Technicolor Creative Studios: 2022 Full Year Results and business
update
CORPORATE PRESS RELEASE
UNAUDITED
CONSOLIDATED FINANCIALS
Technicolor Creative Studios2022
Full Year Results and business update
PARIS
(FRANCE),
March 10,
2023 – Technicolor Creative
Studios (Euronext Paris: TCHCS) (the “Company”) today announced its
Full Year unaudited 2022 financial results1.
- Full Year
performance shows revenue growth achieved
in a context of
operational and delivery
issues leading to profitability contraction:
-
Full
Year revenue of
€784 million, up 30%
compared to 2021, and 23% at constant rate;
-
Full
Year adjusted EBITDA
after lease2 of
€20 million, down from
€75 million in 2021;
- Numerous
successes with
c.65+ projects
in production at
MPC, 3,400+
projects at The
Mill and several
awards won, making Technicolor Creative
Studios a first-choice production
partner for the world’s most creative
companies;
- Technicolor Creative
Studios will pursue the implementation of the Agreement in
Principle on its refinancing that has been reached with a large
majority of shareholders and lenders
Caroline Parot, Chief Executive Officer of
Technicolor Creative Studios, said: “2022 was a year of creative
successes and great business achievements, and the long-term
prospects of the visual arts services industry are promising.
Over the past quarters, the Company has been
facing operational issues as well as market headwinds. To better
seize market opportunities and strengthen Technicolor Creative
Studios’ leading positions, the Company took a series of concrete
measures through the Re*Imagined program. I am convinced that our
strong position in this industry, a new reinforced leadership
structure, together with ambitious operational initiatives, and now
a reinforced capital structure will set Technicolor Creative
Studios back on its journey towards sustainable and profitable
growth. In addition, the Company will leverage its unique
technological expertise, deep and long-standing customer
relationships, and the world’s best talents.
I would like to express my utmost gratitude to
all Technicolor Creative Studios teams, who have demonstrated
relentless commitment towards delivering extraordinary work to our
clients. The whole industry continues to rely on our award-winning
creativity and expertise to deliver our clients’ visions and
additional projects.
I would also like to thank our key creditors and
shareholders for their renewed confidence with the recent signing
of an agreement in principle on the refinancing of the Company. In
conjunction with the improvement actions initiated through the
Re*imagined program, this will improve the Company’s balance sheet
and profitability, re-establishing its market leading position.
“
TECHNICOLOR CREATIVE STUDIOS RECENT KEY
EVOLUTIONS
As announced on March 8, 2023, Technicolor
Creative Studios has reached an agreement in principle with a large
majority of shareholders and lenders on a new financing structure
which includes a c.€170 million new money injection. The
refinancing would also reduce the financial liabilities of the
business by reducing cash interest across all instruments as well
as by subordinating €170 million and converting €30 million of
existing debt into equity.
A part of this new money financing would be made
by end of March / beginning of April 2023, subject to finalization
of the relevant documentation and satisfaction or waiver of the
conditions set out therein. The remaining part of the c.€170
million new money financing is expected to be made available by the
end of Q2 2023.
The Agreement in Principle would therefore
enable Technicolor Creative Studios to address its liquidity needs
from Q2 2023 and allows operating cash flow to be focused on
operational needs and would be combined with an evolution of the
Company’s governance to be further detailed upon finalization of
the conciliation protocol.
Technicolor Creative Studios and its
shareholders and lenders will pursue the implementation of the
Agreement in Principle, which will be submitted for approval to the
Commercial Court of Paris by the end of March.For further
information on the Agreement in Principle, please refer to the
press release dated March 8, 2023 available at the following
address: https://www.technicolorcreative.com/investor-center/.
RESUMPTION OF TRADING ON MARCH 10, 2023
UPON MARKET OPENING
Following the suspension on March 8, 2023, the
trading of the shares issued by Technicolor Creative Studios will
resume on this Friday 10 March 2023, at the market opening.
FORWARD LOOKING ASSUMPTIONS
Demand for VFX and original content remains
strong, and the industry is recognizing Technicolor Creative
Studios for the high quality work its studios are delivering.
However, this demand for original content is facing a VFX
production capacity still impacted by unprecedented post-Covid
recovery challenges and corresponding operational issues. As a
consequence, the Company has been focused on its
Re*Imagined program:
- Third-party reviews by renowned
firms helping the Company to identify areas for improvements from a
financial, reporting and operational perspective;
- Continued improvement of real-time
project tracking with action-orientated processes to resolve
current delivery issues, to run initiatives to develop efficient
best practices across our client facing delivery brands and to
capitalize on our unique global unified platform;
- Deep-dive assessment of top
management completed, and recruitment of critical hires is
progressing well;
- New retention program for key
talents launched, along with plan to attract the right new
talents;
- Improve functional performance and
overall cash management.
In the period preceding today’s announcement, as
part of the process, the Company shared forward looking assumptions
with some of its shareholders and lenders who will participate in
and/or support the transactions.
The figures given for 2023
to 2025 were established in the context of
the discussions on the
refinancing, in no case they should
constitute a guidance, nor forecasts of any kind.As a
consequence of the above, the Company is publishing the following
forward-looking assumptions:
- Overall demand
is expected to continue to grow throughout the period.
