Ymagis Group Reports First Half-year 2017 Results
Return to Equilibrium for Earnings Before Taxes (EBT) despite Wait-and-See Market Important Innovation Investments with Short-Term Sales
Paris (France) - Ymagis Group (FR0011471291, MAGIS, PEA-PME, TECH 40), the European specialist in technologies for the film industry, today reported its earnings and consolidated financial results for the first half year of 2017 ending 30 June 2017, as approved by the Group’s Board of Directors following its meeting on 29 September.
Business in the first half of 2017 penalised by a temporary fall in the CinemaNext Business Unit equipment sales and sales growth of Eclair following successful integration of recent acquisitions
As of 30 June 2017, Ymagis Group’s revenues are slightly down by 1.5% at €82.3M compared to €83.6M for the same period last year. The strong acceleration in activities from the Eclair Business Unit, for which the recent acquisitions are the main growth driver, does not compensate the less important contribution during the first half-year of Equipment sales by the CinemaNext Business Unit and the first effects of VPF recoupments.
The results are broken down as follows by business unit:
- The VPF business unit continued its scheduled reduction under the effect of the initial recoupments made during 2016 in Austria, the Czech Republic and Poland, its revenue falling 8.9% to €31.2M. The drop in average turnover rates in Europe during the period is also one of the reasons behind the decrease in revenue. On 30 June 2017, the number of screens under VPF contract stood at 5,919 compared to 6,036 one year ago.
- CinemaNext recorded revenue of €24.6M for this first half-year 2017, down 11.1% as compared to last year. This slowdown, mainly due to the current economic environment, is linked to a number of major projects being rescheduled for the second half of 2017 and a later-than-expected start to replacement sales. Sales of projection equipment and audio systems thus dropped by 13.7% to €17.9M versus €20.7M on 30 June 2016. Revenue for Online & Support activities was slightly down at €6.3M for the first half-year 2017 as compared to the same period in 2016.
- Boosted by recent acquisitions, Eclair achieved a 22.6% increase in revenue at €26.5M compared to €21.6M twelve months ago. The new entities have made a significant contribution to the Business Unit’s revenue for this first half-year with the integration of Christa Kistner Synchronproduktion, Tecnison and ST’501 in the Versioning and Accessibility division and Open Sky Cinema and DSAT Cinema in the Theatrical Delivery division.
During this first half-year, the Ymagis Group has also significantly consolidated its position as a European leader as CinemaNext signed new service contracts with two large cinema chains in Germany and Norway. Eclair also expanded its European standing, with the signature of a 3-year agreement with Zurich’s Diagonalfilm for the delivery of digital content to cinemas.
In line with its strategic “Perform” plan, the Group actively continued its international development in new key markets, launching CinemaNext North America in partnership with CinTech, and CinemaNext TR in Turkey with Omega Cinema Systems. The Group aims to become the market leader in exhibitor services.
Positive Earnings Before Taxes thanks to external growth and accretive operations and rationalization of the Eclair Business Unit
The Groups indicates EBITDA for the first six months of 2017 fell by 15.7% at €20.0M compared to €23.8M the previous year. Positive effects from recent acquisitions and the rationalisation activities engaged at Eclair mean the EBITDA for the Business Unit significantly improved by €2.2M at -€1.1M. Excluding exceptional elements, the adjusted EBITDA of Eclair is positive at €0.6M.
The Group returned to a positive EBIT during the first half of 2017, standing at €2.4M, despite an increase in payroll costs, which stood at €22.3M on 30 June 2017 compared to €19.7M one year ago under the effect of external growth and the strengthening of some operational roles. The total number of people employed by the Group rose from 677 to 727.
Depreciation and amortization fell by €2.4M to €17.6M following the decrease in amortization concerning the first VPF recoupments in some countries.
After taking into account financial expenses, which continued to fall significantly by almost 35% at €2.3M versus €3.6M in 2016 under the positive effect of the reduced debt related to VPF activities, income from operations before taxes is positive at €0.1M versus a loss of €8.4M the previous year mainly due to non-recurring charges linked to exceptional depreciation.
The tax burden increased to €2.2M compared to €1M on 30 June 2016, given the €1.3M in deferred taxes and a taxation of €0.9M.
After taking into account these elements, the Group’s net result is a loss of €2.2M compared to a loss of €9.4M a year ago.
A healthy financial position which supports the Group’s investment in innovations
In line with the previous year, the Group continued the process of reducing its debt with the repayment of financial leasing debts relating to the VPF model. On 30 June 2017, the Group’s net debt was €70.9M compared to €77.2M on 31 December 2016 and €92.8M the prior year.
Its cash position stood at €15.5M versus €20.6M on 31 December 2016, impacted by investment efforts in innovating projects amounting to €1.9M during the first half-year of 2017.
The Group’s consolidated equity was €28.2M compared to €30.4M on 31 December 2016.
Continuation of the Perform plan and targets confirmed
Just twelve months ago, the Ymagis Group published its Perform plan, which aims to achieve profitable growth for the Group focusing on 3 areas: rationalization and efficiency, innovation and internationalization.
Today a new management team is in place and continuous improvement work aiming to consolidate and optimize the Group’s organization is starting to bear fruit. The full impact of this work should be felt during the year. The Group thus confirms its target to achieve a return to profitability for its Eclair Business Unit with a constant growth of its EBITDA.
In parallel, the Ymagis Group has stepped up deployment of its latest innovations in Europe and worldwide. In a fast-changing industry where innovation is a key success factor, the Group’s recent solutions have found their audience. EclairColor, the Group’s HDR technology, has seen rapid deployment. In under twelve months, 100 cinema screens have already been equipped worldwide. The launch of other new products such as Sphera and EclairPlay have also received a positive response and the first contracts are in the pipeline.
Ymagis has strengthened the positions of its CinemaNext Business Unit with the signing of new contracts in Europe and is confident in its ability to significantly increase the market share of these activities as announced.
The Group has strengthened its geographical expansion by concluding during Q2 of 2017 an agreement with CineTech, leading to the creation of a new subsidiary named CinemaNext North America. Ymagis Group has a 75% equity position in this new structure, which operates out of Dallas (Texas).
Consistent with its aim to offer services with high added value for both the general public and industry professionals, innovation is more than ever at the heart of the Group’s strategy, with the implementation of a new Business Unit focusing on innovation, which should allow the Group to introduce new offers shortly. For instance, the Ymagis Group just launched EclairGame, an e-sport themed business dedicated to cinemas and currently in test phase at a Parisian cinema. Short-term positive effects are expected from this new venture, which should be extended to other cinemas in 2018.
First Half-Year 2017 Financial Statement Online
Ymagis Group’s full first half-year 2017 financial statement, filed with the AMF today, is available under Publications in the "Investors" section of its corporate website.
Next press release: 15 November 2017 - Q3 2017 revenue