Technology

FY-2014: Technicolor reduces financial debt despite lower group revenues

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BENGALURU:  Global technology player in the media and entertainment sector Technicolor reported profit from continuing operations at €137 million as compared to a loss of €111 million last year. The company reported net income after tax, excluding costs due to debt repayments, at €149 million in the year ended 31 December, 2014 (FY-2014) as compared to €69 million in FY-2013. The company reported net financial debt at nominal value (non IFRS) of €645 million in the current year as compared to the €784 million in FY-2013.

Group revenue in FY-2014 was however lower by 3.4 per cent at €3332 million as compared to the €3449 million in the previous year. Group revenue excluding legacy activities in FY-2014 was 1.4 per cent lower at €3315 million as compared to the €3362 million in the preceding year.

Adjusted EBITDA from continuing operations amounted to €550 million in FY-2014 compared to €537 million in 2013, recording year-over-year growth of 3.1 per cent at constant currency. Adjusted EBITDA margin stood at 16.5 per cent, up by 1.0 point year-on-year, reflecting strong Connected Home  performance, driven by continued operating efficiency and better product mix, sustained revenue growth in Production Services, particularly in higher-margin VFX activities, and lower corporate costs, mostly related to transversal functions, which helped to offset the exit from legacy activities and weaker DVD Services contribution, as well as continuing investments in new Technology business initiatives says the company.

The Group’s financial result was loss of €117 million in FY-2014 compared to loss of €288 million in FY- 2013, reflecting the following informs Technicolor:  Net interest costs amounted to €65 million in FY-2014, a significant reduction compared to €112 million in FY-2013, due to lower borrowing costs stemming from the refinancing and re-pricing transactions and from the material decrease in gross debt achieved during the period. Other financial charges amounted to €FY-52 million in 2014, of which costs related to the refinancing and re-pricing transactions for €26 million, including an IFRS reversal recognised as a non-cash charge for €20 million due to the debt prepayments done in FY-2014.

Segment results (Company Speak Excerpts)

Technology

Technology revenues amounted to €490 million in FY-2014, up 1.2 per cent at current currency compared to 2013. Licensing revenues totalled €479 million in FY-2014, broadly unchanged from FY-2013, as a double-digit decline in revenues from the MPEG LA pool (which represented 45 per cent of Licensing revenues in FY-2014 compared to 53 per cent in FY-2013) was offset by robust double-digit revenue growth across other patent license programs. The Group benefited principally from a strong level of new contracts in the fourth quarter of FYT-2014 in its Digital TV program, and from additional revenues related to the LG smartphone patent license agreement signed in February 2014.

Entertainment Services

Entertainment Services revenues (excluding legacy activities) amounted to €1,442 million in FY-2014, down 5.7 per cent at current currency compared to FY-2013, as weaker performance for DVD Services was partially offset by strong revenue growth across Production Services, particularly in Visual Effects (VFX) activities.

Legacy activities generated revenues of €17 million in FY 2014, down by about 81 per cent at current currency compared to 2013.

Connected Home

Connected Home revenues were €1,382 million in FY-2014, up 2.6 per cent at current currency compared to FY-2013, highlighting a good level of activity across most regions, as reflected by record product shipments of more than 34 million units for the year (+5.6 per cent). The Connected Home segment continued to expand faster than the market, achieving year-on-year revenue growth of 4.4 per cent at constant currency, and also succeeded to post revenue increases in each of the quarters of the year. This performance resulted from further market share gains across all regions, in particular in North America and Europe, Middle-East & Africa, as well as ongoing improvement in overall product mix, especially in Latin America. In FY-2014, HD products accounted for 79 per cent of total set top box shipments (FY-2013: 55 per cent), while Ultra Broadband devices (DOCSIS 3.0, VDSL, Fiber) represented 62 per cent of total Broadband CPE volumes (FY-2013: 52 per cent), both product categories recording significant year-on-year mix improvement, in line with the segment’s roadmap.

Technicolor CEO Fredrick Rose said, : “I am extremely proud of the work done by everyone in Technicolor to deliver a fantastic performance in 2014 resulting in a positive net income and the initiation of a dividend. As we now embark on our Drive 2020 strategic plan, we will remain fully focused on creating shareholder value as a leader in media and entertainment services, developing and monetizing video and audio technologies.”

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