Entertainment One Regulatory News (ETO)

ENTERTAINMENT ONE LTD.

HALF YEAR RESULTS (UNAUDITED)

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017

ROBUST FIRST HALF PERFORMANCE, FULL YEAR ON TRACK

FINANCIAL HIGHLIGHTS

OPERATIONAL HIGHLIGHTS

CORPORATE

ALLAN LEIGHTON, ChAIRMAN, commented:

"Entertainment One has delivered a strong set of Group results for the first half of the financial year and has made significant progress in reshaping the Film/Television business to reflect the evolving entertainment market. I thank Margaret O'Brien for her contribution to the Board, as she moves into an expanded operational role, and welcome Robert McFarlane and Michael Friisdahl as new independent non-executive directors with the significant experience that they bring to eOne."

Darren Throop, Chief Executive OFFICER, commented:

"We are pleased to be able to report very robust first half performance which includes strong growth in the Family Division, strong performance in the wider Television Division, including The Mark Gordon Company, and lower operating costs and improved gross margins in Film which have driven strong growth in Group underlying EBITDA.

The Group's strategy to invest in content continues to bear fruit and the entertainment market's focus on quality content plays to Entertainment One's strengths ensuring that the Group is ideally positioned for the future, as illustrated by the increase in the underlying library valuation from US$1.5 billion to US$1.7 billion at 31 March 2017.

The period ahead is an exciting one. The Television business has 82% of the full year's expected margin already committed or greenlit; the Family business is underpinned by exceptional performance from Peppa Pig and PJ Masks; and the Film Division continues to focus investment on new partnerships to reshape the business. As such, the Group remains on track to deliver full year financial performance in line with management expectations."

FINANCIAL SUMMARY

1. Underlying EBITDA is operating profit or loss excluding amortisation of acquired intangibles; depreciation; amortisation of software; share-based payment charge; tax, finance costs and depreciation related to joint ventures; and operating one-off items. Underlying EBITDA is reconciled to operating profit in the Other Financial Information section of this Interim Announcement.

2. Investment in acquired content and productions is the sum of "investment in productions, net of grants received" and "investment in acquired content rights", as shown in the condensed consolidated cash flow statement.

3. Adjusted profit before tax and adjusted diluted earnings per share are the reported measures excluding amortisation of acquired intangibles; share-based payment charge; tax, finance costs and depreciation related to joint ventures; operating one-off items; finance one-off items; and, in the case of adjusted diluted earnings per share, one-off tax items. Refer to the Other Financial Information section of this Interim Announcement for a reconciliation of adjusted profit before tax and Note 6 of the condensed consolidated financial statements for the adjusted diluted earnings per share reconciliation.

4. Reported 2016 amounts have been restated, refer to Note 2 of the condensed consolidated financial statements for further details.

Group reported revenue was broadly in line with prior period at £395.7 million (2016: £401.0 million), driven by strong growth in Family (64% higher) and Television (17% higher), offsetting a decline in Film (29% lower). On a constant currency basis (re-translating prior period reported financials at current period foreign exchange rates), Group revenue decline was 5.0% reflecting the impact of the weaker pound sterling against the US dollar, Canadian dollar, Australian dollar and euro during the period.

Group reported underlying EBITDA was 36% higher at £51.4 million (2016: £37.7 million), driven by strong growth in Family (54% higher), Television (11% higher) and stable period-on-period results in Film. The Family Division delivered financial performance ahead of expectations driven by significant growth in PJ Masks and the continuing strong performance of Peppa Pig. Television Division underlying EBITDA was higher across eOne Television (+10%), The Mark Gordon Company (+10%) and Music (+16%). Underlying EBITDA in Film was stable despite lower revenue in theatrical, home entertainment and broadcast and digital, offset by substantial cost savings. On a constant currency basis, Group underlying EBITDA would have increased by 33.5%, reflecting the impact of the weaker pound sterling against the US dollar, Canadian dollar, Australian dollar and euro during the period.

Net cash used in operating activities amounted to £74.5 million in comparison to £65.5 million in the prior period, driven by higher investment in productions and timing of tax payments, partly offset by inflow in working capital. Investment in productions was higher across all three segments which not only supports our current operations but also drives the value of our content library.

Adjusted profit before tax for the period was £36.4 million (2016: £23.8 million), due to the increase in underlying EBITDA, partly offset by higher interest costs. Reported profit before tax for the period was £0.8 million (2016: £2.5 million loss), impacted by one-off charges mainly from set-up costs associated with MAKEREADY and contingent consideration for Renegade 83, as well as the previously announced reshaping of Film and Television Division into a single studio operation, share-based payments from additional options granted and one-off finance costs primarily relating to losses on currency contracts, as further explained in the Other Financial Information section.

Adjusted diluted earnings per share were 4.8 pence (2016: 2.6 pence). On a reported basis, diluted losses per share were 0.5 pence (2016: 1.4 pence) driven by higher underlying EBITDA partly offset by higher one-off charges, share-based payments and one-off finance costs.

OUTLOOK

The Group anticipates that full year financial performance will be in line with management expectations.

eOne Television expects to deliver around 900 half hours of produced/acquired content for the full year, with 82% of the year's expected margins already committed or greenlit. Investment in acquired content is expected to be over £40 million and production spend is expected to grow to £160 million. The second half of the year will see deliveries of new scripted shows The Detail, Burden of Truth and Let's Get Physical, second seasons of Ice, Mary Kills People and Ransom, seasons two and three of Cardinal and season three of You Me Her, with Sharp Objects (originally planned for delivery in FY18) now anticipated to be delivered in early FY19. The unscripted US business is expected to deliver a strong second half and Renegade 83 will continue to deliver new seasons of Naked and Afraid as well as new show Scared Famous. International sales for Fear the Walking Dead and The Walking Dead are expected to continue at their existing robust levels.

In addition to its existing TV programmes, The Mark Gordon Company has several television projects in production including a premium cable series and new teen dramedy Youth & Consequences partnering with YouTube Red, YouTube's video subscription service, and 50 projects in active development. Film titles in various stages of development and pre-production include Chronicles of Narnia: The Silver Chair, The Killer and All the Old Knives. The second half of the year will include continued delivery of episodes of Designated Survivor season 2, delivery of Youth & Consequences and the film Molly's Game.

