Slide 1: Full Year 2014 Results
Full Year 2014 Resu February 19, 2015 technicolor El FEEL THE WONDER
Slide 2: Forward Looking Statements
Forward Looking Statements S T F 2
Slide 3: Agenda
Agenda Slide 4 to 18 Slide 19 to 26 Slide 27 to 31 Slide 32 to 46 FY 2014 Amplify 2015 Drive 2020 Drive 2020 Financial Key Vision & Financial Performance Takeaways Strategy Implications & Objectives 3
Slide 4: FY 2014 Financial Highlights
FY 2014 Financial Highlights
Slide 5: FY 2014 – Profitability improvement with broadly stable revenues
FY 2014 – Profitability improvement with broadly stable revenues Revenues* (€m) Adj. EBITDA** (€m) & Margin (%) Change at constant rate 16% 17% Change at constant rate (0.9)% 14% +3.1% 3,308 3,362 3,315 537 550 498 2012 2013 2014 2012 2013 2014 Adj. EBIT** (€m) Net Income (€m) excl. Costs & Margin (
Slide 6: Strong cash generation and rapid deleveraging
Strong cash generation and rapid deleveraging Group FCF (€m) +50% Cash Cashtransformation (€m) conversion rate 398 374 312 +45% 58% 230 41% 34% 153 106 2012 2013 2014 2012 2013 2014 Operating Cash Flow FCF/OCF Nominal Net Debt (€m) Net Debt/Adj. 1.64x EBITDA 1.46x €(55)m 1.18x €(139)m 839 1.04x* 784
Slide 7: Technology – FY 2014
Technology – FY 2014 Revenues (€m) Adj. EBITDA (€m) Change at constant rate & Margin (%) Key Highlights 77.8% 72.8% 73.3% Double-digit growth in direct -5% -1% licensing programs, up 16.5% 515 485 490 400 353 359 Significant new contracts, particularly in smartphone and Digital TV: 2012 2013 2014 20
Slide 8: Entertainment Services – FY 2014
Entertainment Services – FY 2014 Revenues* (€m) Adj. EBITDA (€m) Change at constant rate & Margin Key Highlights +2% -6% 14.2% 11.5% 13.4% DVD Services Revenues impacted by weak 2014 1,549 1,530 1,442 199 230 box office 195 Volume trends down particularly in North America 2012 2013 2014 2012 201
Slide 9: Connected Home – FY 2014
Connected Home – FY 2014 Revenues (€m) Adj. EBITDA (€m) Change at constant rate & Margin Key Highlights 5.6% Top-line growth +14% +4% Revenue up 4.4% at constant 1,382 3.2% 77 1,346 rate 1,244 43 Double-digit growth across 1 developed markets 2012 2013 2014 2012 2013 2014 Market share gains ac
Slide 10: FY 2014 Financial Performance
FY 2014 Financial Performance
Slide 11: Q4 2014 & FY 2014 – Revenues
Q4 2014 & FY 2014 – Revenues TECHNOLOGY (€M) ENTERTAINMENT SERVICES (€M) CONNECTED HOME (€M) 485 490 1,530 1,346 1,382 1,442 135 159 466 464 356 358 FY Q4 Q4 FY FY Q4 Q4 FY FY Q4 Q4 FY 2013 2014 2013 2014 2013 2014 Q4 2014: Record quarter for Q4 2014: Revenue growth in Q4 2014: Solid performance YoY
Slide 12: Foreign exchange risk
Foreign exchange risk REVENUE 2014 BY CURRENCY COST BASE 2014 BY CURRENCY USD 23% 28% EUR BRL GBP 50% 8% CAD 55% AUD 8% 5% Other 4% 4% 4% 5% 4% 1% 1% Technicolor’s highest exposures are to the USD and the BRL The cost base largely matched the revenue base, but there are some discrepancies with t
Slide 13: Foreign exchange impact on revenues and Adj. EBITDA
Foreign exchange impact on revenues and Adj. EBITDA 2014 FOREIGN EXCHANGE REVENUE IMPACT (€M) 2014 FOREIGN EXCHANGE Adj. EBITDA IMPACT (€M) 15.9 2.8 8.5 (21.5) (9.8) (8.1) (0.4) (0.3) (3.5) -1,3 (1.3) (0.9) (0.3) 0.1 BRL CAD AUD INR Other GBP USD BRL CAD AUD INR GBP USD Average USD/EUR exchange ra
Slide 14: FY 2014 – Adjusted EBITDA
FY 2014 – Adjusted EBITDA In €m 7 (15) (2) 38 (21) (3) 10 550 537 2013 Adj. Connected Technology Legacy Entertainment Corporate Other Forex Impact 2014 Adj. EBITDA Home Services EBITDA Business contributions affected by the exit of legacy and lower DVD Services performance Significant reduction
Slide 15: FY 2014 – Adjusted EBIT
FY 2014 – Adjusted EBIT In €m (1) (1) (3) (3) (12) 9 41 368 338 2013 Adj. EBIT Connected Entertainment Technology Legacy Corporate Other Forex Impact 2014 Adj. EBIT Home Services Entertainment Services impacted positively with lower D&A expenses Increase in D&A in Technology related to developme
Slide 16: Positive net income
Positive net income (in € million) FY 2013 FY 2014 Change Adjusted EBIT 338 368 +30 Restructuring costs (68) (25) +43 Net impairment losses (31) (48) (17) EBIT at constant scope 226 302 +76 Financial costs (127) (97) +30 Costs due to debt prepayments (161) (20) +141 Share of profit/(loss) from assoc
Slide 17: Strong free cash flow generation of €230m, up €77m YoY
