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2020-07-30

Technicolor: First Half 2020 Results

PRESS RELEASE

     TECHNICOLOR: FIRST HALF 2020 RESULTS

Paris (France), 30 July 2020Technicolor (Euronext Paris: TCH; OTCQX: TCLRY) announces today its results for the first half of 2020.

Richard Moat, Chief Executive Officer of Technicolor, stated:

This first half of 2020 has been a period of intense activity for Technicolor. On the one hand, our teams have been working hard to face the Covid-19 crisis, and to adapt quickly in order to ensure the continuity of our operations and the ongoing delivery of our high value added services to our customers. On the other hand we have successfully structured a comprehensive financial restructuring plan, which will provide a much stronger framework for the long-term sustainability of the Company. The implementation of the restructuring plan is going according to schedule, with the first €240 million tranche of the New Money already received, the second €180 million tranche on its way following the approval of the Commercial Court of Paris on July 28th, and the two capital increases to be launched in the coming weeks. I am proud of the work done and I would like to warmly thank all of our teams, both internal and external, for their commitment and our shareholders for their support. 
In the first half, the Group’s activities have demonstrated resilience to the Covid-19 pandemic. Our business units are well positioned to take advantage of the increased demand for original content, the strong increase in digital media consumption, and the significant growth in residential broadband access. We continue to have valuable assets and global leadership positions in each of our business units. We intend to become a stronger company for our employees and a stronger partner for our suppliers and customers. I am confident that there is a bright future ahead for Technicolor

First half 2020 results:

After a strong first quarter, the Group’s activities have demonstrated resilience to the Covid-19 crisis in the second quarter:

  • Production Services activities were most affected due to the halting of live action shooting, impacting Film and Episodic Visual Effects and Post Production. Increased demand in Animation and resilience in Advertising helped mitigate the impact of Covid-19;
  • DVD Services were hit by the lack of new film releases following cinema closures, partly compensated by strong back catalog demand;
  • After facing supply shortages, Connected Home’s Asian activities are now back to normal. Consumer demand for better broadband and wifi helped drive strong demand in the United States.

Consolidated revenues for the Group were down 19% at current rates to €1,433 million, as the impact of Covid-19 on Production Services and DVD Services was partially compensated by an outperformance in Broadband, particularly in North America (+15% compared to the first half of 2019).

The Group maintained a strong focus on the delivery of previously announced cost savings through the Strategic  Plan, and is well on track to achieve total savings in excess of €160 million this year and €300 million by 2022. To date, €67 million of cost savings related to the Strategic Plan announced in 2020 have been achieved, whilst detailed plans are in place to achieve the remainder.

The financial restructuring plan approved by the Group’s creditors, shareholders and the Commercial Court, provides a framework for Technicolor`s long-term sustainability. The first tranche (c. €240 million) of the “New Money” facility under the financial restructuring plan has been received, and the second tranche (c. €180 million) of the "New Money" facility should be received at the end of August by the Group.

The updated outlook is broadly in line with the base case presented in the press release issued on June 22nd .

First Half Year 2020 Key indicators from continuing operations:

 First Half (IFRS)  
In € million20192020At
current
rate
At
constant
rate
  
  
Revenues from continuing
operations
1,7641,433 (18.8)%(19.3)%  
Adjusted EBITDA from continuing operations10453 (49.6)%(49.2)%  
As a % of revenues5.9%3.7%    
Adjusted EBITA from continuing operations(44)(67)(53.5)%(50.4)%  
EBIT from continuing operations(88)(194)n.a.n.a.  
Free Cash Flow from continuing
operations before net interest expenses
(230)(252)(9.4)%(6.5)%  
Net interest expenses(32)(35)(8.7)%(8.3)%  
Free Cash Flow from continuing operations after net interest expenses(262)(286)(9.3)%(6.7)%  

Figures at current rate, including IFRS 16

H1 2020 Group update

  • Sales of €1,433 million were impacted by Covid-19. Decline in demand in Connected Home linked to a slowdown in Eurasia, volume decline in DVD Services and lower activity in Film & Episodic Visual Effects were partially mitigated by a strong performance in Broadband, driven by higher demand in North America, as well as by Animation, which reported double digit revenue growth.
  • Adjusted EBITDA of €53 million, down 49% at constant rates, was impacted by lower business volumes in Film & Episodic Visual Effects and in DVD Services related to Covid-19 activities interruption, partly compensated by operational and financial improvements across all divisions, particularly visible in Connected Home where Adjusted EBITDA grew 126% to €54 million at current rate.
  • Adjusted EBITA of €(67) million was lower by €(23) million at current rates, mitigated by lower D&A and reserves.
  • A €68 million impairment charge was booked, mainly related to DVD Services due to Covid-19 revised assumptions.
  • Restructuring costs accounted for €(41) million at current rate, including €(17) million in Production Services on cost streamlining actions, €(15) million in DVD Services, mainly resulting from distribution sites opti...
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