The Ymagis Group’s today reported an increase in revenue of 7.2 percent in the first quarter of 2019 following four consecutive quarters in decline. Thanks to robust equipment sales and its geographical expansion, CinemaNext recorded a 45 percent increase in revenue at €17.0 million, which more than offset the scheduled reduction in virtual print fee revenue.
Eclair's revenue was stable (-1.1 percent at €13.7 million), with the decline in revenue for its Eclair Cinema subsidiary, currently in receivership, being offset by the growth in versioning and accessibility activities. Ymagis Group’s new activities have begun to grow, generating revenue of €0.6 million, mainly driven by Illucity.
The VPF BU continues to decline, as planned, with revenue down by 20.3 percent during the first quarter of 2019 at €10.9 million due to the recoupments made in 2018, bringing the number of screens under VPF contract on March 31 to 4,373 as compared to 5,407 a year earlier.
CinemaNext’s strong growth was driven by equipment sales and sustained significant services activities (online and maintenance). Although this increase is primarily due to new cinema equipment projects, the market is starting to see the emergence of demand for the renewal of projection systems.
Moreover, CinemaNext benefited from a buoyant market in several regions such as the United Kingdom, Eastern Europe, and the Middle East with a first agreement signed in Q1. CinemaNext revenue incorporated €0.7m generated by the recently acquired Technical Lamp Supplies subsidiary, the consolidation of which started on January 1.
Eclair experienced contrasting developments with a decline in its creative services activities linked to the placement of French subsidiary Eclair Cinema in receivership. This was largely offset by the versioning & accessibility activities (+20 percent at €5.9 million), which enjoyed continued growth thanks to the synergies between Eclair's production units in Spain, France and Germany.
The new activities (mainly Illucity) recorded revenue of €0.6 million over the quarter, the same amount it reported for the 2018 fiscal year. The virtual reality activity, marked by the launch of the first Illucity adventure park in Paris mid-December, has now entered a growth phase, with revenue of close to €0.4 million during Q1.
Ymagis Group’s services activities began a promising upward curve in Q1 with the confirmation of the start of a new growth phase for CinemaNext, the excellent performance of Eclair’s versioning & accessibility activities, and the potential of the Group’s new virtual reality activities demonstrated in its promising first results.
The need for cinemas to renew their first-generation digital projection equipment, installed between 2008 and 2013, should prove a powerful driver for organic growth for CinemaNext over the coming years. The development and commercialization of new offers such as the Sphera premium cinema concept or virtual reality installations adapted to the needs of cinemas will also contribute to increasing revenue.
The renegotiation of the debt, for which a standstill agreement with its creditors was extended until July 31, should enable Ymagis Group to capitalize on the efforts made to take advantage of these new growth and profitability drivers. Subject to a positive outcome, the discussions underway should enable the Group to enter a new stage in its development.