technicolor - 2019 Universal registration document
2 OPERATING AND FINANCIAL REVIEW AND PROSPECTS RESULTS OF OPERATIONS FOR 2018 AND 2019
FY 2019 excl. IFRS 16
FY 2019
FY 2018 Change (1)
(in million euros)
Total Adjusted EBITA from continuing operations
42 28 (6) 23 (2)
36 24 (9) 23 (2)
98 51 14 33
(63.5)% (56.2)%
Production Services
DVD Services
ns
Connected Home Corporate & Other
(28.8)%
0
ns
Change at constant currency, excluding IFRS 16. (1)
Adjusted EBITA from continuing activities was €36 million compared to €98 million in 2018.
PRODUCTION SERVICES Adjusted EBITDA amounted to €132 million, or 14.8% of revenue, up 20.3% at current rate year-on-year. The EBITDA improvement was driven by Film & Episodic VFX and Animation & Games performance. Adjusted EBITA was down versus last year primarily due to increased cloud rendering costs resulting from an exceptionally heavy delivery schedule, Mill Film facility build outs in Montreal and Adelaide, and a higher number of episodic deliveries by TAP. DVD SERVICES Adjusted EBITDA amounted to €46 million, or 5.3% of revenue, down 31.6% at current rate year-on-year. The margin decline was significantly driven by the reduction in volumes and a weaker product mix, not fully offset by ongoing cost savings and a positive half year impact of renewed contracts. This negative evolution has fully impacted adjusted EBITA. COST OF SALES Cost of sales amounted to €3,381 million in 2019 or 89.0% of revenues, compared to €3,521 million in 2018, or 88.3% of revenues. Cost of sales in absolute terms were €140 million lower in 2019 compared with 2018, mainly in the Connected Home and the DVD Services segments, reflecting the impact of lower sales and cost structure improvement. The principal components of the Group’s cost of sales were the costs of finished goods for resale (mainly in the Connected Home segment), raw materials (mostly in the Connected Home and DVD Services segments), labor costs in the Group’s operations (mostly in the Production Services and in DVD Services segments), as well as costs related to real estate and fixed assets depreciation (mainly in the Production Services and DVD Services segments). Gross margin from continuing operations amounted to €419 million in 2019, or 11.0% of revenues, compared to €467 million in 2018, or 11.7% of revenues. This lower gross margin mainly reflects the lower sales impact in DVD Services and Connected Home segments. The gross margin ratio is also impacted, in Production Services segment, by the growing usage of cloud rendering services.
CONNECTED HOME Adjusted EBITDA amounted to €69 million, or 3.5% of revenue, down 20.5% at current rate year-on-year. The margin decline was driven by the volume reduction and margin mix in North American Video market but partially compensated by the positive evolution of component costs and benefits from our transformation plan. Lower D&A and reversal of a provision have helped deliver an adjusted EBITA of €23 million. CORPORATE & OTHER Adjusted EBITDA amounted to €(1) million, and Adjusted EBITA at €(2) million, slightly lower than in 2018.
Analysis of operating expenses and profit (loss) 2.2.3 from continuing operations before tax and net financial expense
SELLING & ADMINISTRATIVE EXPENSES Selling and marketing expenses amounted to €111 million in 2019, or 2.9% of revenues, compared to €111 million in 2018, or 2.8% of revenues. General and administrative expenses amounted to €212 million in 2019, or 5.6% of revenues compared to €181 million in 2018, or 4.5% of revenues. Change in currency rates accounted for more than €7 million in these variations. The remaining increase is linked to higher resources used to support the strong growth in Production Services segment, and variable compensations to employees across the Group being significantly released in 2018. For more information, please refer to note 3.3.2 to the Group’s consolidated financial statements.
36
TECHNICOLOR UNIVERSAL REGISTRATION DOCUMENT 2019
Made with FlippingBook Learn more on our blog