ANIMATIONS DIGITAL REVOLUTION: FROM LEADERS IN FRANCE TO INTEGRATED - - PowerPoint PPT Presentation

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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

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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%

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11,3 15,9 24,1 28,0 1,9 4,3 7,2 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

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In addition to the arrival

• f 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 Echo hos, 25/3/19 19 Les Echo hos, 26/3/19 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

Presentation of 2018 annual results

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

FREE EE TV PAY Y TV SVOD TV TV DIGIT ITAL AL AVOD

IDEALLY POSITIONED TO CAPTURE THE GROWTH OF TRANSFORMATION

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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

Presentation of 2018 annual results

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Other 2

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Présentation XILAM ANIMATION – Résultats semestriels 2018

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A ‘VIRTUOUS CYCLE’ MODEL CRE REATING TING HIGH VALUE UE-ADDED ADDED

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CREATION PRODUCTION DISTRIBUTION

Very few commissions to be paid on sales Cost control and margin retention No or very few rights-holders

• n its

properties

CONTROL OVER THE ENTIRE VALUE CHAIN

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

Presentation of 2018 annual results

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A HEALTHY AND VIRTUOUS BUSINESS MODEL

─ Powerful driver of catalogue growth ─ strong impact on revenues and profitability Evo volutio tion n of new production ions s vs. catalogue (M€)

NEW PRODUCTIONS CATALOGUE +12% in 2018 65% of 2018 revenues +26% in 2018 35% of 2018 revenues

4,9 5,1 7,7 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

Presentation of 2018 annual results

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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

• perations

OPENI NING NG OF RIGHTS TS FOR FOR 2nd CYCLE OF OPERA RATI TION ON PRO RODU DUCT CTION ON CATALOG OGUE TRANS NSITI TION ON DELIVE VERY OPENI NING NG OF RIGHTS TS FOR R THE 1st

1st CYCLE OF

OPERA RATI TION ON

∞

Presentation of 2018 annual results

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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

Pro Produc ucti tion n co costs ts Rec Receipts ts

Presentation of 2018 annual results

Dec. . 2023

PRODUCT CTION

Revenue nues fro rom operati ations ns

€6.3m €10.8m €16.3m €18.2m 2015 2016 2017 2018

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NEW PRODUCTION SALES 2015 – 2018 (€m) +1 +12% 2% NUMBER OF HALF-HOURS DELIVERED

15.3 €m published

INCREASING NUMBER OF NEW PRODUCTIONS

35 51 63 69 2015 2016 2017 2018

CHANGE IN SALE PRICE PER HALF HOUR (€k)

IFRS 15

181 211 259 264 2015 2016 2017 2018 CAG CAGR: + R: +13.4%. 3.4%.

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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% +26%

2015 2016 2017 2018

Convers ersion ion to to catalogu talogue reven enues in 2018 18

Evolution of revenues from new productions

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DIRECT BROADCASTING ON AVOD PLATFORMS: INCREASINGLY SIGNIFICANT INCOME ON YOUTUBE

Presentation of 2018 annual results

40% YOUTUBE TRAFFIC (BILLIONS OF VIEWS) 0.4 1,1 2.2 2.6 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)

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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

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Presentation of 2018 annual results

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DES RÉSULTATS RECORDS

FI FINANCIA NANCIAL L RE RESUL SULTS TS 20 2018: 8: INCRE REASINGL ASINGLY Y PROFIT OFITABL ABLE E GROW OWTH TH

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RESULTS THAT CONFIRM THE MODEL’S FITNESS FOR PURPOSE

Presentation of 2018 annual results (In thousands of euros)

2018 2017 restated 2017 published

Sales s of New Productio uctions ns 11,690 10,186 9,218 Subsidies and other income on new productions 6,506 6,101 6,101 Total l new product uctio ion n products ucts 18,196 16,287 15,319 Catalogue logue turno nove ver 9,723 7,704 9,017 Other reve venue ue from other activiti ivities 32 32 62 62 62 62 Total l reve venu nues s and other income 27,951 24,053 24,398 Other current operating income (including audiovisual tax credit) 2,350 2,307 2,174 Total l operating ting inco come 30,301 26,360 26,572 72 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) Adjuste usted current t operating ting inco come 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) Operating ing inco come (or loss ss) 7,182 6,169 7,632 % OF REVENUE 25.7% 25.6% 31.3% Net inco come (or loss ss) 5,159 5,017 5,948 % OF REVENUE 18.5% 20.9% 24.4%

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A FINANCIAL SITUATION OF INCREASING STRENGTH

Presentation of 2018 annual results

ASSETS (in thousands of euros) 12.31.18 12.31.17 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 39 T

• tal non-current assets

62,999 55,920 53,954 Current financial assets 288 106 106 Inventories 15 15 Trade receivables and related accounts 9,961 6,531 6,531 Contract assets 1,884 3,961 3,961 T ax 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 T

• tal current assets

23,522 21,442 21,442 T

• tal

l assets ts 86,521 77,362 75,396

LIABILIT ILITIE IES (thousands of euros) 12.31.18 12.31.17 restated 12.31.17 published

Share capital 491 447 447 Reserves, income and treasury shares 48,134 20,464 22,618 T

• tal shareholders' equity

48,625 20,911 23,065 Non-current provisions 632 512 512 Net deferred tax liabilities 1,247 901 Non-current financial debts 7,819 14,663 14,663 Other non-current liabilities 4,217 4,251 4,251 T

• tal 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 T

• tal current liabilities

23,981 37,025 32,004 Total l equity ty and liabil ilit ities ies 86,521 77,362 75,396

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CLOSE-UP ON NET DEBT

Presentation of 2018 annual results

(in thousands of euros) 12.3118 12.31.17 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 financi cial l debt (7,819) (25,214) (25,214)

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CLOSE-UP ON DEPRECIATION/AMORTIZATION POLICY

Presentation of 2018 annual results

(in thousands of euros) 2016 2017 2018 Book value of current productions and catalogue 31,890 41,727 49,037

• f which

ch book k value ue of catalo logue ue (A) 16,905 20,944 20,440 Net catalogue logue reve venue ue (B) 4,637 8,441 9,464 Book k value / net catalogue logue reve venue ue (A) / (B) 3.6x 2.5x 2.2x

ST STRONG ONG VISIBILIT SIBILITY Y & C & CON ONFIRMED FIRMED AMBITIONS BITIONS

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35

51

63

69 80

100

Delivery 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

Presentation of 2018 annual results

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AN AMBITIOUS DEVELOPMENT STRATEGY

Focus on revenue growth and margin improvement International development

Emerging countries + US

Digital platforms

Accelerate growth on AVOD platforms

Preschool activities

High merchandising potential, e-learning and e-gaming

Accellerating new production Strength and resilience of the catalogue Organic & external growth

Presentation of 2018 annual results

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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

Presentation of 2018 annual results

CONCLUSION

Sa Safet ety Vi Visibil sibility ity Pr Profita fitabi bility ity Growth

• wth

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Presentation of 2018 annual results

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WE WELCOME YOUR QUESTIONS