Vantiva S.A. (TNM2.MU) Earnings Call Transcript & Summary

Good afternoon, everybody, and welcome to the VANTIVA and Technicolor Creative Studios Capital Market Days. So as you just discovered, VANTIVA is our new brand, which is going to cover Connected Home and DVD Services, which is now going to be known as VANTIVA Supply Chain Services. Luis Martinez-Amago will be talking in some more detail about the new brand in just a moment. So let's move on to the agenda for today. And we've got the entire management team of VANTIVA and Technicolor Creative Studios here with us. So I'm going to give a brief introduction. Then Luis Martinez-Amago and his team will be giving a run-through of the strategy, operations and financial prospects for VANTIVA, following which we'll have a Q&A about VANTIVA. There will then be a short break. And then Christian Roberton, the CEO of Technicolor Creative Studios and his team will be presenting on their strategy, operations and financial prospects, following which there will be a Q&A on TCS. And then after that, for those of you who are present here in person, we've got a series of product demonstrations just around the corner. So let's just remind ourselves of why we're here today that this is to not only bring you up to date with the prospects of these 2 businesses, but to say where we've got to with respect to the central pillar of our strategy, which is to achieve the spin-off of 65% of Technicolor Creative Studios from the Technicolor group with the intention of creating 2 independent market leaders in their respective sectors. So Technicolor Creative Studios is going to be a pure-play visual effect story in a market with significant growth. Christian Roberton, as I said, is going to be the CEO of that business, and Laurent Carozzi will be the Chief Financial Officer. And the business will be arranged around 4 award-winning studios: MPC, moving picture company, which will handle visual effects; The Mill, which will be covering advertising and experiential; Mikros Animation; and Technicolor Games. VANTIVA will also be the leader in this market segment, and as I said earlier, that will be comprised of Connected Home and VANTIVA Supply Chain Services, which was formerly DVD Services. Luis Martinez-Amago will be the CEO; and Lars Ihlen, the Chief Financial Officer. We will have a strong balance sheet and an upside exposure to Technicolor Creative Studios through the 35% stake in that business, which it will continue to own. Both of these companies will be listed on Euronext in Paris and they will continue to have their headquarters in Paris. So we believe that this is the right time for the next strategic move for the Technicolor group. We've been going over the past 2.5 years through the successful execution of a transformation of the group, improving both its operations and its financial performance, and we now have 3 leading and profitable businesses together with a renewed and experienced management team. We've been pursuing cost restructuring, as you know, with the target of EUR 325 million of cost savings by the end of 2022 on a cumulative basis. We achieved EUR 171 million in 2020, EUR 116 million in 2021, and we're well on track to achieve the remainder and in fact, probably surpass that figure by the end of 2022. We've sought operating efficiencies across all of our businesses, and all of this has led to a strong improvement in our financial performance in 2020 and in 2021 despite the very tough environment against which we've been operating. Our 2020 results, in particular, were severely hit by the COVID crisis. And we had to put in place a safeguard plan, or SFA, in order to enable our debt restructuring, which took place in 2020. Those debt instruments are still in place, and the SFA is still in place. We believe now that we have solid foundations to unlock value creation for all stakeholders and to normalize our capital structure. So with these strong fundamentals, we've now got the possibility of refinancing our debt stack. The end of the noncall period is in July, August of 2022. So there's the opportunity without paying too much make-whole to reduce our cost of debt and through doing so, facilitate the execution of the spin-off of Technicolor Creative Studios. We've made a lot of progress already. So we held an extraordinary general meeting on the 6th of May to approve a EUR 300 million mandatory convertible note, which has been provided by a number of our major shareholders. And that will obviously enable our leverage to be reduced and provide greater liquidity for the group. At the extraordinary general meeting, more than 99.9% of shareholders voting voted in favor of the mandatory convertible note, which obviously is a very strong endorsement that we are moving down the right strategic direction. Following that, as you may have seen yesterday, Barclays and Angelo Gordon have committed to provide a EUR 375 million debt package to VANTIVA, subject to normal conditions and approvals. We are also continuing discussions with Wells Fargo on the extension and expansion of the existing asset-based -- asset-backed loan, which Technicolor has in place. And we've launched the marketing for a EUR 600 million term loan for Technicolor Creative Studios together with a EUR 40 million revolving credit facility. We think this new debt structure is consistent with the separation. It's going to be the implementation of 2 distinct and optimized debt packages for VANTIVA and for Technicolor Creative Studios and will form the basis of the spin-off, which is about to take place. We believe that this process is going to provide benefits, as I said earlier, for all stakeholders. First of all, for employees, there will be a simpler structure, simpler corporate structure. These businesses will be more agile and they'll be able to -- with a sustainable capital structure, invest more in products and services. So customers will get an improved offering as well. Lenders also will see the benefits from the issue of the mandatory convertible note, which will reduce our debt stack by EUR 300 million. So in addition to the deleveraging, hopefully, that will prompt a rating improvement and will secure liquidity for the future. And in terms of shareholders, we hope the Technicolor Creative Studios when, it becomes a separate entity, is going to re-rate according to its market fundamentals that we can reduce the conglomerate discount, which we believe is inherent in the current Technicolor share price and give shareholders the flexibility to manage their exposure separately between Technicolor Creative Studios and VANTIVA. So taking a look at the anticipated time line, many of these milestones have already been reached. We intend to hold an Annual General Meeting on the 30th of June. The main purpose of which is to approve our 2021 financials. We were on that same day, going to hold an extraordinary general meeting to approve the spin-off. But as you may have seen from the press release, which we pushed out about 3 weeks ago, that's now been postponed to September in order to give us more time to achieve the necessary term loan for Technicolor Creative Studios. So the intention is still to hold that extraordinary general meeting early in September and to approve the spin-off. And on the assumption that it is approved, we then believe that the mandatory convertible note will be raised, converted into shares and the listing of technical or creative studios will happen immediately thereafter before the end of the third quarter through an in-kind distribution of Technicolor Creative Studio shares to Technicolor shareholders. So as you know, I am going to continue on as the Chair of VANTIVA. VANTIVA has got some great people, and I look forward to sharing this new chapter of their journey with them. So with that, I will turn it over to Luis Martinez-Amago, who's going to be the CEO of VANTIVA and his team to tell you the story of that business. Thank you very much.

Thank you, Richard. Good afternoon to everyone. My name is Luis Martinez-Amago. I have the honor to be the new CEO of VANTIVA in this very exciting phase. As Richard explained, we have 2 business in VANTIVA: one is the Connected Home business that we are supplying customer premise equipment to service providers; and the other one is the supply chain services that is the leader today of DVDs and moving into new markets as we will explain during the session. But I'm excited because it's a very sweet moment for this company. And why is it a sweet moment? Because it's a solid company, delivering results and very critical for their customers we serve. And it's a sweet moment because the 2 businesses has concluded a very aggressive and ambitious transformation plan on the core business. And now we are developing new initiatives to go to adjacent markets that we will cover in detail during this session. But let me start by showing our brand today, we are discovering the brand, communicating the brand. Let's see a very short video on it. [Presentation]

I hope you like it. I think it's a nice brand, and we will make a lot with it. So what is the value proposition of VANTIVA? So we are critical for our customers. And we'll try to explain why this is the things that we do are critical for them and very relevant in what they do. We will have a very strong balance sheet moving forward with a high deleverage situation. We have already transformed the businesses, the core business, and we are ready to keep investing on them. But we're already moving to new adjacent markets that will help in our growth in the coming future. We have a very differentiated way to act in the markets we are with a very strong culture that I will cover in more detail. And the management team is a very experienced one that they have transformed the business while running the business and delivering results, and I'm sure that it is an insurance policy to provide the future results of the company. So as we were saying, VANTIVA is acting in the markets that we are acting today in the 2 companies, Connected Home. For the people not knowing us, we will develop the service platforms for the service provider, a very critical component. And we decided to be in specific segments that I will cover in detail and we are leading in these segments. When we decided to be there, we were not leading them. But through the different executions of the plan, we are achieving a leadership position. For the supply chain services, it's the same. We are the natural leader, the strong leader in the DVD market. And now using this competence in both business, what we are doing is going to these adjacent markets. I will not cover this in detail because in the next sections for both divisions, we will go in more details. But this is a very ambitious plan, and we are pretty happy of these opportunities of bringing the competence from the core business to these new markets. I will cover the Connected Home part and David, which is the President of the Supply Chain Services Division will cover this business. And finally, Lars, which will be the CFO of VANTIVA, will give you the financial overview of the company. Other colleagues will join us during the questions and answers, but I will present them at the moment of the questions and answer. So let's start with Connected Home. What do we do? Customer Premise Equipment is a service delivery platform that the service provider, the operators of the world, they need to deliver the service to the home. They invest a lot in deploying networks of different technologies, either fiber, coaxial, wireless, but they need a product to deliver this into the home. There are 2 main categories in this market. The first one is the broadband gateways. The different networks deliver the signal to the home, but this signal has to be translated to Ethernet or Wi-Fi in the home, and this requires a lot of technology in order to from the different type of products to deliver the signal in the home. In addition, Wi-Fi has to be provided in the home, and this is the platform that is executing all these type of functionality. In addition, more and more, the operators are deploying applications in these platforms to deliver other type of services and internet connection like security and some other IoT type of functionality. The second category is the video set-top boxes. It's the same. It's a product that's coming from the signals from the network, has to translate to connect to the TVs and is not only translating the signal is providing the user experience that as at home can navigate through channels and specific content. So those are the 2 main categories of the home. And in this category, we are choosing the right segments, in which, as you can see in this slide, we are leading. We have more than 100 million products in the homes of consumers today, and we keep delivering a significant amount of products every single year. Going in a bit more detail in the Broadband segment. This is a critical part of the service provider. It was not in the past, but it's becoming one of the key business they have. And some of them are really track by investors on the amount of new Broadband subscribers that they can at every single quarter. It's a growing segment because of 2 things. First, because there is a very strong consumer demand as we need Internet at home is becoming an additional utility next to electricity, water, et cetera, Internet is extremely crucial. We have more devices at home every time that should be connected to Internet. There is more content coming to the home, not only to the TV, but to any of these devices in streaming. And we need to have an experience for remote working that the pandemic has shown to us how important is to have a good broadband and with Wi-Fi, where there are many devices in the home consuming this. So the demand is there. It's very strong and growing, but there is a technological demand, which is the refresh of the different technologies using these products. There is the access technology, either fiber cable, coaxial or wireless and in each of these technology in order to increase the bandwidth every couple of years, there is a new standard appearing that require the operator to renew the boxes that there is in customer homes. There is the Wi-Fi, which is also a technology that is evolving with new standards with more capable standards that has to be integrated also in this type of solutions, and there is the software ecosystem. Years ago, these boxes were very poor in software. It was most hover proposition. Now these boxes are becoming a platform and its platform with applications to do security IoT controls and many other functionalities. So the software ecosystem of these boxes become more and more complex with time. To develop these type of things, we need to have experts in many of the aspects of these technologies. You see some of the things that we integrate in the boxes, but our engineers working with the final customers, the chief manufacturer had to be always advancing in defining the new standards and after that implementing them. We decided 4 years ago, and I will cover this in a minute to really invest on this, and we have reached the leadership position after the execution of our plan. Moving now to video. Video has been historically a very complex offer for our customers, for the service provider because they needed to create a complete ecosystem in the back office with video systems, with systems that control the user experience. And in their home, we have this set-top-box that was the translation to all these things to the television. Very few companies could afford to develop this complex ecosystem, only very big Tier 1s and even with a lot of efforts. Some of them are leaving this market with very competitive offers like Comcast in United States with the Xfinity ecosystem, which is extremely powerful top class in terms of functionality. But most of the operators, they cannot afford anymore this type of complexity. Years ago, we decided that we needed to create an ecosystem which will be simpler and faster to deploy for any operator in the world that can make these type of services more affordable on execution with a better time to market and more reach. And as it happened in the mobile devices that they evolve to an Android or Apple type of ecosystems, here is happening the same. We said we need to create the Tier 1s, they can stay with their own ecosystem because they have the muscles to develop these type of solutions. But the rest, the other 100 type of operators in the world. We help Google in bringing the same type of technology to the set-top-boxes. We invested a lot because we believe that, that will be the market that will evolve over time, it will be easier or more competitive. We have created a number of platforms based on that and we are leading because we've started ahead of anyone when everyone else was still believing that the other markets will stay, we started to move to this was a real bet, but a good bet because now we are leading the market. We have created a number of products. Let me show you one of them that you can see outside if you have time this afternoon. We put the video. [Presentation]

That will be changed to VANTIVA at the end of the video. Still not there. These 2 markets that we have selected about 4 years ago as the target ones you see the evolution of them in the future. They are the growing segments in this market. All the other markets that are not shown here is flat or declining, but we believe that concentrated concentrating there for segment will provide the growth that we are targeting. You see that the growth that we're expecting over the next 5 years. But developing the product is not enough. Very few companies can serve the demand of this type of products in a very demanding top operators. Because it's not only about creating the product, creating the technology, as I said, this is extremely critical for the service providers. This may look as motherhood and apple pie type of comments because to any business, any product you can say that. But I would like to make sure that you understand why this is specifically true for the CP. In a network equipment, if this fails, the operators can send a track role to fix the team because it's either in the street or in their own premises. It's not consumer disrupting, customer disrupting and easy access to whatever the treatment is. These type of products are in our homes. And if something happens, they need to knock doors, cost a lot of money and a lot of customer experience cost. So this is why a part of the technology that I explained, we need to have the new technology, the earliest possible for them to be competitive. And the user experience, quality, cost and continue to supply is extremely important. Quality, because what I said if the product fails, it is a tremendous cost and customer impact for the service providers and for us, the cost because the network equipment we share between all users of the network, but this is a specific equipment per customer. So this is a significant pocket in the CapEx investment of the customers. So we need to be able to get the cost at a very competitive price because it's fundamental, okay? And for doing this, is about competence in technology. I know we have to develop this product efficiently and scale partnership with suppliers is a complete science, so had to do it in cost. And continue to supply, as you have seen during the last 4 years, we've been in continuous crisis of many different types, either memory crisis, a component called MLCC crisis, then COVID, then trade wars between U.S. and China, now chips crisis. So we need to have the process and the competence to manage all these crisis and keep supplying this product to customers, because if the operators, they don't have the gateway or the set-top box there is no new customers. They cannot sell the service. So it's a fundamental part of what they do. If a network equipment, they suffer supply issues. It's normally a multiyear project of deploying a new network, which is not customer impacting. Those are very critical because it's very impacting to them. And this is -- for this, you need to have a very strong service mentality. It's not only a good set of engineers to develop the product. They need to know what is happening. They need to have confidence in you. We need to be transparent. We need to be action oriented. It's good to tell them the problem, but it's better to tell them how we are going to solve it. We need to be resilient because with the bad news, it's always difficult to find a solution, and we need to be still in agile. This has been the core of the differentiation of VANTIVA Connected Home in front of many others during this crisis. And I think it's creating this service mentality in all the people or the organization has been a fundamental reason of the success that we're having. And the relationship is across the whole life cycle of the product is from the conception. We are talking to them about not only the current technology, but it's the future technology, how this could impact them, their competition, how can compete after that, the conception of the product, the development of the product, the manufacturing, the supply chain, and after that, the support. With more than 100 million units in the field, sometimes the service providers change something in the central systems, they lose connectivity or interworking with the product, our people has to react and help them in reestablishing the services. All this requires a very close relationship with all the pyramids of the service provider, and they have any service experience with us or with others is what differentiates, how well we can support them in this cycle. And this creates a very sticky relationship with them. If they're happy with you, the order to stay because it's a multiyear type of relationship that normally continues generation after generation and is a good platform for a sustainable business. But the most important thing, when we said that we are -- we need to have a centric mentality. We are a service business that sells products, but we are a service business, it's important to understand what we sell. And what customers are buying from us, it is not only the product that is what we deliver, but it's R&D competence, supply chain competence and a very good customer management team that follows and react for the customer demand. I think it's important to understand that this is people. And we have transformed the way all the different departments interact. At the beginning of time, it's only the salespeople, the customer management talking to the customer. The other partners were more back office type of departments. We changed that. And now everybody is frontline. We are showing the whole spectrum of competence to our customers. And for this, we need to be sure that the people have the right competence and culture, and this has been achieved. But the most important thing is we serve all these brands, and it's the main brands in our industry. We serve them for many years, and we have had a significant amount of new brands. And this is unsolicited feedback. We can -- we are not disclosing who, but it's important to read this comment because it's reflecting what we have achieved over the transformation plan. You have comments there that is difficult to report here, but people surprised about how quick we detect issues in the industry and how we react to it? What is the attitude of our people where they ask by the customer to do something, how quick they react. We have plenty of these unsolicited offers. This is e-mails or calls, but it's a real reflection of what we are achieving in front of the customers we serve. But a bit of perspective of what we have done and what we are planning to do. We read the situation in 2018 in a situation that the market was behaving in a specific way. I will not go there. But we were starting to see a number of these [indiscernible]. The most important thing is that we decided to launch a very aggressive and ambitious transformation plan, repositioning the portfolio, portfolio of products, as I explained, broadband and android TV, portfolio of customers, portfolio of suppliers to make sure that we were addressing the core of the market and the market that will provide growth. That was done. The second part is the productivity increase. We set a target that to operate the same type of business with 50% the operational cost. And you cannot do this just taking people out only. We did this through the approach we took to develop products. Instead of doing a specific products for specific customers, we develop platform as the one that I shown that you can see outside. We have established partnership with suppliers. We were buying from 1,300 suppliers. We reduced to 300. And instead of acting in a transactional way, we started to act in a strategic way, even more volume to key suppliers and asking for them better conditions, not only price, but support priority, which is helping us in going through the crisis. We invested a lot in automation, process automation. Normally, the companies in this industry are running the business monthly. We move millions of boxes every year. Every day, we have thousands of containers crossing seas and inventory in factories produce and equipment. We automated all this, and we are acting today. We move from monthly, weekly, daily and now it's automatic. Every time there is something, a disruption or a new demand from customers or a new component that is missing, our system is telling us the situation quickly, which is helping us in reacting extremely quickly. So that was an important part. Mixing all this, we have achieved that we are running the same activity with 50% of the operational cost, which is giving us a good platform of profitability. And then we invested a lot in supply chain and resiliency, and you understand what is happening in the world, and we are really excelling in this type of activities there. Then at the beginning of this year, we launched a new plan which is doubling up in the core business. We are going to keep the focus in the portfolio. We are addressing by adding new innovation and new capabilities in the portfolio that we are selling there. We are going to adjust the markets. And normally, you go one step further to your core competence. We are going with the competence we have for the service provider to a market called IoT for verticals, and I will introduce this briefly. And we are also exploring new solutions for the existing customers. They like us, and sometimes they are accepting or inviting us in considering to do all the type of solutions for them. So that will be part of the future growth. And of course, we have a mentality of continuous improvement, and we keep improving anything in our process to become better and better over time. Now let me show you -- going back to the core business, and all this has been done going through significant crisis in the industry. But let me, in the core business, show a video on one of the innovations on the set-top boxes. [Presentation]

This is a set-top box included in [indiscernible]. We have launched this in South Korea and is having a tremendous success. And now we are preparing the product to be launched in other markets, which is the first company doing this in this market. You see outside, if you have seen a bicycle enter in, we are also introducing a regular set of box, the Peloton type of offer. You know the Peloton offer, you can do this with this bicycle connected to the set-top box and your TV and you can introduce applications that could be a light competitive solution against Peloton that service provider can provide. And we keep innovating in the core business. But let me cover now the new opportunities, [indiscernible] in new markets. It's IoT for verticals. Companies are in the process of digitalizing themselves. And there are a number of companies out there with what we call operational premises. It could be a warehouse, it could be a factory a hotel and station, places that they run their operations that they need to capture information and process this information. In order to do that, they need sensors and they need what we call the IoT gateway. It's an edge computing platform that has to manage the different sale stores, aggregate this information to manage locally and to send it to the cloud to the IoT platforms in the cloud. It's a very fragmented market today, but it's a significant market. And what we do for service providers today is very similar to this IoT gateway. So as you can see, the market today -- last year, it was about EUR 27 billion, the global IoT market. And we are addressing a EUR 7 billion, which is the gateways, the IoT gateway and the sensors. We can -- we are even thinking in developing the specific applications for these specific segments. And there is a significant growth ahead of us. This is what analysts are telling us. So it's a significant big market. And we have the right to play because being very fragmented market, there is a low level of functionality, maybe coming from -- mainly coming from China, Taiwan type of solutions or in-house develop solutions by the integrators that they are not by far at the same level of functionality that we are bringing from the experience with service providers. It's is about security, the risk functionality in terms of software platforms and the capacity to introduce new applications and also the type of support that we can provide that we are providing to service provider. We have explored this market over the last 18 months, and we have ticked all the boxes. This industry believes that we are bringing a differentiated factor. And now what we are preparing is the go-to-market because it's not a service provider, we need a specialized go-to-market unit in order to make sure that we tap in the right opportunities and in the right segments. But we are very optimistic in creating a new source of revenues and margin in this new endeavor. So as a summary, you've seen our products what we are doing today, what we are planning to do, not only in our core segment, but in the new markets. You've seen that we have transformed the business aggressively. We have a very efficient business today ready to grow. We have the right competence in the people. We have the right engineers to do what we need to do. We have a tremendous competence supply chain people, a very competent salespeople, and we have the right culture, a service-oriented culture that is differentiating us in front of our competition. So I'm very optimistic. I'm very proud of this division keep contributing to the evolution of this business. And with this, I pass the floor to David that will cover the supply chain part of it.

