Thursday 11th April 2019 TABLE OF CONTENT
INTRODUCTION BUSINESS REVIEW p.3 p.11 FINANCIAL OVERVIEW 2018 1 2
2018 ACCOUNTS OUTLOOK p.22 p.30 3 4 5 3 | HIGHLIGHTS
2018 PERFORMANCE ABOVE TARGETS , ORIGINALS ✓ AND RIGHTS OUTPERFORMED ON GROWTH 5 TRANSFORMING ACQUISITIONS TO ENHANCE OUR ✓ EXCLUSIVE CONTENT AND FUEL FUTURE TOP LINE ✓ SOLID PRODUCTION LINE-UP FOR 2019/2020 FINE TUNING OF OUR ORGANIZATION IN 4 BUSINESS ✓ UNITS WITH TRANSVERSE HOLDING SUPPORT ✓ STRONG OUTLOOK FOR 2019 AND BEYOND
4 | FINANCIAL RESULTS 2018 FY 2018 – KEY REPORTED FIGURES
➢ R e v e n u e s o f € 2 5 8 . 6 m ➢ Organic growth of +13.0% YoY
➢ EBITDA [ 1 ] o f € 4 9 . 1 m ➢ EBITDA margin of 19.0%
➢ A d j u s t e d net income group share o f € 2 8 . 9 m ➢ After impact of assets recognized through business combinations and other exceptional items (net of t a x )
➢ Consolidated net debt [ 2 ] o f € 1 2 0 . 9 m
[1] After amortization of audiovisual rights (other than recognized through business combinations) 5 | FINANCIAL RESULTS 2018 [2] Excluding production credits SOLID FUNDAMENTALS FOR THE CONTENT MARKET…
EXPONENTIAL GROWTH OF OTT PLATFORMS
~140m subs ~20m subs ~1.3bn DAUs >1bn users
4.7m subs
~70m subs ~191m DAUs
The growth of OTT platforms leads to a strong demand for premium content which has become the key differentiating factor MORE THAN $20bn to be invested in content in 2019
6 | FINANCIAL RESULTS 2018 Sources: Company, Broker research, press reports SOLID FUNDAMENTALS FOR THE CONTENT MARKET…
M&A HEIGHTENING VALUE OF CONTENT
➢ Strong strategic demand for premium content / IP assets
➢ Global distribution enables major jump in production budgets
➢ Telecom / Media convergence driven by the trend towards “quintuple play” offer
7 | FINANCIAL RESULTS 2018 Sources: Company, Broker research, press reports EUROPEAN CONTENT HAS GLOBAL SUCCESS
Contents produced in Europe are increasingly successful globally
8 | FINANCIAL RESULTS 2018 Ranking Channel Name of the program Viewers in millions 1 TF1 "Les enfoirés" - live concert 9.4 2 TF1 News 6.7 FRENCH SERIES 3 TF1 Koh-lanta 6.5 4 TF1 Red bracelets 6.5 CONTINUE TO 5 TF1 Soccer 6.4 6 M6 Soccer 6.1 RECORD THE 7 TF1 Canteloup (talk show) 6.1 8 TF1 Research units 6.1 BEST AUDIENCES 9 TF1 News 6.1 10 TF1 Red bracelets 6.0 11 TF1 Red bracelets 5.9 12 TF1 Red bracelets 5.9 13 TF1 Lucy 5.8 14 TF1 Red bracelets 5.7 ➢ 10 out of the 25 best 15 F3 "Meurtre en Lorraine" 5.7 16 TF1 Red bracelets 5.7 audiences programs in 17 TF1 The Voice 5.7 March 2019 in France were 18 TF1 Research units 5.6 produced by Mediawan 19 F2 "Keplers" 5.6 20 TF1 Koh-lanta 5.5 21 TF1 News 5.5 22 TF1 The Voice 5.5 23 TF1 Research units 5.4 24 TF1 Research units 5.3
9 | FINANCIAL RESULTS 2018 25 TF1 The Voice 5.3 IN ITALY, MEDIAWAN ALREADY HAS STRONG POSITIONS
Date Title Views in millions Audience rates Feb 12th, 2018 « La giostra degli scambi" 11.4 45.1% Feb 19th, 2018 « Amore" 10.8 42.8% Feb 11th, 2019 « L'altro capo del filo" 11.1 44.9% Feb 18th, 2019 « Un diario del 43" 10.2 43.3%
TV Serie Montalbano post record audiences over the past 10 years on RAI in Italy
10 | FINANCIAL RESULTS 2018
A NEWLY INTEGRATED ORGANIZATION
450 permanent employees Leading independent Offices & studios in platform 9 countries in Europe, Global organization with in Europe North America and Asia centralized corporate functions
1st producer of fiction 17 channels, o/w 2 are in in France the Top 10 Pay-TV channels 1st producer of 1st content distributor animation in Europe in France
12 | FINANCIAL RESULTS 2018 AMBITIOUS CONSOLIDATION PLAN
CO- PRODUCTIONS ➢ Mutualization of producers’ expertise, access to talents and broadcasters ➢ Move towards more ambitious and international p r o j e c t s
