animation’s digital revolution: from leaders in · 2019-05-22 · ‒ 20 years in existence ‒ 4...

1

ANIMATION’S DIGITAL REVOLUTION: FROM LEADERS IN

FRANCE TO INTEGRATED DIGITAL PLAYERS ON A GLOBAL

SCALE

MAY 2019

‒ 20 years in existence

‒ 4 production studios: Paris,

Lyon, Angoulême, Ho Chi

Minh City

‒ 400 employees

‒ 7 directors

‒ 20 original creations

‒ 2,200 episodes produced

2

A HISTORY OF STRONG & PROFITABLE GROWTH

Présentation des résultats annuels 2018

CAGR 2015-2018 : +35%

‒ 64% of sales abroad

‒ 1/3 of revenues generated by the catalogue

‒ Recurrence on catalogue: 60%

2

11,3

15,9

24,1

28,0

1,9 4,37,2

9,7

2015 2016 2017 2018

CA EBIT

27% 30% 35%

EBIT as

% Revenue 17%

(€m)

Sales

EUROPEAN LEADER IN ANIMATION

› European leader in animation

─ a portfolio of proprietary brands featuring strong reach, reputation and diversification

─ strength both in France and abroad

─ integration along the entire value chain

─ expertise and know-how acknowledged by major broadcasters

› Strong international footprint

─ 190 countries / >800 million households

› Ahead of the crowd in the digital transformation

─ agility and resources: rapid adaptation to market transformation

─ a confirmed model: accelerating sales over the past 2 years

─ >4 billion YouTube views in 2018, >10 billion cumulative views

─ around 40% contribution of catalogue sales

Presentation of 2018 annual results 3

4

In addition to the arrival

of Disney, Netflix has an

essential fact in its

possession: 60% of its

subscribers watch

programs dedicated to

children and families,

most of which are

cartoons. Over the past 18

months, Netflix has

recruited about 40 people

worldwide to develop

these programs. First

results expected in 2020.

Melissa Cobb

VP “Kids and Family” Netflix

Presentation of 2018 annual results

Les Echos, 25/3/19

Les Echos, 26/3/19

MIGRATION OF THE PAY-TV MODEL TO DIGITAL PLATFORMS

› Multiplication of digital platforms (SVOD/AVOD)

─ from a local broadcasting issue to a global broadcasting issue

› Structural market imbalance

─ high barriers to entry at the level of expertise

─ premiums for players that anticipated digital disruption as a lever for the

globalization of broadcasting

─ producer vs. broadcaster premium

› B2B2C issues: direct digital distribution platforms,

leveraging visibility and margins


Reversal of the balance of power: rarity has shifted from distribution to production

FREE TV PAY TV SVOD

TV DIGITAL

AVOD

IDEALLY POSITIONED TO CAPTURE THE GROWTH OF TRANSFORMATION

5

A STRONG ALIGNMENT OF CAPITAL INTERESTS

Audiovisual CDM

26,3%

Xilam Group

10,1%

Treasury shares

1,5%

4,3%

Float

57,8%

A majority of the voting rights

are held by the founder

(53.3%)

Audiovisual CDM 38.4%

Xilam Group 14.9%

Treasury shares 1.1%

Other 3.3%

Float 42.3%

(1) Xilam Groupe is 100% owned by MDP Audiovisuel, itself 100% owned by Marc du Pontavice (2) Employees and other registered

Voting rights


1

Other 2

6

Présentation XILAM ANIMATION – Résultats semestriels 2018 7

A ‘VIRTUOUS CYCLE’ MODELCREATING HIGH VALUE-ADDED

8

CREATION PRODUCTION DISTRIBUTION

Very few

commissions to

be paid on sales

Cost control

and margin

retention

No or very few

rights-holders

on its

properties

CONTROL OVER THE ENTIRE VALUE CHAIN

Direct production costs financed from 100% to 140% by pre-sales


9

A HEALTHY AND VIRTUOUS BUSINESS MODEL

─ Powerful driver of catalogue growth

─ strong impact on revenues and profitability

Evolution of new productions vs.

catalogue (M€)

NEW

PRODUCTIONSCATALOGUE

+12% in 2018

65% of 2018 revenues

+26% in 2018

35% of 2018 revenues

4,9 5,17,7

9,7

10,8

16,3

18,2

2015 2016 2017 2018

11.3

15.9

24.1

+4%+51%

+26%

+69%

+51%

+12%

+41%

+52%

28.0

+16%CAGR:

+35%.

