Slide 1: First Half 2013 Results
First Half 2013 Results July 26, 2013 Frederic Rose, CEO Stéphane Rougeot, CFO & SEVP Strategy
Slide 2: Forward Looking Statements
Forward Looking Statements “This presentation contains certain statements that constitute "forward-looking statements", including but not limited to statements that are predictions of or indicate future events, trends, plans or objectives, based on certain assumptions or which do not directly relate
Slide 3: Agenda
Agenda Key Q2 and H1 2013 Highlights 4-5 H1 2013 Segment Highlights 6-17 Update on Refinancing HyH1 18-21 H1 2013 Financial Highlights and FY 2013 Objectives 22-32 Appendix 33-36 3
Slide 4: Key H1 Highlights
Key H1 Highlights Revenue growth at constant rate and scope: +3.1% Improved operating profitability, positive net income and strong free cash flow generation Refinancing successfully completed FY 2013 objectives confirmed 4
Slide 5: Q2 Revenue Highlights
Q2 Revenue Highlights Robust revenue performance in Q2 2013, up 4% at constant rate and scope*: •Technology: another quarter of revenues above €100 m •Entertainment Services: revenue increase (without legacy activities) driven by a sustained performance of DVD Services and the return to growth of Di
Slide 6: H1 2013 Segment Highlights
H1 2013 SEGMENT HIGHLIGHTS technicolor
Slide 7: Technology – H1 2013 Highlights: Solid Licensing Performance
Technology – H1 2013 Highlights: Solid Licensing Performance Revenues and Adjusted EBITDA 236 227 219 Slight revenue decrease of 3.3% at 178 constant currency compared to H1 163 164 2012 Revenues above €100m for each 75% 75% 72% quarter despite CE market softness and negative dollar impact Adj
Slide 8: Technology - Strong innovation to build a high quality IP portfolio
Technology - Strong innovation to build a high quality IP portfolio PRODUCT OR FILING & MARKET INFRINGEMENT LICENSING INVENTIONS INDUSTRY PROSECUTION ADOPTION ANALYSIS NEGOTIATION STANDARD PORTFOLIO DEVELOPMENT c. 350 world-class scientific researchers and experts operating as a global network of
Slide 9: Technology - Key strategic initiatives in H1 2013
Technology - Key strategic initiatives in H1 2013 IP collaboration agreement for key technologies used in mobile devices Combined portfolio of key technologies for mobile devices: LTE, Reinforce Technicolor’s ability to monetize its mobile devices WCDMA, UMTS, Wi-Fi, haptics, video compression,
Slide 10: MPEG HEVC, key to Technicolor's businesses and strategy
MPEG HEVC, key to Technicolor’s businesses and strategy Technology Technicolor’s Licensing programs to benefit from patents around this standard (Digital TV in particular in North America with ATSC 3.0; mobile devices, platforms…) Entertainment Services Connected Home As a key enabler for 4K, As a k
Slide 11: Entertainment Services – H1 2013 Highlights: increased profitability
Entertainment Services – H1 2013 Highlights: increased profitability Revenues, €m Adj. EBITDA, €m 757 732 84 +4.2% 67 4.2% revenue increase in H1 2013 at 11.5% 658 680 8.8% constant currency and excluding legacy activities: Strong performance of DVD H1 12 H1 13 H1 12 H1 13 Services Legacy activi
Slide 12: Entertainment Services - Providing key services on major titles and shows
Entertainment Services - Providing key services on major titles and shows Deploying full range of services for tent pole movies Providing both Digital Production and Postproduction work for titles such as: 47 Ronin Fast & Furious 6 World War Z Godzilla Guardians of the Galaxy Postproduction Broadcas
Slide 13: Entertainment Services – Benefitting from industry trends and market drivers