DISTRIBUTION ➢ Internal distribution of new productions ➢ Stronger leverage on clients across the world
MUTUALIZATION OF CORPORATE SERVICES ➢ Operational leverage on specific areas of expertise: digital, communication ➢ Centralized support of admin functions: legal, HR, f i n a n c e
13 | FINANCIAL RESULTS 2018 MEDIAWAN ORIGINALS Business update & trends
o # 1 producer of prime - time fiction in France o More than 250 hours expected in o 17 production companies with independent labels 2 0 1 9 / 2 0 2 0 o Strong portfolio of IPs incl. multiple recurring series o Exploitation of recurring series : o Paving the way for international growth 7 currently in portfolio, ongoing discussions to produce second season for additional 4 - 5 s e r i e s
o Develop and create new high - quality franchises o Revenues of € 8 8 . 4 m o Accelerated building of o + 3 2 % p r o - forma growth international network
o Approximately 100 hours of programs delivered
14 | FINANCIAL RESULTS 2018 MEDIAWAN ORIGINALS A strong line-up for 2019
15 | FINANCIAL RESULTS 2018 MEDIAWAN ORIGINALS Reims studios
16 | FINANCIAL RESULTS 2018 MEDIAWAN ANIMATION Business update and trends
o # 1 producer of animated content in Europe o Expertise in both TV series and movies o Proven ability to develop IPs into 360 successful b r a n d s
2018 o 1 3 5 delivered half - hours (more than 200 e p i s o d e s a c r o s s 9 TV series ) o Consolidated Revenues of € 26.8m (6 months) o € 4 2 . 4 m p r o - forma 12 months o + 1 0 % p r o - forma growth
17 | FINANCIAL RESULTS 2018 MEDIAWAN ANIMATION A strong line-up for years to come
Season 1 Season 3 Season 1 52x13’ episodes 52x13’ episodes 52x13’ episodes 4-8yo 6-10yo 6-10yo
Seasons 4 & 5 Season 1 Season 2 52x26’ episodes 76x7’ episodes 52x11’ episodes 4-12yo Season 1 3-6yo 3-6yo 52x13’ episodes 6-10yo 18 | FINANCIAL RESULTS 2018 MEDIAWAN ANIMATION 2019
o Leverage on the Miraculous p h e n o m e n o n , with seasons 4 & 5 in production and a feature film
o Release of the first Playmobil movie o n A u g u s t 7 th in France, this Summer in Europe and this Fall in the US with a strong potential in Licensing & Merchandising
19 | FINANCIAL RESULTS 2018 MEDIAWAN RIGHTS Business update and trends
o Largest French - speaking library with more than 1 3 , 0 0 0 First original documentary sold to h o u r s o f c o n t e n t o Netflix in March 2019: Griezmann, o Exceptional diversity of series, movies, documentaries the making of a legend and animation content o Growing portion of internally produced content o Expertise for international o Diversified client base: FTA broadcasters, cable formats (co - production with networks, SVOD platforms,… Palomar on Montalbano’s new e p i s o d e s )
o Continued investment in content o Revenues of € 3 5 . 9 m (excl. intra - g r o u p ) to further fuel library o + 2 3 % p r o - forma growth thanks to the success of Babylon Berlin (Canal+) and Rex ( F r a n c e T V ). o Leverage of recent successes o € 10.2m investments in external rights (on top of in - (Alter ego, Under the skin, Papa house productions) ou M a m a n , Miraculous,…)
20 | FINANCIAL RESULTS 2018 MEDIAWAN THEMATICS Business update and trends
o Strong position on thematic channels in France and o Distribution opportunities F r e n c h - speaking territories w i t h OTT major actors Renewal of contracts with distributors until 2020 - 2022 o o Develop synergies with o Portfolio of 17 channels , including A B X p l o r e (in Belgium) Originals, ie A p o c a l y p s e a n d A u t o M o t o (launch in November 2018) broadcasted on “ T o u t e o L a u n c h o f A B 3 in Switzerland to create new revenue l ’ H i s t o i r e ” o Successful repositioning of A B 1 : market share +55% (4+), o Upside from E s p o r t Z o n e o n + 3 5 % ( 2 5 - 49) in 2018 Snapchat (around 5m views/ w e e k )