CATALOGUE

NEW

PRODUCTIONS

2015 2016 2017 2018

─ Leveraging volume:

continuously enriching the

catalogue

─ 60% recurring revenues


6,4

10

A LONG-CYCLE MODEL (1/2)

2 years 3 years 5-6 years old

PRE-SALES = 100% TO 140%

COVERAGE OF PRODUCTION

COSTS

Animation

life cycle

Revenues from

operations

OPENING OF RIGHTS

FOR 2nd CYCLE OF

OPERATION

PRODUCTION CATALOGUE TRANSITIONDELIVERY

OPENING OF RIGHTS FOR

THE 1st CYCLE OF

OPERATION

∞


11

A LONG-CYCLE MODEL (2/2)

avr.-18 août-18 déc.-18 avr.-19 août-19 déc.-19 avr.-20 août-20 déc.-20 avr.-21 août-21 déc.-21 avr.-22 août-22 déc.-22 avr.-23 août-23 déc.-23

Production costs Receipts


Dec. 2023

PRODUCTION

Revenues from operations

€6.3m

€10.8m

€16.3m

€18.2m

2015 2016 2017 2018

12

NEW PRODUCTION SALES 2015 – 2018 (€m)

+12%

NUMBER OF HALF-HOURS DELIVERED

15.3 €m

published

INCREASING NUMBER OF NEW PRODUCTIONS

35

51

6369

2015 2016 2017 2018

CHANGE IN SALE PRICE PER HALF HOUR (€k)

IFRS 15

181211

259 264

2015 2016 2017 2018

CAGR: +13.4%.

13

PERFORMANCE AND RESILIENCE OF THE CATALOGUE

EVOLUTION OF CATALOGUE REVENUES

€4.9m €5.1m

€7.7m

9,7M€

2015 2016 2017 2018

€9.0m

published

IFRS 15

+26%

2015 2016 2017 2018

Conversion to

catalogue revenues in

2018Evolution of revenues from

new productions

14

DIRECT BROADCASTING ON AVOD PLATFORMS: INCREASINGLY SIGNIFICANT INCOME ON YOUTUBE


40%

YOUTUBE TRAFFIC (BILLIONS OF VIEWS)

0.4

1,1

2.22.6

4.0

2014 2015 2016 2017 2018

+55%

‒ >10 billion cumulative views at

the end of December 2018

‒ YouTube revenue: 9% of total

revenue

‒ Number of subscribers to

YouTube channels: +162% to

6.3m at end 2018 (vs. 2.4m at

end 2017)

15

Oggy worldwide

An intergenerational concept

A key name in animation

507 episodes, 7 seasons

Distribution in 190 countries

2.5 million YouTube subscribers

3 million Facebook fans

Zig & Sharko worldwide

A hit on par with Oggy

Nec plus ultra of slapstick comedy

234 episodes, 3 seasons

Distribution in 190 countries

4 million YouTube subscribers

OGGY AND THE COCKROACHES, ZIG & SHARKO: ILLUSTRATING OUR MODEL PERFECTLY

15Presentation of 2018 annual results

16

DES RÉSULTATS RECORDSFINANCIAL RESULTS 2018:

INCREASINGLY PROFITABLE GROWTH

17

RESULTS THAT CONFIRM THE MODEL’S FITNESS FOR PURPOSE


(In thousands of euros) 2018 2017 restated 2017 published

Sales of New Productions 11,690 10,186 9,218

Subsidies and other income on new productions 6,506 6,101 6,101

Total new production products 18,196 16,287 15,319

Catalogue turnover 9,723 7,704 9,017

Other revenue from other activities 32 62 62

Total revenues and other income 27,951 24,053 24,398

Other current operating income (including audiovisual tax credit) 2,350 2,307 2,174

Total operating income 30,301 26,360 26,572

Procurement (181) (133) (133)

Personnel expenses (1,597) (1,281) (1,281)

Other net current operating expenses (2,894) (925) (1,280)

Depreciation, amortization and provisions, net (15,965) (16,821) (15,215)

Adjusted current operating income 9,664 7,200 8,663

% OF REVENUE 34.6% 29.9% 35.5%

Free allocation of shares (1,270) (1,031) (1,031)