- Despite benefits
from Re*Imagined actions implemented starting in Q4 2022 are
expected to materialize progressively over the year, for 2023:
adjusted EBITDA after lease is to remain slightly positive but
below 2022 levels, with results continuing to be impacted by
additional costs to deliver major client projects coming from our
last year operational issues.
- For 2024: sharp
rebound in revenues and adjusted EBITDA after lease not to exceed
€110 million mostly driven by benefits from actions to improve
operations at MPC and the Mill. Mikros Animation to continue to be
awarded with multiple new projects and Technicolor Games to
continue to gain market shares.
- The Company is
to continue to grow and expects a return to a normalized
profitability in 2025.
As mentioned in the press release published on
March 8, 2023, the completion of the refinancing of the Company
would enable Technicolor Creative Studios to address its liquidity
needs from Q2 2023 and allows operating cash flow to be focused on
operational needs.
In addition, notably as a consequence of the
implementation of its Re*Imagined transformation program along with
the Company’s footprint optimization, whose
expected effects are included in the above forward-looking
assumptions, the Company expects restructuring cost to amount to
approximately €40 million in 2023, and to be reduced to
approximately €15 million per year for 2024 and 2025.
To finance its future growth and the Re*Imagined
plan, the Company expects a level of capex (mainly IT) and capital
leases to remain broadly stable in 2023 compared to 2022 and to
progressively decrease to c. €50 million in 2025.
Technicolor Creative Studios results are
sensitive to external macro-economic assumptions, including the
valuation of its main currencies - notably the US dollar, the
Canadian dollar, and the British pound – which have evolved
favorably since the beginning of 2022. These forward looking
assumptions assume a EUR/USD exchange rate of 1.15, EUR/CAD of
1.52, EUR/GBP of 0.89 for 2023 and 2024.
2022 AND EARLY
2023 MAJOR CREATIVE SUCCESSES
MPC: In 2022 and early 2023,
20+ theatrical projects and 45+ streaming / episodic projects were
in production at MPC. The Studio in 2022 won a Visual Effects
Society (“VES”) award for Outstanding Animated Character in a
Photoreal Feature for its work on Apple TV+’s Finch and a César
Award for Best Visual Effects for Annette. 11 films selected for
the 2022 Cannes Film Festival featured the work of MPC, including
the Dardenne brothers’ Tori and Lokita (Prix Spécial); the world
premiere of Baz Luhrmann’s Elvis; and screening of Top Gun:
Maverick starring Tom Cruise. Top Gun: Maverick also received Best
Visual Effects Academy Award and Best Special Visual Effects BAFTA
nominations. In February 2023, MPC won three VES Awards for its
work on Thirteen Lives (Outstanding Supporting Visual Effects in a
Photoreal Feature) and Guillermo del Toro’s Pinocchio (Outstanding
Visual Effects in an Animated Feature and Outstanding Created
Environment in an Animated Feature).
Mikros Animation: During 2022,
6 features and 15+ episodic series were in production at Mikros
Animation.
The Mill: During 2022, The Mill
contributed to approximately 3,400 projects, including 34 Super
Bowl LVI projects - 29 of which were TV spots that aired during the
game, and were nominated for and won several prestigious industry
awards. Notable projects during the year include Burberry’s ‘Open
Spaces’, Samsung’s ‘The Spider and the Window’, Samsung’s ‘Playtime
Is Over’, Pepsi’s Super Bowl halftime trailer ‘The Call’,
Mastercard’s ‘What’s Priceless to You?’ and the title sequence for
Netflix’s Cabinet of Curiosities. Since the beginning of 2023, The
Mill ranked as the #1 Post Production company in the UK and in
Europe in Little Black Book’s Immortal Awards Table of Creativity
for 2022, while Burberry ‘Open Spaces’ was one of four projects
recognized as “Immortal”. At 2023’s Super Bowl LVII, The Mill
collaborated on 16 commercials, including Amazon’s ‘Saving Sawyer’
and Bud Light’s ‘Hold’.
Technicolor Games: During 2022,
Technicolor Games worked with major gaming clients such as Capcom,
Electronic Arts, Gameloft, NetEase, Meta, Sega, Sumo Digital,
Take-Two Interactive’s 2K and Rockstar Games, Ubisoft, Warner Bros.
Interactive Entertainment and Scopely. The Technicolor Games team
contributed to eight global releases including FIFA 23, the biggest
selling sports title of 2022.
