2019 HALF-YEAR RESULTS HIGH LEVEL OF PRODUCTION ACTIVITY, REAL BREAKTHROUGH IN THE US: SOLID PROSPECTS 1
AN INTEGRATED PURE PLAYER WITH GLOBAL REACH A leading animation group › Power, strong reputation and diversification of a proprietary brands portfolio ─ Integration of the entire value chain ─ 20 years ‒ A major digital player › 4 production studios: Paris, ‒ Acceleration in sales to US streaming majors ─ Lyon, Angoulême, Ho Chi A leader in young people’s programming on AVOD platforms (YouTube) ─ Minh A major international operator 400 employees › ‒ 190 countries / over 800 million homes 7 directors ─ ‒ Expertise and know-how recognised by the leading broadcasters ─ 20 original creations ‒ Strong development momentum in the US, a driving force in the global market ─ 2,200 episodes produced ‒ A major player in innovation › 2 Presentation of first-half 2019 results
IN POLE POSITION TO BENEFIT FROM THE STREAMING WAR ─ April 2020 20 ─ Pricing unknown (free for US Available cable subscribers) Not yet available ‒ Lever of continuing globalisation ‒ Favours “super ─ Spring ng 2020 20 producers” ─ €16 -17 per month (expertise and ─ 12/11 2/11 ─ Catalogue: 10,000 h Catalogue ─ €6.99 per month depth innovation) ─ Target: 60m to 90m subscribers in ─ €11.99 - €15.99 per month 2024 ─ 6m subscribers in France ─ 150m subscribers worldwide in Q2 2019 ‒ Increase in purchase (up 24% year-on-year) ─ €100 million invested in French production prices per half-hour ─ $10 billion spent on content in 2019 ─ 1/11 /11 ─ €4.99 per month Family Adults Reversed balance of power: producers rather than broadcasters now enjoy scarcity value 3 Presentation of first-half 2019 results
AN INDEPENDENT FAMILY-OWNED GROUP Voting rights MDP Audiovisuel 38.4% Xilam Group 14.9% Treasury shares 1.1% Other 3.3% MDP Audiovisuel; 1 26,3% Free float 42.3% Free float; 57,8% Xilam Group; 10,1% Majority of voting rights held Treasury shares; 1,5% by the founder (53.3%) Other 2 4,3% (1) Xilam Group is wholly-owned by MDP Audiovisuel, which is in turn wholly-owned by Marc du Pontavice (2) Employees and other registered shareholders 4 Presentation of first-half 2019 results
A BUSIN SINESS ESS MOD ODEL EL WI WITH TH LON ONG G AND D ENDURING DURING CYCLE LES 5
EXPERTISE SPANNING THE ENTIRE VALUE CHAIN CREATION PRODUCTION DISTRIBUTION No or very few Tight grip on Very little third-party costs and commission to be rights in its margin paid to third properties retention parties on sales Business line integration to unlock the greatest possible value 6 Presentation of first-half 2019 results
POWERFUL BUSINESS MODEL PROVIDING VISIBILITY AND SECURITY NEW CATALOGUE PRODUCTIONS 2/3 of revenue 1/3 of revenue Powerful engine of growth Volume leverage: continuous enrichment ─ ─ Steady increase in prefinancing 60% of revenue recurring ─ ─ High visibility for two years Major impact on profitability ─ ─ Cut-off effects and IFRS Impact of prefinancing over the first ─ ─ operating cycle 7 Presentation of first-half 2019 results
A BUSINESS MODEL WITH LONG CYCLES (1/2) 2 years 5-6 years ∞ 3 years Animation life PRO RODU DUCT CTION ON DELIVE VERY ADDI DITI TION ON TO CATALOG OGUE cycle CO COMMENC NCEMENT NT OF PRESALES = 100% % to to 140% % CO COMMENC NCEMENT NT OF Revenue RIGHTS TS FOR R THE RIGHTS TS FOR R THE FIRS RST T COVERA CO RAGE OF PRO RODU DUCTI TION ON SECON COND D OPERA RATI TING NG COSTS CO OPERA RATI TING NG CYCLE CYCLE EXCLUDI DING NG PRESALES 8 Presentation of first-half 2019 results
A BUSINESS MODEL WITH LONG CYCLES (2/2) ∞ 2 years 3-4 years Completion of episode delivery Coûts de production Chiffre d'affaires Encaissements Commencement of multiple rights in France Commencement of international rights Commencement of multiple rights for for the first operating cycle (presales) linked to presales and initial catalogue sales, other operating cycles (catalogue) and CNC subsidy still in the first operating cycle Revenue connected to the pace of episode deliveries Revenue connected to completion of episode delivery Revenue unconnected to the delivery of episodes 9 Presentation of first-half 2019 results