Good afternoon, everyone. For those of you who don't know, VANTIVA Supply Chain Services is the world's #1 DVD manufacturer, providing end-to-end service, including packaging and distribution to retail nationally and internationally. In 2020, we produced over 0.75 billion discs with over EUR 700 million of revenue. In 2021, we diversified into adjacent businesses, intended to deliver strong top and bottom line growth. But before I explain more about our business and the transformation that we've affected over the past 24 months. Let's take a short look at this video, which will bring to life some of the aspects of our business. [Presentation]

Just as Luis was referring to the changes made at Connected Home and the transformation, we've also been making deep transformational change over the past 24 months. On the left there, you can see the situation in 2020 with the Studio DVD business, of course, using all 3 of the verticals that we have. And these verticals are manufacturing, fulfillment and freight and transportation. Utilizing these assets and the personnel we have worldwide, we now have 4 diversified growth businesses that will drive revenues and profitability, as can be seen on the right-hand side of this diagram. So in essence, the first phase of the transformation plan was to streamline our global DVD operations first and foremost and streamline the processes into 1 operating unit. This allowed us to remove 13 facilities worldwide, which amounted to 2.5 million square feet, which was approximately 30% of the entire worldwide footprint. And that has, of course, entailed the removal of associated costs and staffing. The second phase of the plan identified 4 adjacent growth businesses that leverage the excellent capabilities of both our staff and our worldwide facilities. Freight brokerage solutions, non-studio supply chain and fulfillment, vinyl LPs and Microfluidic diagnostic cartridges were these 4 identified businesses. As a result of this transformational change, EBITDA has improved strongly year-on-year despite declining revenues. Phase 3 is starting in July and it includes expert review of the processes and management that will underpin those new growth businesses on the right. 2022 will be the first full year of these new growth businesses. The transformation plan I've just been explaining that forge the company that we now have today was simple in its objectives, but very complex in its execution. And as Luis referred to, it was delivered perhaps not at the best time to do these things under covered conditions, but these transformations were affected the business was run amongst those conditions, 80% of our staff was present worldwide, and we delivered everything we had to do, and it's a testament to the management team that, that was done. So VANTIVA Supply Chain Services has 3 verticals I referred to earlier, and these 3 verticals are manufacturing where we make DVDs, CDs, games, for example, 85% of the worldwide Microsoft Xbox discs are made with us; vinyl LPs and in our Camarillo lab and in our Poland lab, we make microfluidic diagnostic devices. In the middle there, you can see supply chain and fulfillment. And for studios, we package custom and pack DVD, and we build retail-ready displays, which you can see out there, and we ship these all over North America and indeed the world. For new growth businesses, we service customers from Microsoft software, flash pack and ship through to books, toys, household appliances and growing very fast, vinyl packaging and distribution. For transportation, we offer end-to-end managed freight services for each client and our brokerage division, which is expanding very quickly now offers highly competitive intermodal network solutions. And you can see here that our headquarters right in the center there is Memphis, Tennessee, and that's in the hub of the distribution organization in the U.S. From there, we can get to everywhere we need to in North America very, very quickly. FedEx has their hub there, and they have about 450 planes that go in and out of there, 450 flights a day. And I believe they just ordered 60 more planes to cope with the increasing demand. We have these 3 in yellow dots. You can see our manufacturing facilities: Guadalajara in Mexico, [indiscernible] in Poland, and we have Melbourne in Australia. Packaging and assembly plants. You can see here Mexicali in Mexico, obviously, does studio custom pack and auto-pack work and new growth business, supply chain and fulfillment. Memphis, which again is our hub, which we have a campus in is our North American studio DVD and games hub, handling U.S. studio catalog storage [ Auto Pac ] returns from retail and retail cube builds for, for example, Walmart, Target, Best Buy, et cetera. Nashville is non studio. And as you would expect, in Nashville, a major part of this work is music-related North American merchandising distribution. In Rugby, in the U.K., we do studio DVD and non-studio supply and fulfillment. Poland remains DVD focused for the whole of Europe. Sydney is, again, studio DVD packaging and assembly. And transportation and freight which you can see here in green are all co-located, as you would expect, with the packaging facilities. And last but not least, we have 2 microthritic facilities. The first is our lab in Camarillo, and we have a small lab in Poland where we do microfluidic antibiotic reagent loading. So let's have a look at the 2 businesses. The disc business, first and foremost. So we're very pleased that we have 65% global market share, 90% of the North American market share. We're the world's #1 player, as I said, for DVDs, and we're proud to serve all the major Hollywood studios. The format remains valuable to the studios and retail, and it delivers around $4 billion a year. And it draws on an ever-expanding and valuable stock of reinvented catalog and blockbuster new release. And with the huge success this year, for example, of Spiderman, Jurassic Park Dominion, Top Gun Maverick, we'll see this flow through to extended DVD volumes. Only VANTIVA has the scale and geographical reach to serve these customers, and we have deep and long-standing relationships with these big name players and multiyear contracts in place with each of them. So as can be seen here, despite the secular decline of the DVD format, it still represents 40% of studio revenue versus digital. And that's, as I said, worth around $4 billion a year. It's a medium which remains popular with movie buyers and collectors with big movie franchise series, special editions and packaging continually keeping the format relevant. It's interesting to note that 75% of movie buyers are purchasing physical discs, 26% of whom are digital purchases who are also buying the physical format as well. We run a streamlined DVD operation, thanks to that Phase 1 program I was talking to you about and the transformation measures that we implemented. Going into the future, this ensures that we'll remain the #1 player in the industry, and our solidity is backed up by multiyear studio contracts with protections protection mechanisms built into them. These protection mechanisms are threefold, volumetric pricing, raw materials pass-through and a general cost increase, which is enacted at different points in different customers' contracts, but it makes sure that these prices are adjusted against an agreed basket of indices. So it's a long-tail business with sustainable demand. So 80% of our business in the disc side is for the major studios, on movies, DVD. 20% is from other customers. These customers are games and audio -- and I mentioned before, we produced 85% of the global Xbox discs for Microsoft, amongst others. And while DVD movies in UHD and Blu-ray can only be fully appreciated on fiber Connected Home, the same applies to games or perhaps even more for games and gamers. With the bandwidth and interactivity they demand, it's very important that they have the best possible experience of these games. And with 20% of U.S. homes connected end-to-end with fiber, this section of the market as fiber grows, of course, is still expanded expected to continue to offer discs for many years to come. Now as studios consolidate, for example, SDS covers Warner and Universal now. There's been a JV with Disney and Fox. These consolidated requirements means larger volumes must be serviced. And these larger volumes can only be serviced by us. We're the only player in the world that can do this kind of volume. And that's why, together with our deep relationships and with the multiyear contracts that we have, we expect to leverage this leadership for maximum cash generation as we go forward. Now let's have a look on diversification and growth businesses that I was telling about. We have vinyl LPs, skewed supply chain and fulfillment, freight brokerage and microfluidics. And we've leveraged the talents that we have in the precision manufacturing and molding that we do to make sure that these adjacent industries are capitalized on. Before we get into the detail of all of them, I'd like to just explain a little bit about why microfluidics is adjacent. It may not be immediately obvious, but I think it's just worth taking a couple of minutes to explain that the commonalities are that we make them out pretty much the same material, polycarbonate, polymers, plastics. The same kind of work that we do on them at a sub-micron level, nano level is there with the disc. It's there with the cartridge as well. The kind of clean room environment we use, the kind of engineering that goes into it, all of these fundamental things that are required for both that you can see there, absolutely required -- these are the core functionality that's required for both. That's why it's an adjacent industry. Of course, the clean rooms that we do, the DVDs in and the clean rooms that we do, iVDR cartridges in a completely different standards, but the principle is exactly the same. So I hope that explains a little bit about the adjacency that I was referring to. So if we look at these now, we can see that microfluidics, we have, once again, our main lab in Camarillo, California, which has undergone expansion now, and we hope to have this finished by the end of July this year. And then we will be able to go beyond the prototyping that we do there now. For big name customers such as Roche, Abbott and Danaher, PerkinElmer, et cetera. And this is important because it's a truism that the relationship that companies like Roche have with people who do the prototyping for these microfluidic cartridges. Once the prototyping has been approved manufacturer, they usually choose the same company to continue that journey with because the prototype and iterations last for up to a couple of years sometimes to make sure that this thing is absolutely right. So these relationships can't then be thrown away and then started with somebody else just for manufacturer. So this is very sticky. But what we're also doing as well to make sure that we capitalize on revenue is to make sure that we look at one-off opportunities. And we're also looking at using our expertise for nonmedical applications as well. Next, if we look at our vinyl business, this is something that we're very proud of. It's something that's taken off much better than we expected. I think everyone knows that there's huge global demand for vinyl. And we've had just an interesting fact that we started our presentation to Richard and the executive committee last August. And 10 months later, we went from a PowerPoint deck to full production for Universal Music Group in 10 months. And I think that's creditable. I'm very pleased to say that amongst the big name customers, we have Universal and Sony Music signed up. These together alone represent over 50% of the global music catalog. So we're very keen on the opportunities there. Obviously, we're focused on North America at the moment, but we're also intending very soon in half 2 to sit down with our customers and talk about how we can service APAC and the EU. If we look there, the third column, we can see supply chain and fulfillment business. This, again, is non-studio, non-DVD. We started this in Nashville, and we have grown this considerably. We have a very large anchor client there now, Universal. We have 2 pieces of business with Universal. One is vinyl. The other one is for merchandising, and we do the merchandising for all the music artists across all of North America from our Nashville facility. It's a long-term contract with Universal. And we've now, as a consequence, expanded into other premises, Mexicali included. In Mexicali as well, we service non-disc. This is our independent growth business that we've started together with Nashville. So we're overflowing into Mexicali. We have an anchor client that we're very proud of in Mexicali as well. That business is really growing at pace. And what we're doing is looking forward. We're going to reorganize our Memphis campus, and we're going to make sure that by 2028, we've got approximately another 2 million square feet freed up to cater to the expansion which we expect to see from this. The fourth business is freight brokerage. Freight brokerage is booming right now, particularly in the United States. And last year, we grew this business, delineated from the freight that we do for DVD. This business grew 33% last year, and we expect similar robust results this year. And I think as you can see there, we've got some very blue-chip clients that we're very proud to be associated with in all 4 of these enterprises. Let's take a look at Vinyl a bit closer. Vinyl is not really an overnight success, it's been growing for 15 years very steadily. It had a very big boost over COVID when it grew about 20%, but it's got normalized CAGR of about 8.5% a year. It's got a long way to go. We believe this business is going to be growing for some time. Artists get a lot more from it. Every single artist is demanding vinyl from me, studios now. And they realize much more from it than they do on streaming. So there's a very interesting dynamic that's going on here at the moment. In 2021, the North American revenue was about $1.5 billion. It's projected by 2027 to reach $2.6 billion. And we're delighted, as I said earlier, to have signed contracts with 2 major players already. And we're also after one more global player and -- which we're in negotiations with right now. And we're also in negotiations with some of the major independents as well. So we feel very bullish about this particular line. I was very pleased as well that because of the engineering capabilities that our team has and because of the fine tolerances that we work to, the Vinyl that we pressed, first of all, which was a nervous day for us, passed its tests at Abbey Road studios in London, which is some of the most rigorous in the world, first time. They were 100% flawless. And our customers have commented that this is very, very rarely seen. So we're very pleased with that, and that augurs well for gaining the kind of volumes that we've been after. And we're starting to see these come through now because at the moment, due to the demand, the sudden demand, a lot of the big music companies have had to stitch together small companies, which manufactured Vinyl to get the artist content out into the shelves. And as you can imagine, with a bunch of small players, like 20 small players trying to get a Taylor Swift album out, it varies -- the standard of quality varies and what they're after is absolute quality and absolute consistency, and we can give them that. So we're having some very interesting discussions with them, as you can imagine. And the opportunity here really for us is threefold. First of all, to acquire organic market share growth from that growing CAGR that I was telling you about. Secondly, to acquire a bigger market share of the existing customers we've got, we've got some very big customers there. And I'm not kidding anyone but because we're starting off with a relatively small piece of their pie. But with what we can demonstrate we can do and we know we can do it, the opportunity there is to have much more of their pies. Thirdly, as I think I referred to earlier is the opportunities that APAC and EU represent. APAC particularly, is booming right now for vinyl. So it's a very bright sort of prospect that we have for that particular new growth business. Let me go to the next vertical supply chain and fulfillment. So our supply chain and fulfillment service business, it specializes in customers who have grown just too big to service themselves. Or who are fed up with being treated like #30001 from the big giants of this industry. And what we can do is bring together a very unique combination of automated procedures and very highly skilled manual procedures with the kind of volumes to service customers and the kind of labor markets we have access to in Mexico and in Poland to be able to service customers not only 24/7, but also one very important aspect is to give them flex they need according to their market or according to the seasonality and that's very, very important. And that's why we're seeing more customers coming to us than we thought we would have. It's been proving very, very popular indeed. And the customers that have come to us, I don't think I'm giving anything away by saying that they've rapidly increased their original business with us, which is good to see. Our customers, of course, want a cost-effective solution, which is what we can deliver in those locations I've been speaking about. And we have -- looking to the future, we project that we're going to, as I said, repurpose some of the space that DVD currently uses so that we have about 2 million square feet freed up by 2028. So we have our plans all set for growth. So, in summary, I hope that the presentation I've given you short though, it's been has given you some idea of the strength of the 3 verticals that we have in manufacturing, in supply chain, in transportation and freight and those horizontal businesses that we have now, these vibrant businesses, which make full use of the facilities that we have and indeed strength of our staff. We expect to add to these at the appropriate time. But I think our growth strategy allied with our dominance in the DVD business and the strength of our global teams, promises a bright and sustainable and profitable future for VANTIVA Supply Chain Services. Thank you. I will now pass it to Lars Ihlen.

Thank you, David. So to those of you who don't know me, my name is Lars Ihlen. I have been the CFO of Connected Home for the past 10 years. And like Luis, I'm very excited to continue this adventure with VANTIVA. So before we start looking at the numbers, I would like to give you a short summary of where we are in the market today, okay? So first of all, as both Luis and David has mentioned, the large transformation plans we started back in 2018 with Connected Home and in 2020 with Supply Chain Services are now largely behind us, okay? So Supply Chain Services will still see some impacts on cost efficiencies in 2022. But for Connected Home, we are all done, okay? That doesn't mean that we're not going to go out and look for further operational efficiencies when we can, but this will not be under an umbrella of a large restructuring plan. So the restructuring cost is also mainly done by the end of 2021. The demand in the market for both our products are still strong, okay? Unfortunately, for Connected Home, we were impacted like so many other companies in our industry of the supply shortages in 2021 that gated our ability to deliver the full demand. But this will also continue in 2022. And for Supply Chain Services, we saw the start of the growth in the new growth businesses. Despite the turmoil in the supply industry, there has been some positive outcome over the last couple of years, okay? We are now engaging with our customers in a very different way than what we did in the past. So when the lead time of our products increase by more than double, we need to make sure that they actually take the products when it's finally delivered to them. And what we are doing now is that we are demanding to have firm POs before we start the supplying process and gathering the products. That means for Connected Home that we now have a full PO coverage for our sales until the end of the year, and we have very good coverage of sales into H1 2023 as well. On the Supply Chain Services side, we have managed to implement volumetric pricing, which protects our margins when the demand fluctuates. We are also much more aggressive when it comes to pass-through of the op costs that we see in the market. If you go back to this memory crisis of 2017, where we didn't manage to pass on anything to the final customers through the MLCC crisis of 2019 and the start of the component crisis in 2021, where we passed on 2/3 of the cost, we have, for 2022, being able to pass on 100% of the op cost. This has been made possible because we started to engage early with the customers before they finish their budget cycles in 2021. And it's, of course, much easier to have something included in your budget than to explain a variation to it the year after. For Supply Chain Services, we have now implemented pass-through mechanisms and/or general cost indexes, which takes care of the inflation and op costs in this division as well. I will not say much about the results for Q1 2022. But if you read our press release from April this year, you will see that both divisions are off to a very strong start. The main challenge we have this year is the working capital needs created from the quite difficult supply situation where we have longer transportation times due to port congestions on the west coast of the U.S. and the warring Ukraine is also creating some disruptions. But we are working with our customers and suppliers to offset this risk, like we did very successfully in the end of 2021. Okay, that we can go on to the sales. So the sales decline for the group by 6.7% at constant rate from 2020 to 2021, as Supply Chain Services actually increased by 1.6%. This was in full driven by Connected Home. So Supply Chain Services was positively impacted by a stronger than usual demand for their long tail standard definition catalog, which, in fact, was linked to the fact that there was less other options in the market in new titles. This we could see in the decline in their higher definition products that normally is stable for growth, but was down by 7% last year. This decline was offset in the division by growth in their new distribution and freight revenues. For Connected Home, as I mentioned, we were down by 10% because we were not able to get all the products we needed. And we exited the year with a backlog that was -- if you have been able to fulfill the backlog by the end of the year, we would have more sales in 2021 that we had in 2020. So we are bringing this backlog with us into 2022. But because of the supply situation, we will also bring a backlog into 2023 at the end of the year, although it will be smaller than what we had for 2022. If you look at the composition of the sales for Connected Home, you will see that our ratio of broadband to video is now 64% in favor of broadband. If you go back to 2018, like Luis was mentioning earlier, the ratio was the opposite. So we did 40% broadband and 60% video. Because of the lack of sales to North American cable customers, individual segment, this ratio has increased ever since, and we continue to see an increase, and we expect to see that in the future as well as you may see on the market slide that the growth in the broadband segment is much larger than the growth in the set-top box segment. Despite this decline in top line, we still managed to increase our profitability in 2021. So the margins for EBITDA was increasing by 0.6 points from '20 to '21, and it was done by an improvement in both divisions. In Supply Chain Services, we increased by 2 points from 7.5% to 9% -- 9.5%. That was driven by the significant site closures they had in North America and a growth in the non-disc businesses. For Connected Home, we managed to keep the EBITDA roughly stable in absolute value, but the percentage increased by 0.7%. So for Connected Home, we didn't just manage to offset the impact of the negative volume variances, we also managed to offset the portion of the op cost. We did not manage to pass on to the customers. This was done by a much higher level of sales or quality level of sales for 2021. We had the final portions of the cost savings plan, and we had higher operational efficiencies than what we normally have. If you look at the EBITA, you can see that is up by 1.5% year-over-year. And the absolute value increases more for EBITA than it does for EBITDA, okay? So in Connected Home, this is increasing by EUR 7 million, while the decrease in EBITDA is EUR 3 million. And this is because we had costs that were not included in EBITDA, that is counted in EBITA. For Connected Home, this is linked to an assessment of our warranty cost, where we see that the reserves we were taking for warranty was overstated because our products were failing less than we estimated in the past, okay? So during the year, you could release some of the warranty costs. For Supply Chain Services, this was linked to the fact that the portion of the cost savings they were doing on the site closures as linked to depreciation that, of course, are not counted in the EBITA, but it's coming in EBITDA. If you move to look at our requirements for working capital and CapEx, okay? So in terms of CapEx, the requirement for the both divisions is quite low. Over the years, we have spent roughly 3% of our sales in CapEx, and we expect this to continue going forward despite the fact that David and Patricia needs a bit of more CapEx to start in new growth businesses, okay? So for 2022, this means we need to invest in Vinyl presses to get that production up, but these are relatively small investments with short payback terms. In terms of other CapEx that is needed for supply chain services, they have some maintenance CapEx, and they also do some cost savings projects where they see that they can automate and stay more costs than they do by doing things manually. For Connected Home, the CapEx is split mainly 50-50 between intangible CapEx and tangible CapEx, where the intangible CapEx is mainly R&D investments in product platforms and customer-specific developments. And the tangible CapEx is production tools and test benches. All the other equipment we need to manufacture the products are owned by our manufacturing partners. In order to explain the working capital requirements of Connected Home, I will have to take a bit of time to explain the different streams we have in the business here. So first of all, we have the normal streams where we buy finished goods from our manufacturers and we sell it to the customers. But before that, we have the flow of the working of the key components, which is a bit different, okay? So the key components are the components we consider so critical that we are doing the trade of them ourselves, okay? Today, this is mainly the semiconductors. But of course, if something happens, we can improve any product in this category. So what happens in normal is that we buy the key components from the suppliers of the semiconductor we sell them at the same time to our manufacturing partners, and there is no need for inventory because this happened more or less in the same day. Then that cycle of payment term starts, then the manufacturer produces the finished goods. They sell it to us at the completion of the production. We ship it to our customers. And then we will normally collect the payments from the customers before we have to pay the suppliers. So in a normal situation, we tie up a bit of cash in the key component process because of the differences in payment terms, but we collect that again at the end of the process with the finished goods because we are running that at a negative working capital. However, during the supply crisis, we are tying up a bit more cash in both of these product groups because we have cases where we don't have a full kit of components to produce with the manufacturer because one component is missing and then they will not pick up the key component, and they're creating inventory in this part. Then on the finished goods part, we are seeing longer transportation times. Like I mentioned, we have congestion on the West Coast of the U.S. The war in Ukraine is forcing us to use sea routes rather than train through Russia and Belarus. This means that we are carrying the capital for the inventory in transit a bit longer than normal. And in some cases, we have to pay the components before we get paid by the customers. So of course, we are working with our customers and our manufacturers to offset this risk. Like, as I said, we did very successfully in 2021, but this is the main challenge we are having this year. For Supply Chain Services, the situation is a bit simpler. They do have some seasonality with a tie up inventory and receivables during the year before that unwinds at the end of the year. If you look at how we can work from the EBITDA and down to the free cash flow, you will see, as I mentioned, that the EBITDA was improving due to the operational improvements from '20 to '21. The CapEx is roughly the same, but we had a sharp increase in the restructuring cost because of the end of the restructuring plan for Connected Home, where we were doing the European entities that have a much higher payback than the rest of the world. And in Supply Chain Services, we had the impact of the site closures that were costing a bit as well. So in terms of working capital, operating cash flow, we were positive in both year. Both divisions were generating to this positiveness, which has not only been the case, but unfortunately, we had a decrease due to the increase in restructuring costs. If you look at the need for working capital, this was in full driven by Connected Home. So over the years, we had continued to increase the payment term with our key suppliers until we came to a point where they said, "We have too high exposure on you, and we need to start contracting the payment term." So we agreed when we did the refinancing back in 2020 to funnel a bit of this money back to our suppliers. And over 2 years, we paid back EUR 85 million in 2020 and EUR 125 million in 2021. So without these 2 contractions, we would have been generating a positive working cash flow during the period. And for your model purposes, there are IFRS leases that are not included in these numbers for EUR 26 million in 2021, okay? Like you will see with technical and creative services later, they are updating the numbers they are guiding on, and we may be contemplating that for the beginning of 2023 as well. At this I hope the guidance will be a bit easier to understand. So in order to simplify our guidance, we have decided not to guide on revenue any longer, but we will guide on adjusted EBITDA, on adjusted EBITA and on the free cash flow before interest and taxes. So if we start with the adjusted EBITDA, we will say that we will be, for 2022, EUR 140 million or more, which is in line with 2021, and we are saying the same for 2023. This is an update to our previous guidance for '23, that was more than EUR 135 million. But for now, we are capping this at EUR 140 million. This is because we think that any improvement we have on margin from the top line will be offset by the additional investments we are doing in new businesses, both in Connected Home and in Supply Chain Services. The EBITA will follow the same trend as the adjusted EBITDA, and we are saying we will go from EUR 40 million in 2021 to EUR 38 million to EUR 48 million in '22 and EUR 29 million to EUR 39 million in 2023. And for free cash flow before tax and financials, we will go from minus EUR 133 million (sic) [ EUR 113 million ] in 2021 to somewhere between EUR 62 million and EUR 72 million in 2022. So as I said, this assumes that we will have no further contractions on the payment terms and that we return the operating capital to normal -- or the working capital to normal. For 2023, we say this will be between EUR 43 million and EUR 63 million. And finally, for the medium term, we expect the profitability to keep evolving positively in absolute value in the years of 2024 and beyond. And with this, I give the floor back to Luis.

