ANIMATIONS DIGITAL REVOLUTION: FROM LEADERS IN FRANCE TO INTEGRATED - PowerPoint PPT Presentation

ANIMATION’S DIGITAL REVOLUTION: FROM LEADERS IN FRANCE TO INTEGRATED DIGITAL PLAYERS ON A GLOBAL SCALE 1 MAY 2019

A HISTORY OF STRONG & PROFITABLE GROWTH CAGR 2015-2018 : +35% 28,0 CA EBIT Sales 24,1 20 years in existence ‒ (€m) ‒ 64% of sales abroad 4 production studios: Paris, ‒ 15,9 Lyon, Angoulême, Ho Chi ‒ 1/3 of revenues Minh City generated by the 11,3 catalogue 400 employees ‒ ‒ Recurrence on 9,7 7 directors 7,2 catalogue: 60% ‒ 1,9 4,3 20 original creations ‒ 2015 2016 2017 2018 2,200 episodes produced ‒ EBIT as % Revenue 17% 27% 30% 35% 2 2 Présentation des résultats annuels 2018

EUROPEAN LEADER IN ANIMATION European leader in animation › a portfolio of proprietary brands featuring strong reach, reputation and diversification ─ strength both in France and abroad ─ integration along the entire value chain ─ expertise and know-how acknowledged by major broadcasters ─ Strong international footprint › 190 countries / >800 million households ─ Ahead of the crowd in the digital transformation › agility and resources: rapid adaptation to market transformation ─ a confirmed model: accelerating sales over the past 2 years ─ >4 billion YouTube views in 2018, >10 billion cumulative views ─ around 40% contribution of catalogue sales ─ 3 Presentation of 2018 annual results

MIGRATION OF THE PAY-TV MODEL TO DIGITAL PLATFORMS In addition to the arrival of Disney, Netflix has an essential fact in its Les Echo hos, 26/3/19 19 possession: 60% of its subscribers watch programs dedicated to children and families, most of which are cartoons. Over the past 18 months, Netflix has recruited about 40 people worldwide to develop these programs. First results expected in 2020. Melissa Cobb VP “Kids and Family” Netflix Les Echo hos, 25/3/19 19 4 Presentation of 2018 annual results

IDEALLY POSITIONED TO CAPTURE THE GROWTH OF TRANSFORMATION Multiplication of digital platforms (SVOD/AVOD) TV TV DIGIT ITAL AL › from a local broadcasting issue to a global broadcasting issue ─ FREE EE TV PAY Y TV SVOD AVOD Structural market imbalance › high barriers to entry at the level of expertise ─ premiums for players that anticipated digital disruption as a lever for the ─ globalization of broadcasting producer vs. broadcaster premium ─ B2B2C issues: direct digital distribution platforms, › leveraging visibility and margins Reversal of the balance of power: rarity has shifted from distribution to production 5 Presentation of 2018 annual results

A STRONG ALIGNMENT OF CAPITAL INTERESTS Voting rights Audiovisual CDM 38.4% Xilam Group 14.9% Treasury shares 1.1% Other 3.3% Audiovisual CDM 1 26,3% Float 42.3% Float Xilam Group 57,8% 10,1% A majority of the voting rights Treasury shares are held by the founder 1,5% (53.3%) Other 2 4,3% (1) Xilam Groupe is 100% owned by MDP Audiovisuel, itself 100% owned by Marc du Pontavice (2) Employees and other registered 6 Presentation of 2018 annual results

A ‘VIRTUOUS CYCLE’ MODEL CRE REATING TING HIGH VALUE UE-ADDED ADDED 7 Présentation XILAM ANIMATION – Résultats semestriels 2018

CONTROL OVER THE ENTIRE VALUE CHAIN CREATION PRODUCTION DISTRIBUTION No or very few Cost control Very few rights-holders and margin commissions to on its retention be paid on sales properties Direct production costs financed from 100% to 140% by pre-sales 8 Presentation of 2018 annual results

A HEALTHY AND VIRTUOUS BUSINESS MODEL Evo volutio tion n of new production ions s vs. catalogue (M€) Powerful driver of catalogue growth ─ 28.0 strong impact on revenues and profitability ─ +16% CAGR: 24.1 +35%. +52% 18,2 NEW 15.9 CATALOGUE +12% PRODUCTIONS +41% 16,3 11.3 +51% Leveraging volume: ─ 10,8 continuously enriching the +69% NEW 6,4 catalogue PRODUCTIONS 60% recurring revenues ─ 9,7 +26% 7,7 +51% +4% 5,1 4,9 CATALOGUE +12% in 2018 +26% in 2018 65% of 2018 revenues 35% of 2018 revenues 2015 2016 2017 2018 2015 2016 2017 2018 9 Presentation of 2018 annual results

