XILAM (EPA:XIL) XILAM announces its financial results for 2018: increasingly profitable growth

Transparency directive : regulatory news

27/03/2019 18:00

Press release
Paris, 27 March 2019.

Xilam announces its financial results for 2018: Increasingly profitable growth

                   Substantial revenue growth: EUR28m (+16%)

     Strong growth in adjusted recurrent operating income*: EUR9.7m (+34%)

Xilam Animation (ISIN code: FR0004034072, Ticker: XIL), an independent producer
and distributor of animated programmes, has announced its results for the year
to 31 December 2018, reviewed by the Board of Directors on 26 March 2019 under
the chairmanship of Marc du Pontavice.

                                                        2017
                                                      restated        2017
(EUR
thousands)                            2018**   under IFRS 15
published

Revenue from new productions             11,690        10,186         9,218
Subsidies and other income on
new productions                           6,506         6,101         6,101
All new productions                      18,196        16,287        15,319
Catalogue revenue                         9,723         7,704         9,017
Other revenue                                32            62            62
Total revenue and other income           27,951        24,053        24,398
Other current operating income
(including audiovisual tax credits)       2,350         2,307         2,174
Operating income                         30,301        26,360        26,572
Operating expenses                      (20,637)      (19,160)      (17,909)
Adjusted recurrent operating income*:     9,664         7,200         8,663
% of Rev.                                  34.6%         29.9%         35.5%
Operating income                          7,182         6,169         7,632
% of Rev.                                  25.7%         25.6%         31.3%
Net income                                5,159         5,017         5,948
% of Rev.                                  18.5%         20.9%         24.4%

(*)  Recurrent operating income adjusted for impact of free share allocation
     programmes
(**) Unaudited figures

Solid growth and high levels of recurrent sales

As previously reported, Xilam Animation enjoyed a particularly strong year in
2018, recording record levels of revenue, which grew by 16% to EUR28.0 million.
This figure included EUR18.2 million in sales of new productions (up 12%) and
EUR9.7 million in sales from the catalogue (up 26%), representing 65% and 35%
of sales respectively. International markets represented 64% of total sales and
their contribution to the revenue mix continues to rise.

Growth in sales from the catalogue not only reflects real recognition of
'programme brands' built up around the world over the years but is also a
source of highly recurrent revenue (nearly 60% of revenue from the catalogue).
AVOD platforms such as YouTube already account for 27% of catalogue revenue.

With 69 half-hours of new productions delivered in 2018 (from 63 in 2017),
Xilam continued to execute its roadmap which targeted 70 half-hours over the
year. This strong trend has been driven by powerful leverage from market
factors, with the twin effect of increases both in the price of each half-hour
sold (to EUR264,000 from EUR259,000 in 2017) and in the volume of demand, as
competition between broadcasters increases. Pre-sales booked in 2018 reached
record levels and provided up to 140% coverage of production costs.

Strong improvement in recurrent operating margin

Xilam has indicated that it has applied IFRS 15 with effect from 1 January
2018, and retroactive effect to 1 January 2017, the main impact of which was
the recognition of revenue from the moment of the opening of rights to
broadcasters.

Adjusted recurrent operating income for the year* was EUR9.7 million, up 34%,
giving a margin of 34.6%.

This improvement in operating margin was driven by four factors:

- the high level of pre-sales, which represented up to 140% of direct
  production costs;

- control of fixed and production costs, which grew by less than revenue;

- multi-season production of successful series, which creates value and reduces
  the rate of amortisation;

- a very strong catalogue, which is making a growing contribution to income.
  The catalogue is already amortised to a significant extent: net annual
  revenue represents 2.2 times the net book value (value remaining to be
  amortised).

Despite significant non recurrent expenses relating to the free share
allocation plan and the relocation of the Group's headquarters, operating
income rose to EUR7.2 million (vs. EUR6.2 million in 2017 on a same scope
basis).

Net income was EUR5.2 million in 2018, from EUR5.0 million in 2017. The tax
charge of EUR1.4 million represents solely a deferred tax charge, with the
Group having no cash tax payment due in 2018.

A solid financial position

Xilam had shareholders' equity at 31/12/2018 of EUR48.6 million, from EUR20.9
million at 31/12/2017. Net financial debt at 31/12/2018 reaches EUR7.8 million
(including self-liquidating loans).

An increasingly diversified portfolio of brands

Over the year, Xilam's output covered 9 programmes:

Multi-season productions of successful series

- 5th season of Oggy and the Cockroaches, taking the Oggy brand to 117 Ultra HD
  half-hours and ensuring the longevity of the use of the brand around the
  world for many years to come;

- 2nd season of Magic, which has just started a successful broadcast run on
  Gulli;

- 3rd season of Zig and Sharko, already pre-bought by all previous season
  clients.

