2019 HALF-YEAR RESULTS HIGH LEVEL OF PRODUCTION ACTIVITY, REAL - - PowerPoint PPT Presentation

1

HIGH LEVEL OF PRODUCTION ACTIVITY, REAL BREAKTHROUGH IN THE US: SOLID PROSPECTS

2019 HALF-YEAR RESULTS

AN INTEGRATED PURE PLAYER WITH GLOBAL REACH

› A leading animation group

─ Power, strong reputation and diversification of a proprietary brands portfolio ─ Integration of the entire value chain

› A major digital player

─ Acceleration in sales to US streaming majors ─ A leader in young people’s programming on AVOD platforms (YouTube)

› A major international operator

─ 190 countries / over 800 million homes ─ Expertise and know-how recognised by the leading broadcasters ─ Strong development momentum in the US, a driving force in the global market

› A major player in innovation

Presentation of first-half 2019 results

2

‒ 20 years ‒ 4 production studios: Paris, Lyon, Angoulême, Ho Chi Minh ‒ 400 employees ‒ 7 directors ‒ 20 original creations ‒ 2,200 episodes produced

Presentation of first-half 2019 results

IN POLE POSITION TO BENEFIT FROM THE STREAMING WAR

3

Catalogue depth Family

Available Not yet available

─ 12/11 2/11 ─ €6.99 per month ─ Target: 60m to 90m subscribers in 2024 ─ 1/11 /11 ─ €4.99 per month ─ €11.99-€15.99 per month ─ 6m subscribers in France ─ 150m subscribers worldwide in Q2 2019 (up 24% year-on-year) ─ €100 million invested in French production ─ $10 billion spent on content in 2019 ─ Spring ng 2020 20 ─ €16-17 per month ─ Catalogue: 10,000 h ─ April 2020 20 ─ Pricing unknown (free for US cable subscribers)

Reversed balance of power: producers rather than broadcasters now enjoy scarcity value

Adults

‒ Lever of continuing globalisation ‒ Favours “super producers” (expertise and innovation) ‒ Increase in purchase prices per half-hour

AN INDEPENDENT FAMILY-OWNED GROUP

MDP Audiovisuel; 26,3% Xilam Group; 10,1% Treasury shares; 1,5% 4,3% Free float; 57,8%

Majority of voting rights held by the founder (53.3%)

MDP Audiovisuel 38.4% Xilam Group 14.9% Treasury shares 1.1% Other 3.3% Free float 42.3%

(1) Xilam Group is wholly-owned by MDP Audiovisuel, which is in turn wholly-owned by Marc du Pontavice (2) Employees and other registered shareholders

Voting rights

Presentation of first-half 2019 results

1

Other2

4

5

A BUSIN SINESS ESS MOD ODEL EL WI WITH TH LON ONG G AND D ENDURING DURING CYCLE LES

6

CREATION PRODUCTION DISTRIBUTION

Very little commission to be paid to third parties on sales Tight grip on costs and margin retention No or very few third-party rights in its properties

EXPERTISE SPANNING THE ENTIRE VALUE CHAIN

Presentation of first-half 2019 results

Business line integration to unlock the greatest possible value

7

POWERFUL BUSINESS MODEL PROVIDING VISIBILITY AND SECURITY

NEW PRODUCTIONS CATALOGUE

Presentation of first-half 2019 results

2/3 of revenue 1/3 of revenue

─ Powerful engine of growth ─ Steady increase in prefinancing ─ High visibility for two years ─ Cut-off effects and IFRS ─ Volume leverage: continuous enrichment ─ 60% of revenue recurring ─ Major impact on profitability ─ Impact of prefinancing over the first

• perating cycle

8

A BUSINESS MODEL WITH LONG CYCLES (1/2)

2 years 3 years 5-6 years

PRESALES = 100% % to to 140% % CO COVERA RAGE OF PRO RODU DUCTI TION ON CO COSTS Animation life cycle Revenue CO COMMENC NCEMENT NT OF RIGHTS TS FOR R THE SECON COND D OPERA RATI TING NG CYCLE PRO RODU DUCT CTION ON ADDI DITI TION ON TO CATALOG OGUE DELIVE VERY CO COMMENC NCEMENT NT OF RIGHTS TS FOR R THE FIRS RST T OPERA RATI TING NG CYCLE EXCLUDI DING NG PRESALES