o Continued repositioning of A B 1 : broadcast of American o Revenues of € 1 0 7 . 1 m (excl. intra - g r o u p ) I d o l - 1% organic change o o Strong advertising trend o High single digit advertising growth over Q1 2019 , pricing power to continue
21 | FINANCIAL RESULTS 2018 22 | KEY ACCOUNTING CONSIDERATIONS
➢ 5 new acquisitions in the consolidation perimeter ➢ Storia Television , acquired in January, consolidated since January 1 st ➢ M a k e v e r , acquired in March, consolidated since January 1 st ➢ ON Entertainment , acquired in June, consolidated as of June 30 th ➢ M o n V o i s i n Productions , acquired in October, consolidated as of Sept 30 th ➢ M a i J u i n Productions , acquired in October, consolidated as of Sept 30 th
➢ Change in accounting principles and methodology (IFRS 15 in particular) ➢ Limited impact on EBITDA and net income
➢ Unchanged definition of EBITDA (after amortization of all audiovisual r i g h t s - other than recognized through business combinations)
➢ Significant goodwill recognized (partial methodology): PPA achieved for Makever, Storia and ON Entertainment
23 | FINANCIAL RESULTS 2018 REVENUES ABOVE EXPECTATIONS
Solid business performance driven by both M&A and organic growth
I n € m REPORTED P R O F O R M A [ 2 ] Y o Y 2 0 1 8 [ 1 ] 2 0 1 7 2 0 1 8 2 0 1 7 [3] (%)
MDW Originals 8 8 . 4 11.8 9 3 . 2 7 0 . 6 + 3 2 %
MDW Animation 2 6 . 8 - 4 2 . 4 3 8 . 4 + 1 0 %
M D W R i g h t s 3 5 . 9 2 2 . 5 3 3 . 5 2 7 . 1 + 2 3 %
M D W T h e m a t i c s 1 0 7 . 1 8 1 . 2 1 0 7 . 1 1 0 8 . 2 - 1%
Total Revenues 2 5 8 . 6 1 1 5 . 7 2 7 6 . 1 2 4 4 . 4 + 1 3 . 0 %
[1] Includes €0.5m revenues from the corporate center corresponding to invoices to ON Entertainment in H1 2018. [2] Proforma financials including full year contribution of all companies in the FY18 consolidation perimeter.
24 | FINANCIAL RESULTS 2018 [3] Including IFRS 15 restatement for all group companies excl. ON Entertainment. CONSOLIDATED EBITDA OF €49.1m
Profitable growth with EBITDA margin at 19.0%
[ 1 ] +88% ➢ T o t a l E B I T D A o f € 4 9 . 1 m a f t e r 49.1 impact of the corporate center (19.0%) ➢ Group margin of 1 9 . 0 % - Demonstrates the robustness of Mediawan business model and 26.1 positioning across the content (22.6%) value chain ➢ Margin driven by business mix - Profitability tends to be lower at program delivery, while secondary sales and international distribution subsequently contribute to EBITDA 2017 2018 at higher margin rates
25 | FINANCIAL RESULTS 2018 [1] EBITDA reported after amort. of audiovisual rights (other than recognized through business combinations) CONSOLIDATED P&L In € m 2 0 1 8 2 0 1 7
R e v e n u e s 2 5 8 . 6 1 1 5 . 7 Reported net income affected by significant non - EBITDA [ 1 ] 4 9 . 1 2 6 . 1 operating items D&A (excl. audiovisual rights) ( 5 . 2 ) ( 2 . 8 ) ➢ Cf. adjusted net income on n e x t p a g e A d j . E B I T [2] 4 3 . 9 2 3 . 3 Financial income of € ( 3 . 2 ) m Other income/(expense) ( 1 0 . 2 ) ( 4 . 7 ) ➢ I n c l u d e s + € 2 . 1 m exceptional financial Amort. of assets recognized income (non - cash) due to through business ( 3 0 . 1 ) ( 2 1 . 7 ) reevaluation of certain combination financial assets and bank Reported operating debt refinancing 3.6 ( 3 . 1 ) i n c o m e Positive Income Tax impact o f + € 5 . 5 m Financial income/(expense) ( 3 . 2 ) ( 3 . 7 ) ➢ Effective tax of € ( 7 . 7 ) m T a x 5 . 5 0 . 2 compensated by variation of deferred tax by + € 1 3 . 2 m Net Income – consolidated 5 . 9 ( 6 . 6 )