Peppa Pig and PJ Masks will continue to be the drivers of growth for the Family business in the second half. For Peppa Pig, China is expected to grow from 20 licensing agreements in FY17 to 60 by the end of FY18, thanks to the strong foundation built by exposure on broadcast and on-demand platforms. PJ Masks will build upon the success of the US licensing programme and continue to roll-out across Europe and Asia, combined with a stage show which opened in the US in October 2017. The brand is generating significant interest in China and a full launch is planned for next financial year.

The Group will continue to reshape its Film operations as it adapts to the changing market place, with a strong commitment to focus on continued access to high quality premium content and on building deep partnerships with high quality film producers where eOne has more ownership and control over the content. As a result of the transition from physical to digital we expect to achieve approximately £10 million of savings in this financial year. For the full year, we anticipate 180 film releases in total across all territories, of which 100 are expected to be unique titles. Investment in acquired content is expected to be lower than previous expectations at £130 million with the reduction driven by the lower number of releases. Investment in productions is expected to be higher than the prior year at around £50 million.

The integration of Film and Television Divisions into a single studio operation is proceeding as planned to fully leverage eOne's scale in the market and to meet the needs of its partners and customers. This provides the business with opportunities for business efficiencies and the centralisation of a number of internal support functions that are expected to generate annual cost savings of £8 million by FY20.

STRATEGY

The growth in the market for content rights is underpinned by changes in the way content is being consumed. Entertainment One's strategy to focus on growth through content ownership puts it at the centre of this positive structural change.

Business model

The Group's business model remains unchanged. We continue to build the scale of the business by focusing on the Group's three key capabilities:

Source: Developing relationships with the best creative talent in the film and television industries by being their partner of choice, reflecting the quality of our people and our global distribution capabilities

Select: Leveraging local market insight from our independent sales network to invest in the right content for consumers across all eOne territories, and producing content with global appeal to service the Group's global sales operations

Sell: Using the Group's infrastructure, sales operations and global scale to maximise investment returns, ensuring the business is well-positioned to benefit from new and emerging broadcast and digital distribution platforms

The Board continues to see significant opportunity for further growth and to target doubling the size of the business over the five years to FY20 through its strategy of:

The strategy focuses on building a more balanced content and brand business which will see strong revenue and EBITDA growth in Television and Family, while Film continues to focus on delivering an improving investment return through a consistently high-quality release slate and further efficiency savings.

Operationally, as well as developing a digital future across the Group, the strategy targets our Divisions to deliver specific drivers of growth:

Television/Film/Music Building a global production and content business and a world-class sales network, developing partnerships with premium content creators and maximising scale and efficiency in distribution (including the recent transition from physical to distribution)

Family Creating everlasting childhood memories for our audience by carefully selecting, crafting and nurturing the very best content into global brands

STRATEGIC PROGRESS

In addition to strong operational and financial results, the Group continues to deliver strong progress against the strategy, including:

CORPORATE

DIRECTOR appointments

Margaret O'Brien is stepping down as an executive director to increase the proportion of independent non-executive directors on the Board. Margaret will move into an expanded operational role. Joseph Sparacio, Chief Financial Officer, is being appointed as an executive director.

Disclosure requirements under Rule 9.6.13 of the Financial Conduct Authority's Listing Rules in respect of Joseph Sparacio are as follows:

Robert McFarlane, former CFO of TELUS Corporation, and Michael Friisdahl, CEO of Maple Leaf Sports & Entertainment have been appointed as non-executive directors. They both bring extensive experience with accomplished board service in different sectors.

Disclosure requirements under Rule 9.6.13 of the Financial Conduct Authority's Listing Rules in respect of Robert Gordon McFarlane are as follows:

Disclosure requirements under Rule 9.6.13 of the Financial Conduct Authority's Listing Rules in respect on Michael Jeppe Friisdahl are as follows:

There are no further disclosures required under Listing Rule 9.6.13 of the Financial Conduct Authority's Listing Rules.

ANNUAL GENERAL MEETING (AGM)

As noted in its AGM Results Announcement, the Company reflects, in the normal course, on feedback provided by Shareholders by way of their voting at the Company's Annual General Meetings.

The Company confirms that it intends to engage with its key shareholders to understand feedback on those resolutions which did not receive support in excess of 80% of votes cast and will provide a summary of such discussions and any actions agreed in its 2018 Annual Report and Accounts.

As previously noted in the Company's AGM Circular and AGM Results Announcement, the Board is pleased to announce that PricewaterhouseCoopers LLP has been appointed as the Company's external auditor following the conclusion of the formal tender process noted in the 2017 Annual Report.

DIVISIONAL OPERATIONAL & FINANCIAL REVIEW

The Divisional tables below are presented gross of inter-segment eliminations, for further information refer to Note 3 of the condensed consolidated financial statements.

TELEVISION

The Television Division comprises eOne Television, The Mark Gordon Company, the Group's Music operation and the operations of Secret Location, the Group's digital content studio. The Division's focus is on the development and production of high quality television programming and the acquisition of the best third party television content rights, for sale to broadcasters and digital platforms globally.

Revenue for the period was 17% higher at £168.5 million (2016: £144.5 million), driven by new productions in The Mark Gordon Company and continued growth in eOne Television. Television revenue is calculated net of intra-segment eliminations of £25.4 million between eOne Television, The Mark Gordon Company and Music. The financial tables below are presented gross of intra-segment eliminations.

Underlying EBITDA increased by 11% to £20.6 million (2016: £18.5 million), driven by higher revenue. Investment in acquired content and productions increased by 29% in line with the growth in the Division.

eOne TELEVISION

Revenue for the period increased 21% to £118.9 million (2016: £98.0 million), driven by higher international distribution sales for third party content and productions delivered by The Mark Gordon Company. Underlying EBITDA was ahead at £7.8 million (2016: £7.1 million), driven by revenue growth.

Investment in acquired content and productions was higher than the prior period at £95.7 million (2016: £74.9 million), driven by higher profile productions with bigger budgets and increased investment in AMC/Sundance shows. 301 half hours of new programming were produced/acquired in the period (2016: 360) with the decrease largely attributable to the mix of fewer, but higher profile titles and a lower performance in the Canadian unscripted business.

Key scripted deliveries included season two of Private Eyes, which has been renewed for a third season and continues to be one of the most watched shows on Global in Canada, Universal in the UK and TF1 in France, and eOne Television's first Australian production, The Other Guy, which was delivered and aired to strong reviews.