New creations

- Paprika, the Group's 1st preschool project and original creation which has
  started to be broadcast around the world with excellent audience scores;

- If I were an animal, wildlife documentary which is enjoying considerable
  success on Netflix;

- Mr Magoo, a series based on the eponymous central character of the famous US
  series, to be launched worldwide at the end of the first half of 2019;

- Coach me if you can, football-themed series with international appeal, to be
  launched for broadcast to coincide with the Euro 2020 championships;

- Moka, a new slapstick comedy that embodies all of Xilam's expertise;
  production started in 2018 and pre-sales are already strong;

- Lupin's tales, a new preschool series, development of which was completed in
  2018.

A resilient catalogue

Revenue in 2018 was driven principally by Oggy and the Cockroaches, Zig and
Sharko and the Daltons, on both digital and broadcast platforms. New
franchises, notably Mr Magoo and Paprika, but also the 5th season of Oggy and
Cockroaches and the 3rd season of Zig and Sharko, are likely to contribute to
accelerated growth in the catalogue over the coming years.

Outlook confirmed: target of 100 half-hours to be delivered in 2020

Thanks to its solid structure and its very efficient production systems, Xilam
is well placed to meet fast-growing demand from TV channels and digital
platforms. The Group therefore expects to continue its strong growth towards
targets of 80 half-hours delivered in 2019 and 100 half-hours delivered in
2020.

The adjustment to the forecast for 2019 (80 half-hours, from 85) in no way
represents any slowdown in production but is the result of the application of
IFRS 15 which results in a spreading of revenue.

The execution of Xilam's ambitious strategy has several key components:

- accelerating the production of original creations and multi-season
  continuations of already established brands. By continuing to take advantage
  of strong demand from broadcasters, new productions will thus be able to
  grow in both volume and value;

- maintaining high levels of performance and resilience in the catalogue;

- the continuing digital transformation of the business model, through the
  digitalisation of the offering, which will accelerate the globalisation of
  distribution, and the rising contribution from direct distribution on AVOD
  platforms (growing success on YouTube, with 4 billion views in 2018 taking
  the cumulative total over 10 billion);

- expansion of the offering into the preschool segment, which offers strong
  potential for merchandising and monetisation through e-learning and e-gaming;

- continued international expansion, notably in emerging markets such as India
  and China, but also in the North American market;

- acquisitions: boutique studios, talent collectives and other complementary
  pools of expertise.

Marc du Pontavice, Xilam's Chairman and Chief Executive Officer, observed:
"Strong growth in Xilam's profitability in 2018 confirms the relevance of our
business model, which is based in particular on increasingly recurrent revenue.
The disruption of the broadcast market, particularly in the 'Kids' segment,
will continue over the next few years and could even intensify with the arrival
of US majors in the integrated platform market. Xilam is particularly well
placed to take advantage of the considerable growth in investment in original
productions. In addition, we are actively working to diversify the revenue from
our brands."

About Xilam

Xilam is one of Europe's leading animation companies, producing and
distributing original children's and family entertainment content across TV,
film and digital media platforms. Founded in 1995 by Marc du Pontavice, the
award-winning Paris-based company owns a catalogue of more than 2,000 animated
series episodes and 3 feature films, including such household brands such as
Oggy & the Cockroaches, Zig & Sharko, The Daltons, Rolling with the Ronks! and
its first preschool property, Paprika. Broadcast in over 190 countries on all
the major global children's TV networks, these series are also breaking records
on all the major digital platforms, including YouTube with over 300 million
views per month, ranking Xilam among the top global content providers in the
realm of animation. Xilam employs over 400 people, including 300 artists, who
work in its four studios, located in Paris, Lyon, Angouleme and
Hô-Chi-Minh-Ville in Vietnam. Xilam is listed on the Euronext Paris stock
exchange, Compartment B - Eligible investment for French Deferred Settlement
Service (SRD long) and Equity Savings Plans (PEA).

Contacts

Marc du Pontavice - CEO
François Bardoux - CFO
Tel: +33 (0) 1 40 18 72 00

    57 boulevard de la Villette 75010 Paris - Tél : (33) 01 40 18 72 00
                                www.xilam.com
   Société Anonyme au capital de 491 150 EUR - R.C.S PARIS : 423 784 610 -
                   SIRET : 423 784 610 00036 - APE 921 A

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27/03/2019 18:00

XILAM (EPA:XIL) XILAM announces its financial results for 2018: increasingly profitable growth

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