Strong free cash flow generation of €230m, up €77m YoY In €m (107) (45) (12) (67) 550 (72) (16) 398 230 2014 Adjusted Net Capital Net 2014 OCF Change in Financial Tax, Pensions FCF 2014 Group EBITDA Expenditures Restructuring Working and Others (discontinued) FCF Capital & OAL Operating Cash Flow,
Slide 18: Net Debt evolution
Net Debt evolution In €m 01 Jan. 2014 Senior debt 31 Dec. 2014 Group FCF Debt fees repayments Other Forex (26) Cash +230 (194) (3) +14 Position 307 328 Gross Reinstated Debt Scheduled 973 Nominal Prepayment Other* Repayment Forex Debt in May 1,091 Term Loan Debt Prepayment (14) in April (51) +78 (81
Slide 19: Slide 19
Slide 20: Technicolor at a glance
Technicolor at a glance 250 3,700 700 40,000 2,000 €136m €3.3bn €398m 14,000 world-class digital R&D patents patents in revenues operating employees researchers artists engineers granted/year R&D/year cash flow 20
Slide 21: Powerful assets for strong IP generation
Powerful assets for strong IP generation R&I acts as a supply line of innovation Strong operating businesses leverage Industry-leading and extensive IP to the operating businesses & accelerate innovation expertise and unique licensing skills Close collaboration Early investment of Central coordinati
Slide 22: Amplify 2015 scorecard
Amplify 2015 scorecard Leaner operational Realigned and Strong Better quality of earnings structure and well- technology-centric management with increased managed exit of legacy activity portfolio team profitability activities D O N E D O N E D O N E D O N E Completed debt restructuring and
Slide 23: Synergistic technology and business portfolio
Synergistic technology and business portfolio Technicolor’s integrated technology and Close collaboration between * business model provides speed to Technicolor’s Technology activities with market, competitive advantage and operating businesses create a virtuous additional revenue streams cycle of i
Slide 24: Strong management team
Strong management team STEPHANE ROUGEOT DEPUTY CEO BORIS TEKSLER ESTHER GAIDE Finance , Technology Deputy CFO Technology FREDERIC ROSE CEO TIM SARNOFF DEPUTY CEO VINCE PIZZICA SANDRA CARVALHO Production Services, CTO & Corporate International Chief Marketing Officer Strong mix of Entertainment Devel
Slide 25: Better quality of earnings and early investments in growth & innovation
Better quality of earnings and early investments in growth & innovation A solid track record in operational excellence and managing transitions BETTER QUALITY OF EARNINGS Adj. EBITDA 2014 vs. 2012 (in €m)* Successful turnaround of Connected Home Best-in-class operational efficiency in DVD Servic
Slide 26: Successful deleveraging and strong cash generation
Successful deleveraging and strong cash generation Adj. EBITDA (in €m) CUMULATED FCF > €700M COMPLETED DEBT RESTRUCTURING 2014 FCF/OCF: 58% AND REFINANCING 1.64x Net Debt/Adj. EBITDA 560 1.46x to > 230 590 1.18x 550 839 537 230 784 0.75x 645 153 498 106 2012 2013 20142013 2014 2015E 2012 2013 2014 2
Slide 27: Strategy
Strategy
Slide 28: Drive 2020 - Technicolor Vision
Drive 2020 - Technicolor Vision Consumer experiences driven by next-generation video and audio technologies Technicolor leads in Media and Entertainment services, deploying and monetizing next-generation OTT content and services are driving video and audio technologies need for next and experiences
Slide 29: Prevailing market conditions
Prevailing market conditions Emergence of OTT OTT drive change in consumer experiences – more content on more screens – where and when you want it OTT impacts content delivery and creation Increased OTT competition drives more content, better quality, higher production values Next-generation v
Slide 30: Next generation video technology and OTT driving growth
Next generation video technology and OTT driving growth Next-generation video technology being quickly OTT services driving growth in global video adopted - Total global UHD TV shipments to consumption - Total global OTT revenue to double reach 60 million units by 2017 to $38bn by 2017 (in $ billion
Slide 31: Drive 2020 Strategic and Financial objectives
Drive 2020 Strategic and Financial objectives Capture growth through sustained innovation in next generation video and audio technologies and experiences Create valuable IP assets in Media and Entertainment from our research and operating businesses Deepen the competitive advantages of Technicolor’s
Slide 32: Drive Strategies by business division
Drive Strategies by 0 business division
Slide 33: Technology – An integrated licensing approach