Okay. As you've seen, the -- we are in a very sweet moment. We are generating significant results, and we have a business that transformed. I will not repeat the value proposition. I think we went through the different plans, and now we are in full execution of this plan. And I will invite now the people to go to the stage for questions-and-answers, and I will introduce Girish, which is the CTO of Connected Home and Patricia, which is the Financial Director of Supply Chain Services. And Richard, if you want to be with us...

So please go ahead with your questions. Is it going to be a microphone handed around?

[indiscernible] from Morgan Stanley. I've got 3 questions, if I could. Maybe start maybe for Luis, could you just talk about supply chain problems that you referred to? What do you anticipate might change in 2022? And could you maybe just talk a little bit about what impact you expect that to have on the business perhaps in terms of free cash flow or revenue? And that's the first Question. Do you want to take 1 by 1 or I've got a couple of...

I can take 1 by 1, if you want.

Let's do 1 by 1.

So on the supply chain, we are in a difficult situation, but stable. As Lars was explaining, when the crisis started at the beginning of last year, we were surprised, all the industry. And then we started to execute plans in order to -- for us to deliver the committed results and to the customers to get the products. But entering into this year, the situation is bad, but we have already volumes negotiated with our suppliers that has been kept as committed. It means that we are not serving all the demand. We have demand that remain unserved, but the customers are [ warned ] and the suppliers are more or less behaving as expected, which is not completely good. But we are running now, I would say, a stable difficulties and we will not deviate from the guidance, the guidance that Lars has provided is in line with these expectations.

What are you assuming in terms of the issues that -- what are you assuming in the '22 guidance in relation to supply chain issues?

The guidance that Lars has shown is taking into account all the supply chain issues. So this is taking into and we are committed to deliver this guidance. The other question could be the upside that we could have if this supply chain were not there. And I'm telling you is we have unserved demand that could have been increasing this guidance. But we know that this is just -- the demand is there, but we are not going to be able to serve this demand.

Okay. Great. And then just maybe for you as well. Could you talk about why is -- what impact price has on the decisions of your customers to sign with you? So you talked about the importance of technology, service and volumes, but how important is price?

Price, in a normal conditions, is very important because this is a significant part of the CapEx of any operator and it's important, as I was referring. Now when a situation like this arrive and there is an up cost, additional price, and we are transferring this price to the customers, it's proving that this is a very resilient market because there are a few customers that are saying, "No, and I don't want products." All of them are leaning forward because they need this to keep commercializing the service. Now the point is the price flexibility or elasticity of different markets. There are many markets that are very elastic in price: North America, Europe, Japan, Korea, Australia. The consumers are ready to pay if they are transferred the price to the consumer. There are markets that are less flexible, Latin America and some countries, India, in which when the price is transferred to the consumers, we may see a variation of the demand. Today, it is not showing up, we still see the market pretty resilient in terms of demand, but there are some market less elastic than others. But the places in which we do business for the moment are showing quite a significant resilience in terms of price.

On the back Alexandra.

It's Michael Rapps from Converium Capital. You talked a bit about working capital and how much that's hit you over the last couple of years. When the situation normalizes, what should we expect in terms of a release of working capital?

So we are expecting the working capital to be flat when the situation normalizes. So it's not that we -- as we have paid back in 2020 and 2021, the buildup of the working -- or the decrease basically of the working capital because we extended the payment terms, there is not more to take out of the bank when this normalizes.

And even with shipping delays, transportation delays normalizing you would expect it to just remain flat?

So what we did last year was that we made our customers and our suppliers cover for a portion of the shipping delays, okay? So we went back to our customers and we said, well, you have to pay a bit in advance because somebody has to fund the time these inventories in transit. So that saw a decrease of -- in the DSOs in 2021. So what we will do is that we will release that back again then the transportation times return to normal.

It's Fiona Orford-Williams from Edison. You talked about the way the business is sticky in terms of the broadband. But that's also going to be the same for your competitors. So how do you expand your market share from the 16% that you've got there?

It's a very good question. So it's very sticky if you perform well, okay? And you perform well, this is known. When you're in a customer and you give the service and you saw the feedback that we are getting from them, not only we remain in business, you get more share, sometimes exclusivity in some of the categories. Because in certain customers, they choose a dual supply. It's a similar product is delivered by 2 competitors. And we see evolution over the last year that in some accounts, we get the exclusivity to serve this category of product because of the quality of our service to them. Now the question is how we can develop new accounts? I mean our strategy is delivering or acquiring new accounts. You need to show in advance this type of qualities. We bring customers to see other customers that we have. We have European customers visiting some of our American customers. They visit our labs, we show the way we do things, and then we leave them with our customers, and then they explain how we do things and how we behave, and this gives us opportunities to enter in these new accounts, normally [indiscernible] by the category and over time, you can expand. But it's slow. In reality it's a business that is very sticky, but it's very difficult to go up or even down. It takes time because the relationship with customers for the current supply is very good, is very, very strong, and you need time to keep developing this. We are doing that. We are adding new accounts. Our strategy was to our new Tier 1s. And over the last 2, 3 years, we have a significant amount of new accounts in which we expect the business to keep a hold it.

And if I may have a second. We've talked before about the difficulty in the Latin American market, particularly in terms of the currency and the pricing. Can you update us on the situation there, please?

Yes. In Latin America, the first crisis was with the price of oil when it went down 3 years ago, and all their currencies are very indexed to the -- or the economy is indexed to the price of the oil. We saw a demand which was a bit weaker than we were expecting. Then we entered into COVID, I mean, to increase of prices. And it's not that the demand is going down is that we need to be more aggressive to adapt the effort to this type of market. And again, if you are working with the big players, the Tier 1s of these countries, they are aggressive in their business case and they are ready to make effort themselves, and we see the demand continue if you are with smaller players, normally, they may opt to reduce the marketing campaigns, to delay products, to wait until the economical situation and is where we see some countries, some accounts that are showing a weak part of the process.

We have a question from the web here. Some of these questions have been answered already, but what is the current situation with respect to pricing for components?

They are overall stable. We see difficult. This is more today the problem of getting supply more than a continuous increase of prices. Even if we continue to see some signs of a particular supplier that because of the shortage they have, they try to keep improving prices. We see positive evolution for example, in memories, which is a tremendous commodity in the market. It is trending better over the last years because it's quicker for these people to execute their new capacity. The type of machines they use, the type of production they use is simpler than what other chip manufacturers use. So they started their crisis beginning of last year. And now we are seeing the new capacity in place we see more memories in the market and the price not drastically, but it's evolving in a positive way. In terms of chips remain tough, and we expect next year to be still in shortage. And the price will depend a little bit on the evolution of the overall demand, not only in our categories, but the overall electronic business demand, how the price will evolve. And it is a very generic question because then you need to speak about the type of chips that we buy in which technology because the prices are related to the specific bottlenecks in the specific products.

This is a question on client concentration. What proportion of our revenues to the top 5 customers represent? And are there any recurring aspects to our revenues?

The top 5 could be easily maybe 50%, 60% of our revenue because it was part of our strategy in the customer portfolio, we've made selectivity in order to grow in these customers and have less customers. that is inherited in our strategy. And the recurring revenues, I would say is almost all the business is recurring over the years. Lars has commented that we have all the purchase orders for this year and a good amount of purchase orders until the mid of next year, and this is categories that the customers keep buying from us. The disruption we see is when a customer because of the refresh of technology I mentioned, new access technology, a new WiFi technology, make a new decision process, normally, this opens the business to other people through RFQs and this is where you have to recompete compete again with other people. But if you are well established in this account, the customer has all the interest that you are the one continue.

Is there a region where you're currently small, but you have the ambition to grow and what strategy would you adopt to achieve that?

I think there is the -- we are very well present in North America and in Latin America, traditionally, and we have evolved significantly during the last 4 years in these 2 markets. We decided at the beginning of the period to abandon a number of countries, China to start with Southeast Asia because it was a very fragmented market, very dominated by low-quality type of products. And we invested a lot in South Korea and Australia, New Zealand. The place that we are not at the level that we should be compared to other region is Europe for historical reasons in which we were not present in major Tier 1s. But little by little, we are getting back in this market. We got a significant French operator. We are active in a number of other European operators, and we are stepping now in big accounts like Deutsche Telekom. We have ambitions to go to others. Europe is one of the key priorities, but we are going to be very selective. We are going to go to the cream of the market and develop a little lite presence in this account.

David, why is there so much demand for Vinyl?

Good question. I think it's probably threefold really. If we look at the consumer side, we've got the younger generation, which is trying to -- as I understand it, trying to distinguish themselves rather than just a streamer and someone who just likes to listen to the music with the AirPods in all the time, they like to distinguish themselves with what they view as more of a kind of a form and something which is a talking point with their friends. It's something where they can look at pictures of the group. They can look at lyrics, all kinds of things like this. On the other side of the consumer demand curve, you've got the older generation who are able now to afford the decks and the amps and the speakers and the paraphernalia that goes along with it to play the Vinyl that's now available in better album covers and new designs, repackaging, et cetera. Interesting though on this -- for this particular segment, 20% of the vinyl albums that, that particular segment buys are never opened because they speculate and they just like keeping it. On the other side, it's fueled by artists who are demanding more and more that they have Vinyl because they get a bigger cut than they do from streaming.

And another one for you, David. Can you share with us the contribution of diversification revenues compared with disc revenues within VSCS?

Well, we won't be able to do that until next year because the first full year is this year. As I said in my presentation, we launched these diversified growth businesses last year. But we expect them to give a more and more robust contribution as we go forward. And in about 5 years' time, we expect these to be accounting for most of the revenue.

Just going to add, we're not necessarily talking about profit margin but contribution to total revenue. So the growth businesses now represent about, I'd say, 13% of our total revenue. with a view, as David said, of growing to about 50% share within the next 5 years.

Coming back to you, Luis, or perhaps Girish. As far as diversification in IoT is concerned at Connected Home, do you intend to do it organically or through M&A.

The first part of it is our strategy on connect, collect, compute and create, and we are planning to use our current DNA and experiences in developing products and software. So there is an organic growth associated with it to address in the first phase. As we start to serve the customers in these markets, we would look at both an inorganic and organic plan for business application software.

Perhaps another one for you, Girish, could you elaborate on the risk that Google, Amazon or similar big tech companies develop their own set-top boxes?

Google has Android TV solutions and their ambition with the relationships with the operators is to work through companies like Technicolor, which has the dominant market position in the Android TV set-top boxes. Case of Amazon, the same solutions of Fire TV, they're not with that many operators. And their path is to stay neutral and work through companies like us. So we don't expect at direct competition from Google or Amazon with the operator business and they're serving the software solutions for us.

One for you here, Lars. Can you explain the strong working capital requirements at the beginning of the year? Working capital increased by about EUR 200 million in Q1 versus EUR 100 million at the end of the year.

So this is linked to the seasonality of our businesses. So if you go back in time, you will see that this is the case basically for every Q1 since at least 2015, as far as I can remember. So the fact is that the sales is not linear. So you go from collecting an -- 1 quarter that may be lower than the quarter you are paying, that was the higher quarter. So that's why the working capital is swinging from quarter-to-quarter during the year. There was also some incentives of some finished goods inventory that was delayed at the end of the quarter. That created a bit of working capital need as well that we are working through in Q2.

And the seasonality has to do with the market is normally back to school when people change homes, we see a peak, and this is over September, then we have Thanksgiving in the United States now coming to Europe as well. And then Christmas campaigns where the operators make offers. And we see this, which is back in the second half and is what Lars is saying that then we see an increase of volumes that then we need to pay in the quarter 1.

Disc volumes are set to decrease with the rise of streaming of videos and movies, what disc volumes do you expect over the next 5 years? And how do you plan to adapt the cost base?

So disc volumes are indeed in secular decline. And however, in '21 versus '20, it was pretty much flat, obviously, due to no new release, COVID, et cetera. But what that proved is just how enterprising, the studios are in repackaging and reselling their catalog. And that was proven by the flat progress we saw there, and it's sparked an interest in the studios on how they can extract more value from the catalog that they've already paid for. Nonetheless, however, I would see the disc volumes decreasing between 15% to 17% annually and coming down to [indiscernible] we've talked to the studios finding its own level and plateauing at some point in the out years.

Similar to what we've seen with CD where it's plateaued for a while.

Okay. And Lars, can you explain the assumptions behind the projected fall in free cash flow between 2022 and 2023?

So for the difference between 2022 and 2023, as you can see, we are decreasing a bit in '23 is the fact that we have a positive impact on the working capital included in our estimate in 2022 that we will not see again in 2023.

[indiscernible] Goldman Sachs. Just picking up on that point, Lars. I understand the working capital effect that you've spoken about, but what's the depreciation effect year-over-year? Just because you're guiding for a similar EBITDA number, but the EBITA number seems quite significantly different and I may have a follow-up...

Can I follow up with you on that one? Can we follow up after -- yes? I need to look into that, please.

Sure. And just more broadly, for all of you, really. When you think about CPE demand and breaking into those Tier 1 European accounts, for example, does that -- is that related to the fact that you need countries where the broadband rollout isn't necessarily as advanced as you mentioned Deutsche Telekom in Germany, is that why that's kind of a more attractive operator to break into? Any color would be helpful there. And then secondly, just on your 4 growth businesses. How do you think about the margin profile across those businesses, where -- which of those businesses are more most accretive from a margin perspective and which are least accretive, that would be very helpful.

Okay. Concerning the demand, the demand is strong everywhere, okay? You can make distinctions between type of countries, type of economies. But the Internet is becoming a utility, and we see the demand very strong. Why we are selecting certain customers and not others is because of the scale, okay? When we -- it's not only the cost of developing the solution or adopting one of our platforms. It's after that, the volume that we can expect and the dedication that we need to give in our service approach, okay? And it's not the same that we are dealing with a Comcast or a charter in the United States or Deutsche Telekom or Telecom Italia that if you are leaving with a small Tier 2 operator in the country, okay? This is why our selection process is not related to the demand. It's related to the scale that we can achieve. The demand is strong everywhere. In broadband is very strong because of everything I explained is the refresh of the technology. There is a race now of better WiFi and there is new WiFi standard app in the market, WiFi 6, WFA 6E and WiFi 7. And this is really something that we will experience. And when an operator offer you this and the other not someone will lose. This is why the operators are really invested in deploying these type of solutions. The second question was related to the profile of margins between the different business, I assume. So every...

That was the BSCS question, yes. Both businesses. Okay, sorry. Growth businesses, sorry. I'll let Patricia take that one.

So for the growth businesses in supply chain services, the combined growth business margins are higher than the DVD margins. And then if we look within the growth businesses, certain aspects of them are higher than each other. So the Vinyl and TPB margins tend to be higher than the other 2. Does that answer your question?

I think we've answered all the questions from the web. So if there are more questions from the room.

I think from the press release, I noticed that the free cash flow for '22 and '23 was quoted before finance and tax expenses, which would then result in negative free cash flow after those expenses are paid out. Is that -- when does that go to cash flow breakeven? When can we expect that?

So what we need to do in order to achieve that is to reduce the interest costs that we are paying today, okay? And with the sale of the TCS assets, we are, of course, planning to refinance our debt and hopefully pay less in interest going forward. And when that happens, we are expecting to reach a free cash flow plus a positive at the bottom line.

With no other questions, thank you very much for your questions. And so I think now it's time to take a break before we hear from Christian Roberton and his team at Technicolor Creative Studios. Okay, sorry. Yes, break time. Thank you very much. [Break]

