Xilam Animation announces successful financial results for 2018

Xilam Animation has announced its financial results for the year to 31 December 2018. The results were reviewed by the board of Directors on 26 March 2019 under the chairmanship of Xilam chairman and CEO Marc du Pontavice.

Pontavice observed: “Strong growth in Xilam’s profitability in 2018 confirms the relevance of our business model, which is particularly based 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.”

(€ thousands)	2018**	2017 restated under IFRS 15	2017 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
Per cent of Rev.	34.6%	29.9%	35.5%
Operating income	7,182	6,169	7,632
Per centof Rev.	25.7%	25.6%	31.3%
Net income	5,159	5,017	5,948
Per cent 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 –

Xilam Animation enjoyed a particularly strong year in 2018, recording record levels of revenue, which grew by 16 per cent to €28.0 million. This figure included €18.2 million in sales of new productions (up 12 per cent) and €9.7 million in sales from the catalogue (up 26 per cent), representing 65 per cent and 35 per cent of sales respectively. International markets represented 64 per cent of total sales and their contribution to the revenue mix continues to rise.

The growth in sales from the catalogue demonstrates the recognition of Xilam’s established IPs which have been built up around the world over the years. These sales are also a source of highly recurrent revenue (nearly 60 per cent of revenue from the catalogue). AVOD platforms including YouTube already account for 27 per cent of catalogue revenue.

With 69 half-hours of new content delivered in 2018 (up from 63 in 2017), Xilam continued to execute its strategy which targeted 70 half-hours over the year.

An increasingly diversified portfolio of brands

Over the year, Xilam’s output covered nine programmes with multi-season productions of successful series

Fifth season of Oggy and the Cockroaches, taking the Oggy brand to 117 Ultra HD half-hours and ensuring the international longevity of the brand for many years to come;
Second season of A Kind of Magic, which has just started a successful broadcast run on Gulli;
Third season of Zig and Sharko, already pre-bought by all previous season clients.

New creations

Paprika, Xilam’s first preschool project and original creation which has begun airing internationally with excellent audience ratings;
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 fifth season of Oggy and Cockroaches and the third 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. Xilam therefore expects to continue its strong growth towards targets of 80 half-hours delivered in 2019 and 100 half-hours delivered in 2020.

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.