BREAKTHR AKTHROUGHTS OUGHTS 10
INROADS MADE BY THE XILAM BRAND WITH US STREAMING MAJORS GLOBAL DISTRIBUTION AGREEMENT WITH NETFLIX PRODUCTION DEAL WITH DISNEY FOR A FOR I LOST MY BODY , A GRAND PRIZE WINNER IN THE CHIP ‘N’ DALE ANIMATION SERIES CRITICS’ WEEK SECTION AT THE CANNES FILM FESTIVAL ─ A successful R&D development, leading to ─ 39 x 7 minutes expansion in the range of programming offered ─ Xilam’s teams handed sole responsibility for the series (creation and for adult audiences production) ─ Much higher budgets than for children’s ─ One of the first original animation series to air on Disney+ programmes ─ Super-sized budget Average sale price per half-hour sold set to increase sharply 11 Presentation of first-half 2019 results
CREATIVE CUBE, UNRIVALLED EXPERTISE IN COMPUTER-GENERATED IMAGES ─ Integrated ani animated film film pr production studio base based on on com omputer-generated im imag ages ─ Mul ulti-genre and and hig high-end expertise : short films, music videos, adverts, “big - screen” 3D films, series and feature-length films ─ Br Broad cus customer po portfolio : famous brands such as Cartier, Lu, Total, Kellogg’s, and Skoll, theme parks. ─ Suc Successful ne new de developments s in in pr proprietary pr production: Athleticus (broadcast on Arte), Kaeloo (on Canal+, Teletoon+, C8), Tangranimo (for France Télévisions) and Pfffirates (for TF1) ─ Ac Acquis isit itio ion of of 50.1% % of of the the sha hare capit ital l and and voti oting ri righ ghts ─ Payment due due in n cash and and en entrepreneuria ial l busin business mo model l adop adopted ─ CC’s average revenue: around €5 mi milli lion over the the las ast 3 fi fina nancia ial l year ears ─ Ac Acquis isit itio ion due due for or comple letio ion by y year ear-end 2019 12 Presentation of first-half 2019 results
ORGANISATIONAL IMPROVEMENTS AND FINANCE DIVISION STRENGTHENED Fabrice Cantou François Bardoux Chief Financial & Strategy Officer Deputy Chief Operating Officer ─ Di Digital pr profile aligned with Xilam’s ─ 3 years at Xilam as CFO development as a pure player ─ Operational background ─ Intern rnational/U /US pr profi file providing a ─ Specialist in applying management good fit with the acceleration in control to production international sales and especially to US platforms ─ Tasked with coordinating control over multiple production units and ─ Str Strategic/M /M&A pr profile, fully attuned to subsidiaries the strategy of acquisitions ─ Expert know-how in managing audiovisual industry financing plans 13 Presentation of first-half 2019 results
RECORD RESULTS H1 20 2019 9 RE RESUL SULTS TS 14
RESULTS DEMONSTRATING THE MODEL’S EFFECTIVENESS (€ thousands) H1 2019 H1 2018 Revenu nue from m New Productio ctions ns 2,962 3,963 Subsidies and other income from new productions 1,844 4,502 Total l income me from new productio ctions ns 4,806 8,465 Catalogue logue reve venue ue 3,055 5,385 Other reve venue ue 25 25 16 16 Total l reve venu nue and other inco come 7,886 13,866 Other recurring operating revenue (o/w audiovisual tax credit) 648 1,081 Total l operating ting reve venue ue 8,534 14,947 47 Purchases (88) (48) Staff costs (921) (821) Other recurring operating expenses, net (438) (1,054) Depreciation, amortisation and impairment, net (4,041) (7,658) Adjuste usted recur curring ing operatin ting income me 3,046 5,366 % of revenue 38.6% 38.7% Bonus share allotment (272) (1,079) Other non-recurring operating income and expense (239) (542) Operating ing inco come 2,535 3,745 % of revenue 32.1% 27.0% Net incom come 1,613 2,603 % of revenue 20.5% 18.8% 15 Presentation of first-half 2019 results
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