Minority interests ( 0 . 9 ) ( 0 . 2 ) Net Income group share 5 . 0 ( 6 . 8 )
[1] After amortization of audiovisual rights (other than recognized through business combinations) [2] Before amortization of assets recognized through business combinations 26 | FINANCIAL RESULTS 2018 [3] Mainly a portion of the put option liability (towards minority shareholders) assimilated to remuneration under IFRS ADJUSTED NET INCOME AND EPS
In € m 2 0 1 8 2 0 1 7 N e t N e t EBT T a x I n c o m e I n c o m e Reported net income 0 . 4 5 . 5 5 . 9 ( 6 . 6 ) # shares outstanding Amort. of assets recognized 3 0 . 1 ( 1 2 . 2 ) 1 7 . 9 1 4 . 4 through business combination ➢ 2 9 . 1 m average over FY18
Non recurring costs (incl. M&A ➢ 3 1 . 1 m as of 31/12/18 5 . 6 ( 0 . 7 ) 4 . 9 5 . 7 and exceptional indemnities) ➢ 3 1 . 8 m as of today (after issuance to Palomar N o n - cash remuneration expense management) 4 . 6 ( 0 . 0 ) 4 . 6 0 . 6 (incl. IFRS 3 [ 1 ] and free shares) # warrants issued Exceptional financial ( 2 . 1 ) ( 0 . 8 ) ( 2 . 9 ) ( 2 . 0 ) [ 2 ] ➢ 2 2 . 2 m warrants as of income/(expense) today (ratio 2:1) Adjusted net income 3 8 . 6 ( 8 . 3 ) 3 0 . 4 1 2 . 1 Diluted # of shares
Minority interests (restated) ( 1 . 4 ) ( 0 . 2 ) ➢ 3 0 . 8 m average over FY18 ➢ Calculated assuming Adjusted net income – group share 2 8 . 9 1 1 . 9 “treasury method” for conversion of warrants depending on daily share Adjusted EPS € 0 . 9 9 € 0 . 4 0 p r i c e Adjusted EPS - d i l u t e d € 0 . 9 4 € 0 . 4 0
27 | FINANCIAL RESULTS 2018 [1] Portion of the put option liability (towards minority shareholders) assimilated to remuneration under IFRS. FY 2018 CASH CONTRIBUTION
Operating cash flow conversion at 60% due to increase in content investment and partial self - financing by certain producers
(10,0)
60% conversion (30,0) EBITDA to (28,6) operating cash flow (50,0)
Include ~8M€ CIT (70,0) 49,1 overpayment (compensated by equal receivable for 2019) (90,0)In €m
(19,8) (3,2) (110,0) (6,4) Includes over- (16,1) (120,9) (130,0) (96,0) (124,6) investment in library vs. depreciation
(150,0) Net Debt M&A & Net debt EBITDA Change in Capex Interests Tax Net Debt as of capital post M&A / WC & library (excl. audio.) as of Dec17A increase Capital rights Dec18A increase (incl. associated costs) 28 | FINANCIAL RESULTS 2018 SUMMARY BALANCE SHEET
➢ Increase in intangible assets t h a n k s t o consolidation of acquired businesses and BALANCE SHEET ( € m) investments in content D e c 1 8 D e c 1 7 ➢ Net financial debt of € 1 2 0 . 9 m
Intangible assets 361 209 - Consolidated cash position of € 4 6 m G o o d w i l l 165 96 - Gross debt mainly relates to € 1 5 0 m credit facility raised in December Other assets 20 21 2 0 1 8 Total assets 546 326 - E x c l u d e s € 42m of production credits associated to ongoing productions Shareholders’ equity 222 210 - E x c l u d e s € 34m “put options” Net financial debt 121 29 liabilities Production credits 42 0 ➢ Negative working capital of € ( 8 2 ) m Other liabilities 80 51 consistent with industry practice in Net Working capital 82 37 content production and distribution Total liabilities 546 326
29 | FINANCIAL RESULTS 2018
STRATEGY AND OUTLOOK
CAPITALIZE ON THE BOOMING DEMAND FOR CONTENT TO ACCELERATE PRODUCTION
EXTEND LEADERSHIP WITH SELECTED EUROPEAN ACQUISITIONS
STRENGTHEN OUR LIBRARY OF RIGHTS
ORGANIC GROWTH TO AVERAGE 10% p.a.
EBITDA PROGRESSION DESPITE MIX EFFECT DUE TO HIGH VOLUMES OF PRODUCTION
31 | FINANCIAL RESULTS 2018 DISCLAIMER
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32 | FINANCIAL RESULTS 2018