FULL YEAR FINANCIAL
HIGHLIGHTS
Consolidated
revenue
Q4 2022 |
Q4 2021 |
% Change |
% Change at constant currency |
in € million |
FY 2022 |
FY 2021 |
% Change |
% Change at constant currency |
58 |
83 |
-30% |
-29% |
MPC |
375 |
242 |
55% |
47% |
49 |
24 |
105% |
95% |
Mikros Animation |
147 |
82 |
79% |
70% |
51 |
67 |
-24% |
-29% |
The Mill |
248 |
265 |
-6% |
-14% |
3 |
2 |
n.a. |
n.a. |
Technicolor Games |
13 |
10 |
n.a. |
n.a. |
0 |
0 |
n.a. |
n.a. |
Corporate & Other |
1 |
1 |
n.a. |
n.a. |
160 |
177 |
-9% |
-12% |
Total |
784 |
601 |
30% |
23% |
Technicolor Creative Studios FY 2022 revenue
amounted to €784 million, up 30% (up 23% at constant rate) compared
to 2021. This improvement resulted from a sustained demand and was
achieved despite a significant shortage of experienced talents
which caused delays on both ongoing projects and the start of new
ones and highlighted the need for improved project management and
monitoring to deliver on time. In addition to this lack of adequate
resources, operations were negatively impacted by internal
reorganisations at MPC and The Mill post-Covid. Those headwinds
impacted fourth quarter revenue which decreased by 9% to €160
million versus Q4 2021.
At MPC, FY
2022 revenue amounted to €375 million, up 55%. Full year
significant revenue growth was driven by the continued ramp-up in
production of major theatrical projects, as well as increasing
contributions from all the major streaming platforms, while 2021
revenue was still affected by the Covid impacts. Post-Covid demand
has been strong and MPC delivered 65+ major films with heavy visual
effects content in 2022.
However, fourth quarter revenue was down 30% to
€58 million, due to the shortage of experienced talents creating
more delays and inefficiencies in delivering some major
projects.
At Mikros Animation, FY 2022
revenue amounted to €147 million and were up 79%, and Q4 2022
revenue was up 105% year-on-year to €49 million. This improvement,
in line with expectations, was mainly a result of higher volumes in
feature animation projects.
At The Mill, FY 2022
advertising revenue amounted to €248 million, representing a 6%
decrease compared to 2021. Activity was restrained by decelerating
advertising spending growth compared with a high comparative base
in 2021, along with the impact from passing on certain projects in
Q3 and Q4 because of the lack of specific types of experienced
talent. Q4 revenue declined by 24% year-on-year to €51 million.
At Technicolor Games, FY 2022
revenue amounted to €13 million, compared to €10 million in FY 2021
thanks to greater production capacity.
Adjusted EBITDA after lease
Q4 2022 |
Q4 2021 |
Var |
In € millions |
FY 2022 |
FY 2021 |
Var |
160 |
177 |
-17 |
Revenue |
784 |
601 |
183 |
-32 |
23 |
-55 |
Adjusted EBITDA after lease |
20 |
75 |
-55 |
-20% |
13% |
n.a. |
In % of revenue |
3% |
13% |
n.a. |
In FY 2022, adjusted EBITDA after lease amounted
to €20 million compared to €75 million in FY 2021, with margin down
from 13% to 3%.
The €55 million decrease year-on-year, mainly in
the fourth quarter 2022 (-€55 million compared to Q4 2021), was
primarily explained by unprecedented post-Covid recovery challenges
and corresponding operational issues leading to higher costs.
Despite an increased margin at Mikros Animation driven by higher
sales, the margin at MPC was impacted by the shortage of
experienced talent and a high-level departure of key talents, which
drove production inefficiencies notably over the second half of the
year. This resulted in higher costs and production delays. In
addition, margin at The Mill decreased due to lower sales combined
with the shortage of experienced talents resulting in fewer higher
margin projects.
For FY 20223, adjusted EBITDA after lease
amounted to €32 million (6% margin) at MPC & Mikros Animation,
€7 million (3% margin) at The Mill & Technicolor Games, and
-€18 million for corporate & other.
At December 31, 2022, the Company employed
approximately 11,800 people.
Analysis of
Full
Year net
result
in € million |
2022 |
2021 |
Revenue |
784 |
601 |
Cost of sales |
(716) |
(495) |
Gross margin |
68 |
106 |
Selling and administrative expenses |
(93) |
(78) |
Restructuring costs |
(24) |
(5) |
Net impairment losses on non-current operating assets |
(1) |
(4) |
Other income (expense) |
(1) |
0 |
Earnings before Interest & Tax (EBIT) from continuing
operations |
(51) |
20 |
Net financial expense |
(39) |
(21) |
Income tax expense |
(9) |
(18) |
Loss from continuing operations |
(99) |
(19) |
Net gain (loss) from discontinued operations |
0 |
5 |
Net loss for the year |
(99) |
(14) |
Cost of sales amounted to
€716 million in 2022 or 91.3% of revenue, compared to
€495 million in 2021, or 82.4% of revenue. This €221 million
increase mainly reflected higher revenue and higher costs linked to
operational inefficiencies. Cost of sales in percentage of revenue
has increased due to a lower absorption of costs linked to
operational inefficiencies. The principal components of the
Company’s cost of sales were labor costs, as well as costs related
to real estate and fixed asset depreciation. As a result, gross
margin amounted to €68 million in 2022, or 8.7% of revenue,
compared to €106 million in 2021, or 17.6% of revenue.
Selling and administrative
expenses amounted to €93 million in 2022, or 11.9% of
revenue, compared to €78 million in 2021, or 13.0% of revenue.
General and administrative expenses amounted to €72 million (9.2%
of revenue) compared to €63 million in 2021, or 10.5% of revenue.
