Ymagis Group today reported its consolidated revenue for Q3 and for the first nine months of 2018. The lower than expected performance of CinemaNext’s equipment distribution activities and increased difficulties with Eclair's post-production and restoration activities are not sufficient to offset the decline in virtual print fee activity over the third quarter of 2018.
Revenue for Q3 2018 fell by 17.2 percent to €35.9 million as compared to the historically high Q3 2017 which benefited from catch-up invoicing. Over nine months, the group’s activity inched down 8.3 percent to €115.2 million versus €125.6 million the previous year. Over 12 rolling months, the drop-in activity reduced to 4.9 percent, totalling revenue of €169.2 million.
The activity of the VPF business unit continued to fall as anticipated under the effects of the recoupments made over the last few months, recording a drop of 17.9 percent during Q3 2018, with revenue of €11.5 million. Revenue for the first 9 months of the year stands at €38.2 million.
The CinemaNext business unit was penalised during Q3 by the fall in equipment distribution sales mainly due to a number of delayed projects. Online and Support services, which are high margin value activities, benefited from a strong increase of over 50 percent during Q3. Over the course of the quarter, the business unit’s activity fell by 21.7 percent to €13.2 million versus €16.9 million a year earlier. Activity is down by 6.8 percent over 9 months at €38.7 million, the surge in Online and Support Services not offsetting the decrease in equipment sales
The Eclair business unit, whose revenue is down 10.5 percent at €11.1 million, suffered a steep decline in creative services (post-production and restoration) during Q3. Over nine months, revenue for the business unit was stable at €38.1 million. The strong decrease in Eclair’s creative services is offset by the growth of its Distribution Services & Preservation activities and Versioning & Accessibility services, which constitute the heart of Eclair's business development strategy.
The Group’s new activities (EclairColor, EclairGame and virtual reality) achieved limited revenue of €0.2 million over the first nine months of the year. The opening of the first virtual reality adventure park is scheduled for the end of November in Paris, opening the way for an ambitious national and international development plan including a strategic franchise plan aimed at cinema exhibitors. Moreover, the fast-growing development of EclairGame (eSport in cinemas) should contribute to revenue as from the next quarters. These new activities should become significant revenue and earnings contributors from 2019 onwards.
The activity’s lower performance during Q3 2018 should partly be offset during Q4. The Group is thus setting itself an annual revenue target of €170 million.
Ymagis decided to launch a cost savings plan in September which is ongoing and should reduce the fixed expenses of the entire Group by at least €5.0 million over a full year as from 2019. All of these actions should contribute to a return to profitability for CinemaNext and Eclair in order to guarantee the targets in the Perform Plan are achieved.
In addition, Ymagis has sold its majority interest in CinemaNext Consulting to the Managing Partners. The Group will deconsolidate this business beginning in Q3 2018. Ymagis Group is also considering the cession of further non-strategic assets in order to focus on its business priorities.
The Group is continuing its development strategy focusing on internationalisation and innovation. The Group’s own brand-new virtual reality offer (Illucity Virtual Reality Adventure Park) and virtual reality installations in partnership with cinema exhibitors will be presented to investors on 13 November. This new, high-potential activity could constitute an important driver for profitable growth for the Group and strengthen the profitability targets scheduled in the Perform Plan for 2020.