Entertainment Services – Benefitting from industry trends and market drivers in packaged media Industry trends How Consumers Watched Movies US, Past 3 months (March 2013) DVD & Blu-rayTM 1st support for content distribution 72% of total home video spending (including VOD subscriptions) through p
Slide 14: Connected Home – H1 2013 Highlights: Top line growth and positive Adj. EBITDA
Connected Home – H1 2013 Highlights: Top line growth and positive Adj. EBITDA Revenues, €m Adj. EBITDA, €m 630 572 2 -12 H1 12 H1 13 H1 12 H1 13 Gross Margin, €m Five consecutive quarters of double- 74 digit revenue growth 61 Good execution on turnaround plan 11.7% Tight working capital manage
Slide 15: Connected Home – Customer deployment and new awards in H1 2013
Connected Home – Customer deployment and new awards in H1 2013 North America: return to growth in Q3 2013 100th millions STB Full ramp up in delivered as of June of Xfinity GW Docsis Modem; Gateways; roll out 3G Tablet; 1st July, 1st 2013 + + new awards with roll out in H2 starting in H2 2013 shipme
Slide 16: Connected Home – Customer deployment and new awards in H1 2013
Connected Home – Customer deployment and new awards in H1 2013 LATAM: strong positions with all operators, leader in all countries Mexico Brazil Mexico Brazil Brazil Brazil VDSL/VoIP; M&R; new STB New generation STBs launched Strong sales in deployment in end 2013 in Q2 2013 Q2 2013 H2 2013 APAC: le
Slide 17: Connected Home – H1 2013 Highlights
Connected Home – H1 2013 Highlights Q2 13 TCH H2 13 Market Region TCH Volume TCH Opportunities Market Structure volume Outlook 50% cable STBs Wins in Broadband thanks to technology NAM leadership Recognized capability in software 45% satellite STBs Full product range LATAM Strong local prese
Slide 18: Update on Refinancing
UPDATE ON REFINANCING technicolor
Slide 19: Refinancing transaction rationale: lower rate, longer maturity, more flexibility
Transaction rationale: borrow at a lower rate, extend maturity and increase financial flexibility Before Refinancing After Refinancing Gross Debt* (€m) Gross Debt** (€m) 1,207 1,140 460 Notes New Term Loan: 838 -USD Tranche: $830 -Euro Tranche: €200 723 Loans 282 Existing Debt Blended nominal intere
Slide 20: Financial Statements Impacts
Financial Statements Impacts Cash Impact A 1.1 pts reduction in interest rates A €67m reduction of the Nominal Gross Debt 905 838 A c.€15m 1,207 reduction of 8.4% 1,140 annual 7.3% interest charges Tendered Debt New Term Loan June 2013 Post Refi 2013 Debt Proforma P&L Impact As of Proforma, IFRS eff
Slide 21: Further improving our financial structure
Further improving our financial structure Extending debt maturity profile: 2013-2017 repayment schedule* Principal repayments before refi. €660m of repayments pushed back after Principal repayments after refi. 2017 890 576 252 H2 2013 2014 2015 2016 2017 2018 2019 2020 Lighter covenants • Lighter Co
Slide 22: H1 2013 Financial Highlights
H1 2013 FINANCIAL HIGHLIGHTS 22
Slide 23: H1 2013 Results Highlights
H1 2013 Results Highlights (€ million) H1 2012 H1 2013 Group revenues down 1.9% at constant currency Revenues from continuing operations €1,646m €1,589m Group revenues up 3.1% at constant currency and scope Adjusted EBITDA* from €198m €207m continuing operations 12.0% sales 13.0% sales Adjuste
Slide 24: Q2 2013 Revenues by segment at constant scope
Q2 2013 Revenues by segment at constant scope Δ% Δ% Δ% (€ million) Q1 2012 Q1 2013 Q2 2012 Q2 2013 H1 2012 H1 2013 Constant* Constant* Constant* Technology 121 125 (1.5)% 115 101 (5.2)% 236 227 (3.3)% Entertainment Services 395 376 (5.4)% 362 356 +0.6% 757 732 (2.5)% excluding legacy activities 345