This percentage decrease reflects the cost structure optimization
done throughout the Group. Selling and marketing expenses amounted
to €21 million in 2022 compared to €15 million in 2021.
Restructuring costs: in 2022,
restructuring costs amounted to €24 million, compared to €5 million
in 2021. This increase mainly resulted from footprint
reorganization and the implementation of the Re*Imagined
transformation plan.
In 2022, the Company recorded net
impairment losses of €1 million compared to
€4 million in 2021 which mostly related to the impairment of
Mr. X following integration of all VFX brands under MPC.
As a result of the above,
earnings before interest and tax (EBIT)
from continuing operations was a loss of €51 million in
2022 compared to a profit of €20 million in 2021.
The Company’s net financial
expense amounted to €39 million in 2022 compared to
€21 million in 2021:
- Net interest expense amounted to
€43 million in 2022 compared to €21 million in 2021. FY 2021
and the first nine month of 2022 were mainly impacted by the
financial interest on current accounts with the former parent
company prior to the spin-off (Vantiva) while fourth quarter 2022
mainly corresponds to interest on the new Technicolor Creative
Studios debt signed on September 15, 2022.
- Other financial income was €4
million in 2022 (mainly due to foreign exchange gains) compared to
nil in 2021.
The Company’s total income tax
expense, including both current and deferred taxes,
amounted to an expense of €9 million in 2022 compared to an
expense of €18 million in 2021. This decline mainly results from
lower profit before tax.
As a result of the above, loss from
continuing operations amounted to €99 million in 2022
compared to a loss of €19 million in 2021.
Net gain (loss) from discontinuing
operations was nil in 2022 compared to a gain of
€5 million in 2021 consisting of discontinued activities
related to post-production activities sold to Streamland Media in
April 2021.
Net loss totaled €99 million in
2022 compared to a net loss €14 million in 2021. There was no
net income attributable to non-controlling interests in 2022 nor in
2021.
Adjusted Operating Free Cash Flow after
lease
Over FY 2022, adjusted Operating Free Cash Flow
after lease4 amounted to €(76) million, compared to €74
million for 2021.
This €150 million deterioration is explained
by:
- € (55) million adjusted EBITDA
after lease deterioration as a result of unprecedented post-Covid
recovery challenges and corresponding operational issues leading to
higher costs;
- € (50) million working capital
deterioration, primarily due to lower advanced payments as the
order book is lower compared with the order book at the end of
2021, and in parallel cash received from 2021 advanced payments was
consumed over the period in line with the advancement of the
related projects;
- € (38) million capex and capital
lease cash out increase to €64 million, as a result of increased
level of activity over the period;
- € (5) million higher
restructuring cash out, mainly due to the implementation of the
Re*Imagined transformation plan.
- € (2) million of higher other
non-current cash out.
Standalone cash and
debt
Cash and cash equivalents at the end of December
31, 2022 amounted to €38 million and nominal gross debt to €828
million (€776 million IFRS debt, including €140 million of
operating lease liabilities5).
Liquidity as of December 31, 2022 amounted to
€38 million, consisting of the above €38 million of cash and cash
equivalents, while the €40 million RCF was fully drawn.
Status of audit work: The audit work is in
progress.
***
WARNING / FORWARD
LOOKING STATEMENTS
This press release 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 to historical or current facts.
Such forward-looking statements are based on management's current
expectations and beliefs and are subject to a number of risks and
uncertainties that could cause actual results to differ materially
from the future results expressed, forecasted, or implied by such
forward-looking statements.
Investors’ attention is drawn to the risk
factors relating to Technicolor Creative Studios described in
Chapter 3 of the prospectus prepare in connection with the
admission of TCS shares to trading on the regulated market of
Euronext, approved by the AMF on August 1, 2022 under number
22-331,which is available free of charge and upon request at the
company’s registered office, 8-10 rue du Renard, 75004 Paris,
France, or on the websites of the AMF (https://www.amf-france.org),
and Technicolor Creative Studios
(https://www.technicolorcreative.com/investors/.
This press release does not contain or
constitute an offer of securities for sale or an invitation to
invest in securities in France, the United States or any other
jurisdiction.
***
ABOUT TECHNICOLOR CREATIVE
STUDIOS
Technicolor Creative Studios shares are admitted
to trading on the regulated market of Euronext Paris (TCHCS)
Technicolor Creative Studios is a creative
technology company providing world-class production expertise
driven by one purpose: The realization of ambitious and
extraordinary ideas. Home to a network of award-winning studios,
MPC, The Mill, Mikros Animation and Technicolor Games, we inspire
creative companies across the world to produce their most iconic
work. Our global teams of artists and technologists partner
with the creative community across film, television, animation,
gaming, brand experience and advertising to bring the universal art
of storytelling to audiences everywhere.
www.technicolorcreative.com
***
Investor Relations
Contact:investor.relations@technicolor.com
Corporate press:Image 7:
Technicolorcreative@image7.fr
APPENDIX
Appendix I – 2022
UNAUDITED FINANCIAL
STATEMENTS
Preliminary note:Until
September 27, 2022, the arrangement that constituted the combined
Technicolor Creative Studios Group was not a legal entity in its
own right and was made up of entities under the common control of
Technicolor (now named Vantiva). On September 27, 2022, Technicolor
distributed 65% of the shares of Technicolor Creative Studios to
its shareholders and concurrently listed Technicolor Creative
Studios on Euronext Paris. This common control business combination
was accounted for using pooling of interest accounting. Therefore,
the consolidated financial statements as of December 31, 2022,
comprise nine months of combination and three months of
consolidation, and no purchase price allocation was performed.