A LONG-CYCLE MODEL (1/2) 2 years 5-6 years old ∞ 3 years Animation PRO RODU DUCT CTION ON DELIVE VERY CATALOG OGUE TRANS NSITI TION ON life cycle OPENI NING NG OF RIGHTS TS PRE-SALES = 100% TO 140% OPENI NING NG OF RIGHTS TS FOR R FOR 2nd CYCLE OF 1st CYCLE OF Revenues from FOR THE 1st COVERAGE OF PRODUCTION operations OPERA RATI TION ON COSTS OPERA RATI TION ON 10 Presentation of 2018 annual results

A LONG-CYCLE MODEL (2/2) Pro Produc ucti tion n co costs ts Receipts Rec ts Revenue nues fro rom operati ations ns PRODUCT CTION Dec. . 2023 avr.-18 août-18 déc.-18 avr.-19 août-19 déc.-19 avr.-20 août-20 déc.-20 avr.-21 août-21 déc.-21 avr.-22 août-22 déc.-22 avr.-23 août-23 déc.-23 11 Presentation of 2018 annual results

INCREASING NUMBER NUMBER OF HALF-HOURS DELIVERED CHANGE IN SALE PRICE PER HALF HOUR (€k) OF NEW CAGR: + CAG R: +13.4%. 3.4%. PRODUCTIONS 69 63 264 259 51 211 181 35 2015 2016 2017 2018 2015 2016 2017 2018 NEW PRODUCTION SALES 2015 – 2018 (€m) €18.2m +1 +12% 2% IFRS 15 €16.3m 15.3 €m published €10.8m €6.3m 2015 2016 2017 2018 12

PERFORMANCE EVOLUTION OF CATALOGUE REVENUES AND RESILIENCE €9.0m OF THE published 9,7M€ +26% +26% CATALOGUE €7.7m IFRS 15 €5.1m €4.9m 2015 2016 2017 2018 Convers ersion ion to to catalogu talogue reven enues in 2018 18 Evolution of revenues from new productions 2015 2016 2017 2018 13

DIRECT BROADCASTING ON AVOD PLATFORMS: INCREASINGLY SIGNIFICANT INCOME ON YOUTUBE YOUTUBE TRAFFIC (BILLIONS OF VIEWS) +55% >10 billion cumulative views at ‒ the end of December 2018 40% YouTube revenue: 9% of total ‒ 4.0 revenue 2.6 2.2 Number of subscribers to ‒ YouTube channels: +162% to 1,1 6.3m at end 2018 (vs. 2.4m at 0.4 end 2017) 2014 2015 2016 2017 2018 14 Presentation of 2018 annual results

OGGY AND THE COCKROACHES, ZIG & SHARKO: ILLUSTRATING OUR MODEL PERFECTLY Oggy worldwide Zig & Sharko worldwide An intergenerational concept A hit on par with Oggy A key name in animation Nec plus ultra of slapstick comedy 507 episodes, 7 seasons 234 episodes, 3 seasons Distribution in 190 countries Distribution in 190 countries 2.5 million YouTube subscribers 4 million YouTube subscribers 3 million Facebook fans 15 Presentation of 2018 annual results 15

DES RÉSULTATS RECORDS FI FINANCIA NANCIAL L RE RESUL SULTS TS 20 2018: 8: INCRE REASINGL ASINGLY Y PROFIT OFITABL ABLE E GROW OWTH TH 16

RESULTS THAT CONFIRM THE MODEL’S FITNESS FOR PURPOSE (In thousands of euros) 2018 2017 restated 2017 published Sales s of New Productio uctions ns 11,690 10,186 9,218 Subsidies and other income on new productions 6,506 6,101 6,101 Total l new product uctio ion n products ucts 18,196 16,287 15,319 Catalogue logue turno nove ver 9,723 7,704 9,017 Other reve venue ue from other activiti ivities 32 32 62 62 62 62 Total l reve venu nues s and other income 27,951 24,053 24,398 Other current operating income (including audiovisual tax credit) 2,350 2,307 2,174 Total l operating ting inco come 30,301 26,360 26,572 72 Procurement (181) (133) (133) Personnel expenses (1,597) (1,281) (1,281) Other net current operating expenses (2,894) (925) (1,280) Depreciation, amortization and provisions, net (15,965) (16,821) (15,215) Adjuste usted current t operating ting inco come 9,664 7,200 8,663 % OF REVENUE 34.6% 29.9% 35.5% Free allocation of shares (1,270) (1,031) (1,031) Other non-recurring operating income and (expenses) (1,212) 0 0 Operating ing inco come (or loss ss) 7,182 6,169 7,632 % OF REVENUE 25.7% 25.6% 31.3% Net inco come (or loss ss) 5,159 5,017 5,948 % OF REVENUE 18.5% 20.9% 24.4% 17 Presentation of 2018 annual results