Ymagis Reports First Half-Year 2015 Earnings

23 September 2015

- EBITDA increased by 8% due to a favorable mix of sales - - Takeover of Eclair: A new growth driver for the Group -

YMAGIS (ISIN: FR0011471291, TICKER: MAGIS), the specialist in digital technologies for the motion picture industry, today reported its financial earnings for the first half-year of 2015, as approved by the Group’s Board of Directors following its gathering on the 22nd of September, and which have been subject to a limited review by the auditors.

Note: As a reminder, the 2014 fiscal year was marked by the merger of the Group with Belgium-based company dcinex, which is included in the Group’s consolidated financial statements as of 1 October 2014. In order to provide a better comparison basis, the first half-year 2014 earnings are presented in pro forma(1). The consolidated and published earnings, i.e. excluding dcinex, are presented at the end of this document.


As of 30 June 2015, revenue amounted to 68.3 M€, which represents a decrease by 7.4% compared to the same period last year on a pro forma(1) basis. Excluding negative base effect explained by the one-off equipment sale to leasing companies in the scope of VPF agreements during the first quarter 2014, revenue would have increased by 2.6% in the first semester of 2015 compared to the same period in 2014 pro forma(1) .

During the first six months of 2015, the VPF business benefited from agreements executed with Turkish movie exhibitors. Those agreements mark the end of the promotion of this innovative business model initiated in 2008 in Europe. As a reminder, as of 30 June 2015, the total number of VPF screens rolled-out by the Group amounted to 6,401 spread over 19 European countries versus 5,784 a year ago.

Despite an expected decrease of its revenue from Equipment Sales and Installation, the “Exhibitor Services” business was positively impacted, mainly during the second quarter, both by the opening of new cinemas across Europe and by investments in immersive sound technologies by cinema owners, areas in which the Group’s teams have developed a renowned expertise. It further evidences the resilience of this activity.

“Content Services” sales increased, mostly due to the Content Delivery business, which benefited from revenue generated by Arqiva's network of connected cinemas, consolidated as of 1 April 2014, as well as the organic growth of the existing network, despite lower revenue generated by the postproduction activity.


As a result of a favorable mix of sales with the revenue increase of the VPF business, the Group’s EBITDA increased by 7.8% during the first half-year to 26.2 M€, representing 38.4% of revenue.

Over the period, the Group recorded a significant decrease of the cost of goods, explained by the expected downturn of the equipment sales in the context of the end of the digital transition of cinemas. As a reminder, a one-off sale of 7.2 M€ with low margin was booked in the first half-year 2014 corresponding to the end of the rollout of VPF agreements in Spain and Germany.

Operating expenses are stable over the period and the other operating charges (net) amount to 0.8M€ due primarily to the impact of non-recurring items.

The payroll costs remain under control with an increase limited to 8.5%, illustrating not only the synergies achieved with the merger of dcinex but also demonstrating the strengthening of local teams to develop the business abroad, particularly in high-potential markets (e.g., Spain, UK, Turkey, Russia and the US). As of 30 June 2015, the Group’s headcount is 364 versus 358 the prior year.

Depreciation charges increased by 3.5 M€ (+19.8%), 2.7 M€ related to the VPF sector after the booking of accelerated depreciation on digital equipment bought in the scope of the third-party VPF financing model. The financial net expenses decreased by 5.8% despite an unrealized exchange loss of 0.7 M€ explained by the Group’s exposure to British pounds (GBP).

Therefore, the profit before tax is 0.1 M€ versus 1.4 M€ as of 30 June 2014 pro forma (1). After tax and thirdparty interests, the net result group share amounts to 0.9 M€ versus 0.7 M€ as of 30 June 2014 pro forma (1).


The consolidated net equity amounts to 42.1 M€ in line compared to 31 December 2014. The net financial debt decreased by 11.9 M€ to 113.4 M€ as of 30 June 2015 compared with 31 December 2014. The debt allocated to the VPF sector for the financing of digital equipment under the third-party VPF financing model decreased by 18.8 M€ to 95.2 M€ compared to 31 December 2014.


During this first half year, the Group raised 40 M€ through a bond issuance. Thanks to this operation and operating cash flow of 23 M€ generated during the period, the Group’s position is strengthened with 21.5M€ cash compared to 18.1 M€ as of 31 December 2014. This private placement allowed the Group to:

- Redeem anticipatively and without breakup fee the bonds with warrants (OBSA) issued in October 2014 to acquire dcinex for 15.4 M€. As a result, the attached warrants have been cancelled, eliminating the capital dilution risk of up to 18.9%.

- Buy back the 14.3 M€ dcinex junior debt bearing an interest rate of 9.8%.


On 31 July 2015, the Group announced that its offer to take over the businesses and certain assets of Eclair Group was accepted as part of Eclair’s rehabilitations proceedings, which began on 12 June 2015.

These activities are divided into five different operational units: adaptation (i.e. subtitles, dubbing, etc.), content delivery services, film and video content restoration, post production of feature films, and the restoration and preservation of analogic and digital content, which becomes a separate unit.

These five activities expand and enrich our portfolio of services that will fall under the “Content Services” business unit. It also opens up new and bright growth perspectives with broadcasters such as television channels, VOD and similar platform owners, as well as with their content providers. The Group aims to develop these activities abroad once they have been fully rationalized.

Of the 320 currently employed by Eclair Group, YMAGIS has decided to maintain 233 employees, which have been now integrated into two newly-created and distinct business entities: Eclair SAS and Eclair Cinema SAS, as well as its subsidiaries, which have been taken over as part of the process.

YMAGIS acquired these assets including inventory for a total of €670K. Furthermore, the Group has contributed €217K to the redundancy program for employees not kept on, and assumes responsibility for €337K in fees owed to specific suppliers to ensure the businesses can continue operating. The total of approximately €1.2M is fully financed by the Group's own equity. The takeover comes into effect on 1 August 2015. Eclair's earnings will be consolidated starting from that date.


As expected, the first half of 2015 marks the end of the digital transition of cinemas in Europe. However, the resilience of the “Exhibitor Services” business unit suggests that the growth drivers identified by the Group (new markets, new cinema and new technologies) will generate significant revenue to partially offset the slowdown of equipment sales and installation related to the end of digital conversation.

In the coming years, movie exhibitors will progressively replace their first generation digital projection equipment. This replacement market should positively contribute to earnings as of 2016.

In a short-term perspective, the Group expects to conclude at the beginning of the fourth quarter of 2015, the acquisition of a majority stake in Spanish integrator Proyecson in order to expand its services to movie exhibitors in the Iberian Peninsula. In addition, following the strategic and business agreements signed with Eutelsat this past June, the Group will be able to accelerate its efforts to streamline the Content Delivery business undertaken since the beginning of the year, which should improve the profitability of this activity.

Thanks to the recent purchase of the Eclair Group’s activities, the “Content Services” division will see a tremendous expansion in its product and service portfolio for feature film content providers as well as those in video distribution (television broadcasters, VOD platforms and similar, etc.). As a result of this operation, the revenues of this market segment should grow significantly in the second half of 2015.

After signing a first pan-European agreement with one of the three largest Hollywood movie studios in the US for the delivery of all its cinema content in Europe in November 2014, the Group continues to pursue similar agreements with other potential international distribution companies. The goal is to establish new partnerships and enrich our existing infrastructure with new content deliveries to exhibitors.

The merger with dcinex, which is now fully integrated, and the takeover of Eclair’s businesses will allow the Group to confirm its position as a European leader in its industry.