Technology – An integrated licensing approach ADDRESSABLE MARKET 3.5 billion consumer CAGR 2015-2020: +4.1% Growth driven largely by electronic devices* by 2020 tablets and smartphones * Smartphones, tablets, TVs, PCs, STBS, OTT devices, Blu-ray players – Sources: Park Associates, Gartner, IDC, Info
Slide 34: Technology – R&I, a major source of innovation in Media & Entertainment
Technology – R&I, a major source of innovation in Media & Entertainment 4 PRIORITY INNOVATION DOMAINS TO FOSTER CROSS-BUSINESS DEVELOPMENT TECHNICOLOR’S STANDARDIZATION OF NEXT GEN A/V TECHNOLOGIES AND INDUSTRY ALLIANCES ARE A COMPANY’S WIDE PRIORITY Augmented & Develop new partnerhsips and industry
Slide 35: Technology – Expanding patent Licensing
Technology – Expanding patent Licensing A MARKET LEADING PATENT LICENSING PLATFORM, MONETIZING PATENTS GENERATED BY R&I AND OPERATING BUSINESSES Competitive advantages Best-in-class IP licensing platform Industry-leading R&I team, engaged with the operating businesses Scale and relevance of pa
Slide 36: Technology – Developing new licensing models
Technology – Developing new licensing models A MARKET LEADER IN CREATING AND LICENSING NEXT GENERATION VIDEO AND AUDIO TECHNOLOGY SOLUTIONS FOR CONSUMER ELECTRONIC DEVICES, SERVICES AND APPLICATIONS Competitive advantages Industry relationships via operating businesses Technology deployment oppo
Slide 37: Production Services – Leading global services and technology solutions platform
Production Services – Leading global services and technology solutions platform THE GLOBAL MARKET LEADER IN ENABLING MEDIA AND ENTERTAINMENT COMPANIES AND CREATIVE TALENT TO ACHIEVE GROUND BREAKING VIDEO AND AUDIO EXPERIENCES 37
Slide 38: Production Services – Business expansion to promote early adoption of Technicolor's technologies
Production Services – Business expansion to promote early adoption of Technicolor’s technologies MARKET OTT CONTENT GAMES ANIMATION BRANDS AND 1ST ACHIEVEMENTS OPPORTUNITIES ADVERTISING Grow with North Creative market for Extend current American OTT Games: $1.3bn services High growth providers inter
Slide 39: DVD Services – The global market leader
DVD Services – The global market leader Maintain lowest cost structure Optimize logistics/ freight management business Selectively seize consolidation opportunities Customer leverage with Production Services Global scale, talent relationships and leverage Experience in building/ managing logistics b
Slide 40: Connected Home – Worldwide leader position
Connected Home – Worldwide leader position HEVC/4K/UHD/HDR set top Leverage early OTT move and extend Value-creative consolidation boxes with 1st deployments in use of next generation video and audio opportunities 2015 technologies Leading innovation in WiFi, Ultra Broadband, OTT solutions
Slide 41: Drive 2020 Financial Implications and Objectives
Drive __ Financial Implications 0 and Objectives
Slide 42: Cash generation and operational excellence to fund Technicolor's growth strategy
Cash generation and operational excellence to fund Technicolor’s growth strategy Operational excellence across businesses by maintaining or REACH BEST-IN-CLASS reaching industry-leading operational efficiency LEVEL IN ALL BUSINESSES Further reinforce Connected Home to reach an Adj. EBITDA at 8-9% in
Slide 43: Drive 2020 financial objectives
Drive 2020 financial objectives ADJUSTED FREE EBITDA CASH FLOW 2017 c. €400m €160m to €200m 2020 Over €500m At least €250m All objectives are calculated at constant rate and perimeter. 43
Slide 44: Technicolor's financial policy
Technicolor’s financial policy Retention of Credit lines to Continued focus on MAINTAIN AMPLE free cash flow adequate cash on secure temporary LIQUIDITY hand to operate liquidity needs and generation businesses cushion Mandatory debt Initiation of a yearly Selective M&A to VALUE-CREATION repayments
Slide 45: Alignment of employee compensation with objectives
Alignment of employee compensation with objectives ANNUAL LONG-TERM VARIABLE COMPENSATION INCENTIVE PLAN 36% The Board retained an external advisor to design a new long term incentive program of Executives, Managers and Professionals Program with multi-year performance metrics and presence vesting c
Slide 46: Key takeaways
Key takeaways Amplify 2015: Strong business portfolio Drive 2020: Capture Growth Market leading and profitable operating businesses Focus on next generation video and audio technologies Effective and recognized research, innovation and Large growth opportunities across our businesses licensi