Slide 25: H1 2013 Gross Margin - constant scope
H1 2013 Gross Margin - constant scope Change at (€ million) H1 2012 H1 2013 constant scope Technology 210 199 (11) % Revenues 88.8% 87.8% (1.0)% Entertainment Services 59 75 +16 % Revenues 7.8% 10.3% +2.5% Connected Home 61 74 +13 % Revenues 10.6%* 11.7% +1.1% Other (2) (2) 0 Total from 328* 346 +18
Slide 26: H1 2013 Adj. EBITDA by division - constant scope
H1 2013 Adj. EBITDA by division - constant scope (€ million) H1 2012 H1 2013 Change Technology 178 164 (14) % Revenues 75.4% 72.2% (3.2)pts Entertainment Services 67 84 +17 % Revenues 8.8% 11.5% +2.7pts Connected Home (12) 2 +14 % Revenues (2.0)% 0.3% +2.3pts Other (47) (43) +4 Total from 186 207 +2
Slide 27: H1 2013 Net Result: Net profit from continuing operations
H1 2013 Net Result: Net profit from continuing operations (€ million) H1 2012 H1 2013 Change EBIT from continuing 115 87 (28) operations Financial costs, net (116) (72) +44 Share of profit / (loss) from associates (4) (5) (1) Income tax (21) (20) +1 Profit / (loss) from continuing operations (26) (1
Slide 28: Positive Free Cash Flow of €24m despite legacy litigation payments
Positive Free Cash Flow of €24m despite legacy litigation payments Operating Cash Flow* and Group Free Cash Flow, €m 52 +19 30 51 207 30 125 38 24 H1 13 Adjusted Net capital Net OCF* Change in Financial Tax, Pensions FCF from Group FCF EBITDA expenditures restructuring working and Others discontinue
Slide 29: Gross debt reduction in H1 2013
Gross debt reduction in H1 2013 In €m 31 Dec.12 Group FCF Net Debt reimbursement Other Forex 30 June 13 (cash impact) (Acquisitions…) Other Cash +24 -34 -5 -12 397 370 position 1,207 1,236 Gross -34 +15 debt +5 Nominal IFRS impact* IFRS impact* Forex 1,101 IFRS at IFRS value Other 1,115 Net Debt adj
Slide 30: FY 2013 Objectives
Fy 2013 OBJECTIVES technicolor
Slide 31: FY 2013 Objectives confirmed
FY 2013 Objectives confirmed Growth in Adj. EBITDA between 5% to 10% compared to FY 2012 Adj. EBITDA at constant scope (€498 million): Licensing Adj. EBITDA broadly stable compared to FY 2012 Continued improvement of Connected Home Adj. EBITDA and return to positive free cash flow generation Impr
Slide 32: Update on Net debt/adj. EBITDA ratio objective
Update on Net debt/ adj. EBITDA ratio objective Shift to a nominal value based ratio, as financial covenant in the Group’s new debt and Amplify 2015 goals are based on nominal debt ratios. The Group objective for 2013 is updated as follows: Net debt (at nominal value) to adjusted EBITDA ratio below
Slide 33: Appendix
APPENDIX technicolor —=
Slide 34: H1 2013 Adjusted EBIT - constant scope
H1 2013 Adjusted EBIT- constant scope (€ million) H1 2012 H1 2013 Change Technology 176 159 (17) % Revenues 74.4% 70.0% (4.4)% Entertainment Services (12) 14 26 % Revenues (1.6)% 2.0% 3.6% Connected Home (32) (18) 14 % Revenues (5.6)% (2.8)% 2.8% Other (51) (44) 7 Total from 81 111 30 continuing ope
Slide 35: Balance sheet at 30 June 2013
Balance sheet at 30 June 2013 31 Dec. 30 June 31 Dec. 30 June (€ million) (€ million) 2012 2013 2012 2013 Total non-current assets 1,817 1,785 Total equity 241 242 o/w goodwill 478 484 Total non-current liabilities 1,703 1,659 o/w other intangible assets 433 422 o/w long term debt 1,019 998 o/w prop
Slide 36: Debt Proforma
Debt Proforma As of June 30, 2013, in €m Proforma for Transaction Transaction at end June 2013, in €m (67) costs (127) 370 Tendered Debt reimbursement 176 Cash position 1,101 1,066 Gross IFRS gain debt reversal on IFRS Tendered Debt Existing reimbursement IFRS gain on Debt* New Debt (67) 77 (45) 1,1