Entertainment One Ltd. Full Year Results

12/05/2016

Full Year Results for the Year Ended 31 March 2016

Solid financial performance with strong growth in Television and Family, despite challenges in Film

  • Group reported revenues up 2% to £803 million, driven by strong Television and Family performance, offset by weaker Film
  • Group reported underlying EBITDA up 20% to £129 million, driven by organic Television and Family growth, and acquisitions completed during the year
  • Group reported profit before tax up 9% at £48 million
  • Diluted earnings per share was 9.6 pence per share (19.4 pence per share on an adjusted basis)
  • Net debt leverage remains low at 1.4x Group underlying EBITDA
  • 9% increase in dividend to 1.2 pence per share (2015: 1.1 pence per share)

Creating a global television business

  • eOne Television saw strong organic growth of 27% in the financial year with revenues increasing to £188 million and underlying EBITDA up 44% to £23 million
  • 998 half hours of new programming acquired/produced in the year (2015: 752 half hours) with a strong pipeline of programming already greenlit for the next financial year
  • Continued success from third party content and a significant number of new development and production deals announced

The Mark Gordon Company delivering strong performance

  • Financial performance in line with expectations with strong cash generation from existing library participations, with five series currently airing on US network and premium cable
  • Very positive television production slate, with two new series in production for major US networks for first seasons, and almost sixty projects in development

Making Peppa Pig the world’s most loved pre-school property

  • The Family Division saw strong growth in the financial year with revenues up 10% to £67 million and underlying EBITDA up 82% to £43 million, supported by the acquisition of Astley Baker Davies Limited in October 2015
  • The delivery of a new series of Peppa Pig commences in July 2016
  • Over 500 new and renewed broadcast, licensing and merchandising contracts signed during the financial year, with almost 850 deals in total now live
  • PJ Masks took an average audience share of 29% of 2-5 year olds on Disney Channel and Disney Junior in the US – the merchandising programme launches in the US in autumn 2016 and the broadcast roll-out to 30 Disney channels internationally continues over the course of 2016

Positioning Film for the future

  • The Film Division saw continued weakness with revenues 7% lower at £553 million and underlying EBITDA 28% lower at £53 million, but with stronger adjusted cash conversion at 87% of underlying EBITDA (2015: 25%)
  • 210 theatrical releases in the year compared to 227 in the prior year
  • A very strong upcoming slate of films in the new financial year is expected to deliver around 220 theatrical releases, led by The BFG, the first film from eOne’s new partnership with Steven Spielberg’s Amblin Partners, and David Brent: Life on the Road starring Ricky Gervais, from the team behind the hit series The Office
  • Restructuring programme launched which will yield annual cost savings of £10 million from FY18, including the previously announced partnerships with 20th Century Fox Home
  • Entertainment and Sony Pictures Home Entertainment designed to maximise eOne’s opportunities within the evolving home entertainment marketplace

On track to double the size of the business over the five years to 2020

  • Successfully built content pipeline supported by strategic investments and acquisitions, including Amblin Partners, Sierra Pictures and Renegade 83
  • Foundations for growth are now in place, allowing the focus to move to delivery of organic growth across the business
  • The £201 million rights issue completed in October 2015 and the issuance of £285 million senior secured notes in December 2015 have put the appropriate long-term financing structure in place to support the Group’s organic growth strategy

Positive outlook

  • eOne remains well-positioned to benefit from long-term structural industry drivers
  • Content markets remain dynamic and the Group continues to review potential investment and corporate acquisition opportunities

DARREN THROOP, CHIEF EXECUTIVE, COMMENTED:

"eOne has delivered solid financial results at the Group level, driven by strong organic growth in Television and Family, and the impact of acquisitions completed during the year, despite weakness in the Film Division continuing into the second half. The benefit of the Group’s diversified model is apparent with growth in Television and Family providing a greater balance to the Group’s portfolio, enhancing the mix of eOne’s revenues towards higher margin activities and protecting the bottom line against the cyclical film market.

The Group’s model to source, select and sell high quality content continues to be at the centre of our strategy and is at the foundation of the Group’s achievements in the year. We have continued to build relationships with world-class content producers through our investment in Amblin Partners with Steven Spielberg and our acquisition of Renegade 83. We continue to select the best content to exploit across our global network and expect our film and television slate for the next financial year to be particularly strong. At the same time, we continue to deliver sales across the world through long-standing local relationships in our own territories and through our global international sales network, which has been enhanced through the investment in Sierra Pictures.

As has always been the case, great content is at the heart of Entertainment One – The Mark Gordon Company has five US network and cable series currently airing and two new series in production for major US networks for first seasons, eOne Television has delivered strong content and the Film slate looks to be the strongest for many years. In Family, new production PJ Masks has surpassed our expectations on the Disney channels, and we start to deliver the new series of Peppa Pig from July.

Whilst there are positive expectations for the new financial year in Film, we have taken specific steps in the Division to address its long term profitability – a wide-reaching restructuring programme has been launched which will see annual cost savings of £10 million per annum from FY18, including long-term partnerships with Fox and Sony to help maximise eOne’s home entertainment profitability.

The foundations for growth are in place, with eOne’s key capability for high quality content generation allowing the focus to move to delivery of organic growth across the business. With consumer demand continuing to grow, we anticipate that audiences will increasingly focus on the quality of the content that they consume, gravitating towards premium television series, film and speciality genres. This market dynamic plays to Entertainment One’s strengths and supports our strategic goal to double the size of the business over the five years to 2020.


 

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