Other non-recurring operating income and (expenses) (1,212) 0 0

Operating income (or loss) 7,182 6,169 7,632

% OF REVENUE 25.7% 25.6% 31.3%

Net income (or loss) 5,159 5,017 5,948

% OF REVENUE 18.5% 20.9% 24.4%

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A FINANCIAL SITUATION OF INCREASING STRENGTH


ASSETS (in thousands of euros) 12.31.1812.31.17

restated

12.3117

published

Goodwill on acquisitions 664 664 664

Intangible assets 60,422 53,002 51,075

Property, plant and equipment 1,602 1,517 1,517

Non-current financial assets 311 698 698

Net deferred tax assets 0 39 0

Total non-current assets 62,999 55,920 53,954

Current financial assets 288 106 106

Inventories 0 15 15

Trade receivables and related accounts 9,961 6,531 6,531

Contract assets 1,884 3,961 3,961

Tax receivables 5,034 5,884 5,884

Other receivables 4,052 3,133 3,133

Cash and cash equivalents 2,303 1,812 1,812

Total current assets 23,522 21,442 21,442

Total assets 86,521 77,362 75,396

LIABILITIES (thousands of euros) 12.31.1812.31.17

restated

12.31.17

published

Share capital 491 447 447

Reserves, income and treasury shares 48,134 20,464 22,618

Total shareholders' equity 48,625 20,911 23,065

Non-current provisions 632 512 512

Net deferred tax liabilities 1,247 0 901

Non-current financial debts 7,819 14,663 14,663

Other non-current liabilities 4,217 4,251 4,251

Total non-current liabilities 13,915 19,426 20,327

Current provisions 70 70

Current financial debts 2,303 12,363 12,363

Trade payables & current accounts payable 2,977 3,647 3,647

Other current liabilities 6,736 5,913 6,268

Contract liabilities 2,736 6,677 1,574

Current trade receivables and deferred income 9,229 8,355 8,082

Total current liabilities 23,981 37,025 32,004

Total equity and liabilities 86,521 77,362 75,396

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CLOSE-UP ON NET DEBT


(in thousands of euros) 12.311812.31.17

restated

12.31.17

published

Net cash and cash equivalents 2,231 1,770 1,770

Borrowings (3,173) (3,880) (3,880)

Debts related to finance leases (882) (1,103) (1,103)

Self-liquidating financial debts (5,995) (22,001) (22,001)

Net financial debt (7,819) (25,214) (25,214)

20

CLOSE-UP ON DEPRECIATION/AMORTIZATION POLICY


(in thousands of euros) 2016 2017 2018

Book value of current productions and catalogue 31,890 41,727 49,037

of which book value of catalogue (A) 16,905 20,944 20,440

Net catalogue revenue (B) 4,637 8,441 9,464

Book value / net catalogue revenue (A) / (B) 3.6x 2.5x 2.2x

STRONG VISIBILITY & CONFIRMED AMBITIONS

22

35

5163

6980

100Delivery forecasts for new productions (in half-hours)

2015 2016 2017 2018 2019 2020

New productions that, each year, strengthen the catalogue

CONFIRMED OBJECTIVE: 100 HALF-HOURS IN 2020

+195 half-hours +300 half-hours

2021-2023


23

AN AMBITIOUS DEVELOPMENT STRATEGY

Focus on revenue growth and margin improvement

International development Emerging countries + US

Digital platformsAccelerate growth on AVOD

platforms

Preschool activitiesHigh merchandising potential,

e-learning and e-gamingAccellerating new

production

Strength and

resilience of the

catalogue

Organic &

external growth


24

A COHERENT EXTERNAL GROWTH STRATEGY

XILAM IS LOOKING FOR XILAM OFFERS

‒ studio workshops

‒ a talent collective to integrate

‒ adjacencies

‒ editorial strength

‒ business expertise

‒ financial resources

‒ access to digital platforms

The challenge: preparing for tomorrow's growth through acquisitions that are

‒ targeted

‒ Accretive

‒ sources of added value


CONCLUSION

Safety Visibility

ProfitabilityGrowth

25Presentation of 2018 annual results

26

WE WELCOME YOUR QUESTIONS

animation’s digital revolution: from leaders in · 2019-05-22 · ‒ 20 years in existence ‒ 4...

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