Hi, everyone. Thanks, Richard, for the introduction, and welcome to this overview of Technicolor creative studios. We're going to have a rundown from myself as an intro from the divisional presidents. We're also going to do a deep dive into some of the workflows that we have. So it's my privilege to stand here today as the CEO of TCS. A bit of background about myself. For the last 25 years, I've been working in animation and visual effects. All my working life has been in this industry, and I've literally started at the ground level, making tea, sweeping the floor and animation studio becoming a production coordinator, production manager, producer, joining MPC in 2003 as a producer, becoming the Managing Director in 2008, when we were just a few hundred people and in growing the MPC film business to over 6,500 people in 2019 and then having the amazing opportunity to head up Technicolor Creative Studio. So this is my life, and I've put everything into it. Because of that, too, I've developed really deep, meaningful relationships with all of the major studios and our major clients with many of them having worked with many of them for 10, 15 years-plus and there's a big relationship business, that's an essential part to who we are. So TCS is a world-leading provider of creative visual arts. And we are made up of 4 key divisions. And those divisions operate under a single brand. And each of those brands are very well recognized and well known within their particular field. We have over 11,000 -- 11,700 employees, 8,000 of which we refer to as artists. And that is the one thing that unifies us unites us all as these 4 divisions. What we do is we describe it as creative visual art, we do computer graphics and we apply computer graphics in these different environments in the entertainment and advertising and gaming sector. And we operate with these brands as sort of client engagement. Our clients speak slightly different languages, and we use those brands and those divisions to communicate to those clients in the languages in the way that they want. But underneath all of this, we are doing exactly the same thing. We are taking a creative brief. We're turning that into a bid, into a value, and we're applying our craft using tool sets and workflows to then go back to the clients and provide this sort of premium content. So Technicolor Creative Studios is the underpinning platform for these divisions to connect with clients, but then provide all of these sort of key components and importantly, the talent and craft that support it. So a little bit more information about these divisions, these brands. So MPC is the film and episodic VFX business. So if you think about visual effects because you'll start to hear the sort of subtle nuances, differences between these different activities, VFX is when you're putting computer graphics CGI into a live action photography, whether that's in a TV show or in a feature film, a theatrical film, and that's the process of visual effects. So MPC is providing VFX services for some of the largest entertainment companies in the world that sort of the Hollywood major studios and all of the sort of major streaming providers. And they're doing roughly 30 to 60 different projects over a course of the year. Advertising is on The Mill brand. The Mill is one of the largest advertising VFX post production businesses out there. To put that in perspective, the Super Bowl, one of the largest sort of marketing events in the planet, The Mill did around 50% of all the visual effects in the commercials that played out during the Super Bowl. So really large volume of the world's advertising content is going through the hands of The Mill. A big regional spread for The Mill because it's about connecting with clients and lots of different places around the world and doing about 3,000 projects over a course of a year. So smaller in value, but more in number and a lot quicker turnaround. I'll touch on the sort of the overall velocity of that business as well. And then on Mikros Animation, so this is animation for features and episodic production. So animation is typically fully CG. There's no live action photography in that whatsoever. So this is sort of -- if you think about the movies that we work on, sort of Paw Patrol or SpongeBob Square Pants on the episodic side, it's the episodic productions for DreamWorks or for Disney. So these are sort of fully CGI production from start to finish. And Mikros is a really growing business for us, similar clients to what we have in MPC. So we're doing a lot of work for Netflix and for Paramount. But a growing business under the sort of demand that the streamers are asking for. And then the last division is Technicolor games. Now this is something historically that was wrapped in within our animation business and not really given its own consideration. We see a huge amount of opportunity with Technicolor games. It is a huge market that has been untouched really by Technicolor. We have a huge amount of cache from our entertainment and movie business that we can bring to the gaming sector, and we know as a stand-alone business that has got a huge amount of potential. It's worth mentioning the overall sort of velocity that our 4 divisions operate under. If you think about sort of from the moment we get first contact from our clients to when we start recognizing revenue to when we start delivering on the MPC VFX side, it could be sort of 12 months to 6 months from the initial contact to when revenue starts to come in and we start to deliver projects. On the advertising side, it might be sort of 6 weeks to 6 days to maybe 6 hours in same cases from initial content when work starts and a lot higher sort of volume of business and sort of short turnover as well, we quite quick turn-around projects. On the animation side, a lot more visibilities. We might be in conversation for maybe 18 to 12 months from initial contact to then when revenue starts. And then the projects may take another sort of 12 to -- 12 months, maybe even 2 years to complete. And on the gaming side, a bit of a blend between our VFX and advertising businesses where you might be sort of 3 to 6 months and a lot of reoccurring business where clients continuously come back. So all of these 4 divisions operate at different velocities, which is also an opportunity for us to start utilizing -- maximizing the utilization of our talent and our artists. So not only do we share the sort of the craft, but in some cases, we're also sharing our clients. And so you can see here from these examples, Disney is a client that touches a number of our divisions, Paramount and EA as well. And this is something that we feel as we come together and integrate further, there's a really huge opportunity for us to expand the ability to connect our client services across our divisions and better coordinate all of our business development activity. When you also think about the Metaverse, and we're going to touch on this a little bit later too, there's a real opportunity to apply ourselves with the same client across these various different activities. So Technicolor is a brand that has got a huge amount of history and is very well known within the entertainment and advertising sector. And it comes with that sort of blue-chip brand recognition within its particular field. It's also a company that, within its DNA, has been able to reinvent itself and adapt itself with the changing market. And so if you think the historic Technicolor, which was a photochemical film processing business in the short -- in its recent history has been able to completely transform itself into this digital content creation business through a series of acquisitions and bringing together these different businesses and different companies to formulate what we see today as Technicolor Creative Studios. So within its makeup, there is this ability to sort of recognize change, bring in new companies, bring in new expertise and actually recreate itself. And I think that's something for us to really think about as we go forward about adaptation, about its ability to recognize change and reconfigure its business but still holding on to the core values of Technicolor, which is about the combination of creativity and technology. And really, every time our clients are coming to us, their expectation is to be working with the best talent in the world and with the best tools in the world and so you can see here from that recent history of us bringing these different companies together. So as what happens quite often when you bring lots of companies together, the efficiencies and the synergies haven't been there. And with my appointment into this role just over 18 months ago, the first thing that I wanted to do was actually recognize the strengths of us coming together and the efficiencies of us coming together. So we've been running a program of consolidating and collaborating and integrating a lot of our services. So the sort of the shared services, the typical stuff of HR, finance technology, we've now integrated that and brought that together as a single operation, whereas before, we were not very integrated. In fact, some parts of our business were actually competing against each other. So we've eliminated all of that. The key part here is about how do we maximize the usage of our talent, how do we improve utilization, how do we improve the efficiency of our talent, how do we improve the efficiency of our workflows, how do we actually eliminate waste cost and have a single process to do many of the shared activities that we have. We're very much on the early stages of this transformation. We've always estimated it's probably about 3 years, and we're just a year into it. But there is far more to go, but there's also far more sort of efficiency and margin to recognize through that process. So we are incredibly confident that we can improve the business, continue to expand our business through this collaboration. So we've identified the sort of 8 key pillars, the key ingredients to our future growth, our future success. And I'm not going to go reading all of these because we've got everything broken out into a little bit more detail. So starting, the demand is there. We know our clients are asking us to grow. They're approaching us all the time with more opportunities, more work. We know that the market in each one of our different fields is growing. And there is sort of -- there is that demand that we're seeing real time as our clients approach. So obviously, on the MPC VFX side, we know the impact of the streamers and the additional content that needs to be created for the streamers is driving our growth. Similarly for the animation side, we're also seeing that same drive from the streamers producing huge demand. And so that demand is the underpinning of why we are very confident about the future growth that we have as TCS. On the Mill side, we also know that our addressable market can be expanded through the regional growth and also expanding into different services. In the short term, advertising is affected by the sort of global economic sort of impacts. But the thing with advertising, it might be the first to sort of be affected by that, but it's also the first to recover. And we also saw over the COVID period too that advertising was able to sustain its business very successfully. So we know it can be a resilient business and recover very quickly. And as I mentioned earlier, on the games side, it's a sector that is completely untouched and has been historically overlooked by us, and so we know that there's a massive amount of opportunity within the gaming sector. So the demand is there, and the clients are asking us to grow with them. We're very much focused on the premium side -- premium content side of the activity. That's where we know that the value is for us, and that's where we know that our price point is the most successful. That premium side also means that we come into contact with some of the most sort of demanding clients in the world and some of the most high-profile clients in the world. And because of that, we are challenged to improve our output, our product every year and outdo ourselves every year. And obviously, as you can see from here, we get a lot of recognition and accolades from the work that we do. So not only are we a scale player, but we're also a quality player as well. Our ambition is to be large but also ensuring that we maintain quality and really operate in the sort of premium end of the market. And that doesn't just apply to our film and episodic business, but as you can see from this slide as well, it's also in our advertising business as well. The Mill and Mikros and our games business are all very much focused on the sort of premium content. That means that we get a lot of recognition for the work we do. So as I just said, we are connecting with some of the sort of the largest entertainment companies in the world and some of the biggest brands in the world. And as a relationship business, we have a very long-standing relationship with many of our clients. And you can see again from this slide here, we have a lot of reoccurring business. On the game side, even though it's small, we've worked on the same title for many, many years, those clients coming back to us continuously to get these same services. So we have these very well-established, long-term relationships with these key clients, these key creative entertainment companies and brands as well. So one sort of client in particular has been a strong part of our VFX business, and that's Disney. So Disney is obviously one of the largest entertainment businesses in the world, so it's only natural that a large part of our business would be tied to their output. But if you can see here, this is a long-standing relationship with Disney and in many titles over the recent years have come to us because they recognize that we have a cost that works for their model. We also have the talent and the technology and we're producing content that really fits the quality level that Disney want. We're also incredibly proud of our long history with Disney. And so there's a sort of a landmark moment for us this year, where we're delivering Pinocchio, which is a movie that we worked on with -- Technicolor worked on in 1940, so on the original Pinocchio movie. So it's not many companies that can say that they've had a long-standing sort of relationship with a single client for that long delivering sort of creative and technical services over this length of time. And those relationships don't just stay with the studios and the executives that work at those studios. Filmmakers, show runners, advertising directors, they have also trust in us and those key relationships with our key creators. And for example, we have Jon Favreau, Adam Valdez, who's going to be up here later to give a bit of insight into his job and working on the movie The Lion King. Now Adam has a relationship with Jon Favreau. And because of that, Jon Favreau asks for Adam's involvement on every project that he works on. And that actually travels not -- that travels across different studios as well. So if you think The Jungle Book and The Lion King were done for Disney, but Prehistoric Planet was done in conjunction with the BBC and Apple. So that relationship sort of transverses those particular studio relationships because they have that trust and that faith in how we work and the content that we make. The other key ingredient that we have is this regional growth. Talent is obviously key to what we do. Our ability to craft the images that you see on the screen about people sitting behind computers, using computer software to craft those images. And for us to be able to capture the best talent in the world, we need a global reach, a global spread to be in the places where those talents exist. And not only is it about our global reach and regional sort of approach is not only about talent, but it's also about the price point too that we're able to offer. In a number of our locations, in Montreal, Paris and Adelaide, we are operating in the sort of top-tier tax incentive, and we have the most amount of capacity in that top-tier tax incentive of 40%. And so for the VFX and animation business, that really utilizes these tax incentives. Being able to have a lot of our work passed through those regions is incredibly important to put a very competitive price to our clients. This is then coupled with our large production base in India. And every project that we do across all of our businesses has -- at some point, goes through our India site. And that low-cost base is also able to bring a competitive pricing to our clients and also the margin improvement that we get from it. So this regional footprint is incredibly important for those -- that tax incentive but also for capturing the talent that we need. So with talent, where we find ourselves today, with the growth that we have right now and our future outlook with growth, all of that is going to be fueled by our ability to capture talent. And so what -- first of all, what we want to do is, through our centralized workforce planning, which is one of the areas that we've really focused on in the recent transformation, is about how do we best utilize the people that we have today and how do we efficiently deploy the people that we have within the business. And so every point of efficiency improvement has a significant impact improvement to the bottom line. So workforce planning and optimizing our workforce is a critical component to where we find ourselves today but also to our future growth. We also have to think about talent acquisition and how do we find more people. In 2021, we hired 6,500 people. We came from quite a low point where we had to go through a lot of restructuring due to COVID, and then we quickly bounced back up. So we've got a proven track record of hiring high volume amount of talent around the world and actually on boarding them quite efficiently. So we have already in place a structure that allows us to recruit very high volumes. And again, that will lead into sort of the growth requirements that we have. But it isn't just about recruiting from the open market, it's also about training our own talent. And this has been an important component for Technicolor now for over 10 years as well. Our Technicolor Academy is our graduate training program. This year, we're putting 3,000 graduates to our training program to actually ensure that the demand is being met through our own supply of talent by creating our own supply because, in some cases, the demand is outstripping the actual ability for universities to train people at the right proficiency. So we've actually taken that into our own hands and started to train a lot of those people ourselves. So this is a sort of established route for us. And then retention is also another important component of our own talent strategy. We have experienced in the recent months a high rate of attrition, in particular, in sort of Canada and India, on the back of COVID, all production started up around the same time, which triggered a huge amount of demand, and there was a large amount of attrition from that. But we're working on that through our employee value propositions by enabling people to learn and develop within the company, giving proper career growth, career path to a lot of individuals. It isn't always about sort of compensation incentives, it is part of it, but we're actually managing to achieve an awful lot just through sort of career development and the projects that we get to work on. And also Global Mobility is an important part, the ability for people to actually recognize that they can work and take their skills and craft to another part of the world. We have quite a young workforce, and so the ability to move around the world is an important piece to that. And so a lot of these efforts are going into the overall retention of the company. So if we talk about talent, the other part is the tools. Our artists, our employees have to have the world's best tools in their hand for them to be able to do the craft that they need to do. Our approach is very much about using sort of off-the-shelf cornerstone software packages to sort of be the foundational underpinning of most people's activity. That is because if we go down a fully proprietary pipeline, that requires a huge amount of training. If you're hiring thousands of people a year and then have to do months of training on a very proprietary tool set, that is a very costly decision to make, and it's something that we've avoided. What we have invested in, though, is the sort of proprietary tools around specific activities like animation or character design, character development, things that you need to create sort of photoreal-looking creatures and animals that you'll see in the movies. We put a lot of effort into these sort of small tool components. And the other part is the sort of the noncomputer graphic stuff, the underpinning of our asset management system. So Bill is going to talk later about the overall sort of technology stack that we have. But we're moving terabytes of data between these different regions. And to do that efficiently and effectively, you need a very robust asset management system to enable you to access artists all around the world to be working in collaboration simultaneously. That could be a very costly process if you're not efficient, and so we have a very sophisticated system that we've been investing in for over 10 years to enable us to be able to move this data around to these different locations. We also have full integration into cloud compute as well. So not only we have AWS, Google and Azure as for cloud rendering, which means that when we do peak beyond our on-premises render, we are able to access a huge amount of compute power. That means it's very efficient for us to be able to work that way. And also, through the consolidation of the business activities, what we've been able to do is refocus on unifying our tool sets. So we actually have the same tools available to all artists in all divisions. And especially when we think about the future with the real-time computing and potentially into the Metaverse, having a single tool set is going to be a huge advantage to us. So we -- through the transformation actions that we have with -- coupled with the demand, we also know that there is a significant opportunity for top line growth, margin and cash flow generation. And so we see a massive amount of opportunity for this business as we go forward to be an optimized, lean, efficient company to capture this huge demand that our clients are asking of us. So when we think about other potentials and how we do grow the business, we try and simplify the way that we think about that as best as possible. And I always sort of referred to the 2 levers that we can pull for our business. On the MPC side, it's pretty straightforward. The demand is there. Our clients want us. And if we can grow capacity and have more people, we will be able to do more revenue and more sales. So it's a straightforward sort of growing capacity and growing ability. So everything that we're doing around our recruitment and training is all about just fueling the growth through adding more talent to the business. When it comes to the Mill, it's not really about increasing the numbers of headcount in one location because there's a finite sort of amount of work you can generate in each region, but it is about regional growth. And so the launch of our new studio in Seoul in Korea is about our regional expansion to tap into clients in different areas and then to provide them a network of services across the globe throughout the network of the mill offices. It's also about expanding the services beyond just visual effects. So it's about growing our experiential and creative production to then come together to our clients, which offer more than just the pure VFX services that we have. For Mikros, it's very much like MPC. The demand is there. The clients are asking us to do more work. So it's about how do we find more people to join our business, how do we scale up capacity. There's also the opportunity about IP development, and that's something that we will continue to expand on. It's like the ideas that we have, the demand from the streamers especially they need new ideas, they need new content. And so that's something that we want to be able to expand on is through our own IP development. And then on the game side, the business is really focused around art and design. But we know if we can expand our services into QA and co-development, that's again, that's an offer to our clients where we can package up sort of portfolio of services, which is something that they're asking to go to one company to provide multiple different services. So we have a very clear idea about our future growth and how we get there. We also have the team. You're going to meet most of the people on this slide today, and it was really my intention to introduce as many people as possible because we have a really fantastic team with an immense amount of experience and also the connections and network within our industry to be able to leverage on the relationships that they have. And so we have this fantastic team that is able to -- that really does completely unite on the vision for the company, understand where we go. We have the sort of single ambition as Technicolor Creative Studios, and so we're incredibly fortunate to have a management team that are completely behind the future of this company and what we want to do. So then really just to sort of summarize everything that I've been saying. Our goal is to expand to meet the demand that we see, to continue to grow our services, to continue to capture as much work as we see, to meet the demands that the clients are asking of us. It's also to create talent, to build our talent pool. To enable that growth, we need people, we need artists to sit behind the computers to use those -- the tools that we have. So it's incredibly important for us to build that pipeline of talent and to be an employer of choice for a lot of that talent as well. It's about R&D and technology development. When we do The Lion King 1, we have to better ourselves for The Lion King 2. We constantly have to evolve. We constantly have to invest in that technology. We constantly have to improve the imagery that we create. And we have to make those tools ourselves. And we also have to expand the efficiency within our business through the business development tools that we need as well. So there is this constant element of talent coupled with technology that requires that investment within the business. And then when we think about -- when we think beyond the services that we do today, we think about opportunity as well. So the Metaverse can kind of go many different ways depending on who you talk to and how it could be sort of defined. But certainly, one definition of the Metaverse is about content, product, brands being represented in digital form across multiple different platforms. And how you get that digital content to the consumer has to pass through the hands of creatives. This is not being generated automatically by computers. This is being generated by humans. Creating computer graphics, designing, making creative choices and then gets delivered to the platform, whether that's in the new version of the web or in your game or in your TV show, however you access it through your social media, there is a human involvement using computer graphics to make digital content. And then that's where Technicolor comes into play. Because we have that experience across these different platforms, whether it's animation or advertising or games, real-time tooling applied to all of these different divisions is going to be a critical part to our future. So a company like Technicolor, again, when we think about the evolution of this company, how it has the ability to evolve, recognize new trends and adapt, this is where we see a real opportunity when we have such a high concentration of talented craftspeople being able to apply themselves to this particular field presents itself as a massive opportunity for the future beyond what we do today. So we do feel that the Metaverse has something to offer. It's not here today, but certainly in 5 to 10 years, you can see that, that opportunity as computer graphics continues to evolve will be there for us. So that concludes the sort of the overview. We're now going to run through divisional updates. We're going to start off with MPC, and Tom Williams is going to come up here and share with us his view on MPC. Thanks, Tom. [Presentation]

Hi, everyone. I'm Tom Williams. I'm the President for MPC, which is incredibly a proud achievement in my career as well to run one of the best VFX companies in the world. A little bit about myself. I've been with MPC for 4 years. Previously, I was with Sky, and I wasn't going to add this, but I always we've Abbey Road Studios for 10 years before this. Nothing to do with you getting that certification on the vinyl. I wasn't aware of this that time. So MPC has got 25 years of experience in VFX. During that time, we've got a long history of relationships, some of which are on the slide in front of you. Relationships is key to our business. Without the work, without the clients, we've got nothing to do, so you've got to maintain and build those relationships. We've got 10 global locations, one of the biggest, of course, the engine room of our business is in India with 2,500 artists. So we've been there for about 10 years building that core team up, and it's an essential part of the business. I can't stress that enough. MPC works with filmmakers to create VFX. We take the vision from their brands, might be the director or the show runner if it's an episodic series. And we put that on screen, and that goes through concept, through previews right through post-views to what you see on screen either on phone or on a cinema screen or TV. And that's what we do. We've currently got over 60 episodic shows underway and 20 features underway as well. And just picking out a couple of the clients, obviously, Christian has mentioned Disney, which is a huge client for us, but we've been doing a lot of work with Paramount, as you've seen Sonic 2 recently, and Top Gun doing very well in the cinemas. So the growth is amazing at the moment. The demand for the market is unprecedented, really. What's driving that is the pandemic was one of those interesting double edge swords. Where everybody stopped being able to go to the cinemas, was at home, started signing up for streaming services, so Disney+ has grown massively. Netflix has grown, and obviously recent use of Netflix. But there's also been Paramount+, HBO Max and Amazon Prime, et cetera, all of which we've had to build new relationships with as well, which has been a very successful part of the last 2 years is learning who our new clients are, how do we get them on board, how do we find out what drives them, what work have they got and how do we bring them into the MPC family. What we need to look at going forward is that our business in 2019 was 75% features, 25% streaming episodic products. Now in 2020, that was more 50-50. So what does that mean for us? That means we've had to kind of balance the business a little bit, looking at the casting of the staff, so the artists that we have, who's best placed to work on an episodic show, which might be 10, 15 episodes; or who's best for that 1 feature with fully CG characters and then creatures. So that's been a big part of this year has been rebalancing that team out and casting correctly especially across all locations. MPC is 1 of the big 5 major players on the market. Now the best thing obviously about that is we've got one of the largest scale on the vinyl, and it kind of really slides off from there in terms of scale. Scale is a massive commercial advantage for a number of reasons. Just the technology, which Bill will discuss later, creates a competitive advantage in that some of the smaller studios can't take on full photoreal creatures and characters. That means that we are the first call normally for Prehistoric Planet or a Lion King. Detective Pikachu, for example, where you need hundreds of these photoreal creatures and characters, that you need to have them performing on screen, and you need to be able to make that consistent across 1,500 shots. That is something that other companies, especially outside of Tier 1 really struggle to do. The other great advantage of scale is that we can hire a great number of people at speed and scale fast. And we've done that over the years, as Christian mentioned previously, going from 6,500 and then having to hire, I think, over 7,000 people, whatever it was, over the last year. That again means that we are first call, first port of call for most of our clients. We're always there being asked by Disney, Paramount, et cetera, how do we do this, how do we get involved, how do we improve technology and because they know we can scale, we have the people and the ability to do that. So on this slide, you'll see a great selection of our shows. Just to pick a few out, 1917 on there which we won the Oscar against ourselves for The Lion King, we were nominated for both in the same year. We won the BAFTA for 1917 as well, and Lion King picked up the VES Award. Obviously, as I mentioned before, you've got Sonic 2 there, which is a very successful releases for Paramount as well as Top Gun really beating everybody's expectations this year. We've had a great year so far, and we've got many more features coming out as well. Just to talk about some of the relationships that we have. So our traditional relationships have always been with studios. And as Christian said, Christian and the team have built those relationships over the last 15, 20 years. And these are the major players, the real strong players that we've worked with and we have that history with and that we -- as I said before, we get that call, we work with them, we develop, we help the directors really develop their content. What's changed for us over the last year is that we've added a whole lot of new people and new clients and new people we need to kind of work with. For example, Netflix has a new European structure, which means you're not only having to work with the head office in L.A., where you've got European clients that you work with, the Rest of the World clients, APAC, et cetera. So there are multiple people you've got to follow and track. And we can't take this for granted, so we have a very strong team in L.A. and around the world who help us go and win that business. And that's essential. If you don't do that, if you take it for granted, you would lose those relationships, and those sales will start to fall off. And that's why we don't take it for granted, and we put maximum effort in to maintain those relationships and building them to grow for our future. But as Christian mentioned before, the demand is very, very high. So being MPC and having that stature in the market makes us a very easy approach, and people know what we do on the whole in our industry. We're very well known for that. So for us, it's all about leveraging those existing relationships. This is how we're going to grow. And as Christian said, it's the 2 levers, it's talent and growing the market. So we need to keep leveraging those existing relationships, building on those. As I've talked about, we also need to attract and retain talent. So we have the academies. I think we hired 1,200 of 1,600 trained last year. As Christian said, we've got 3,000 more coming through. It doesn't just stop there, though. Once they're on board and in the business, we have 35 creative trainers now in the facility. We have a full suite of training tools that we use to keep them -- one, keep them as part of their career, so they know what they're doing when they enter the company. They've got a plan of progression. So if they join as an artist and they want to be a VFX supervisor, we can give them a full plan that will take them there over the next 10 years. We have training for production as well. Production is incredibly important part of the business. It's not all just about the creative, we also have to make sure that the creative know what they're doing and can deliver on time. So we know we have a full suite of program for both, and that's really important because bring them in from the academy is not enough. We need to retain them and grow our own talent internally as well. Technology. Now Bill Polson is going to come here and give a wonderful presentation on how -- the pipeline. But for us, it's incredibly important to keep growing that because that creates efficiency. And efficiency generates more margin for us as a company and allows us to grow even further. So every day, our artists need to be able to come into the building and know across the 5,000 plus of them that they can sit down at their desk, turn on the machine and work. Without that, we cover the margins you lose and everything else in the future have to have that pipeline investment. Also, we want to use AI to help us remove some of those manual tasks or repeatable tasks that our artists have to do, again, creating more time to be more creative and work with our clients to create even better work. So that's how we're going to make the most of this growth and how we're really going to expand that market. So just my last slide, so sort of bringing it all together. The Lion King was an amazing example of what MPC is all about. Working from the Jungle Book with Jon Favreau, building on that relationship, Adam Valdez will talk more in detail about some of the technology in a minute. But Jon Favreau come to us and say I want to do The Lion King. I want to do it in a photoreal documentary style. Immediately, the team can just jump on this, think about how do we do it. So they come up with plans, they test, they create new technology, new tools, travel to Africa, fly all over Africa and helicopters shooting tons of photo and footage and then bringing that back and building 150 square kilometers of environment. There's only one real shot in that whole film, which is the sunrise at the beginning. Everything else you see from then on was created by MPC in-house. So the way the animals move, every rock, every floor, fauna and bug, everything you see was MPC start to finish. Without us, that film doesn't exist. And I think the front poster credit that we've got, which I think is the first for a VFX company to ever get a front, I could be wrong, but it's a really important example of what we can do as a company when we're given the opportunity to go in from day 1 on a show and really deliver. And that show, as Christian mentioned, spawned the Prehistoric Planet conversation. Mike Gunton from the Natural History Unit called up Jon Favreau and said, "Jon, who did that for you?" And he said, "You need my MPC team," which is an amazing example of what these relationships can do. This has also driven more work for The Mill and everyone else because it's a real calling card. And our work is always our best marketing. And that's what I kind of want to leave you with today is that our work speaks for itself. The market is extremely strong, and we really believe we're best placed to take advantage of that growth in the future. So I'm going to hand over to Josh now, who's going to go through The Mill. And I'm going to move on to the next slide, which will play his video. [Presentation]