Key content acquisitions for the period included season three of Fear the Walking Dead, season two of Into the Badlands and the fourth and final seasons of Halt & Catch Fire and Turn which continued to support revenue. International sales for Designated Survivor were very strong due to a worldwide streaming rights deal with Netflix outside North America.

The unscripted US business delivered season three of Growing Up Hip Hop, the sixth and final season of Mary Mary, and new productions The Hollywood Puppet Sh!tshow and Siesta Key, which was MTV's highest rated new series among female demographics. Renegade 83 also delivered new seasons of Naked and Afraid which is still Discovery's most watched Sunday show among adults, and new show Who Killed Tupac. The business also received eOne Television's first Emmy nomination for LA Burning: The Riots 25 Years Later.

2018 OUTLOOK FOR eOne TELEVISION

The second half of the year will see deliveries of new scripted shows The Detail, Burden of Truth and Let's Get Physical, second seasons of Ice, Mary Kills People and Ransom, seasons two and three of Cardinal and season three of You Me Her. It is important to note that Sharp Objects, starring Amy Adams, and which is currently in post-production, was originally anticipated to be delivered in FY18 and will now be delivered in FY19.

The unscripted US business is expected to deliver a strong second half with deliveries of new series Ex on the Beach and Death Row Chronicles, additional episodes of Siesta Key and season four of Growing Up Hip Hop. Renegade 83 will continue to deliver new seasons of Naked and Afraid as well as new show Scared Famous.

For third party global sales, AMC titles including Hap & Leonard and Into the Badlands will continue into new seasons. International sales for Fear the Walking Dead and The Walking Dead are expected to continue at their existing robust levels.

As noted in the Group's September Trading Update, the number of half hours of produced/acquired content is expected to be around 900 for the full year, with 82% of the year's expected margins already committed or greenlit. Investment in acquired content is expected to be over £40 million and production spend is expected to be £160 million.

Secret Location, eOne's digital studio, currently has a number of products and projects underway, focusing on the fast-growing virtual reality industry. VUSR, a virtual reality content distribution platform, its biggest project in development, has already seen commitments from a number of large media companies including Discovery, The New York Times, AMC and Frontline. In the first half of the year Secret Location continued to strengthen its reputation through a number of industry award nominations and wins including Best Video at the PR News Platinum PR Awards for Under The Net and Best Virtual Reality at the AToMiC Awards 2017 for Halcyon.

To fully leverage eOne's scale in the market and to meet the needs of its partners and customers, the TV sales force for eOne Television and Film was combined into a global sales team from 1 April 2017. This has led to a more streamlined approach to the sale of television and film content in windows outside of theatrical release. We expect this change in structure to yield increased revenue and profitability benefits from FY18 onwards.

THE MARK GORDON COMPANY (MGC)

Revenue for the period was up 82% to £51.6 million (2016: £28.3 million), driven by the delivery of episodes of seasons one and two of Designated Survivor. Underlying EBITDA increased 10% to £9.9 million (2016: £9.0 million), driven by increased revenue. The underlying EBITDA margin percentage was lower than prior period reflecting change in revenue mix and higher operating expenses as the business continues to grow and invests in more owned productions.

Investment in productions increased 33% to £33.5 million (2016: £25.2 million) driven by investment in Designated Survivor, Molly's Game, new teen dramedy Youth & Consequences and two pilots.

Continuing with its new production studio model MGC has seen strong revenue growth period-on-period, and this success is endorsed by the industry with Mark Gordon chosen as Hollywood Reporter's Producer of the Year. In MGC's television division, revenue growth was driven by delivery of nine episodes of Designated Survivor and two new pilots.

The MGC film division also completed its first feature film Molly's Game which will be distributed internationally by eOne and in the US by STX Entertainment with a release date of 25 December 2017.

The studio continues to benefit from its library of television and film titles, with relatively high margins favourably contributing to the bottom line and cash generation. During the period MGC had five series airing on both US network and premium cable, all with continued strong viewership including season twelve of Criminal Minds (renewed for season thirteen), season two of Criminal Minds: Beyond Borders, season five of Ray Donovan (renewed for season six), season two of Quantico (renewed for season three) and season thirteen of Grey's Anatomy (renewed for season fourteen) becoming the longest running scripted prime-time show currently airing on the ABC network.

2018 OUTLOOK FOR MGC

In addition to its existing TV programmes, The Mark Gordon Company has several television projects in production including a premium cable series and new teen dramedy Youth & Consequences partnering with YouTube Red, YouTube's video subscription service. The Mark Gordon Company has 50 projects in active development. Recently announced, with a straight-to-series order from ABC, MGC will produce The Rookie starring and executive-produced by the former Castle star Nathan Fillion. eOne will handle all international distribution rights outside of the US further expanding on MGC's independent studio model. The first episode is in development with expected delivery in spring 2018. Film titles in various stages of development and pre-production include Chronicles of Narnia: The Silver Chair, The Killer and All the Old Knives.

The second half of the year will include continued delivery of episodes of Designated Survivor season two, delivery of Youth & Consequences and the film Molly's Game.

91% of the year's expected margins are already committed or greenlit. Investment in productions in FY18 is expected to decrease to around £80 million in line with previous guidance. Half hours delivered are anticipated to be around 60 based on the current business plan for FY18.

MUSIC

Revenue for the period decreased by 9% to £23.4 million (2016: £25.8 million), due to the strong performance of The Lumineers' second album, Cleopatra, which was released in the prior period. Underlying EBITDA increased 16% to £2.9 million (2016: £2.5 million) and underlying EBITDA margin increased by 3pts, due to the continued shift in the business from physical to digital. ADA, a member of Warner Music Group, now handles all physical sales and distribution in the US and Canada allowing the business to focus on higher margin digital distribution and artist management.

Music continues to have strong contributions from eOne labels Dualtone and Last Gang. Dualtone includes the continued strong performance of The Lumineers' highly successful second album, Cleopatra, as well as the late Chuck Berry's new album Chuck which debuted at #2 on the Independent Chart in the US. Last Gang's international label footprint has been enhanced through a series of key releases all of whom are benefitting from top-tier play listings across Spotify and Apple Music.

The artist management division also experienced rapid growth and success with Arkells' main single Knocking At The Door setting a new record at Canadian radio by staying #1 on Rock Radio for 14 weeks, and Jax Jones has now sold over five million singles globally with You Don't Know Me going platinum in 20 countries.

The number of albums released in the period was lower at 40, versus 45 in the prior period, and digital singles released increased to 110, compared to 98 in the prior period, in line with the strategic direction of the business.