∞

Presentation of first-half 2019 results

9

A BUSINESS MODEL WITH LONG CYCLES (2/2)

Coûts de production Chiffre d'affaires Encaissements

Commencement of multiple rights in France for the first operating cycle (presales) and CNC subsidy

Revenue connected to the pace of episode deliveries

Commencement of international rights linked to presales and initial catalogue sales, still in the first operating cycle

Revenue connected to completion of episode delivery

Commencement of multiple rights for

• ther operating cycles (catalogue)

Revenue unconnected to the delivery of episodes Completion of episode delivery

2 years 3-4 years

Presentation of first-half 2019 results

∞

10

BREAKTHR AKTHROUGHTS OUGHTS

11

INROADS MADE BY THE XILAM BRAND WITH US STREAMING MAJORS

Presentation of first-half 2019 results

GLOBAL DISTRIBUTION AGREEMENT WITH NETFLIX FOR I LOST MY BODY, A GRAND PRIZE WINNER IN THE CRITICS’ WEEK SECTION AT THE CANNES FILM FESTIVAL ─ A successful R&D development, leading to expansion in the range of programming offered for adult audiences ─ Much higher budgets than for children’s programmes PRODUCTION DEAL WITH DISNEY FOR A CHIP ‘N’ DALE ANIMATION SERIES ─ 39 x 7 minutes ─ Xilam’s teams handed sole responsibility for the series (creation and production) ─ One of the first original animation series to air on Disney+ ─ Super-sized budget

Average sale price per half-hour sold set to increase sharply

12

CREATIVE CUBE, UNRIVALLED EXPERTISE IN COMPUTER-GENERATED IMAGES

Presentation of first-half 2019 results

─ Ac Acquis isit itio ion of

• f 50.1%

% of

• f the

the sha hare capit ital l and and voti

• ting ri

righ ghts ─ Payment due due in n cash and and en entrepreneuria ial l busin business mo model l adop adopted ─ CC’s average revenue: around €5 mi milli lion over the the las ast 3 fi fina nancia ial l year ears ─ Ac Acquis isit itio ion due due for

• r comple

letio ion by y year ear-end 2019

─ Integrated ani animated film film pr production studio base based on

• n com
• mputer-generated im

imag ages ─ Mul ulti-genre and and hig high-end expertise: short films, music videos, adverts, “big-screen” 3D films, series and feature-length films ─ Br Broad cus customer po portfolio: famous brands such as Cartier, Lu, Total, Kellogg’s, and Skoll, theme parks. ─ Suc Successful ne new de developments s in in pr proprietary pr production: Athleticus (broadcast on Arte), Kaeloo (on Canal+, Teletoon+, C8), Tangranimo (for France Télévisions) and Pfffirates (for TF1)

13

ORGANISATIONAL IMPROVEMENTS AND FINANCE DIVISION STRENGTHENED

Presentation of first-half 2019 results

Fabrice Cantou Chief Financial & Strategy Officer

─ Di Digital pr profile aligned with Xilam’s development as a pure player ─ Intern rnational/U /US pr profi file providing a good fit with the acceleration in international sales and especially to US platforms ─ Str Strategic/M /M&A pr profile, fully attuned to the strategy of acquisitions

François Bardoux Deputy Chief Operating Officer

─ 3 years at Xilam as CFO ─ Operational background ─ Specialist in applying management control to production ─ Tasked with coordinating control over multiple production units and subsidiaries ─ Expert know-how in managing audiovisual industry financing plans

14

RECORD RESULTS

H1 20 2019 9 RE RESUL SULTS TS

15

RESULTS DEMONSTRATING THE MODEL’S EFFECTIVENESS

Presentation of first-half 2019 results (€ thousands)

H1 2019 H1 2018

Revenu nue from m New Productio ctions ns 2,962 3,963 Subsidies and other income from new productions 1,844 4,502 Total l income me from new productio ctions ns 4,806 8,465 Catalogue logue reve venue ue 3,055 5,385 Other reve venue ue 25 25 16 16 Total l reve venu nue and other inco come 7,886 13,866 Other recurring operating revenue (o/w audiovisual tax credit) 648 1,081 Total l operating ting reve venue ue 8,534 14,947 47 Purchases (88) (48) Staff costs (921) (821) Other recurring operating expenses, net (438) (1,054) Depreciation, amortisation and impairment, net (4,041) (7,658) Adjuste usted recur curring ing operatin ting income me 3,046 5,366 % of revenue 38.6% 38.7% Bonus share allotment (272) (1,079) Other non-recurring operating income and expense (239) (542) Operating ing inco come 2,535 3,745 % of revenue 32.1% 27.0% Net incom come 1,613 2,603 % of revenue 20.5% 18.8%