Hi, everybody. Please excuse me in advance. London is having its way with my allergies. I'm Josh Mandel. I've had the great pleasure of being the -- leading The Mill through its growth and evolution efforts for just time 3 years now. Prior to that, I spent about 23 years in the world of advertising and marketing, principally at some of the world's best advertising agencies, some of whom I now call clients, and also 4 years at Nike, where I was Marketing Director of Nike Mexico. Let me give you a quick overview of The Mill, and then we're going to dive into some more detail after this slide. But for more than 30 years, The Mill has been participating in premium craft for the world of VFX, advertising and post production. In the last decade, we've also added more capabilities, which are enabling us to compete across marketing -- a marketer spend in production services. As Christian alluded to, we're in 11 global locations. We employ hundreds of artists as well as a pretty big team of creative technologies in order to be able to get after the work. We are a high-velocity business. So we are producing over 3,000 projects per year, which roughly equates to 250, 300 per month, and I'll go into some detail about how we're able to do that. We have -- not unlike Tom was saying, we have some very long-standing relationships that help drive our business. We've been working with EA for almost a decade now across a great number of titles across their gaming titles. We have an almost 20-year relationship with Wieden+Kennedy, which many of you will know is the principal agency with Nike, which means Nike comes attached. And then also Samsung and Apple, big brands spending a lot of money to push products. And the work that we do in addition to winning a lot of awards for marketers, it stands out. Whether you go into engagement numbers or views, the work that we do, it works is the point. When we look at our market, let me unpack this for you a little bit because it's important to understand once we get into our suite of capabilities to understand how we're able to attack a bigger breadth of a brand marketer spend. You'll see that the biggest part of that bar chart there continues to be TV advertising. I think if you looked at that a couple of years ago, you might have seen as more of a flat line in a world where we're looking at a decline in broadcast for a year. But the reality is with ad-supported versions of streamers and the streaming world as well as the growth of connected TVs, there is a bit of a renaissance of investment in TV spend. The next bar up from that is premium branded content. That is not advertising, and I'll give you a couple of examples of that, of projects that we've done in the past. You will have seen a number of months ago that Facebook made the transition to Meta as their platform. We produced a 40-minute film that was the introduction of Meta and the direction of where the brand was going. Another version is Tim Cook getting up at any one the worldwide developer conferences. And there's beautiful imagery of the Apple Watch or whatever product is that he's pushing at that particular developer conference. Then above that, we talk about experience marketing. Experience is a bit of an omnibus kind of umbrella term for a number of different things. Think about it as kind of the new and where brands are pushing in terms of digital immersive experiences. So things like augmented reality, virtual reality, location-based experience. A good idea of a location-based experience is something that we did with the tape here in London a couple of years ago, where there were a number of paintings where you could hold your phone up and get a more immersive experience, learning about the artist and the story behind the artwork. And then what we're anticipating -- we're already seeing right now but what we're anticipating, as Christian was alluding to, moving forward into the future, it's more and more creation for Metaverse platforms. Look, the reality is, is that we are already existing with Metaverse platforms. Gaming is a Metaverse in its way. Call of Duty is an immersive digital experience. Fortnite is an immersive digital experience. What we're anticipating now is as brands compete to create space, there'll be more and more places where we will be asked to create for those environments. It's also important to be honest and recognize that we are in some economic headwinds right now. Whether you look at it through the lens of the war in Ukraine or the talk in the U.S. about a potential recession on the horizon, there's an adage about advertising is that it's first to go and first to return. So when marketers tend to feel a dip in the market, they may reduce their spend, they may reduce their production. But the second they sniff that the market is coming back, advertising comes roaring back. So it is, to some degree, cyclical. But there are a couple of things that put The Mill in good stead. First is that we have very deep relationships in categories that tend to typically keep their spend up during times of recession. So automotive, what I would call old tech, which is at these days really Samsung and Apple, who will continue to push products during the recession, luxury and beauty and gaming all continue to spend during economic tough times. And that's a lot of the bread-and-butter of our business. In addition, I think even -- with some of the guidance that we've gotten from our financial consultants looking at something of a worst-case scenario of the forecast, we're still talking about a $30 billion market that The Mill has scratching the surface of. So over the last 1.5 years, we've led a transformation of The Mill from a connected series of studios to being organized around 3 global business lines. So we continue to be driven largely by VFX but VFX in more places, not just for television content but increasingly branded premium content. Creative production is in the middle there. That's a wrap-up of a directorial offering. We have over 40 directors on staff globally as well as a design studio that's able to create content end-to-end. So we're not solely at the end of that post-production relationship, but we're actually able to go out to brands and go out to advertisers and do content from start to finish for them. And then I already explained the experience bucket there. But what that does for us is it enables us -- if you look at those moments across the bottom where a brand wants to show up in a premium way, we can play across that whole swath of activity. So we're not just locked in TV, like a lot of our boutique competition is, but we can produce work for digital spaces, we can lead experiences, we can do market retail and also new direct-to-consumer channels. It's kind of a variation of the previous slide, but what it shows is because of these capabilities, we're able to compete across a bigger swath of the market and, thus, capture more share of wallet. We are the market leader in the VFX space competing against other VFX companies. But with the creative production offering, it creates a whole different set -- a whole different competitive set. Similarly, for experience, I think as you're kind of going up the slide, you're seeing that we own smaller parts of the market, which means greater opportunity for growth. And then finally, with strategy, we're currently doing our due diligence at strategy as a stand-alone capability for the simple reason that what's been happening over the past couple of months as we're getting approached almost weekly from brands asking for a strategy about how to navigate these immersive digital spaces, what's my Metaverse strategy, what should I be making, what should I be doing. So the transformation from a series of individual studios to a proper global network is driven first by a hub satellite strategy. So in each region, we have a very large principal studio. They're generally between 250 to 350 people, all of our suite of services, deep in technology, and they service the region. So you can see for Europe, it's a little more mature. That was the birthplace of The Mill, so we've got a few more satellites around there. 2 hubs in U.S. because of the size of the U.S. as a market. The hub in India is mainly fulfillment. So that's where we send an awful lot of our work. And then we've just opened up in Seoul as our footprint for Asia Pacific. That's why that when started. And then based on being in Seoul, we're already being asked to open up locations in Tokyo and Singapore, and we're also currently exploring Latin America. So what all of those hubs do is they essentially -- it's client proximity, go and fish where the fish are. So a good example is Amsterdam, where we -- it's proximity to 3 great creative agencies as well as 2 premier sports brands, Nike and Adidas. But we don't need a full studio in order to be able to service those relationships. So we've got between 12 to 15 people there at any given time, win the work, pump it back into London or into India. The other piece that enables the global network is we've built out a common operational back end that includes sales, capacity, utilization, and project tracking, which we can do almost in real time. It updates every 5 hours. So for our industry, that's pretty close to real time. So I want to end just with a couple of very quick case studies which show really the evolution of The Mill from pure-play post production to being a creative partner and how it opens more market for us. So the first example is a brand example with IBM. We started with IBM back in 2018 through the traditional lens of the VFX on ads. So we were doing things like CG composition and finish. The next year, they've learned about our creative production capability, so we started doing end-to-end production with them and doing fun stuff like virtual production, LED, use of game engines to render. And then since 2020, our experience businesses played in, and we've been having conversations about what IBM should be doing in Metaverse, should they be building their own Metaverse, big kind of existential questions which are a lot of fun. What that's led to is a global master services agreement. So we're not in a position where we're constantly pitching for work, but we're in a partnership with them where they show up with briefs for us. Innocean, similar but different. If you're not familiar with Innocean, they are a global multinational agency that was created by Hyundai to service their needs. It's a similar situation that Samsung has with channel. They're also able to go out and pitch their own work and act as an advertising agency. When they heard that we were showing up in Seoul, they approached us not solely to be a VFX provider, they approached us to be a strategic creative partner with them because they want us to work up and down the breadth of the work that they do. So for instance, yes, we're currently working on a World Cup spot for Hyundai, doing end-to-end production that will run during the World Cup in Cotter. But we're also sitting down with our creative teams as they're being briefed so that their solutions aren't always to fall back on a 30- or 60-second spot as the solution but kind of opening their minds about the type of work and the type of things that they could be producing based on the briefs that they're getting. So it's a very -- it's a deep relationship. We've got briefs going down through 2024, it says 2023 there, and a lot of fun. So that's The Mill. We're super excited both with the international expansion as well as the growth of our capabilities and very excited about the future. And now I'm going to hand over to Andrea Miloro, who is the President of Mikros Animation. [Presentation]

Hi. I'm the short one in the group, so here we go. Hi. I'm Andrea Miloro. I am the President of Mikros Animation, and I have 30-plus years of industry experience. Most recently, prior to coming to Mikros, I was the President of Fox Animation and Blue Sky Studios, where I oversaw every facet of that business. And prior to that, I was the Head of Production at Sony Pictures Animation, where I had the joy of leveraging Sony Pictures Image Works technology and talent to create with a very talented team and Oscar award-winning world-class animation studio that just hit 20 years. So 15 months ago, I chose to join Mikros Animation because I saw a great opportunity to actually take a boutique studio and turn it into a global player. And as you can see, we had a pretty good foundation, so I didn't start from scratch by any means. A lot of these people, and I'll get into all these details later, but a lot of these studios I've worked with in the past I have spent my entire career in entertainment, and a lot of this has been home happily. One thing I do want to point out that everything that you see in animation, every single thing is created from nothing. So it leaves no boundaries to the imagination, which sometimes is a very large box to start playing with and that you have to kind of contain at some point or it never ends. So let me take you through our future at Mikros. This transformation is really important because it will help us capture this growth, a 6% year-over-year growth in a marketplace that sees no end to it and can be done better also. Christian has pointed out that we have a very long history with Disney. But actually for a little bit of history, historians will actually mark that 114 years ago in France was the actual first creation of the animation. In 1937, Walt Disney came out with Snow White. Everyone was amazed. 50 years plus going now, Hanna-Barbera started, and all of us are first things that we ever watched most likely was the animation. So this is deep-rooted, multigenerational media content that continues to grow. And because of that, it's become very mainstream, and that's why everyone is so interested in it. It just keeps going. So how do we do this? How do we grow the business? And it's part of all of the transformation, but at the root of it, Mikros is a 12-year-old animation studio. It has a global footprint, which makes it very, very competitive. The global footprint is in Bangalore. We have 3 locations in Bangalore, Montreal and Paris. Originally and previously, those studios were operated as standalones. So Montreal and Paris would do one movie, and India would do all of the episodic. What we did was we unified them, making one larger global studio. What that did immediately was achieved 3 major goals that we had. One was we increased the utilization for talent. And at the same time, we were able to put a lot more efficiency into our production, into the process of the production. We also, for the first time, which was exciting, we were able to take people that have worked in India for years on very, very well-known episodic television, and we were able to train them on feature film tools and immediately garnered us more capacity. The second thing we did is we streamlined 2 very different -- sorry, 2 different pipelines. And Bill, the technology genius, is going to come up here and explain how. But when we streamlined those 2 pipelines, we were able to then have all 3 locations talk to each other, again, increasing capacity because we could push and pull the files. And instead of just waiting for somebody to spin up in the same location, we were able to spin it across locations. The third and most important was that we were actually able to capture more of the tax incentives. Instead of having one product or project in one location with one tax incentive, we were able to spread the different pieces across Montreal and Paris with good tax incentives and lean into and utilize the lower cost point in India. So that helped lower our cost production costs and increase our margins. The fourth component was we spent a lot of time focusing on retention and recruitment of talent. Talent -- without the talent, we don't go anywhere. It is the driving force. So how do we retain them? How do we recruit them? We go after the best projects. Everyone knows from our experience that mainly all creatives want 3 things. They want to work on the best projects with the best creative direction and the other cool kids, all the other best talents globally. And Mikros delivers on that over and over again. As a matter of fact, since I've come to the company, in the last year, we have actually landed 6 new feature films. So we've tripled the business, and we've also been awarded our first long-form series, which everybody is now breaking into. So it's kind of a hybrid. It's between a feature, where you only get a certain amount of time to tell your story and all the characters; and episodic, which continues on and on, and it's right in the middle. It's usually 6 to 8 very long episodes, if you want to think of it that way. So where do we land in our competitive edge of this -- yes, in our competitors. Our continued success actually comes from our history. Mikros has a very long-standing reputation for delivering high-quality animation in all formats. So it has done where our -- unlike our competitors who are now coming into the market and they're kind of new in it and starting to deliver on episodic in features, Mikros past has delivered 10 feature films successfully, over 30 animated series. And just last year alone in 2021, it delivered over 4,000 minutes of animation. So to kind of quantify that in terms, an average feature film is 80 minutes. So if you just do the simple math, that means Mikros last year delivered 50 animated films, almost 1 every week, which is unprecedented. The other impressive thing is that we have 6 feature films in production right now, and we have 10 more series. And we have our long form also. So that's kind of where we stand in the competitive of deliveries. Now the other thing we do that's a bit different. We can be an end-to-end solution. Like I said, everything that starts in animation is really from the idea. It's from the conceit. So it's really important that we get in at the beginning. And like Tom and MPC because of Mikros' reputation, we get the opportunity to join in -- at the very beginning. We'll even get questions of do you have a production designer. Most recently, I was talking to a potential studio to work with. And they said, can you do the whole thing? And the answer is yes. So when they say do the whole thing, it's can you pick up the director? Can you help us choose a production designer? So we really jump in and we promote that heavily because it isn't a client vendor relationship. It's a true partnership. We start at look a picture. We do animation tests. We do character designs, we can make things move. We bring their vision to life so that they know they can actually happen. And we really love doing it. As a matter of fact, recently -- very recently, one of our tests, we came into Netflix has a book series. You may have heard of them. They're the doll series, the real well. But we did everything with the director from character design to look dev to animation tests. To our surprise, the test went so well that we actually didn't get that project. We got the golden ticket. We got Charlie and the Chocolate Factory, and we just signed the contract on it today. And Christian just let us know or let me know that it was the largest contract to date signed for Technicolor creative studios. So again, Mikros' reputation. I feel like I should drop the mic right there. I know. Can I just like go now like -- so we have a way of doing things, and we have a real passion for it. And that passion comes across on everything we do. You can tell I'm excited. I've been doing this for a long time, and I love what I get to do every day. So I just want to bring you through 1 thing about how we partner. So we picked PAW Patrol as a case study because it's actually an interesting one. Spin Master is actually our client and our partner. And it's a very old company building toys and they're really good at it. And you may have known and you might have noticed in our real, we have a lot of PAW Patrol. We're really proud of PAW Patrol. But what happened was is that they took their beloved television series, they came to us and amongst other companies, and we really thought for this project because we really liked it. We thought it could be something great. And we knew we had to elevate those characters and then you had to make them the quality for a feature film. We also knew that Spin Master had never done a feature film before. Television is animated and features is a little bit different. It's a little bit bigger, it's a little bit schedule, but you have to make it for a budget and you got to make it on time on schedule. So we did multiple tests and multiple passes at the world's design, and we were just starting to build assets. We got the job we were just starting to build assets. We had a plan. What we didn't plan for was the pandemic. This film other than a couple of assets was done completely during the pandemic and lockdown in Montreal and we had to deploy systems and software and figure out how we were going to talk to the director every day to get that vision on the screen because that's the most important thing. And to Mikros' credit and to Spin Master, we did it seamlessly. They actually produced over 85 minutes of animation under lockdown. And we were tasked with -- we went into the bid. We do change orders as things change. We went into the bid with having about 20% of the shops needing to have visual effects in them. It ended up to be 70. They were much more complex. We had to create technology tools to actually get it done. And in the end of the day, it was a complete box office hit. But most importantly, it was a very, very creative partnership and everyone worked together so seamlessly that I'm very happy to report that we're doing PAW Patrol 2. And there's talks about the third one already. So that's how we love to work. I think it gives us a complete edge because we have the capability and we've proven it. We have such deep strong relationships. One of the projects I'm working on right now, my ex-boss at Sony is my client. So she's got my cell phone number every minute of the day. And we really enjoy that because it becomes a 1-team dynamic and it continues forward. So on that. I think that's where we continue to grow and gather more of the market share and just go and make unbelievable at work. So that's me across the animation, and I'm going to turn it over to lovely Jeaneane Falkler, who is the Head of Games, the President.