2018 OUTLOOK FOR MUSIC

Music will continue to build on its existing label business by investing in profitable content and improving margins through cost savings and a continued transition to higher margin digital revenue. The Group will continue to develop the initiatives launched in the prior year to reposition eOne Music as a worldwide brand and to grow the music publishing business. eOne Music is also working closely with other eOne business units, supervising music across Film, Television and Family properties to create Group synergies.

As a result, the Group expects to see continued improvement in the profitability of the Music business from FY18 onwards.

FAMILY

The Family business develops, produces and distributes a portfolio of children's properties on a worldwide basis, the principal brand being Peppa Pig, with much of its revenue generated through licensing and merchandising programmes across multiple retail categories. In addition to managing the growth of Peppa Pig, the Family business also manages and distributes a balanced portfolio of complementary family brands including PJ Masks.

Revenue for the period was up 64% to £62.1 million (2016: £37.9 million), driven by the continued strong performance of Peppa Pig and significant growth from PJ Masks.

Underlying EBITDA increased 54% to £38.1 million (2016: £24.7 million), driven by increased revenue. The underlying EBITDA margin was marginally lower reflecting the revenue mix from different properties.

Investment in acquired content and productions of £5.2 million (2016: £2.3 million) was £2.9 million higher than the prior period. Investment spend in the period included season five of Peppa Pig, season two of PJ Masks and new properties Cupcake & Dino: General Services and Ricky Zoom.

The Family business continued to perform strongly with the ongoing success of Peppa Pig and rapid growth of PJ Masks. The business generated US$1.2 billion of retail sales in the period (2016: US$0.7 billion) driven by the hugely successful retail rollout of PJ Masks and continued growth of Peppa Pig. More than 550 new and renewed broadcast and licensing agreements were concluded in the period which was an increase of more than 70% period-on-period. At 30 September 2017, the business had over 1,300 live licensing and merchandising contracts across its portfolio of brands (31 March 2017: almost 1,100).

Peppa Pig continued to grow period-on-period with revenue of £37.4 million (2016: £31.7 million). The growth was driven by China where licensing and merchandising revenue increased by over 700% period-on-period. This performance was ahead of expectations, with licensing and merchandising activities in China expanding across a number of categories including toys, clothing, FMCG, home/furnishings and publishing with over 25 million publishing titles sold since launch in April 2016. Continued nationwide TV exposure from state owned CCTV and all major VOD platforms, including iQiyi, Youku and Tencent, has increased interest in and exposure to the Peppa Pig brand. The VOD platforms have registered over 34 billion views since launch in October 2015. In addition, Peppa Pig was recently launched on TV Tokyo in Japan. This continued growth in China and across South East Asia remains a key driver for the brand. Peppa Pig remains one of the leading pre-school brands in key territories such as the US and the UK. In the US the brand remained a top-rated show on Nick Jr. for children between 2-5 years old and the licensing programme continues to build, supported by the significant investment and recruitment in Peppa Pig's brand management infrastructure.

In the UK, the brand benefitted from the release of Peppa Pig: My First Cinema Experience, which generated box office revenue of £3.6 million in the territory (as well as A$2.2 million in Australia and New Zealand) and consolidated its position as an 'evergreen' brand in the market. For mature markets, like the UK, the strategy is to maintain the market-leading position and generate steady revenue.

PJ Masks has been a key driver of revenue growth for the business in the period with revenue increasing over 600% period-on-period from £3.0 million to £22.3 million. This growth resulted mainly from licensing and merchandising revenue driven by the global roll-out from the master toy partner Just Play and new licensing deals. The licensing programme for the brand started in September 2016 in the US and due to strong demand and positive retail feedback PJ Masks was the ninth fastest growing property across the total toy market and fifth-ranked pre-school toy property for the nine months to September 2017. Following the successful US rollout, the licensing programme continues to expand to the UK to positive results where it has contributed to more than 15% of the total licensing revenue for the period, and building on this momentum, agents are being signed across Europe, Australia and Asia. PJ Masks is broadcasting in all key territories on the global Disney Junior network and France TV with excellent ratings. Following the success of the first season of PJ Masks, a second season (52 episodes) is currently in production with new episodes expected to launch early calendar year 2018, and season three is expected to be greenlit in the second half of the financial year.

A licensing programme for Ben & Holly's Little Kingdom was launched in the US in August 2017 across toys, apparel and publishing in Target stores nationwide. The brand's retail performance in its other key markets was stable during the period.

The business is in production on a number of other properties, including: Ricky Zoom, a pre-school vehicle-based series of 52 episodes from the same creative team as hit series PJ Masks with major broadcasters attached in France, Italy, and Latin America and a master toy arrangement currently in the final stages of negotiation; and Cupcake & Dino: General Services, a high profile 52 episodes comedy series which is in full production with broadcast commitments from Teletoon in Canada, Disney Channel in Brazil and worldwide SVOD rights with Netflix.

The business is continuing to explore, and is seeing growth potential in, other platforms including mobile applications, live shows and experiential events to engage the consumer in new ways.

2018 OUTLOOK FOR FAMILY

Peppa Pig and PJ Masks will continue to be the drivers of growth for the Family business in the second half.

Family continues to focus on building Peppa Pig into the most loved pre-school brand in the world with growth in the second half underpinned by China. China is expected to grow from 20 licensing agreements in FY17 to 60 by the end of FY18, thanks to the strong foundation built by exposure on broadcast and on-demand platforms. Peppa Pig's content pipeline looks strong with an additional 117 episodes in production with the original creators of the show. The first batch of deliveries is expected in the first half of 2018 with the last delivery in December 2021. This continued flow of new programming content will support the longevity of the brand from a licensing perspective.

In October 2017 the business entered into a global partnership with Merlin Entertainments, to develop and operate location-based entertainment attractions based on Peppa Pig. The deal covers all territories excluding the UK and Merlin will have exclusive rights for all location-based entertainment formats with the exception of China, which will be licensed to Merlin on a non-exclusive basis. Merlin expects to open in-park areas in two Merlin Resort Theme Parks in 2018 and it is expected the first standalone attraction will open in 2019.

PJ Masks will build upon the success of the US licensing programme and continue to roll-out across Europe and Asia, combined with a stage show which opened in the US in October 2017. The brand is generating significant interest in China and a full launch is planned for next financial year.

Family currently has ten projects in development.