The information relating to the year ended
December 31, 2021, presented in the consolidated financial
statements is from the Combined Financial Statements as of December
31, 2021, December 31, 2020 and December 31, 2019 approved on June
9, 2022 by Technicolor SA, as President of Tech 8, prior to the
transformation of Tech 8 into a Société Anonyme and the change of
its corporate name to "Technicolor Creative Studios".
Status of audit work: The audit work is in
progress.
UNAUDITED CONSOLIDATED
STATEMENT OF PROFIT AND LOSS
|
|
Year ended December 31, |
(€ in million) |
|
2022 |
|
2021 |
|
|
|
|
|
CONTINUING OPERATIONS |
|
|
|
|
Revenue |
|
784 |
|
601 |
Cost of
sales |
|
(716) |
|
(495) |
Gross margin |
|
68 |
|
106 |
|
|
|
|
|
Selling and
administrative expenses |
|
(93) |
|
(78) |
Restructuring
costs |
|
(24) |
|
(5) |
Net impairment
losses on non-current operating assets |
|
(1) |
|
(4) |
Other income /
(expense) |
|
(1) |
|
0 |
Earnings before Interest & Tax (EBIT) from continuing
operations |
|
(51) |
|
20 |
|
|
|
|
|
Interest
income |
|
40 |
|
10 |
Interest
expense |
|
(83) |
|
(31) |
Other
financial income |
|
4 |
|
0 |
Net financial expense |
|
(39) |
|
(21) |
|
|
|
|
|
Income tax
expense |
|
(9) |
|
(18) |
Loss from continuing operations |
|
(99) |
|
(19) |
|
|
|
|
|
DISCONTINUED OPERATIONS |
|
|
|
|
Net gain /
(loss) from discontinued operations |
|
(0) |
|
5 |
|
|
|
|
|
Net loss for the year |
|
(99) |
|
(14) |
|
|
|
|
|
Attributable
to: |
|
|
|
|
- Equity
holders |
|
(99) |
|
(14) |
-
Non-controlling interest |
|
(0) |
|
- |
UNAUDITED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
|
(€ in million) |
|
December 31, 2022 |
|
December 31, 2021 |
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
Goodwill |
|
190 |
|
188 |
|
Intangible
assets |
|
88 |
|
96 |
|
Property,
plant and equipment |
|
55 |
|
46 |
|
Right-of-use
assets |
|
138 |
|
117 |
|
Other operating non-current assets |
|
8 |
|
11 |
TOTAL OPERATING NON-CURRENT ASSETS |
|
479 |
|
459 |
|
|
|
|
|
|
|
Non-consolidated investments |
|
- |
|
1 |
|
Other financial non-current assets |
|
17 |
|
14 |
TOTAL FINANCIAL NON-CURRENT ASSETS |
|
17 |
|
15 |
|
|
|
|
|
|
|
Deferred tax assets |
|
7 |
|
22 |
TOTAL NON-CURRENT ASSETS |
|
503 |
|
495 |
|
|
|
|
|
|
|
Trade accounts
and notes receivable |
|
99 |
|
63 |
|
Contract
assets |
|
64 |
|
74 |
|
Other operating current assets |
|
28 |
|
31 |
TOTAL OPERATING CURRENT ASSETS |
|
191 |
|
169 |
|
|
|
|
|
|
|
Income tax
receivable |
|
7 |
|
7 |
|
Other
financial current assets |
|
4 |
|
181 |
|
Cash and cash
equivalents |
|
38 |
|
12 |
|
Assets classified as held for sale |
|
1 |
|
2 |
TOTAL CURRENT ASSETS |
|
241 |
|
371 |
|
|
|
|
|
|
TOTAL ASSETS |
|
744 |
|
866 |
|
(€ in million) |
|
December 31, 2022 |
|
December 31, 2021 |
|
|
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
|
|
Share capital
(546,681,915 shares at December 31, 2022 with nominal value of 0.50
euro per share) |
|
273 |
|
0 |
|
Additional
paid-in capital & reserves |
|
(390) |
|
357 |
|
Cumulative translation adjustment |
|
(171) |
|
(130) |
Shareholders equity attributable to owners of the
parent |
|
(288) |
|
227 |
|
Non-controlling interests |
|
1 |
|
- |
TOTAL EQUITY |
|
(287) |
|
227 |
|
|
|
|
|
|
|
Retirement
benefits obligations |
|
4 |
|
5 |
|
Provisions |
|
4 |
|
3 |
|
Contract
liabilities |
|
- |
|
1 |
|
Other operating non-current liabilities |
|
1 |
|
10 |
TOTAL OPERATING NON-CURRENT LIABILITIES |
|
9 |
|
19 |
|
|
|
|
|
|
|
Borrowings |
|
562 |
|
1 |
|
Lease
liabilities |
|
133 |
|
107 |
|
Other
non-current liabilities |
|
0 |
|
0 |
|
Deferred tax
liabilities |
|
9 |
|
16 |
TOTAL NON-CURRENT LIABILITIES |
|
713 |
|
143 |
|
|
|
|
|
|
|
Retirement
benefits obligations |
|
0 |
|
0 |
|
Provisions |
|
12 |
|
6 |
|
Trade accounts
and notes payable |
|
59 |
|
40 |
|
Accrued
employee expenses |
|
51 |
|
62 |
|
Contract
liabilities |
|
81 |
|
77 |
|
Other operating
current liabilities |
|
30 |
|
39 |
TOTAL OPERATING CURRENT LIABILITIES |
|
233 |
|
226 |
|
|
|
|
|
|
|
Borrowings |
|
49 |
|
216 |
|
Lease
liabilities |
|
32 |
|
27 |
|
Income tax
payable |
|
4 |
|
28 |
