YMAGIS: 2013 YEARLY RESULTS
Income before taxes: +27.2%
Net income, Group’s share: +18.2%
YMAGIS (ISIN: FR0011471291, mnemonic: MAGIS), the specialist in digital technologies for the cinema industry, has published its 2013 yearly results, closed during a board meeting held on March 21, and which underwent a review by auditors* .
* All consolidated accounts were audited by the auditors and their report will be issued soon. 2013 consolidated financial statements are already available on the company’s website at : www.ymagis.com (section Investors/ Publications).
ACTIVITY IN 2013
All of the Group’s activities, with the exception of sales and equipment installations, recorded two-digit growth over the period.
VPF (1) segment’s revenues (61% of turnover), the Group’s core business, reached 29.0 M€, an increase of +34.3%, benefiting notably from the strong rise in the number of cinema screens under VPF contract over the year.
Indeed, on December 31, 2013, the number of screens deployed under a VPF contract with YMAGIS rose by +28.8% to 2 785 versus 2 162 on December 31, 2012. Thus YMAGIS has a solid base providing recurring cash flows, as well as potential new revenues coming from the sales of new digital equipment and services.
The Services segment revenue (39% of turnover) grew by +1.1% to reach 18.3 M€. Although it recorded significant growth in revenue at the end of the year with the deployment by the Group of the last screens under a VPF contract, the Equipment Sales and Installation business registered a decline of -18% over the year, falling to 10.0 M€. This decline had been anticipated and does not have much impact in terms of margin. All the Group’s other Services activities, namely Laboratory (including post-production and duplication & delivery of digital prints) and Digital Cinema Online Support and Maintenance, showed two-digit growth rates, respectively +47.0% and +28.0%.
As a reminder, since December 1st, 2013, the business of duplication and delivery of digital copies has been carried out by SMARTJOG YMAGIS Logistics, a 60% owned subsidiary of YMAGIS created at the end of the year and emanating from a merger of these activities with TDF group which owns 40%.
2013 ANNUAL RESULTS’ ANALYSIS
As a preamble to the company’s results analysis, in order to ensure better understanding, it should be noted that there are two possible models on offer by the Group to meet the specific expectations of every contracted exhibitor for financing digital projection equipment that gives rise to VPF collection by Ymagis:
- The Third-Party Investor model (1 311 screens deployed on December 31, 2013, i.e. 47% of the Group installed base), through which YMAGIS finances digital equipment, most often through leasing. Then the Group invoices the related exhibitor for his share of the equipment financing and, when financed through leasing, makes rental payments to the related financial institutions. Equipment that is deployed through the ThirdParty Investor model is posted in the assets of YMAGIS’s Balance Sheet and depreciated over 8 years. In the case of leasing, in accordance with IFRS standards, the leasing are recorded as debt in YMAGIS consolidated Balance sheet and rents are accounted for in the Income Statement as financial expenses for the portion relating to finance charges, and as debt reduction in the Balance Sheet for the portion representing the capital.
- The Third-Party Collector model (1 474 screens deployed, 53% of the Group installed base), through which the exhibitor finances his equipment by himself and invoices YMAGIS for a contribution that is recorded as external charges in the Group’s accounts.
Both models have neither an impact in terms of VPFs’ revenue recognition nor in terms of cash position but lead to a different presentation of the operations in the Income Statement and in the Balance Sheet.
Hence, the financial indicator best representing the Group’s operational performance is the evolution of the Income before taxes and non-recurring items
Improvement of results despite further investment in the second half-year
The Cost of Goods and Services Sold decreased by -15.8% to 8.3 M€ due to the decline in Equipment Sales and Installation business over the period.
Other charges recorded a significant increase linked to the Group’s vibrant development. Notably, the opening of laboratories in Barcelona in July and in Berlin in October, and the creation of SMARTJOG YMAGIS Logistics at the end of the year were reflected in the strengthening of the teams over the year. Thus the payroll increased by +28.4%, with the Group’s headcount reaching 138 employees on December 31, 2013, versus 116 on June 30, 2013, and 90 on December 31, 2012.
External charges increased by +37.9%, mainly due to the increase in VPF segment charges, the contributions paid to the exhibitors increasing by 2.6 M€ (+35.9%) due to new screens installed over the period under the ThirdParty Collector model, which represented 1 474 screens at end of December 2013 versus 1 215 at end of December 2012 (+21%).
Depreciation charges increased by +33.0%, mainly due to the rise in the number of VPF screens deployed under the Third-Party Investor model, activated and depreciated over 8 years. On December 31, 2013, the number of VPF screens under this model climbed to a total of 1 311 versus 947 on December 31, 2012 (+38%). This line is also impacted by the increase in depreciations related to investments made in the Group’s three laboratories.
In this context, the operating income before non-recurring items is at 6.6 M€, an increase of +11.4%.
Income before taxes and non-recurring items: +27.2%
On December 31, 2013, YMAGIS recorded a reduction in its financial charge of -6.8%, to reach 2.6 M€, mainly due to the drop in financial expenses related to convertible bonds, because of their conversion at the end of April at the time of YMAGIS’ IPO on one hand, and the payment of the related capitalized interests on the other hand.
Consequently, YMAGIS shows an income before taxes and non-recurring items of 4.0 M€ improving by +27.2%, and a net income, global and Group’s share, over the period of nearly 2.4 M€, an increase of +26.8% (+18.2% for the group’s share).
A strengthened financial situation
Over the year, YMAGIS raised 11.6 M€ on the occasion of its Initial Public Offering in May 2013. On December 31, 2013, the Group had a cash position of 12.0 M€ (5.2 M€ on 2012/12/31) and its shareholders’ equity, which included the effects of the operations leading to the creation of SMARTJOG YMAGIS Logistics, reached 30.6 M€, including 25.5 M€ for the group’s share, a strong increase versus December 31, 2012 (7.9 M€ in each case on 2012/12/31).
Financial structure has been further strengthened with the capital increase carried out by private placement in January which allowed YMAGIS to raise nearly 5 M€ with institutional investors
The net financial debt stands at 36.4 M€ on December 31, 2013, including 36.8 M€ in debt related to leasing, mainly contracted to finance digital projection equipment within the Third-Party Investors model.
For 2014, the VPF and Digital Cinema Online Support & Maintenance businesses should benefit from the full effect of the deployment of cinema theaters under VPF contract, carried out all year long and especially at the end of the year in Spain.
Moreover, SMARTJOG YMAGIS Logistics should make its full impact, with the sales teams now integrated and operational.
Furthermore, YMAGIS is studying new acquisition opportunities in order to further broaden its geographical reach and its product and services offer to distributors and exhibitors.
In this respect, the capital increase by private placement carried out in January, which allowed YMAGIS to raise nearly 5 M€ with institutional investors, strengthens the Group’s already sound financial structure, and will make it possible to speed up its growth strategy and achieve its ambition of becoming the European leader in digital services and technologies for the cinema industry more quickly.