalised by a negative base effect as the first quarter of 2014 incorporated equipment sales to leasing companies under VPF contracts signed with exhibitors in Spain and Germany for an amount of €7.2m. Excluding this item, revenue would have only declined by 2% in the first quarter of 2015.
VPF(2): organic growth of +8.6%
The VPF division (56.3% of revenue in Q1 2015) recorded first quarter revenue of €18m, an increase of 8.6% compared to the first quarter of 2014 pro forma(1). 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, two regions which were previously lagging behind other European countries in terms of digital conversion.
As of 31st March 2015, the total number of VPF screens rolled out by the Group amounted to 5,994 in 19 European countries, against 5,759 in the prior year period.
Exhibitor Services: revenue impacted by the end of the digital transition in Europe
As anticipated, revenue from the Equipment Sales and Installation business, which were driven by the digital transition of cinemas in Europe that is now complete, decreased to €7.9m in the first quarter.
The expansion of this business in additional territories, the opening of new cinemas, the adoption of new technologies (4K format, immersive sound, etc.) and the expansion of the product and service portfolio are growth drivers which should gradually help offset the decline in revenue linked to the end of the digital conversion cycle.
Online/Support business revenue amounted to €2.6m over the period, an increase of 10.0% compared to the first quarter of 2014.
All in all, revenues for Exhibitor Services division were down 47.4% to €10.7m in the first quarter of 2015.
Content Services: growth of 19.9%, driven by the Delivery business
The Content Services division recorded first quarter growth of 19.9% to €3.3m. This increase was driven by the Delivery business, up 34.4% to €2.5m, benefiting 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.
As a reminder, these figures do not include revenue generated by DSAT Cinema, the satellite content provider which is 49.8% owned by dcinex and 50.2% owned by Eutelsat and is consolidated by the equity method.
Excluding DSAT Cinema, the number of connected cinemas, net of overlaps between the SmartJog/Ymagis and Arqiva networks, amounted to around 2,627 cinemas as at 31 March 2015 against 1,960 as at 31 March 2014.
Financial position as at 31 March 2015
YMAGIS is in a stronger financial position following the issue of a €36.5m bond in February, raised with French and Belgian institutional investors. This bond was tapped in April for an additional €3.5m with existing and new investors. The tap breaks down into two tranches under the same conditions as the initial placement: a first tranche of €2.0m due February 2019 with an annual coupon of 4.00%, and a second of €1.5m due February 2020 with an annual coupon of 4.25%.
As at 31 March 2015, including the impact of this additional bond issue, the cash stood at €33.5m of which €11.1m is assigned primarily to future repayments of bank loans and leases related to the VPF business aaccording to the terms of the agreements entered into by the Group with its banks.
Launch of a new digital content delivery service for North American cinemas
At CinemaCon, the annual congress of the National Association of Theatre Owners (NATO) in Las Vegas in midApril, YMAGIS announced it was extending its content delivery services for cinemas to the United States and Canada through its new subsidiary, Direct Cinema North America (DCNA). Based in New York, DCNA provides North American distributors and exhibitors with an innovative service to send and receive DCP(3) and other digital content via its online platform. This service primarily targets independent films, trailers, film from catalogues, alternative content and advertising.
This new approach to content distribution illustrates the “Cinema On Demand” strategy. It uses the growing capacity of internet broadband via the “CineConductor” platform, which is becoming another user-friendly content delivery solution.
As expected, the beginning of 2015 witnesses the end of the digital transition in Europe, reflected in a decrease of revenue from the Equipment Sales and Installation business. The growth drivers identified by the Group should generate new additional revenue for this year to offset the slowdown of the “Exhibitor Services” division. Furthermore, the Group anticipates that this year will see the onset of a cycle where exhibitors will start to replace their first generation digital projection equipment. This replacement market should materially contribute as from 2016.
The efforts to streamline the Delivery business undertaken since the beginning of the year should improve the profitability of the “Content Services” division. These efforts focus mainly on reducing the fixed cost structure, optimising satellite capacity and harmonising the technological framework of the distribution platforms as part of the tie-up with DSAT Cinema in the long term.
Finally, the various synergies generated by the merger with dcinex will contribute to the Group’s operational profitability, which is expected to improve compared to the first half of 2014.
You will find below the revenue published by YMAGIS for the first quarter of 2014, and therefore without the contribution of dcinex which was consolidated from 1st October 2014.
Published revenue – breakdown by business activities