That is Technicolor Games. So I'm Jeaneane, I'm President of Technicolor Games. And so a little bit about myself before I start talking about the business. I have been in games -- I started in games 24 years ago. And since then, I've worked on all the platforms, essentially mobile, online, PC console, casino, you name it. And I've worked also in both games and game services, which is an important distinction. Game services. It's a different business model really than games. So that included VMC, which is a keyword studio, right? This is the largest in the industry in terms of game services as well as Lionbridge gaming, where I increased revenues 3x and a little under 3.5 years, while I was there, and I joined Technicolor in Q4 of last year, and I was very excited that -- about the quality of the team, some of the amazing IP that they've worked on and also the other TCS business units since we all work pretty closely together. So games, as most of you know, it's a huge business, set to be $220 billion in consumer spend by the end of this year. And games is also the fastest-growing in containment segment. So there's a lot of opportunity in games overall, and there's also a lot of opportunity within Technicolor games, specifically in terms of game services. So I'm going to talk a little bit about that. To set some context for where the group has been and where it's at now. As Christian mentioned, animation and games used to be sort of 1 combined group, and animation is 8x larger. So games sort of got lost a little bit there. And there is no one to really focus on it. So we now have a completely dedicated team focused on games from business development to marketing to production, you name it. And so we're starting to see results from that, right, because you don't get results if you don't focus on something. A little bit about the book of business. It currently is really a dream list of clients some of the top 10 game companies and the most well respected in terms of creativity. So for example, Electronic Arts is a long-standing relationship. And we've done 14 FIFA's in a row with Electronic Arts. I think 12 NHL games with Rockstar, we've worked with them for 15 years. So none of these are one-offs. These are all long-standing relationships that you can only get by delivering quality year after year after year. And it really speaks to not just the quality really to the expertise of the team as well. We have some people that have been on board for the last 17 years in games and that are still there. So -- and also in terms of the gaming book of business, it's not uncommon in this space to have your top 2 clients be 60% of your revenue or more. And that's definitely not the case here. It's a very balanced portfolio, which is fantastic. And currently, we do a lot of our art out of India. And -- but we are looking at making that more global for that service line. So we're looking at other locations. And we're going to be adding 2 additional service lines this year. One is game development; and one is QA. It's also known as Quality Assurance or testing. So functional testing specifically. What we really mean by that is just making sure the game doesn't have any errors in it that would affect gameplay essentially. So Art is really the first part of the game development cycle. And then there's game development, which involves level design and porting and different things and then functional QA. So those all kind of go together. And then when we take a look at the total addressable market, you'll understand sort of where those fit into the bigger picture. But yes, we plan on doubling this year. And so that's really the plan, right, is to expand beyond Art into other locations as well as expanding into new service lines this year, at least these 2. And we expect to bring on a head of game development in Q3. And for QA, we are testing, we'll be starting our first project next month with a very large client, also in the top 10 games clients, which is fantastic. So in terms of total addressable market, these are sort of the guesstimates of how big the space is in terms of what gets outsourced by games companies. As you can tell, it's huge. And ART is one of the largest ones, the blue band to the bottom, and it's growing. And then the most requested service line from our current clients is game development. which is also very quickly growing in the orange. And then the next phase is QA, which is sort of tied right now in terms of size on outspend with Art. So this is the plan, and a lot of this has been driven by our clients, right? This is what they want to see. And it makes sense. If you're already doing the Art, it makes sense to keep it with us for the game development pieces, to smoother transition for them in a lot of ways. And it does put us in the top 3 largest buckets in terms of outsource spend, which is also very good. So -- and if you can see the growth there is huge in games. And that is expected to continue as more and more game companies really want to focus on their core competencies, not doing your own QA and things like that. So in terms of our competition, and because it is a really highly fragmented market, I think it's interesting to know that the keyword is by far the largest. They did over EUR 500 million last year. and then pull to wind at about USD 200, right? So there's a huge gap even between the largest keywords and the next largest pull to win. And there's a lot of opportunity for growth, as you can see here, not just with game development and functional QA that we plan on adding this year, but a lot of other service lines as well. And so there's a need in the market. And we have some really fantastic long-standing relationships who want to work with us on these things, which is good news. And then I think it's also important to point out what some of the key differentiators are, especially for those who aren't maybe that familiar with the game services space. Technicolor Games isn't that well known yet. But Technicolor is, right? When you say Technicolor, people recognize it, it's a household name. None of the other service providers here have anything close to that. They're not recognizable. They're not household names. Technicolor is iconic. And so a lot of companies want to work with us because of that, because of our legacy as well as talent. It helps us a lot in terms of attracting talent. I think another piece in terms of the key differentiation is Technicolor games as part of this larger organization that you've heard from with Josh and Tom and Andrea, right? And you also probably noticed some of the logos were gaming logos. So a lot of the other business units have also worked on games. And sometimes, they're games IP that we haven't worked on, right? So we're right now just sort of working together to get each other into the companies that we haven't worked with in the past. And so there's a lot of value in that. But it's also the cool factor. When you're in games, entertainment is the shiny thing, and it's especially, I think, attractive for not just name companies, but talent as well to get to work alongside people that have worked on Cruella and Top Gun and the Lion King and all the great things we produce. It's very impressive. And then really, the only other key differentiator I would list here is -- and one of the reasons I was actually really excited to come on board Technicolor Games is in the past, I've had to compete against other companies that have an India advantage as long as you can control for quality, like it's really hard, competing against India's hard. So I'm very happy to have such a large facility in India that does great work, and we hear it from the clients all the time. I mean, they rave about the team in India. And so what else I'm here. I mean I think those are really the key pieces is just look at the potential for growth. And then being in the first bucket, clients want to continue working with you if they can, on the other pieces on the same IP. But if you're a different competitor, say, I don't know, Lionbridge, or universally speaking, once you get something to do functional QA on, everything else before that's been done. So if you wanted to get into art services or game development, you can't, at least on that IP, right? You have to wait until the next round. So it's much easier to sell downstream when you're in the beginning. So it's a great position to be in as well. So here are some trends that we see -- we've been seeing quite a bit of recently that I thought were worth covering. I know you've already heard about the Metaverse, and I'm sure there's different opinions on the Metaverse. But the main thing is in the game space, it's something that we've kind of been working within for quite some time, a persistent virtual world. You can interact in with an Avatar, you can customize the digital currency. So games have kind of been on the forefront of that. And so then not surprisingly, we've been getting a lot of incoming requests for work in the Metaverse. So companies reaching out to us, wanting us to build them 3D assets for their Metaverse, NFT fighting games, all sorts of things. So -- and it's great and it makes sense, right, given the funding that we're seeing in this space as well. There's a lot of companies out there with funding to build their Metaverse. And we don't expect that trend to change anytime soon. It definitely seems to be escalating. And then I mentioned leveraging TCS previously. And there's a couple of pieces here. One of the things we came across recently when The Mill sent someone our way ended or assets was any game company that's already worked with one of the other business units. There's already an NDA in place, a master services agreement. All we have to do is come in with the [ saw ]. So it's also a really quick ramp-up for additional revenue on the game side. So it's a fast path to that. And also like it helps us to just leverage those long-standing relationships that The Mill and MPC and others have with game clients. It's very beneficial. And on the technology side, what had started out more as sort of tools and technology for games has sort of morphed right where a lot of game technology like Unreal Engine is now used to make major movie pictures and episodic TV shows. So we also have a lot of the tools and technologies are the same that we're using. So I think also as a group, we're very well positioned to take a game IP and then make -- have Tom's team make a film or movie out of it, and they may be Josh, does the digital marketing and experiential around that. I think, too, we've seen a little bit of that today with both MPC showing Sonic and The Mills showing Sonic. You've seen a lot of similar logos, games logos on the slide. And really, the last trend is outsourcing. That continues, right, as more and more game companies want to really focus on what they do well, which is building a great game. And that's not QA. It's not a lot of other things. And so the pattern, at least also on the total addressable market was showing that those would be more and more outsourced. They're growing, but they're also outsourcing those pieces more, which definitely benefits us. So I think if you look at everything from the beginning now that we have a fully dedicated team on games, and a team that scaled previously in game services, and we're able to sort of piggyback off of some of the games relationships that The Mill and MPC have that we don't as well as some of the new incoming people, right, the relationships they have. We are very well positioned to grow additional revenue and market share in '22 and beyond. Thank you. And that concludes the rundown of the presidents, I don't want to say update, presentation. And I think Christian, you're going to come back up now.

Okay. Thank you very much,. We're going to go and do a bit of a deep dive on workflows as storytellers. We like to always have a story behind everything. So we're going to start with the bidding and sales process, how that gets translated into our sort of resource management understanding the workforce and the resources we need to complete a project, the technology, and then we're going to finish up with actually giving you an example of our involvement within the project. So I think if we could just start here, I'm going to just tie it up. It really starts with our initial engagement at the script and story level. It starts with identifying the talent that we need, whether the location that, that talent is going to operate in the tax incentive or the cost base that, that talent is attached with. It's also about key talent as well. Is there a key individual, a key creative that a client wants to interact with and how do we connect that key talent with that particular client. That talent then translates into price. We have a fixed rate card, which contains an element of our average salary, our overhead, our utilization, our efficiency. We apply that rate card to that activity, we generate a price, we attach a tax incentive to that, and then we come up with a price. And then ultimately, it comes down to the quality to the content to the product that we make. Does the client want what we have? Do we have a prior experience? Are we connecting on that sort of creative and quality level. So those 3 key components apply to any one of our divisions, any one of our activities. And ultimately, that's how we connect with our client on the initial price time and quality, obviously, linked to the technology. So I'm going to ask Leah to come up here now and kind of go into a little bit more detail about how we go through that sales and bidding process.

Great. Thank you, Christian. Hi, everyone. I'm going to take you through the first step of the production workflow, as Christian mentioned, is bidding. But first, a little summary of myself. I've been at MPC for 12 years now. And I'm very proud to work to this amazing company. We produce amazing work, as you've seen today. I started in 2010 as an artist working directly on delivering content. And I've worked my way up through since doing a variety of roles from both the artist side, working on directly on the content, but also on the creative management side, focusing on how we work and supervising shows. Currently, I'm the Global Head of Creative Operations for MPC. I look at creative strategy, the workflow we adopt, the delivery of our projects as well as the key talent management that you heard Christian discuss. The experience I've had in both the artist side and supervising shows has really helped me understand what it takes to deliver our content. So understanding how long things take and how we manage that work has really helped me know how to bid. So I'll talk you through the overall process. which at a high level, is how we quantify what we do and how we determine how much it will cost. Why is bidding so important? Well, it's the first step for us to achieve our margins. If we underbid, we risk losing that margin. If we overbid, we risk losing the project altogether and therefore, the revenue that goes with that. So it's critical to us as a business to have the ability to bid correctly and cost at the right value. We have a centralized team of bidding producers based in L.A. that have a lot of experience doing this, and they're very good at it. So you see summary across the top there, the stages from start to end, I'll guide you through each one. It starts by receiving as much information as possible from our clients. Usually, that comes in the form of a script. So a script of the story that they want to tell. We look at that with them, and we discuss and consult on how we can realize their vision for them. Can what they want to do even be done. Usually, the answer is yes and will help them do it. We partner with them on methodologies, how are they going to approach this project? How are we going to do it for them. We might do a visual test for them, a small chunk, a demo, a pitch, you may have heard to visually help them understand. This is what we mean, is this what you'd like, so that we are all on the same page around expectations. All of those conversations and those small tests and demos really help us have a deep understanding of actually what they want us to do, which is essential to accurate bidding. You see on the right-hand side, the next step is for us to assign a supervisor. So a VFX Supervisor is the creative lead for any project, and you'll hear from Adam Valdez later today, one of our supervisors. We, at MPC, have a deep bench of very highly regarded supervisors that work with the clients from the start to the end of their project to collaborate with them and lead the creative vision that they are trying to realize. Our supervisors also work with our internal teams to help ensure that the artists meet the requirements. If we have a supervisor attached to a project, there is a very high chance that we will win either the full show or a significant portion. So in those conversations, our supervisor will work with the script and with the clients to break down all of the required content generally into 2 sections: assets; and shots. You've heard those words we mentioned a few times today. I'll just do a brief explanation of what they are, and it's important for us to know the difference, especially in the bidding phase. So assets are something that we create once. We build it once, and you will see it multiple times throughout the course of the movie. So you see on the left, an example is Dumbo. We made Dumbo once, and you saw Dumbo many times throughout the course of that movie. You see on the right-hand side, an example of a shot. That's where we use our assets to tell a specific moment of that story. You see Dumbo flying through the surface. That's a specific moment in time, a camera cut to a camera cut using an asset we have previously built. Second example underneath in the Lion King. So Pride Rock is an example of an asset. We built the Pride Rock once, and we bid it to build it once. You see on the right-hand side, Pride Rock at the moment of the story, which you all saw in the theater, I hope, where all of the characters are around telling a specific moment of that project, camera cut to camera cut. So it's important for us to know the difference between the 2 when we do our breakdowns and our bids. Ensuring our bid is accurate is obviously important, and that's why we go down and break through that script with our supervisor. We bid each task in terms of days, the amount of time it will take to do those specific tasks. We assigned days to each individual item in our bid and the script that we received. And you can think that the total bid days describes the amount of effort needed to deliver the work our clients are asking for. The total revenue for a project is determined by those bid days multiplied by their respective rate cards. You see here our rate cards are made up of a variety of costs. They incorporate direct and indirect salaries. They incorporate things like operational costs, facilities, machines, et cetera. They incorporate items like render, which you'll hear Nathan discuss shortly, and assumed efficiencies of our artist team. When we're applying our rate cards and obviously when we're bidding the work, the location of where we're bidding is super important. Each location has their own target margin. And as you've heard a few times today, their own tax credits. So in the bid, we determine where the work will be done. We have a process in place to constantly review those rate cards and ensure that they're kept up to date, for example, to incorporate cost of inflation. So to recap, we're at the end, we've received the material from our clients. We've had the conversations and maybe done a short test for them. We've assigned a supervisor. We've broken down the script into shops and assets. We've assigned our bid days, and we've multiplied those bid days by our respective rate cards. We're now at the point where we could submit that bid to our clients. That bid that goes out will include a summary of the gross and net pricing. It will include the breakdown, as I mentioned, of all of the assets and all of the shops. It will include a list of assumptions to really ensure that we're on the same page with the clients. We are assuming you will give us this. Therefore, the work you're asking us to do is this. All of that is incorporated in the bid. And we also got the names of those key supervisors in there so that they all know exactly what they're going to get. Once we're happy, we submit and send that bid off. And upon award, when we win that project, we hand all of that information over to our production teams in their locations. They get the full details of all of the bid so that they know exactly what was discussed, exactly what was agreed and all of those included assumptions. During production, of course, things may change. Bids are done sometimes many months in advance. And on set, maybe something has changed and the client wasn't expecting. So we, as a business, have a change order process in place to allow us the ability to increase or adjust the bid days required based on the work we're being asked to do. An example is say a client is on set and in the bid, they had assumed that there were are trees in the background, and they wanted them there. So in our bid, we had assumed trees already exist. Maybe when they went on set, they weren't there. So they've asked us, "No, you need to do the trees now. You need to build them. So at that stage, we would do a change order and say, well, that's going to require more work. That's going to require more days. We're going to do a change order and increase the amount of effort needed to do that work. Therefore, negotiating an increase in the original award size. On average, generally, the award size increases by about 10% due to our change order process. And that concludes the bidding process from start to finish. The first step of our production workflow. I'm now going to hand you over to Nathan, who's going to take you through the second step of around the operations teams that are needed to deliver the work that we've bid. Thank you.

To make the Lion King, it took 70 million render hours to convert the CD world into pictures. That's how the audience believe it's real. It looks real doesn't it. That's equivalent of using 10 [ power ] for PCs for 800 years. We did this in 2 years, and we used 1,200 artists across 3 locations: artists in India; artists LA; and artists in London. It was all planned for 2 years even before we awarded the project. I'm here to tell you how we pull that off. We're doing around 90 shows in 10 locations across the world with around 8,000 artists, which require thousands of years of computing power. I am Nathan Wappet. I've been with Technicolor Credit Studios for 10 years. I come from the tech industry recently from HP and before that, 20 years with Alcatel-Lucent. I have expertise in operations, I implement large-scale integration projects around the world and use people and technology to get that done. There are 2 aspects of operations I'll talk to you about today: workforce planning; and render management. Let's start with workforce planning. The way we allocate our resources globally to ensure we deliver our projects on time and with predictable margins. So we have a rolling 3-year workforce planning process. We define the requirements in 3 phases: In people and talent; in the real estate; and the technology we need to get those -- deliver that pro plan. Our plan takes into consideration the 3-year revenue forecast from the businesses, an estimate of the artistic skills that we're going to need an assessment of what actually is available in the market for those artistic skills. As you can see, our 3-year plan puts a heavy spotlight on talent. We look at the talent we need by location and compare it against the available estimate in the market. And since we know talent -- sorry, the demand outstrips supply of talent we actually have established Technicolor Credit Studios Academy. The Technicolor Creative Studios Academy offers 21 different courses to prepare junior artists with a strong focus on the creative, the technical and soft skills needed in production. We deliver this through the cloud globally and in studios in India, and courses include animation, FX and modeling. The courses follow a very similar structure with a high trainer student interaction and run between 8 to 14 weeks, depending on the discipline. The skills and competencies of these courses are all developed in-house and adapted as need be. In 2021, we enrolled around 1,600 students in the Academy; and we hired 1,200 of those after graduation. And as Christian mentioned, we're going to double that this year with over 3,000 students going through the academies. We also use the 3-year strategic plan to look at our real estate needs. We opened the visual effect studio in Adelaide in Australia and also in Mumbai in India, taking into account the talent pools, the tax rebates that we mentioned before and the real estate market survey. The Studio in Adelaide was open because the state government there wanted to give the opportunity for the local talent pools, which was a huge tick for us. and offered our clients tax rebates for making it a perfect fit. Within TCS, we've implemented a centralized governance model. We matched the production demand with existing resources and new talent supply through a combination of hiring in the market and the Academy graduates. Since our workforce needs to operate in the most efficient and profitable way. We use supply and demand forecasting to monitor the progress through the deliveries. And as the show moves closer to delivery, we guarantee the crew levels by locking them in. So in The Lion King examples, in the final stages of delivery, we didn't move artists around. This model is also used to ensure that artists have rolled off projects and on to new work without any idle time. We also use our scale to our benefit. We share resources dynamically. We have artists originally hired in The Mill currently engaged in projects in MPC. We have Artists and Games assigned to projects in Mikros and MPC today. We review the show resources also on a 1- to 6-month window. Taking the original bids, workforce planning maps out the resources needed by location and skill and make sure every detail in the bid is maintained. So in our planning for The Lion King example, we locked in the locations, London, India and L.A. And we also locked in the art of skills necessary to deliver that project. This process drives the quarterly vacancy list, which we give to our talented recruitment team on a rolling basis. In summary, workforce planning ensures we have the pool of artists recruited and developed and ready to start. We take into account the locations and tax rebates and we use India. We lock in artists and in skills ensuring consistency on a project. And there's no downtime as we roll out between shows. That's not just half of it. The other important piece of the puzzle is the need for computer rendering power. And I'll talk about rendering management in a second. But first, I'll talk about what is rendering. Rendering is the final stage in the VFX and animation [ shop ] process. At this stage, the frame is created in its final resolution, as you can see here. As a simple analogy, rendering is like baking a cake. Bakers take time to add the ingredients, follow the recipe and the cake goes in the oven to bake. Rendering is the baking process. when it goes -- when it all goes into the oven, it takes as long as it needs, and there's nothing you can do while it's in there. And once it's done, it's done. So with rendering, we're talking about significant computer power and time. A single shot depending on the complexity, can take many hours and sometimes days to complete. Rendering is our second largest project cost driver after the artist labor cost. Each show P&L has a forecast of rendered needs, factoring in the complexity of the shot and our rendering capacity needs are planned at the bidding process like a builder would cost the materials to quota house. Producers are accountable for delivering the show within the estimated P&L. While the cost -- we define a cost per render by unit, so producers don't need to worry about whether the render requirement is provided in our own technology hubs or via using the cloud. This is all done by our technology management team or our TRM team, which we have set KPIs to maximize the use of the on-prem farms before bursting to the cloud. The TCS farms are significant. We have around 550,000 cores, which are basically computers, all located within our technology hubs. We have developed software and tools which let us track the use of these render farms in real time to ensure optimal resource allocation. We also have the capability to render through cloud providers, which expands on our on-prem farms. We have the capability to use the 3 major cloud providers, Azure, AWS and Google, and we have commercial agreements with all 3. With our TRM tools, we've implemented the optimum mix between on-prem, which is a CapEx expense and cloud, which is OpEx. Our TRM function allocates the machines to deliver the shots for each project without the optimal cost. And 2019 was our first experience of using cloud in a mass way. And we had overruns back then. Our rental forecast was not accurate, and we had other cost overruns. But since then, we have developed the tools to manage this in real time and not how to repeat of those cost overruns. We can track everything on-premise and in the cloud providers exactly the same way. We monitor the progress of the shot by task, by department, by artists and by cast in real time. To close, there's no way we can deliver a show without advanced planning. We need the right talent, the right resources in the right location at the right time to make 1 single show. We also need the right amount of computer power and the balance between our own TCS farms and the cloud to have the optimum mix between CapEx and OpEx. But let's not forget, we're delivering around 90 shows at any 1 time. None of what our creative teams can achieve can be done without strong operational background. And none of it comes by chance, we have 500-plus operational staff providing 24-hour coverage for all last studios. Thank you. I'll now pass on to Bill to talk about technology.

Thank you. Hi, I'm Bill Polson, the CTO for R&D. And I'm here to tell you how the technology platform supports all this that we've been talking about. Before I start, just a bit about me. Prior to coming to TCS, I had 19 years at Pixar, where I had a career both as a technologist and as an artist. Started as a software developer, but I fell in love with the art, and I became character artist. I built characters. I did special effects. I did lighting. I did compositing I led projects. And ultimately, I helped lead the short films group. And 4 of the projects that I supervised were nominated for Academy Awards. Then I went back to the technology side and led the software team that does the production stack for the movies themselves. That led me to be the Assistant CTO of Pixar, where I had an industry strategy role focused on creating standards in the industry. And a lot of the standards that are driving the growth of AR and VR and so forth came from that effort, several of those standards I participated in, one of them I created in Lead. And that brings me to TCS where there's this amazing opportunity to build a unified, flexible, scalable technology stack. And so those are our pillars. This is what I talk to my team about every day. Unification is important. We have 4 divisions, but all the back-end stuff how the data is stored, how it is tracked, how it has moved around, how it is accessed, how it's gotten to the cloud and back, that needs to be the same. So we're very focused on that. I'll tell you how far we are on that journey. Unification does not mean we make all the artists cookie cutters. We work very hard that each division can have their own identity. That requires flexibility in the software stack. So flexibility is the -- is how we can take on any kind of project. We can configure our workflows to let the artists work the way they need to for that project. And finally, scalability. Scalability is critical to the growth of the company. And it means not just taking on more work, but it also means letting the artists do more work so that an individual artist can have a bigger impact on the project, which makes the artist work more fulfilling and at least the cost efficiencies for us. So scalability is critical to everything we do. It all starts, though, with unification. So -- here are 4 divisions, 4 maps of the world. I carry these maps in my head every day. This is the connectivity of how the data is flying around and where the people are. And -- although we have 4 divisions, we have 1 technology team. There is 1 team deploying the infrastructure everywhere in the world. There is 1 team deploying the software everywhere in the world. On that infrastructure, the backbone software that controls the data, we have unified MPC and Mill. They are together now. Over the past year, we've been working on unifying Mikros internally, as Andrea was telling you. They're next to come on to the platform. And of course, games is just getting going. So this is good for us because as Jeaneane adds a city, we add them to the platform. So that's very good for us. So next up is the flexibility in the software stack. And the way I like to explain it is we buy stuff, we build stuff, and we integrate everything. So when we buy things, from Autodesk or from SideFX or from whomever, we are typically the largest purchaser of that software or one of the largest purchasers. And our artists are typically the biggest power users of that software. And as a result, our opinions about their road map and where they are going, carry great weight with our vendors. And so we work very closely with the vendors to shape their road maps. And then we build stuff for a couple of reasons. One is, the vendors may not have gotten there yet. We need something that doesn't exist. And that's where we were on Lion King, we had to build the virtual production capability. The other reason we build stuff is we will finish a project and say that one really well, let's make sure we do that again. So we take that idea, whatever that was, whatever we discovered and we make a tool out of it and make sure that it's available to other artists on other projects and in other divisions and so forth. And the integration, we bring it all together, the integration means, it goes on to that core platform that I was talking about, so that it connects to our data backbone in the same way everywhere. So let me give you a sense of the data backbone and the scale of it. So you've heard some of these big numbers. Let me see if I can put them into context for you. 8,000 artists. I think that's the biggest in the world, writing 300 terabytes of data every day. Now how can you put your head around that? If you stream a movie from Netflix, that's 6 gigabytes of data coming into your home. If you can think of that. So 300 terabytes is 50,000 of those. That's how much data is being written daily onto our core platform. And you can see about half of that is flying around the world because in general, if you write the data here, we probably need it over there. It's the way we work. So most of the data is flying around. And in aggregate, over the years, where we've accumulated this much currently in storage, 60 petabytes. And I want to give you a sense of how big that data platform is and how active that is. So I'm going to compare it to Google. I don't think Google releases their numbers, but industry analysts estimate that they handle between 60,000 and 100,000 queries per second worldwide. Average on our data platform, 5,000 queries per second. And when we're really cooking, we'll do 12,000. So that is a significant fraction of the at least the activity. I'm not saying the size. The Google data platform is way bigger than 60 petabytes. But when you talk about the activity and how intensely we're using it, we are a significant fraction of that. The bottom row is about rendering. And you've seen this number 550,000, so 0.5 million cores. That means when we're fully occupied, which we usually are, we're making 500,000 pictures at any given moment. Each one of those cores is making a picture. How can I put that into context? Well, Occasionally, we run out of room internally. We've got to go we got a burst to the cloud. We go to any 1 of 3 clouds. That's invisible to the user. They just say, I want to render and we route it to where it needs to go. But to put all this in context, recently on a day in March, we did 700,000 cores on Azure. And that was all we had. That was all they had. So that I think puts the 550 into some kind of context. It's a significant fraction of the most we could buy from a major vendor, a major cloud vendor. So it's a big thing. In the lower right-hand corner, 5.5 terabytes of data about the render. This is maybe the most important step because this is us accumulating data as we work so that we can monitor it, we can plan, we can bid, we can prevent cost overruns. We can see what's going on. And that data platform continues to grow day by day with every vendor. We learn more about how we're working internally. So the last thing I want to do is bring all this together with a use case. And you're going to see images in a moment from Adam, you're going to see videos and so forth of him working on stage in L.A. with a director. And what I want you to understand is you're watching Adam work is that it's this backbone that's supporting that because he's on stage in L.A., but the software he's using was written in Montreal. And the characters were built in Bangalore and rigged in London, where we have a center for excellence for characters, okay? And so each of the cities are participating. And this doesn't make L.A. unique. We could run this stage anywhere in the world and the cities would still contribute in the same way. And this model is used when we're building characters or environments or doing animation, there will be some city who's on the firing line, getting the work done and 3 or 4 other cities working with them, watching, helping supporting. So that's the power of this connected network. So hopefully, I will give you some context for appreciating what Adam is about to show you. And with that, I'm going to turn it over to Adam. Thank you.