16

FINANCIAL POSITION STRENGTHENED

Presentation of first-half 2019 results

ASSETS (€ thousands) 30 June 2019 31 Dec. 2018 Reported

Goodwill 664 664 Intangible assets 67,138 60,422 Property, plant and equipment 683 1,602 Rights of use related to leases 7,884 Non-current financial assets 311 311 Deferred tax assets, net T

• tal non-current assets

76,680 62,999 Current financial assets 225 288 Inventories Trade and other receivables 7,058 9,961 Assets related to contracts 1,190 1,884 T ax receivables 3,528 5,034 Other receivables 3,563 4,052 Cash and cash equivalents 13,994 2,303 T

• tal current assets

29,558 23,522 T

• tal

l assets ts 106,238 86,521

LIABILIT ILITIE IES (€ thousands) 30 June 2019 31 Dec. 2018 Reported

Share capital 491 491 Retained earnings, net income and treasury shares 49,374 47,728 T

• tal equity

49,865 48,219 Non-current provisions 687 632 Deferred tax liabilities, net 994 1,044 Non-current financial liabilities 15,700 6,488 Non-current lease liabilities 7,162 Other non-current liabilities 4,918 4,217 T

• tal non-current liabilities

29,461 12,381 Current provisions Current financial liabilities 5,493 3,634 Current lease liabilities 1,008 Trade payables and related accounts 3,017 2,977 Other current liabilities 5,439 6,736 Liabilities related to contracts 2,955 3,345 Customer advances and prepaid income 9,000 9,229 T

• tal current liabilities

26,912 25,921 Total l equity ty and liabil ilit ities ies 106,238 86,521

17

ANALYSIS OF NET DEBT

Presentation of first-half 2019 results

(€ thousands) 30 June 2019 31 Dec. 2018 Reported Cash and cash equivalents, net 13,966 2,231 Borrowings (15,414) (4,055) Self-liquidating financial liabilities (5,751) (5,995) Net debt (7,199) (7,819)

HEALTHY THY VISIBILIT SIBILITY, , OB OBJECTIVES ECTIVES RE REITERA TERATED TED

18

Presentation of first-half 2019 results

19

26 half-hours 26 half-hours 26 half-hours 26 half-hours 13 half-hours 52 half-hours

6 SERIES IN PRODUCTION – A RECORD LEVEL

A total of 169 half hours

20

35

51

63

69 80

100

Delivery projections for new productions (in half-hours) 2015 2016 2017 2018 2019 2020

New productions strengthening the catalogue with each passing year

OBJECTIVE RESTATED

+195 half-hours

Presentation of first-half 2019 results

21

REGULATORY CHANGES FAVOURABLE TO INDEPENDENT PRODUCERS: ENACTMENT OF THE EUROPEAN DIRECTIVE ON AUDIOVISUAL MEDIA SERVICES INTO FRENCH LAW

Presentation of first-half 2019 results

› Two major reforms applicable from 01/01/2021

─ At least 30% of the content broadcast on all channels and platforms in Europe must be of European origin. ─ All broadcasting channels and platforms operating in France must comply with all the local regulations

› Implications

─ Growth in demand from US platforms for French-origin catalogues ─ All platforms will have to invest between 16% and 20% in French production (varying from one to the next), including 7% to 10% in original independent production.

Xilam in pole position to win a major share of this engine of growth

22

AMBITIOUS DEVELOPMENT STRATEGY

International expansion Digital platforms

Increase in the US component of revenue

Extension of the product range:

• Pre-school
• Kids
• Family
• Adult

Growth in volume AND in value of new productions Power and resilience of the catalogue Organic growth and growth through acquisitions

Presentation of first-half 2019 results

CONCLUSION

Presentation of first-half 2019 results

Se Security rity Vi Visibil sibility ity Pr Profita fitabi bility ity Growth

• wth

23