TOTAL CURRENT LIABILITIES |
|
318 |
|
497 |
|
|
|
|
|
|
TOTAL LIABILITIES |
|
1,031 |
|
640 |
|
|
|
|
|
|
TOTAL EQUITY & LIABILITIES |
|
744 |
|
866 |
UNAUDITED CONSOLIDATED
STATEMENT OF CASH FLOWS
|
|
December 31, |
(€ in million) |
|
2022 |
|
2021 |
Net loss |
|
(99) |
|
(14) |
Gain (Loss)
from discontinuing operations |
|
(0) |
|
5 |
Loss from continuing operations |
|
(99) |
|
(19) |
Summary
adjustments to reconcile loss from continuing activities to cash
generated from (used in) continuing operations |
|
|
|
|
Depreciation
and amortization |
|
101 |
|
83 |
Impairment of
assets |
|
14 |
|
(1) |
Net changes in
provisions |
|
0 |
|
(3) |
Loss on asset
disposals |
|
(1) |
|
(3) |
Interest
(income) and expense |
|
44 |
|
21 |
Other items
(including tax) |
|
11 |
|
23 |
Changes in
working capital and other assets and liabilities |
|
(33) |
|
30 |
Cash generated from (used in) continuing
activities |
|
37 |
|
131 |
Interest paid
on lease debt |
|
(15) |
|
(9) |
Interest
paid |
|
(27) |
|
(23) |
Interest
received |
|
7 |
|
12 |
Income tax
paid |
|
(24) |
|
(1) |
NET OPERATING CASH GENERATED FROM (USED IN) CONTINUING
ACTIVITIES (I) |
|
(22) |
|
110 |
Acquisition of
subsidiaries, associates and investments, net of cash acquired |
|
(5) |
|
(0) |
Proceeds from
sale of investments, net of cash |
|
0 |
|
0 |
Purchases of
property, plant and equipment (PPE) |
|
(37) |
|
(10) |
Proceeds from
sale of PPE and intangible assets |
|
4 |
|
2 |
Purchases of
intangible assets including capitalization of projects |
|
(25) |
|
(16) |
Cash
collateral and security deposits granted to third parties |
|
(4) |
|
(13) |
Cash
collateral and security deposits reimbursed by third parties |
|
3 |
|
11 |
NET INVESTING CASH USED IN CONTINUING ACTIVITIES
(II) |
|
(64) |
|
(26) |
Net
contributions from / (to) Vantiva SA |
|
(14) |
|
(5) |
Net proceeds
of borrowings |
|
173 |
|
- |
Net cash
pooling variance |
|
(0) |
|
(81) |
Repayments of
lease debt |
|
(36) |
|
(31) |
Repayments of
borrowings |
|
(3) |
|
(1) |
NET FINANCING CASH GENERATED FROM (USED IN) CONTINUING
ACTIVITIES (III) |
|
120 |
|
(118) |
|
|
|
|
|
NET CASH GENERATED (USED IN) DISCONTINUED ACTIVITIES
(IV) |
|
0 |
|
17 |
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT THE BEGINING OF THE
YEAR |
|
12 |
|
28 |
Net increase (decrease) in cash and cash equivalents
(I+II+III+IV) |
|
34 |
|
(16) |
Exchange gains
/ (losses) on cash and cash equivalents |
|
(8) |
|
(0) |
CASH AND CASH EQUIVALENTS AT THE END OF THE
YEAR |
|
38 |
|
12 |
Appendix
II – Key
Performance Indicators
As part of the spin-off, Technicolor Creative
Studios updated its Key Performance Indicators (“KPIs”), with the
goal of becoming more comparable with its peers and market
practice, and to further align them with the way the business is
managed. These KPIs include Adjusted EBITDA after lease, Adjusted
EBITA after lease, and Adjusted Operating Free Cash Flow after
lease.Adjusted EBITDA after lease corresponds to Adjusted EBITA
after lease adding back Depreciation and amortization, excluding
depreciation of usage-based IT costs, operating leases assets
depreciation and Amortization of intangibles that arose from
acquisitions or disposals (PPA amortization) and non-cash income
and expense such as equity-settled share-based payments, including
capital lease depreciation. Adjusted EBITA (Earnings before
Interest, tax, depreciation and amortization) after lease
corresponds to EBIT (Earnings before interest and taxes) adjusted
positively by the amortization of intangibles that arose from
acquisitions or disposals (PPA amortization), restructuring costs,
other non-current items, comprising Other (expenses) income,
Impairment (losses) gain and Capital gains/losses, and negatively
by the difference between operating lease payments and operating
leases assets depreciation.Adjusted Operating Free Cash Flow after
lease is defined as Adjusted EBITDA after lease minus capital
expenditures, excluding usage-based IT cost (without cloud
rendering), capital leases cash out, restructuring cash out, change
in working capital (excluding cloud rendering cash out) and other
non-current cash out.