Thank you. Thank you, Bill. Hi, everybody. I'm Adam Valdez. I'm a VFX Supervisor at MPC. I started in the Bay Area here in California, and then I worked in New Zealand for a while, and I've been based here in London for about 20 years now. I'm going to talk to you about Creative. It's in the name of the studio. I know that this is a bunch of people analyzing us as a business and looking at financials, but creative is the heart of the thing. I hope it's clear that when you see those amazing reels going by of all the work that it is creative lead. And I guess I hear standing representing the 8,000 artists you keep seeing on the slides, right? That's -- I represent them. I also represent the relationships with directors and sort of where the rubber hits the road. I get to use this amazing studio to generate amazing work and all these friends of mine contribute to build this amazing capability and I get to sort of show up and be passionate and creative and win a job and be accretive person, but I do rely on all of it, and it's impressive. I also -- as we go through my bet, I think I will hope to highlight some themes that I've been observing through the day. Yes, as Christian said at the top, what do we do? We do computer graphics, right? There's a tool set here. There's a digital content creation going on. We're using game technologies to make movies. We're -- I always think of movies as sort of like the tour bus experience of a world that has all kinds of further exploration that's possible. It's an introduction through character and story, but you're seeing how any one of our groups could create something that has a life in other places. And then you're hearing about how that's Metaverse, and Metaverse is really digital. And so you sort of see the wheel there of creativity, different venues, the continuity of our ability to create one character appearing in all these different places and how we're mixing technologies digitally to do that. And these are the lofty ideas. I wanted to emphasize story. I think story is a human, really, really essential basic human need. And it's a perennial. There's a bit of cynicism that says, oh, why is how they would we make things and stuff. But I think for all of us, as an industry, as a commercial artist, we have to recognize that every year, there's new kids and there's new people going out on dates who need a date movie. And the world is changing and you have to take old myths and old truths and lessons about life and re-contextualize them for today. So when you're looking at the total addressable market and how a streamer now is a venue versus what it used to be. And we're doing computer graphics, yes, but we are making stories here, and they run through everything we do. And I love this quote about imagery being the universal language of that. Okay. So the way I like to define us is visual storytellers. We are a lot of things, but for me, in my job and what I bring and what I'm thinking about every day, is visual storytellers. One is technology specialists, but now really essential collaborators and the planet just wants story. And I think the pandemic revealed that in a big way that when people were in trouble people were home, what were they reaching for. They are reaching for more story. And how did this guy get to do all this cool stuff. Many years ago, Well, that's not me, but it could have been me. And I could use a computer, and it was on the first Jurassic Park movie ever that I got a chance to take the ability to use a computer and apply it to making an amazing experience for people. And it starts, as Leah said, with the sort of first steps and my portion of those first steps are hopefully facing a project no one's ever done before or something new and innovative about it or some things kind of scary about it, like it's super ambitious. And I think it's fair to say that for a lot of studios or content providers and makers, we are like an essential go signal for them. They need to hear us say, "Yes, let's do this." Can it fit in the money box? Can it be done in time? Is the technology there? Do you guys have the space in your facilities to do it for us at this time? And these are the types of images we might see on day 1, pencil sketches, design studies. You've heard people talk about tests today. Andrea, I talked about look of picture. It's like -- can we imagine it? Can we start to see some initial images? And that's really where it all begins. And then assuming that goes well and it often does. This is an example of us saying, "Okay, next step." And you have John Favreau, who have done a number of movies with, and shows with, now, and he's very motivated about new technologies. So here, we are using a game technology to provide a VR experience to find the shot that you see on the right. So you see the thing on the right doesn't look like a finished movie. But what live action people do is they go out in the world and they bring together action and location and camera. And that's what a shot is made from. And so they're used to standing around and working it out when it's all digital and theoretical. How do you find it? Well, we're using these new technologies to do that. And I also think these new technologies and our ability as a company to innovate new ways of applying them is one of the essential things we're talking about for this whole scale and growth thing, right? You're hearing a lot of that theme because the world wants more story, the globalization of story, the regions opening up Netflix is just the most obvious example of someone who's investing seriously in expanding the amount of production for region but also that goes global. And their Squid Game show was this example of some phenomenon that went global. So how do you scale, How do you amplify or multiply talent is tricky. We're talking about making more talent, developing them, making them better. I need to work with the director and a few other key friends inside the facilities to do this creative work. So I'm -- we're starting to use this type of technology to get directors involved, working with them on the project, and that's a big deal because if you can make these big creative choices at the front of the process, it means as you take your projects through all of the incredible capability that's just been described to you in terms of ability to spend it across so many thousands of artists, you need to have creative choices made. Okay. So that -- this is one of our big pillars of how we're going. Camera is kind of what it all comes down to in the end when you're making shots. And you can see multiple examples here of cameras. And upper right is Lion King stage. Caleb Deschanel is one of the world's most accomplished cinematographers. First time applying his hands to the wheels, driving a CG camera showing real-time feedback for Lion King. Bill Pope is upper left. We saw how can we -- we're on a blue screen stage. You can't see anything. We're supposed to be in the jungle. Maybe we could like Google Street View or on your phone, you can look around and see what a street far away from you. Could we give this cinematographer, the ability to look around the virtual world, even though they're standing on a blue screen stage. So you load that iPad with some virtual content, and they hold it up, literally looking around, "Oh, there's trees over there. I should put a light and [indiscernible] shadow. And there's a river here." So that gave them the ability to sort of see into the future. And then bottom left is myself at home during pandemic, shooting cameras for the BBC-Apple Prehistoric Planet series. Basically, we call that a room-scale version instead of the stage-scale version. And that's like you've heard a lot of stories about reacting to pandemic, but we think this is also just about global collaboration. How do you have computers that are talking to each other and people who are at home, talking to a director at home, et cetera. So a lot of exciting new changes to how technology is also building bridges to filmmakers and accelerating our creativity. Okay. So this reel you're going to see is I wanted to make the point that when we make our shows, our films and our TV series and our -- that hey, it's kind of like games. We build worlds. We build characters and worlds and this is just showing you the world of Lion Key around the Pride Rock area. Doesn't look that beautiful when we're doing the design part, but that's where we're going. And we have to create a world that vast to find our shots and to find all of our shots and where our actions should take place. In this case, we run it like a shoot. We have traditional equipment driving the computer, and you can see the feedback that Caleb is getting there, operating in real time. I just want to move along to what supervisors like me do on a daily basis. So every filmmaker goes into one of these projects kind of scared that is this going to go well and their personal reputations are on the line, a great product comes out. Us delivering quality and making a great piece for them and making them better as a filmmaker is essential. And here, you have Andy Jones, one of our animation supervisors over John Favreau's shoulder. And this kid is talking to animated leopard that's not there, and they have to keep reminding them shot of a shot after shot like what they're doing in the moment, how we're creating. So we're onset. We're over the shoulder, making sure everything is going well, shot by shot, day by day on a shoot. This is Eric who was innovating a way to take the game engine lighting and bringing it to this dome that you see upper right, a way of really directing the light of a scene from the game engine. And you can see in the bottom, it might be a little tricky to see, but there's tons of little computer screens on a set these days. It's a light camera, computer action now. And that's us, that's showing up and adding that whole dimension. We're also out in the world for Prehistoric Planet, they shot, I don't know, Tom, how many locations on the planet, dozens or something. And we're climbing around in the rooftops of where the sets were out on roof. I mean, it's just -- it's global deployment of staff when we go and we shoot. And then in the end, we have final beautiful images. The one bottom right is the shot I showed you earlier with John Favreau was finding a shot. That's what it ends. I'm not really deep diving into how that gets done because I think reel is -- and people have been talking about that. But -- so I'm mostly giving you the journey of starting something to getting to this final stage. But I'm going to show you next is a reel of befores and afters. So you can sort of see how we plan a shot and we prep for it and then how it becomes photoreal , the befores and afters. You can see the digital world becoming more photorealistic. And time after time, these projects are about what is this filmmaker and studio ambition? What are we going to try to do? How do we partner from the very, very beginning all the way to the final pixels that end up in the theaters or on any screen anywhere? Building an entire world, building a cast of movie stars, making you believe in it, taking you for a piece of catharsis, a piece of escape and meeting that need that everybody has for a story. Okay. So I think that's me. And then after me, it's going to be Laurent, right, coming on up for finances. Okay. Thank you.