The business is expected to generate strong revenue and EBITDA growth across the portfolio in FY18 ahead of management expectations. It is also expected that underlying EBITDA margins will be somewhat lower in percentage terms driven by the growth of PJ Masks as a proportion of total sales and increased brand management costs of around £2 million which are necessary to facilitate growth.

FILM

eOne's Global Film Group is one of the world's largest independent film businesses with operations in the US, the UK, Canada, Spain, the Benelux, Australia and New Zealand, with recent expansion into Germany, and, together with its global digital rights business, focuses on production and sale of film content worldwide.

Revenue decreased by 29% to £171.8 million (2016: £242.0 million) driven by lower theatrical, home entertainment and broadcast and digital activity compared to that generated by a stronger slate in the prior period.

Underlying EBITDA was relatively stable period-on-period, despite lower revenue. The impact of lower revenue was largely offset by a gross margin improvement of 3.5pts due to lower P&A spend and amortisation of acquired content as well as significant cost savings from the reshaping commenced in FY16 and substantially completed in FY17, largely centered around the transition from physical to digital distribution.

Investment in acquired content was lower by £26.5 million at £71.2 million (2016: £97.7 million) driven by limited higher profile theatrical releases in the period. Investment in productions was higher by £25.9 million at £22.2 million (2016: (£3.7 million)), reflecting the Group's focus on increasing the level of produced content over which it has a greater level of control, including spend on the eOne Features production Stan & Ollie and Sierra Production How It Ends.

THEATRICAL

Overall, theatrical revenue decreased by 45% reflecting the reduced level of box office takings, which were also 45% lower at US$83 million (2016: US$152 million). The decrease reflected the scale of films released during the period and the reduced number of releases (76 compared to 88) including the timing of releases moving into the second half. The number of unique theatrical releases was 48 in the first half compared to 49 in the prior period. The prior period included higher profile releases of The BFG, Now You See Me 2, Bad Moms and Eye in the Sky.

The period included the first release from eOne's new relationship with Annapurna Pictures, Detroit, from Academy Award-winning director Kathryn Bigelow and Valerian and the City of a Thousand Planets, written and directed by Luc Besson. Other key releases included A Dog's Purpose, Peppa Pig: My First Cinema Experience, Bon Cop Bad Cop 2, De Pere en Flic 2, Hampstead and Logan Lucky.

HOME ENTERTAINMENT

Revenue decreased by 39% on a reported basis and 32% on a like-for-like basis. Like-for-like revenue excludes the prior period home entertainment revenue generated in the Film Division from the US Distribution business that related to music sales which are no longer generated in the current period due to the outsourcing of music physical sales and distribution to ADA. The like-for-like decrease reflected the lower profile and number of theatrical releases, the continued shift from physical to digital formats and timing of releases.

In total, 122 DVDs and Blu-rays were released during the period (2016: 215) including key titles such as A Monster Calls, season seven of The Walking Dead, Ballerina, A Dog's Purpose and John Wick: Chapter 2.

The transition to eOne's new partnerships with 20th Century Fox Home Entertainment, on a multi-territory basis, and Sony Pictures Home Entertainment, in the US, for physical home entertainment distribution has largely been completed.

BROADCAST AND DIGITAL

The Group's combined broadcast and digital revenues were 28% lower on a reported basis and 12% on a like-for-like basis, which excludes the prior period digital revenues generated in the Film Division from the US Distribution business that related to music sales. The like-for-like revenues were lower reflecting the impact of fewer and smaller-scale releases and the reduced volume of Free TV licensing of film product by broadcasters in Canada.

The Group recently entered into a new multi-year exclusive SVOD deal with Amazon, for the first Pay TV window in the UK. This new deal will give Amazon Prime members exclusive access during the first Pay TV window to all new releases in the territory. In addition, the Group signed a SVOD catalogue and second Pay TV window deal with Netflix in the UK. In Australia, the deal signed with Netflix in the prior year continues to drive strong SVOD revenue.

PRODUCTION AND INTERNATIONAL SALES

Revenue for production and international sales decreased by 18% to £46.4 million (2016: £56.5 million) due to the timing of film deliveries.

During the period eOne delivered The Ritual which premiered at the Toronto International Film Festival. It has been released theatrically in the UK with the bulk of remaining worldwide rights sold to Netflix. eOne also delivered Just Getting Started (formerly titled Villa Capri) with further revenue still to be recognised in the second half. Atomic Blonde produced by Sierra Pictures was released this summer and has significantly over-performed box office expectations with world-wide box office approaching US$100 million and I, Tonya, a key sales title that is also being distributed in several eOne territories, received positive reviews at the Toronto International Film Festival, and is well positioned for a theatrical release roll-out this winter.

2018 OUTLOOK FOR FILM

The Group will continue to reshape its Film operations as it adapts to the changing market place, with a strong commitment to focus on continued access to high quality premium content and on building deep partnerships with high quality film producers where eOne has more ownership and control over the content.

The transition from physical to digital distribution commenced in FY16 and substantially completed in FY17. This has positioned the Group to achieve annualised cost savings of approximately £10 million in this financial year. Additionally, the Group has gained momentum in positioning the new combined Film and Television studio operation for growth. This also provides opportunities for business efficiencies and the centralisation of a number of internal support functions that will drive further cost savings beginning towards the end of this financial year and continuing into FY20.

The second half of the year will also benefit from the higher performance of home entertainment and digital over the Christmas period.

For the full year, we anticipate 180 film releases, marginally lower than previous guidance of 200, in total across all territories, of which 100 are expected to be unique titles. Investment in acquired content is expected to be lower than previous expectations at £130 million with the reduction driven by the lower number of releases. The pipeline for the remainder of the year contains stronger theatrical releases than the first half including Steven Spielberg's The Post starring Tom Hanks and Meryl Streep (from Amblin Partners) to be released in January, A Bad Moms Christmas and Molly's Game, Aaron Sorkin's directorial debut produced by The Mark Gordon Company. Investment in productions is expected to be higher than the prior year at around £50 million.

OTHER FINANCIAL INFORMATION

Adjusted operating profit increased by 40% to £49.5 million (2016: £35.3 million), reflecting the growth in the Group's underlying EBITDA. Adjusted profit before tax increased by 53% to £36.4 million (2016: £23.8 million), in line with increased adjusted operating profit, partly offset by higher underlying finance charges in the period. Reported operating profit increased by 55% to £20.4 million, with the Group reporting a profit before tax of £0.8 million (2016: loss of £2.5 million).