Reconciliation between KPIs and IFRS
indicators
|
Q4 2022 |
Q4 2021 |
Var |
In € millions |
FY 2022 |
FY 2021 |
Var |
P&L |
160 |
177 |
-17 |
Revenue |
784 |
601 |
183 |
-67 |
17 |
-84 |
EBIT |
-51 |
20 |
-71 |
n.a. |
10% |
n.a. |
In % of revenue |
n.a. |
3% |
n.a. |
-10 |
-6 |
-4 |
Operating leases – rent paid cancellation (mostly real estate) |
-31 |
-22 |
-9 |
8 |
6 |
2 |
Operating leases - depreciation |
21 |
16 |
5 |
2 |
2 |
0 |
Amortization of purchase accounting items (PPA) |
9 |
8 |
1 |
21 |
1 |
20 |
Restructuring costs |
24 |
5 |
19 |
-1 |
-5 |
4 |
Other non-current items |
3 |
4 |
0 |
-47 |
15 |
-62 |
Adjusted EBITA after lease |
-25 |
31 |
-56 |
n.a. |
9% |
n.a. |
In % of revenue |
n.a. |
5% |
n.a. |
15 |
8 |
7 |
Depreciation & amortization (1) |
45 |
43 |
1 |
-32 |
23 |
-55 |
Adjusted EBITDA after lease |
20 |
75 |
-55 |
n.a. |
13% |
n.a. |
In % of revenue |
3% |
13% |
n.a. |
FCF |
-32 |
23 |
-55 |
Adjusted EBITDA after lease |
20 |
75 |
-55 |
-16 |
-8 |
-8 |
Capex (2) |
-50 |
-14 |
-36 |
-4 |
-2 |
-2 |
Capital leases (cash out) |
-14 |
-12 |
-2 |
-4 |
0 |
-4 |
Restructuring cash out |
-12 |
-7 |
-5 |
56 |
42 |
14 |
Change in working capital (3) |
-19 |
31 |
-50 |
2 |
-2 |
4 |
Other non-current cash out |
-2 |
1 |
-2 |
3 |
54 |
-51 |
Adjusted Operating Free Cash Flow after lease |
-76 |
74 |
-150 |
(1) Excluding
depreciation of cloud rendering and other usage-based IT costs,
operating lease asset depreciation and amortization of intangibles
that arose from acquisitions or disposals, including capital lease
depreciation. |
(2) Excluding usage-based
IT cost (without cloud rendering). |
(3) Excluding cloud
rendering cash out. |
Appendix
III – Debt
details – At the end of December 2022
In million currency |
Currency |
Rate Formula |
Final maturity |
Nominal rate |
IFRS rate |
Nominal Amount |
IFRS Amount |
Term Loan |
EUR |
3M Euribor w/ floor of 0% +6.00% |
Sept. 26 |
8.05% |
11.85% |
564 |
519 |
Term Loan |
USD |
3M SOFR w/ floor of 0% +7.50% |
Sept. 26 |
12.03% |
15.36% |
56 |
53 |
RCF |
USD/EUR |
SOFR/Euribor +4.50% |
Sept. 25 |
7.10% |
7.77% |
40 |
36 |
Lease debt |
|
|
|
10.21% |
10.21% |
165 |
165 |
Accrued interest
and other debt |
|
|
|
0% |
0% |
3 |
3 |
TOTAL GROSS DEBT |
|
|
|
|
|
828 |
776 |
Cash & Cash
equivalents |
|
|
|
|
|
(38) |
(38) |
Total Net Debt |
|
|
|
|
|
790 |
738 |
Average Interest
rate |
|
|
|
|
|
8.67% |
11.50% |
Appendix
IV – Indicative Terms & Conditions
of instruments and reinstated debt under
the Agreement in Principle
|
Convertible Notes |
New Money Credit Facility |
Amount |
€60 million net of Original issue Discount
FeeFully backstopped by Angelo Gordon |
€110 million net of Original issue Discount and
Underwriting feesFully underwritten by certain Lenders |
Drawing |
- Convertible Notes and Lender New Money to be drawn pro
rata.
