Editoria e Media
2018 Financial Earnings - Extension of the Standstill Agreement With Financial Creditors Until 31 July 2019
2018 FINANCIAL EARNINGS
EXTENSION OF THE STANDSTILL AGREEMENT WITH FINANCIAL CREDITORS UNTIL 31 JULY 2019
Ymagis Group (FR0011471291, MAGIS, PEA-PME, TECH 40) , the European specialist in digital technologies for the film industry, today reported its full-year earnings for the 2018 fiscal year, ending 31 December 2018, reviewed by the Group's Board of Directors following its meeting on 24 April 2019.
Natural drop in VPF and stability of other activities
In 2018, the scheduled reduction in Virtual Print Fee activities (-15.7% at €51.8m revenue) was not offset by the growth of service activities:
EBIT is down by €20m
Earnings for 2018 fell significantly under the effect of the reduced contribution from VPF activities, the losses made by the Eclair BU, currently restructuring, and the cost of developing the new activities. Furthermore, the contribution of CinemaNext to earnings is not significant enough, the level of activity remaining close to its break-even point.
Details of the contribution of each business unit to the Group's performance are shown below:
EBITDA for VPF fell by €11.8m due to the reduction in activity and the inclusion of additional operating costs linked to contracts coming to an end. The end of the leasing contracts, restated as fixed assets under the IFRS standards, also had an impact on the EBIT for the BU, down by 36% at €11.7m.
EBITDA for CinemaNext increased by €0.8m despite its revenue falling slightly, thanks to control of operating costs (reduced rent for some sites, optimisation of maintenance operations, improved supply chain). After depreciation & provisions and taking into account exceptional operating costs for CinemaNext North America of €0.2m, EBIT for the BU stood at -€0.5m. Ymagis stresses that the departure of the Managing Director of CinemaNext North America during the year affected the development of this activity which should generate a low contribution in 2019.
EBITDA for Eclair was down by €5.2m mainly due to the difficulties experienced by the creative activities. This led the Group to ask for its Eclair Cinema subsidiary, which operates these activities in France, to be placed in receivership in November. The EBIT was impacted by Eclair goodwill impairment of €7.0m. Eclair goodwill was entirely impaired on 31 December 2018.
Lastly, the new activities contributed negatively to the Group's EBITDA for €2.4m, approximately half of which is linked to the sales costs of developing the HDR EclairColor technology, revenue for which remains low. The other half is due to the launching of the EclairGame and Illucity-related activities.
In total, the Group's EBIT stood at -€12.6m, down by €20.1m as compared to the previous year.
At -€4.6m, the net financial charges deteriorated by €0.5m given the greater use of short-term credit lines and overdrafts.
The tax burden represented €0.4m (€2.6m in 2017), a drop linked in particular to the lower earnings of the foreign subsidiaries operating the VPF activity.
With a minority interest share - foreign partners of the CinemaNext network - of €0.7m, the Group's net income stands at -€18.3m, as compared to €0.8m the previous year.
Free cash flow financed investments in 2018
Cash flow Table
The fall in earnings has reduced the self-financing capacity by €21.4m. With working capital requirements down by €4.0m, operations generated a positive flow of €20.9m, the largest share of which, €16.4m, was dedicated to investments. These concerned the digital transformation of Eclair, fitting out the new Malakoff and Barchon premises and the launch, costing €4.0m, of the new EclairGame and Illucity activities. To this was added capital investments (creation/repurchase of subsidiaries and share repurchase programme) for €0.9m.
Given the high level of investment and cash flows relating to financing of €10.9m, of which €10.0m for loan repayments, the cash flow variation for the year stood at -€6.3m.
The available cash flow of €9.8m at the end of 2018 did not allow the EuroPP bond repayment term of €19.5m initially scheduled on 23 February 2019. This led the Group to enter into discussions with all its financial creditors and obtain “standstills” awaiting the outcome of debt negotiations.
Business development outlooks subject to renegotiation of the debt
From an operational point of view, Ymagis moves into 2019 with strengthened positions on its different business segments:
In this context, renegotiation of the debt should enable Ymagis to capitalise on the efforts accomplished to take advantage of these new growth and profitability drivers. If the discussions underway succeed, they should enable the Group to enter a new stage in its development.
This situation raises considerable uncertainty regarding the ability to continue operating as a going concern. Nevertheless, the Group approved its consolidated earnings on 31 December 2018 based on the assumption of an ongoing concern scenario given the confidence it has in:
Lastly, the Group and its financial creditors have reached an agreement to extend the “standstill” agreement negotiated in February 2019 until 31 July 2019. This new agreement indicates the willingness of Ymagis and its financial creditors to secure appropriate solutions regarding the Group's debt.
Next press release on 13 May 2019: revenue for Q1 2019
Attachment
2321 Rosecrans Avenue. Suite 2200
90245 El Segundo Stati Uniti