1. Adjusted operating profit excludes amortisation of acquired intangibles, share-based payment charge and operating one-off items.

2. Reported 2016 amounts have been restated, refer to Note 2 of the condensed consolidated financial statements for further details.

AMORTISATION OF ACQUIRED INTANGIBLES, DEPRECIATION AND AMORTISATION OF SOFTWARE

Amortisation of acquired intangibles, depreciation and amortisation of software has decreased by £1.2 million in the period. The decrease is primarily on account of assets written off as a result of the restructure of the Group's physical distribution business in the year ended 31 March 2017.

SHARE-BASED PAYMENT CHARGE

The share-based payment charge of £5.8 million has increased by £3.0 million during the period, reflecting additional awards issued in the period and also due to the fair value of the awards increasing as a result of the increase in the Entertainment One Ltd. share price in the period.

ONE-OFF ITEMS

One-off items resulted in a net charge of £3.3 million, compared to a credit of £1.4 million in the prior period. Strategy related costs of £0.8 million consist of £0.7 million of costs associated with the integration of the Film and Television Divisions and £0.1 million of foreign exchange movement on accrued redundancy costs. Acquisition costs of £2.2 million were due to the re-assessment of contingent consideration in relation to the Renegade 83 acquisition of £0.6 million, and banking and legal costs of £1.6 million associated with the creation and set-up of MAKEREADY in the period. Other corporate project costs of £0.3 million related to costs associated with aborted corporate projects during the period.

NET FINANCE COSTS

Reported net finance costs increased by £3.9 million to £19.6 million in the period. Excluding one-off net finance costs of £6.5 million, adjusted finance costs of £13.1 million (2016: £11.5 million) were £1.6 million higher in the period, reflecting the higher average debt levels period-on-period. The weighted average interest rate for the Group's senior financing was 6.5% compared to 6.7% in the prior period.

The one-off net finance costs of £6.5 million (2016: £4.2 million) comprise:

TAX

On a reported basis, the Group's tax credit of £0.5 million (2016: £1.3 million), which includes the impact of the release of tax provisions and one-off items, represents an effective rate of (62.5%) compared to (52.0%) in the prior period and 20.7% for the year ended 31 March 2017. On an adjusted basis, the effective rate is 24.7% compared to 21.8% in the prior period, driven by a different mix of profit by jurisdiction (with different statutory rates of tax). The adjusted effective tax rate for the full year is expected to be approximately 22%.

CASH FLOW & NET DEBT

The table below reconciles cash flows associated with the net debt of the Group, which excludes cash flows associated with production activities which are reconciled in the Production Financing section below.

ADJUSTED CASH FLOW

Adjusted cash outflow at £31.9 million is lower than prior period by £12.5 million with improved cash flows in Family and Film partly offset by marginal reductions in Television and Centre.

TELEVISION

Television adjusted cash inflow reduced in the period to £9.3 million (2016: £11.7 million) driven by higher investment in productions and lower underlying EBITDA partly offset by improvement in working capital movements. The higher investment in productions for the period related to The Climb and Youth & Consequences in MGC. Working capital was flat in the period as the increase in the accrued income in MGC relating to the participation revenue was offset by higher deferred income and accruals for Youth & Consequences.

FAMILY

Family adjusted cash inflow increased 59% to £26.4 million (2016: £16.6 million) supported by growth in underlying EBITDA partly offset by higher working capital outflows. Working capital outflows increased period-on-period driven by increase in receivables as a result of higher revenue.

FILM

Film adjusted cash outflow of £63.2 million improved compared to the prior period (2016: £69.5 million), driven by lower investment in acquired content rights, partly offset by higher working capital outflow and lower amortisation of investment in acquired content rights.

The reduced investment in acquired content rights was driven by the lower profile theatrical titles in the period. Working capital outflow of £25.4 million was primarily due to a decrease in payables driven by the seasonal timing of payments in the distribution territories, partly offset by lower receivables driven by timing of receipts from the previous year end.

FREE CASH FLOW

Free cash outflow for the Group of £66.6 million was £1.3 million higher than previous period primarily due to timing of tax payments.

NET DEBT

At 30 September 2017, overall net debt at £312.8 million was £49.5 million higher than the prior period largely due to higher one-off items, including payment of prior years' restructuring charges, and higher one-off finance items.

Refer to the Appendix to the Interim Announcement for the definition of adjusted cash flow and free cash flow and for a reconciliation to net cash from operating activities.

PRODUCTION FINANCING

Overall production financing increased by £3.1 million period-on-period to £141.8 million reflecting the higher opening production financing balance at March 2017 partly offset by the positive adjusted cash inflow and movement in foreign exchange. The adjusted cash inflows were driven by improvement in underlying EBITDA and positive working capital inflows in Television and Film.

The production cash flows relate to non-recourse production financing which is used to fund the Group's television, family and film productions. The financing is arranged on an individual production basis by special purpose production subsidiaries which are excluded from the security of the Group's corporate facility. It is short-term financing whilst the production is being made and is paid back once the production is delivered and the sales receipts and tax credits are received. The Company deems this type of financing to be short-term in nature and is excluded from net debt. The Company therefore shows the cash flows associated with these activities separately. The Company also believes that higher production financing demonstrates an increase in the success of the Television, Family and Film production businesses, which helps drive revenue for the Group and therefore increases the generation of EBITDA and cash for the Group, which in turn reduces the Group's net debt leverage.

FINANCIAL POSITION AND GOING CONCERN BASIS

The Group's net assets decreased by £22.0 million to £723.0 million at 30 September 2017 (31 March 2017: £745.0 million). The principal risks impacting the Group have been discussed in Note 8 of the condensed consolidated financial statements.

The directors acknowledge guidance issued by the Financial Reporting Council relating to going concern. The directors consider it appropriate to prepare the consolidated financial statements on a going concern basis, as set out in Note 2 of the condensed consolidated financial statements.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors confirm that to the best of their knowledge:

By order of the Board

DARREN THROOP

Director

20 November 2017

A presentation to analysts will take place at 9.30am on Tuesday, 21 November 2017 at eOne's UK office (45 Warren Street, London, W1T 6AG). For more information, or to register to attend, contact Alma PR +44 (0)20 8004 4217 or josh@almapr.co.uk).