- First drawdown: €85m in aggregate within 3
Euronext trade days from homologation of the conciliation protocol
(“First Drawdown”) expected by end of March / beginning of April
2023
- Second drawdown: €85m in aggregate expected in
June 2023 (“Second Drawdown”).
|
Maturity |
July 2026 / bullet repayment at par in cash if not converted in
equity |
July 2026 / bullet repayment at par in cash |
Non-call |
N/A |
Non-Call 2; 103 for the following 12 months then repayment at
par |
Interest |
|
EUR Tranche: Until June 2024
- Cash: Euribor (0% floor) + 0.5%
- PIK: 11.5% (subject to PIK toggle to cash depending on EBITDAal
level to be agreed)
Thereafter
- Cash: Euribor (0% floor) + 2.0%
- PIK: 10.0% (subject to PIK toggle to cash depending on EBITDAal
level to be agreed)
USD Tranche: Until June 2024
- Cash: SOFR (0% floor) + 0.5%
- PIK: 11.5% (subject to PIK toggle to cash depending on EBITDAal
level to be agreed)
Thereafter
- Cash: SOFR (0% floor) + 2.0%
- PIK: 10.0% (subject to PIK toggle to cash depending on EBITDAal
level to be agreed)
|
Original issue Discount Fee |
4.0% |
5.0% |
Commitment Fee |
N/A |
1.5% Commitment Fee on undrawn amount during the
availability period |
Underwriting Fee |
N/A |
3.5% Underwriting fee on the initial committed
amount of the New Money Credit Facility |
Conversion of Convertible Notes |
33% (fully diluted basis)
- Automatic conversion into equity if
EV is equal to or exceeds €1.2bn or EBITDA exceeds a level to be
agreed
- Voluntary conversion (in full or in
part) upon each participating shareholders’ election at all
times
|
N/A |
Warrants |
N/A |
11% (fully diluted basis) |
Ranking |
Super senior (on a pari passu basis with the Reinstated Super
Senior RCF) from date of the First Drawdown (security package plus
intercreditor agreement) |
Security |
- Security granted on First Drawdown
(benefits all New Money amounts): first lien security on sufficient
assets including the fiducie-sûreté over the shares of Mikros
Images SAS or, if not feasible, Technicolor Trademark Management
SAS.
- Full security package (benefits all
New Money amounts) to be put in place by Second Drawdown: first
lien security on the shares of Tech 6 by way of fiducie-sûreté (and
golden share) as well as first lien security on the other assets of
the group (as per the security package for the existing debt).
|
|
Reinstated RCF |
Reinstated First Lien Facility |
Amount |
€40 million |
c.€421 millionEUR tranche: €382
million USD tranche: c.€39 million
(EUR-equivalent) with right for to convert to EUR tranche |
Ranking & Security |
Pari passu on the New Money security |
Second Lien on New Money security |
Maturity |
July 2026 |
September 2026 / bullet repayment |
Interest |
- Cash: Euribor (0% floor) + 2.0% cash
- PIK: 3.5% (subject to PIK toggle to cash
depending on EBITDAal level to be agreed)
|
EUR Tranche: Until June 2024
- Cash: Euribor (0% floor) + 0.5%
- PIK: 5.5% (subject to PIK toggle to cash depending on EBITDAal
level to be agreed)
Thereafter
- Cash: Euribor (0% floor) + 2.0%
- PIK: 4.0% (subject to PIK toggle to cash depending on EBITDAal
level to be agreed)
USD Tranche: Until June 2024
- Cash: SOFR (0% floor) + 0.5%
- PIK:7.0% (subject to PIK toggle to cash depending on EBITDAal
level to be agreed)
Thereafter
- SOFR (0% floor) + 2.0%
- PIK: 5.5% (subject to PIK toggle to cash depending on EBITDAal
level to be agreed)
|
|
New Subordinated Instrument |
Amount |
€170 million |
Participants |
First Lien Facility lenders pro rata to their holdings in the First
Lien Facility |
Use of proceeds |
To repay a portion of the First Lien Facility at par |
Security |
None |
Maturity / Amortisation |
Bullet repaymentMaturity to be discussed |
Interest |
PIK: 0.5% |
Stapling |
Stapled to the Reinstated First Lien Facility |
Ranking |
Contractual subordination to New Money (being any Convertible Notes
not converted into equity and New Money Credit Facility) and
Reinstated Debt. Senior to equity (including equity arising from
conversion of Convertible Notes). |
1 Following the March 9, 2023 meeting of the Board of Directors
of the Company.2 A definition of adjusted EBITDA after lease along
with a reconciliation to GAAP measure is presented in Appendix II
of this press release.
3 For FY 2021, adjusted EBITDA after lease by
segment could not be computed retrospectively as allocation rules
for many expenses could not be reliably established over the
periods presented.4 A definition of Operating Free Cash Flow after
lease (new definition) along with a reconciliation to GAAP measure
is presented in Appendix II of this press release.5 As a reminder,
next financial covenant test (First Lien Net Leverage Ratio) under
its Senior Secured Facility will be on June 30, 2023.
- 2022-03-10-TCS-FY22 ENG-25-final
Technicolor Creative Stu... (EU:TCHCS)
Historical Stock Chart
From Mar 2024 to Apr 2024
Technicolor Creative Stu... (EU:TCHCS)
Historical Stock Chart
From Apr 2023 to Apr 2024