Okay. So they put the least creative person after the most creative person. So this is the anti-climax moment. Now we're just on the land softly, I hope. And yes, I'm going to basically take you through our financials. Maybe a word about me. So Laurent Carozzi. So I'm currently the Group CFO of Technicolor. Joined the company in '18 to try to have sort out a few things. Prior to that, I spent half my career in banking. So the corporate finance side by side always on the media side. And then after I joined a few media companies like Lagardere SCA and Publicis, we had various CFO functions. So today, in my presentation, it's not going to be extremely long, but we have 3 sections. Of course, at the end, the idea is to take you our guidance for '22 and '23. And explain a little bit how we're planning to do that. Before that, I will give you 2 or 3 slides around the recent period of '19 to '21, so you start to get familiar with our numbers, with where they are, how they evolve and one of the story, the recent story. And prior to that, I need you to bear a little bit with me. I told you it was an anti-climax moment, but we're going to do a little bit of accounting because we're planning to use new KFIs. I don't know how to do that in VFX, just have to do it straight. So a bit of VFX ,KFI to Technicolor. So we're planning to change a little bit and provide you with some more transparent, more clear indicator for you to follow the activity of the group. So first of all, as well, as part of these first parts, I would like to remind you 4, 5, 6 points that are key when you want to understand how we build up our growth, our forecast and our business plan. So the first thing of importance, and I think you heard the word growth repeatedly before. So I'm going to do it one last time. But we're on for quite a strong year in 2022, probably 2023 as well. We expect, in particular, for instance, MPC to grow very significantly. And you mentioned you heard about it is really on a good path, and we'll come back to that. Advertising will be a little bit muted because of the slowdown in the economies, but games is going to carry on growing. So overall, we're on for a strong year. I think the second point of importance is that behind us. It's interesting for 2022, one last for 2023, but 2022 is still a COVID year recovery. So MPC in particular, didn't work almost in 2020, recaptured some of the activity in 2021, deal bit more in 2022. And that bit will come and help in securing the growth we have. So if you consider that more or less, MPC might get close to what we see. But almost double in terms of size, half of that comes from the fact that they also still are recovering from COVID, so they go back to normal life. So it has a little bit of a solidity in the numbers we're presenting. The third part, and I get more in detail, so I won't be too long here, but we are also -- and I think Christian mentioned it and all the President mentioned that, the work started 2 years ago. There's been a whole work of -- around transformation about rebuilding, building up efficiencies. It leads to something very tangible you are interested in. It's improving margins. So from '19 to '21, I'll show you how the margins have already involved. And hopefully, it's going to give you confidence that this is going to continue. And guidance point for, obviously, are supported as well from the strong growth you've seen in our market. So no need to repeat that. You've seen already. But with TCS, there is a combination of strong market -- strong market growth, combined with gaining market share. It's obvious in games and animations, they are the smaller divisions. But obviously, this will continue also with advertising. We talked about Korea and Asia and MPC. the work done in streaming world is clearly about also grabbing market share. Another point of importance, we have a reasonably good visibility, it shouldn't be too extreme there. But if you consider that basically today, we have -- if you look at Mikros combined with MPC, as of June, we have of the 86% sales of the year committed and we have an extra 4% of high potential. So we are in between 85% to 90% of the sales that are secured, and we're starting to build up visibility into 2023. Final points. There's obviously a strong point of attention that needs to be put on recruitment, retention, efficiencies that you've heard that from the various Presidents. The thing you need to know is we've recruited a lot of people already in 2021. We'll be recruiting in 2022, but probably we need less than what we've done in the past. So maybe give or take in between 500 to 1,000 to go down to a net 300, 400. So these are the sort of magnitude of numbers. So we are now moving into territories where basically the need for mass recruitment, is diminishing a little bit. I'm not saying it's going to stop. It's probably going to continue forward, but this is more or less where we are now. The retention is really put on efficiencies and gaining efficiencies. The next 2 slides, I'm going to take you through probably the most dull moment you had in the day, but still, I think it's important since we're going to present you on new KFI. So what is the idea here? Basically, until recently, we were using the traditional way used by Technicolor of reporting under IFRIC. So the sales, EBITDA, EBITDA, all this element. We introduced EBITDA a few years ago to start to capture all the costs when you analyze us. Now what we are proposing is basically to modify that and to go a step further in terms of transparency, openness also make us more comparable to the U.S. to U.S. GAAP. I think that has virtues here. So what is it that we're planning to do? So we are going to introduce 1 or 2 new KFIs. The most important one being what we call the adjusted EBITDA after lease. So because of IFRIC 16, some of you are familiar with this, [indiscernible], when you look at an EBITDA these days, you do not have the rent cost in there. So it's a little bit misleading. You see our performance, but you don't have the rent there. Also, for some specifics, this is specific to our industry, it wouldn't apply to Connected Home, but as far as we're concerned, we also have what we call token-based IT spent. So these are spent, IT spent that are captured as depreciation, CapEx depreciation. So they are under the EBITDA, captured by the EBITDA, but see, they're not in the EBITDA. But they vary, the [ future ] with the activities. So the higher the activity, the higher the consumption. And the depreciation is not a linear pattern. It could be -- you have EUR 40 million on the balance sheet. This year, you use, I don't know, EUR 30 million of rendering costs, you're going to put EUR 30 million in the books. So it makes sense to bring it back at the EBITDA level so that when you look at your EBITDA, you have a full picture always. So in a nutshell, the adjusted EBITDA, the new KFI we're proposing is your traditional EBITDA. We reintroduced all the rent in there and all the token-based IT spend. So you can see there on your screen, and so that gives you also a first hint of some of the numbers. The rents are EUR 22 million for 2021. It was a [indiscernible] of EUR 21 million a year before. And what we bring back as well in terms of IT spent token-based is in the region of EUR 11 million. So that's the first element. So new KFI, adjusted EBITDA. And all the numbers you will see after will follow this new rule. If we do that, whenever then I want to continue to show you the rest of the P&L and the cash flow, I need to do some adjustments. The CapEx, in particular, would be slightly lower. Why? Because you had some of these IT-based costs that were captured in CapEx because I've put them already in EBITDA. Now I need to take them away. So it's EUR 10 million. So your CapEx level will reduce accordingly. And it's the same with work cap. In working cap, you had some of the rendering costs were in working cap because now we're putting them back in EBITDA, we need to clean the work cap. So as a result of that, you will have a lower adjusted EBITDA, but you have a lighter CapEx and a lighter working cap. Next, I promise it won't be too long. But next, KFI, we are changing. And I think it's a very important one, is the adjusted operating free cash flow. It's important because you are interested in trying to track in an easy fashion, the evolution of our cash, the real cash. So we are on the left-hand side of this deck, you have the -- always we had your EBITDA, CapEx restructuring, work cap, non-current, leading you to our free cash flow. But in its free cash flow, you are not quite yet at the bottom. You needed to take out the rent and you need to take out also something else, the capital leases. Capital leases are considered -- it's like CapEx, the same nature. It's made of basically, you have workstations, you have all these elements. So it's really a signature of CapEx. It's just not accounted for in the same fashion. It's more accounted for as debt and repayment of debt. So if you really want to understand how the free cash flow moves and the debt moves, you need to have that to the free cash flow. So that leaves you with the numbers you have at the bottom in red. The good news is that the new number I'm proposing you will lead you to exactly the same variation in cash. So that's 1 good thing. But it will be a way, much easier. So you will start from the adjusted EBITDA. You already have the rent. You already have the token-based element. You will use the CapEx redefined. It's a lower level because some of that has been already taken into account. Of course, we have the restructuring. We will have the capital leases now, so that will be -- we'll do it for you. So you would be in there. The work cap will be adjusted from the older rendering costs. You have a little line. So I know there are some tedious analysts in the room. So the other non-current cash outs, the [ EUR 10 million ], before I get the questions, these are very small items, pension litigations, bits and bobs, should be neutral. But every year, you have EUR 1 million or EUR 2 million that are fluttering now. And that leads you to your operating free cash flow, not just operating cash flow. So in a nutshell, an adjusted EBITDA, and an adjusted operating cash flow, you'll be closer with these 2 notions from the real cash flow of the company. We make things, I think, a lot easier to forecast and to plan. So these were the 3 most boring slides. Now we're going to go through some boring slides a little bit less. So we are going to look at the recent history, so '19 to '21. So the idea here is for me to tell you a little bit the story. You've heard the operations, and let's have a look at the numbers and what happened over the recent years. So in the spreadsheet, you have left-hand side the sales in '19, '20, '21 and the various colors of the various divisions. On the right-hand side, it looks a little complicated, but it's not really. You have in these sort of bar charts, the top number is the EBITDA, that's a new definition. And then you have D&A. And then at the bottom, you have the adjusted EBITDA. So that's very simple. You have the sales and you have the margins. So let's start to look at the history of the last 3 years and starting with MPC. So let's start in '19. '19 was a strong year for the company, very strong year, in particular for MPC, you recall the Lion King, you have plenty of fantastic movies being delivered, although that was coming one year. So it's really a year of reference there. So they did EUR 435 million of sales at the time. Then enter basically 2020, and they stopped working after quarter. So for 3 quarters, there was no activity. They dropped to EUR 133 million. By the way, the other will come to that. We're also affected, but probably less than MPC. So MPC dropped there and started to recover in 2021. So when I told you, it's just the beginning. It's this EUR 242 million shows that. Are we halfway? No, probably more than that, we are probably 60% of the way, but we are on our way back to -- go back to the '19 numbers next year. So they had to go through these big sequences. Something also of importance is that back in '19, the clients were mainly -- not only mainly tent-pole movies. So you didn't really have studios. You had very, very, very little amount of streamers. I think it was in less than 10% at the time. In 2022. We'll come back to that, but now it's half the business. So it's been a big shift. It has, through pandemic, as Christian reminded us, we had an increased amount in term of people basically are streamers producing. Now this has had, obviously, an impact on margin. So will be commenting for you immediately the impact on the MPC margin. So basically, they had -- so here, I mean, with the new adjusted format. And so some of you know of our margins in the old EBITDA. They need to be familiar now with the new format. So they were more or less in the region of 12% at the time. It doesn't sound too high, but you remember what Nathan told you about in '19, we incurred a lot of rendering cost in excess in close to EUR 30 million. So the EBITDA was okay, but actually and the rendering costs were quite high. So leading to a low level of EBITDA. The company, MPC lost some money, not a huge deal, but in vision of EUR 20 million in 2021 because of the lack of activity simply. Although they took out a huge amount of cost and stuff, actually. So it was more on that year. At the end of the year, we have 3,000 less people in the organization. The peak being, I think, in June, July where it picked up above 4,000. And then before coming back and recovering margins, and we will not, in the future, provide you with very specific guidance on margin, but for you to have a sort of an idea where we stand. They are already -- we were already last year in between 15% and 20%. So you already had the comeback there. Quick word for -- on The Mill. So EUR 269 million of sales at the time. At the time, we were still 2 different agencies. So you have The Mill and you had MPC advertising, if you remember, was affected also by the lockdown in 2020. Interestingly enough, not as much as movies. So they kept on working through the period. I think some of your -- you touched on that, but some of you customers, the Amazon or [indiscernible] continued actually to advertise through the pandemic. So it was in the plastic recession. You had -- some of these as we're continuing to [ trace their ] product. So they had to advertise and they had to fulfill the work from home basically everywhere. So it was quite a challenge. But you can see the sales were off, but not that much compared to the impact it had on MPC. And we have started to come back in 2021. The story on margin is different. And just was not at the helm of the company. So it's okay. Back in '19, these margins were very, very low. So they were -- you were probably in the region of 6%. That was super low, and low for the industry and whatever. So we went with more classic approach of a reduction of cost, all these elements. And then following up Christian's arrival and thanking the helm of the company and bringing these entities together and [ Josh's ] appointment, we went into more work on efficiencies. So the idea is to or today already, they have moved north of 10%. Again, I won't be giving you very too specific guidance here. But I would say here, we are probably halfway. And we should be -- we should continue to improve over the years. It's not next year, but over the years and to continue to do this work. So it's been also advertising a very heavy already story of transformation, and it is just going to continue. If we look at Animation, so we had EUR 58-odd million of sales, EUR 60 million in 2020. So another example of resilience during COVID time and going up already in EUR 82 million. I think we don't need to say much. And I think Andrea alluded to that 2 or 3 years ago, that company was doing one movie in Mikros Animation. 3 in 2021, working on 6 in 2022. We'll see in the future. But obviously, it's more a volume-driven type of activity. Margin's high. Margin's high at the time. Margin is high today. So you are in a slightly above 20%. That hasn't moved. It continues like that, and we hope it will continue. So that is explained to you, the swing you see in '19 to '20, and they come back in '21. We talk about 2022 later, but obviously, you see the path we have entered. There are 2 more elements we need to comment for you is the CapEx on one hand and then the operating cash flow. So CapEx, pretty simple slide here. Basically, in '19, you had EUR 56 million of CapEx dropping massively in '20 and '21. So here, you need to have a little bit of explanation. In '19, probably we had already in between EUR 15 million to EUR 20 million of still CapEx in expansion. This is when we open up Paris. We had other places I think that was in delay had -- so at the time, the company was finishing part of the MPC mainly. A part of it's a geographical expansion. So you have this CapEx in there. We had also a company that is within Andrea [ remit ] called the [indiscernible] called [ IP ], so they're doing [ IP ], and they were delivering quite a lot of shows at the time when they deliver shows, it's being CapEx in year 1. So you had more than EUR 5 million of CapEx for that. So really, you can see that really the level should have been probably more in the region of 35% in normalized fashion. Dropped to EUR 23 million and EUR 14 million. Why? Well, less activity. Maybe I need to tell you a word about what is the CapEx. The CapEx is made of workstations, the mix of all these basic things, the level of intangible CapEx in this bucket is max put tap aside this max EUR 10 million, right? So the rest is really made -- this is really -- sorry, intangible CapEx is really EUR 10 million. So the rest is really tangible. And so workstations and all these things when the activity drops, is pending less. And there was also a constant to effort to try to do as limited as possible spend on CapEx. I mean, for those who were here around the time of the restructuring that we probably understand why. It has been low. We see that this is not a normalized level, obviously, I'll give you a normalized level after it will be higher because the activity is improving. Last part of the 3-year story. So '19, '20 and '21, now the operating cash flow, so free cash flow, so it's the new definition again. So let's go maybe here line by line, it might be easier. So on the top, you have the adjusted EBITDA. So high level for '19, good year, dropping to a negative [ EUR 12 million ] in '20 before coming back to EUR 75 million in 2011. So I've explained already this sequence. The CapEx, EUR 56 million, EUR 23 million, EUR 14 million,, we saw that in the previous slide. Maybe a word on capital leases. Cash out. They were in a region of EUR 25 million, EUR 26 million dropping in 2021. The 2021 level seems to be a little low. I mean, it probably is going to go up and we're not completely convinced we will continue to use capital leases. Probably we're going to go more for CapEx going forward. It's so dependent on the cost of the money. And if it's cheaper to go for capital leases, we'll do that, but it should be probably slightly higher. You have a line on restructuring provisions. Careful between P&L and free cash flow. You know that when you enter into a restructuring, you book as a P&L charge, all your expected restructuring charges, but you pay them out through a sequence of years. So really, you need to add the [ 13 ] to the [ 11 ], the [ 20 ] to the [ 21 ] number. It's actually the same restructuring plan that are planned in 2020. That was basically funded through the coming 2 years. We'll discuss about the future later. The work cap, the work cap of this company should be pretty neutral. There's no reason to see big swings in the work cap. Now once I've said that, there is a big swing in the year '21. So what is happening, and it's a positive one. What is happening here is, I think, in the sequence, in particular, for MPC and in particular with studios, what happened is when they want to make sure, secure team. What they do is that they give what we call down payments. The down payment could be close to 10% of the overall amount of the contract and so the company received this cash upfront, then will be paid for the delivery of our milestones. At the very end, when we finish the movie, we won't get paid because we had the milestone. So we will cover that, right? And so we had plenty of that in 2021. That should be the same every year, except that in 2020, the company barely worked and the work cap is a variance is the difference between 2 years. So because of that, they received down payments in '21. They had none in 2020. The difference is positive in 2021. Do not expect anything next year because they have started to work again. So they're receiving the down payment as we speak. And then you have a litany of small other noncurrent cash out. So I think I went maybe pretty fast, but this gives you sort of an idea of the recent history. And also now shown through the lenses of the new KFIs, because I think you probably need to get used to that. Let's have a go now for 3 slides on the future. So on this first slide, Basically, I think the overall message is, if you look on the right-hand side, in sort of orange type of column, you have basically sort of a forecast for '22 and '23 for the adjusted EBITDA and adjusted EBITDA. You can see that we expect growth. We expect growth in 2022, and we expect growth in 2023, irrespective of the difficulties that are -- because it's not an easy trading environment. You heard about the equipment, you heard about advertising. But still, this is -- these are the numbers we believe that are achievable. What we gave you also -- is also a notion of other elements of CapEx. Usually, it should be 4% to 5% of revenues. Let's say, consider that it should be basically in between EUR 15 million to EUR 20 million. every year. Give or take, if you're in this bracket, you are not going to be too -- too wrong. Also, we're trying to help you a little bit with the work cap. So we think it's going to be slightly negative. EUR 10 million. So this is what we've put in our forecast. So maybe a word of explanation here. In 2022, we think that there is a special effort that is made into capturing extra sales at MPC and at Advertising. And we believe that this if this is successful, this might happen more towards the end of the year. If it happens more toward the end of the year and booking the revenue and booking the EBITDA, I'm not paid. So my work cap is negative. It reverses in 2023. Now you're going to tell me why are you taking then a negative number in 2023? Because probably there's a little bit of a prudence here. And we think that if the company grows, we might have this effect that every year, you have more and more sales but you have more -- your Q4 will be higher than your Q1 and therefore, you won't be paid entirely there, and will move into the next year. So you will have this sort of a negative pattern going forward. It's not a big number. I don't think it will be a big number, but we thought for your modeling purposes, it might be helpful. And then we're giving you sort of a range of capital lease. I think increasingly, and thinking going through that with an important person in this finance direction was in the room, [ Martin Roric ] is a very important guy. He's been with us for a long time. He's done a lot of work for this company, but we're thinking increasingly that CapEx and capital leases should be considered as one, and we figure out a way to even simplify it. But the 2 are the same nature. So don't spend too much into analyzing that. So let's try to understand how we plan to get there. We're not going to give you, of course, a specific forecast per subdivisions, but some elements that probably will help you to better understand what are the underlying trends there. I mean if you look at MPC, really, you have, I think, 2 to 3 elements that are important. So you have a growing part of the streamers in the mix. So 10 per movies are doing fine. They're growing, but they continue to grow. But there is a stronger growth coming from the streamers. So half the sales will remain of the streamer sales in 2022, probably the mix might even twist even more in 2023 and they're paying more and more. So the ASP per movie, we're doing more movies and the ASP is going up for the tent-pole but also for the streamers. And the streamers, for those of you who have been discussing in the past, we have had lower margins than the studios 5, 6, 7 points a few years ago. This gap is reducing. Their projects are more ambitious. They spend more money. And therefore, basically, they're paying better and the margin are going up. So more streamers, so that's for the top line growth. That's always helping for the indirect cost and the fixed cost and higher margin because they are delivering a higher margin. I think also there is a conscious effort from Tom's team to focus increasingly and increasingly and increasingly in particular in times where the resources are not that great on high added value projects. So the ones where we have the latest margin. So this is where they have been focusing more and more of the activity. And I would say, I would add a third point because it is probably still not optimal in 2021 and not yet in 2022. And I think both Tom, Nathan and Christian alluded to it surcharge efficiencies. So we do not believe that our staff are as efficient as it should be and COVID didn't help. So that needs to be improved, and that will be also supporting that. If we look at Advertising here, so it's important. I mean, Josh will continue the work of transformation. It has started to continue. So it's about selecting projects with that pays, charging the client, everything we're doing for them, adjusting the rate card properly and also working on efficiencies. So that's bucket one. Second bucket is to intensify the use of India. Today, they are at 30%. The MPC is way higher than that. So the plan now is to move them to 45%, let's say, towards the end of the year, up to above 50% the year. It's not going to be easy. It's not going to be -- this is a cultural change as well. But this is -- and you understand that with the same sales, shutting down the light step-by-step. I must have said something wrong. The -- basically, the -- you know that with the same sales, basically, if you move to India, your margins are just going to the roof because it's 1/3 of the cost. So that makes sense. And finally, Christian started 18 months ago, they have just to bring together The Mill and MPC then as one brand in The Mill. They've done a huge amount of work already, but it's not finished. So we still have duplication teams. We still have -- there's still work to do. So that work will also come through and help move out these margins as I told you from 6% a few years ago, that they are above 10%. And the idea is to take them, of course, even further. Now the part on amination is very simple. You have 2 numbers. You had 2 movies, 6 movies. We think we'll be working on more movies than that. The outlook for 2022 and in 2023 is pretty good. You've heard about the Netflix Charlie and the Chocolate Factory in news. I've been waiting for that one in signature for 4 years now. So I think it's really a landmark. It's not in the budget. So these things will come up. We've started to put that in our future numbers for 2023. We know it's coming, but this is the path we're following. One, comments really on also a very important theme underlying our plan. The is to move more and more and more and more stuff towards and work towards India. The important number on that is not only to see that. we are going to recruit more. Okay, given. And the fact that we've used more and more in India, but we plan to go to 70% of the headcount in India next year, it's ambitious, but we think we can get there. This is a strong underlying sign of how we plan to improve the quality of the business. That's that. One last slide about financial policy. I endured the nature of reading it. It's pretty standard. I think one piece of news that was in the press release, I think, this morning is that because all these transactions are connected, we've secured the -- we secured the private debt funding of VANTIVA. So it's EUR 375 million, which basically means because we had already EUR 300 million. My speech is improving. The EUR 300 million -- I'm talking money. So it's EUR 300 million at the start of the year, the MCM, we have EUR 375 million with the private debt. So obviously, it leaves us with probably something in the region of EUR 600 million to raise for TCS via term loan also. So that's the bucket we need, and that's the important number here. Well, for the rest, I think, again, I'll let you read that at ease. I think overall message, we expect strong growth in the short term, '22 and '23. You have our guidance there despite the difficulties we have in terms of managing and recruiting headcount and retaining and the softness we have in Advertising. Midterm, the prospects are good. You saw that. And there is still a lot of benefit from the transformation that has started to come through. So all in all, we have interesting times ahead of us. And with that, Christian, I think we're moving on to Q&A. Thank you.

Okay. Does anyone have any questions?

Thanks a lot. Thank you for the detailed presentation. It's Matthew Walker from Credit Suisse. I've got 2 questions. The first is -- actually 3 questions. The first is on revenue. The guidance in the slides are tiny bit vague. But if I look at the number that you gave for sort of the total addressable market size growth back in the early presentation, it sort of averages out at somewhere between 10% and 15% across the group. Is that a reasonable guide for '22 and -- '22 and '23? Second question is on MPC. Obviously, it's half in size. You said it was going to double. Over what time frame would the MPC revenues double or get back to the 2019 level? And then the last question is, if I sort of look at free cash flow, operating free cash flow. And I sort of plug in all the different guidances that you've given for the different lines in the free cash flow with the change in working capital going back to, say, minus 10% from 30% and all the other lines that you've given, it looks like free cash conversion to EBITDA would be around 55%. Does that make sense?

Right. So that's right. Apologies. Yes. So your first question is around -- you're absolutely right. The guidance on sales is not extremely detailed. [ Your all ] number was 15% to 20%. I think you're a little bit shy of where we're planning to be. But the answer to your second question might help in a sense that yes, we think that MPC should go back to '19 levels, probably if not in 2022, towards 2022 or 2023. So do we expect quite a big amount of growth here. For Animation, you saw the pattern. So you think you can -- you've been an analyst long enough, Matthew, so you know how to do the trend there. And as far as Advertising is concerned, we said that we will be probably flat or slightly down. So with that, you have the number. For the cash flow conversion, it's pretty good. Yes.

Fiona Orford-Williams from Edison. Could you just tell us quickly what level of disclosure you'll be giving in future reporting, please? Because that will help us with the modeling. The second question I've got is you talked a lot about the importance of relationships that you have with the client base. But we know that with the shortages in the industry, there's a lot of churn. Are the relationships that are valuable at fairly stable levels of the business or is that an issue?

Do you want to answer the reporting one first, and I'll go into the...

Right. So the idea is to basically disclose when once TCS would be listed to regroup the divisions in 2 blocks. So you'll have MPC and I mean cost on one hand and the Advertising and Games on the other. And basically to focus really, of course, you're going to have the sales. I mean we'll give you all the lines, not the P&L as usual. But really -- the really strong point of focus now needs to be the adjusted EBITDA after and because it captures everything. So it's really important there. Then you just need to check if CapEx and Work cap is going along the line of what we've said. But that's the idea.

And then on the attrition side, the attrition was really focused around 2 main areas. It was Montreal and Bangalore and in particular to MPC, MPC was really suffering the sort of highest rate of attrition. We started to see that subside now in Montreal as projects start to get delivered. You can see the job postings from our competitors start to reduce. So we're seeing a slowdown in Montreal. It still remains high in India. And obviously, our academy, the output from the academy is going to help counter a lot of that. The vast majority of the attrition is coming those with 1 to 2 years of experience. So if you think these are people who've joined us in lockdown, never set foot in the actual offices, have quite a low level of engagement and just have joined the company and immediately being given an offer to leave. So fortunately, the sort of key creatives, those people who are very much at the top. We've retained every single one of those and we've been able to sort of hold that sort of very experienced senior group together.

Can I do another one? You talked a lot about the amount of computing power that's involved in these projects. Is the environmental impact of what you're doing part of the decision-making and costing arrangement?

Well, definitely, the whole sustainability aspect is a significant part. And as we look at the suppliers that we're buying our compute power from sustainability is certainly a factor within the procurement process. So yes, we are considering all of that.

This is Julien from Angelo Gordon. First of all, this was super interesting and helpful. So thank you for spending so much time with us. I have a couple of questions. You've got 4 divisions now growing fast and experiencing strong demand. How do you allocate resources? Because specifically, it seems like Andrea would make 20 movies if she could. How do you allocate resources if everyone is trying to secure capacity?

It's a very good question. So centralizing workforce planning is -- especially in India, so it's all starting to -- everything is trying to connect together. Bill's efforts to unite our tools means that we can actually have people trained in the same tool sets across the different divisions. So the friction between moving between the different divisions is lowered, so we can then assign people across different activities very quickly. So if we see a certain area of the business is going to be -- have a lower level of utilization as a break, there's a gap between projects, we can then move them between the different activities. We're not -- obviously, the demand is very high in MPC. So MPC is always attracting a lot of time and drawing a lot of talent in. So there's not sort of a bias between one particular division. We're trying to cater for everyone's needs as the growth is there. But centralizing workforce, planning and unifying our tool set is going to mean once we've got people into the business, we can then move them around with relatively low levels of friction and then continuously utilize the ones before. We'd have the sort of seasonal effect with theatrical coming out of summer in the holiday period. We then have a slump and then let people go. We can now retain those people and move them to different parts of the business.

Great. And just one more. So Adam mentioned, you constantly need to innovate and obviously, Lion King 2 needs to be better than Lion King 1. So maybe a question for Nathan. You mentioned all those cool stats about Lion King 1. So what are the stats compared on Lion King 2 in terms of man hours, shots, et cetera?

So Lion King 2 is in the early phases. They're still doing the onset virtualization. I don't know that that's off the top of my head for the bid, but maybe we can get back to you on that, but we haven't gone through the end of process you are interested in.

Okay. And last one for me. Congrats on Charlie and the Chocolate Factory. Is that in the budget, Laurent?

It wasn't in the budget. But as you can see, we have -- we're pushing a bit of boundaries in 2023. So there was a bit of a challenge in Andrea's budgets, so that will nicely help for the 2023 guidance. .

There's a question from the web. Okay. So we have a question from the web. How do you explain the difference of performance with DinEX.

Sorry, with DinEX. I think we're very much focused on our performance. I think when we look at the split of activity between India and the rest of the world, that's obviously a key driver in DinEX financial model, and it's obviously a key driver in our structure as well. So when we sort of make comparisons, it's often around the volume of activity that we're looking at in India. And I think that's the sort of key metric that we can look at when we're comparing the 2 businesses, the very mature business that we have in India and our ability to each year commit more and more as we build up the talent pool in India, we can continue to increase the volume of work that we have in India.

I think basically -- and again, we don't have access to the DinEX number, but our analysis tends to tell us that they are probably 10 points ahead of us in terms of the amount of stuff they have in India. It creates a real difference in mix. You understand the sense of the last slide I show you that it is absolutely too critical to succeed in the move to India. And that's probably 2/3 or 3/4 quarters of the explanation of the difference of profitability with DinEX.

There is another question from the web. So the question is -- how has the relationship evolved over the year with Disney, which can produce internally VFX? And why do they still work with you? .

I think if you look at the sort of the ongoing and continued relationship with Disney, it's really about that ongoing investment that they see that they're making in our company. When you -- when we started all the way back on even the sort of the Narnia movies, we're building tool sets and capability. We're building around rigging and character animation sort of capability that they see that they're investing in year-on-year and that they are then getting the benefit from when they come back to us, then coupled with the tax credits that we're able to access in Montreal and with India, we're giving a very competitive price, but we're not diminishing the quality of work. So that ongoing relationship is about them recognizing there's a continued investment in our workflow and our process. And then we've also been able to nurture this great bench of talent on the VFX Supervisor side that they really are connecting with their supervisors that we have that they want to work with people like Adam and others, they just see us really connect with the type of material that they're working on. And so there's that combination of price and then investment where they can continue to build up with us.

So just one quick follow-up. It's quite boring. But assuming the debt comes down to the level that you expect, what is your interest guidance and your tax rate guidance?

Maybe we're not going to go in that level of details of forecasting. So 2 things. In terms of tax, basically, we haven't been paid many taxes because we had a lot of [ noise ] in the U.S. So we've started to pay taxes in Canada, and we started to pay taxes in the U.K. And the breakdown of sales is probably -- I think you should consider that maybe 40%, 50% of the sales could be taxable in these 2 countries. So we're starting to pay our taxes there. In France, we have nodes and so far we see in the future, but we have nodes in the U.S. And even if we lose them, we were not that profitable here. On interest, it's all going to be depending on the [ quantum ] that we are going to raise because this is TCS you're talking about. So is it going to be EUR 600 million? We think, yes, and then the conditions, the terms and conditions, but we just started the discussion. So here, I won't be able to help you there. We need to wait -- to bear with us a few weeks or months before we end up with the deal.

I understand the reasons for listing on Euronext initially, do you have plans longer term to do a list the company on, let's say, U.S. exchange or somewhere where there's more TMT-type investor base?

That's what we -- so no, to your point, I mean, first of all, let's tackle again this question because you do see that we're doing a lot of things at the same time. We're doing the spinoff, we're doing a refinancing. We have all of the companies that are doing transformation. So there is a point in time where you need to start adding projects to projects. Otherwise, it's going to create a catastrophe. So the easier, the cheapest and then the simplest way was to, of course, lease the company in -- on the Euronext. And there is also -- they are also linked with France in respect because of Euronext Paris because you have the Animation business that is in Paris, we have also a little bit of advertising a little bit of movie there. So there is a sense here more than in Amsterdam, for instance, of business to makes more sense to have a headquarter here. I mean longer term, I'll be a little bit coy on that one. I think it's more a decision for the Board going forward, more than just simply for the managers to decide where -- you're always talking about the U.S., but you could also argue that London could be also a base because there is a big activity in London. So it's not as if one was obviously better than the other. We have ties with the 3 places. Well, I think for the time being and for the near future, this is where we're planning to be. And maybe -- they may be reopened in a few years. But I think at the moment, this is not the case.

Any other questions? Okay. If not, I think that concludes it. Thank you so much for your time today. We very much appreciate it. Thank you very much.