For further information please contact:

Alma PR

Josh Royston

Tel: +44 (0)20 8004 4217

Email: josh@almapr.co.uk

Entertainment One

Darren Throop (CEO)Joe Sparacio (CFO)

via Alma PR

Patrick Yau (Director of Investor Relations)

Tel: +44 20 3714 7931

Email: PYau@entonegroup.com

CAUTIONARY STATEMENT

This Interim Announcement contains certain forward-looking statements with respect to the financial condition, results, operations and businesses of Entertainment One Ltd. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. These statements are made by the directors in good faith based on the information available to them up to the time of their approval of this report. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this Interim Announcement should be construed as a profit forecast.

A copy of this Interim Announcement for the six months ended 30 September 2017 can be found on the Group's website at www.entertainmentone.com.

CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017

CONDENSED CONSOLIDATED BALANCE SHEET

AT 30 SEPTEMBER 2017

These condensed consolidated financial statements were approved by the Board of Directors on 20 November 2017.

DARREN THROOP

Director

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017

1. Refer to Note 7 for further details.

2. Refer to Note 11 for further details.

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017

1. NATURE OF OPERATIONS AND GENERAL INFORMATION

Entertainment One (the Group) is a leading independent entertainment group focused on the acquisition, production and distribution of television, family, film and music content rights across all media throughout the world. Entertainment One Ltd. (the Company) is the Group's ultimate parent company and is incorporated and domiciled in Canada. The registered office of the Company is 134 Peter Street, Suite 700, Toronto, Ontario, M5V 2H2, Canada.

The Company's common shares are listed on the premium listing segment of the Official List of the Financial Conduct Authority. Segmental information is disclosed in Note 3.

2. BASIS OF PREPARATION

SIGNIFICANT ACCOUNTING POLICIES

These condensed consolidated financial statements, included within the Interim Announcement, have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union. These condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's consolidated financial statements for the year ended 31 March 2017 which were prepared in accordance with International Financial Reporting Standards and International Financial Reporting Standards Interpretations Committee interpretations, as adopted by the European Union.

Other than income taxes which are accrued using the tax rate that is expected to be applicable for the full financial year, the policies are consistent with the principal accounting policies which were set out in the Group's consolidated financial statements for the year ended 31 March 2017.

These condensed consolidated financial statements are unaudited but have been reviewed by the Group's auditor and their review opinion is included at the end of these statements.

These condensed consolidated financial statements are presented in pounds sterling, which is also the functional currency of the parent company. All values are shown in millions, rounded to the nearest one hundred thousand pounds, except when otherwise stated.

These condensed consolidated financial statements were approved for issue by the directors on 20 November 2017.

PREPARATION OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ON THE GOING CONCERN BASIS

In addition to its senior secured notes (due 2022) the Group meets its day-to-day working capital requirements and funds its investment in content through its cash in hand and through a revolving credit facility which matures in December 2020 and is secured on certain assets held by the Group. Under the terms of this facility the Group is able to draw down in the local currencies of its operating businesses. The facility and senior secured notes are subject to a series of covenants including interest cover charge, gross debt against underlying EBITDA and capital expenditure.

The Group is exposed to uncertainties arising from the economic climate and uncertainties in the markets in which it operates. Market conditions could lead to lower than anticipated demand for the Group's products and services and exchange rate volatility could also impact reported performance. The directors have considered the impact of these and other uncertainties and factored them into their financial forecasts and assessment of covenant headroom. The Group's forecasts and projections, taking account of reasonable possible changes in trading performance (and available mitigating actions), show that the Group will be able to operate within the expected limits of its existing financing and provide headroom against the covenants for the foreseeable future. For these reasons the directors continue to adopt the going concern basis of accounting in preparing these condensed consolidated financial statements.

USE OF ADDITIONAL PERFORMANCE MEASURES

The Group uses a number of non-IFRS financial measures that are not specifically defined under IFRS or any other generally accepted accounting principles, including underlying EBITDA, one-off items, adjusted profit before tax, adjusted earnings per share, adjusted cash flow, free cash flow, net debt and production financing. These non-IFRS financial measures are presented because they are among the measures used by management to measure operating performance and as a basis for strategic planning and forecasting, and the Group believes that these measures are frequently used by investors in analysing business performance. Refer to the Appendix to the Interim Announcement for definitions of these terms.

PRIOR PERIOD RESTATEMENTS

Non-compliant forward currency contracts

During the period, the Group identified three forward currency contracts, entered into between December 2015 and September 2016, that were not in compliance with the Group's hedging policy. The losses in respect of these forward currency contracts were not reflected in the consolidated audited financial statements for the years ended 31 March 2016 and 2017 or in the condensed consolidated financial statements for the six months ended 30 September 2016.

The effect of the prior period errors on the consolidated income statement amounted to a £4.4m reduction in profit for the year ended 31 March 2016, £6.2m reduction in profit for the period ended 30 September 2016 and £7.6m reduction in profit for the year ended 31 March 2017. The impact of the prior period errors on the consolidated statement of financial position amounted to a £4.4m reduction in total equity at 31 March 2016, £10.6m reduction in total equity at 30 September 2016 and £12.0m reduction in total equity at 31 March 2017. These forward currency contracts were settled through a payment of £9.8m in the period and application of payments on account made in FY17 in the amount of £4.9m. The cash payment has been classified as 'Fees paid in relation to the Group's senior bank facility and one-off finance costs' in the condensed consolidated cash flow statement for the six months ended 30 September 2017. Upon settlement, an additional loss of £2.7m (30 September 2016: loss of £6.2m) was recorded which has been reflected as a one-off finance cost, refer Note 5. The restatement and current period impact does not impact the financial covenants on the Group's revolving credit facility or senior secured notes.

The Group concluded that the prior period errors were not fundamental to any of the Group's previously issued financial statements. Therefore, the Group has corrected the prior period errors retrospectively by restating the comparative amounts for the prior period presented in which the error occurred and restating the opening balances for the earliest prior period presented in this Interim Announcement, as required under International Accounting Standard 8.

During the period, a further two forward currency contracts entered into in June 2017 and July 2017 were also identified as not being in compliance with the Group's hedging policy. These forward currency contracts were settled during the period, resulting in a one-off finance cost of £2.5m, refer Note 5.

In response to the above, the Group conducted a broad and continuing review of the Treasury processes, systems and controls across the Group. Steps have been taken to improve controls within Treasury including changes in personnel and enhancement of the control environment. In addition, a detailed review of all, externally confirmed, open forward currency contracts at 30 September 2017 was completed to ensure that they were in compliance with the Group's hedging policies.

Accounting for put options

The potential cash payments related to put options issued by the Group over the non-controlling interest in subsidiary companies are accounted for as financial liabilities. The amount that may become payable under the option on exercise is initially recognised on acquisition at present value within other payables with a corresponding charge directly to equity. The Group restated the condensed consolidated financial statements for the six months ended 30 September 2016, to reflect the corresponding charge in equity attributable to owners of the Company to better reflect the risk of ownership of the non-controlling interests, consistent with the treatment in the 2017 Annual Report.

Classification of investment spend

International Accounting Standard 7 Statement of Cash Flows requires that cash flows from operating activities are primarily derived from the principal revenue-producing activities of the business. The Group's revenue is derived from the licensing, marketing and distribution and trading of feature films, television, video programming and music rights. The Group has reclassified the discretionary spend incurred in the acquisition and creation of underlying intellectual property rights, being the investment in productions and investment in acquired content rights, as operating cash flow in the condensed consolidated financial statements for the six months ended 30 September 2016, consistent with the treatment in the 2017 Annual Report.

Other

A reclassification of finance income in the prior period was made to better reflect the split of income and costs.

A summary of the impact of the above restatements on the condensed consolidated financial statements at 30 September 2016 and statement of financial position at 31 March 2017 is shown below:

NEW STANDARDS AND AMENDMENTS, REVISIONS AND IMPROVEMENTS TO STANDARDS ADOPTED DURING THE PERIOD

Details of new or revised accounting standards, interpretations or amendments which are effective for periods beginning on or after 1 April 2017 and which are considered to have an impact on the Group can be found in the annual financial statements for the year ended 31 March 2017.

IFRS 15 Revenue from Contracts with Customers is effective 1 January 2018. The standard requires the identification of performance obligations in contracts with customers and allocation of the total contractual value to each of the performance obligations identified. The standard also requires the Group to assess whether its licences to intellectual property are either a promise to provide a right to the intellectual property at a point in time, or a promise to provide access to the intellectual property as it exists at any point during the licence. Revenue is recognised as each performance obligation is satisfied either at a point in time or over time.

An initial impact assessment has been undertaken which involved the review of all contract types across the Group. The Group expects an impact on the results of the Family Division where the Group currently recognises contractual minimum guarantees from licensing arrangements when the licence terms have commenced and collection of the fee is reasonably assured. The Group expects the recognition of the minimum guarantees to change and be spread over the consumption of the intellectual property. In addition, there may be timing differences arising from the way the Group recognises revenue for content licensing in the Film and Television Divisions.

The impact of the transitional arrangements is under review. There is no impact on the timing of cash receipts, which are determined by the terms and conditions of contracts with customers.

IFRS 9, Financial Instruments, is effective from 1 January 2018. The standard covers recognition, classification, measurement and impairment of financial assets and financial liabilities, together with a new hedge accounting model. The Group is still assessing the impact of the adoption of this standard to the Group.

The Group expects an impact from IFRS 16 Leases on the results of the Group. The Group currently recognises an operating lease when substantially all the risks and rewards incident to ownership remain with the lessor. The lease payments are recognised as an expense in the income statement over the lease term on a straight-line basis. IFRS 16 establishes principles for the recognition, measurement, presentation and disclosure of leases. Upon lease commencement a lessee recognises a right-of-use asset and a lease liability. The right-of-use asset is initially measured at the amount of the lease liability plus any initial direct costs incurred by the lessee, with adjustments for lease incentives, payments at or prior to commencement and restoration obligations. The Group is still assessing the extent and quantum of the impact of the adoption of this standard to the Group.

ESTIMATES

The preparation of condensed consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amount of assets and liabilities, income and expenses. Actual results may differ from these estimates. In preparing these condensed consolidated financial statements, the significant judgements made by management in applying the Group accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements at and for the year ended 31 March 2017.

FINANCIAL INSTRUMENTS

The Group uses derivative financial instruments to reduce its exposure to foreign exchange movements. The Group does not hold or issue derivative financial instruments for financial trading purposes. Derivative financial instruments are classified as held-for-trading and recognised in the condensed consolidated balance sheet at fair value.

The Group uses forward currency contracts to hedge transactional exposures. The majority of these contracts are denominated in the subsidiaries' functional currencies and primarily cover minimum guaranteed advances payments in Canada, the UK, Australia, the Benelux and Spain and hedging of other significant financial assets and liabilities. Interest rate swaps may be put in place by the Group in order to limit interest rate risk.

At 30 September 2017, there were no significant differences between the book value and fair value (as determined by market value) of the Group's financial assets or liabilities other than the Group's £285m senior secured notes, which have a fair value of £310.9m. There were no transfers between levels in the period and there have been no changes to the basis of determining the fair value measurements and valuation inputs disclosed within the Group's consolidated financial statements for the year ended 31 March 2017.

3. SEGMENTAL ANALYSIS

SEASONALITY OF OPERATIONS

The Group's business is normally subject to seasonal variations based on the timing of film cinema releases, physical home entertainment and television and digital content releases. Release dates are determined by several factors, including timing of holiday periods, the US release date of the film and competition in the market. In addition, revenue for the Group's licensed consumer products are influenced by seasonal consumer purchasing behaviour. Accordingly, if a short-term negative impact on the Group's business occurs during a time of high seasonal demand, the effect could have a disproportionate effect on the Group's results for the period.

The Group's exposure to seasonality varies by Division. Within the Television Division, revenue from television productions are driven by contracted delivery dates with primary broadcasters and can fluctuate significantly from period-to-period. The results of the Family Division are affected by the timing of royalties earned on properties driven by timing of holiday periods. The results of the Film Division are affected by the number and timing of film releases. The release dates are not entirely in the control of the Group and are determined largely by the production and release schedules of each film's producer and the timing of holiday periods.

OPERATING SEGMENTS

For internal reporting and management purposes, the Group is organised into three reportable segments based on the types of products and services from which each segment derives its revenue - Television, Family and Film. The Group's operating segments are identified on the basis of internal reports that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. The Chief Executive Officer has been identified as the chief operating decision maker.

The types of products and services from which each reportable segment derives its revenue are as follows:

Inter-segment sales are charged at prevailing market prices.

Segment information for the six months ended 30 September 2017 is presented below:

Segment information for the six months ended 30 September 2016 is presented below:

4. ONE-OFF ITEMS

Items of income or expense that are considered by management for designation as one-off are as follows:

The strategy related costs of £0.8m consists of £0.7m of costs associated with the integration of the Film and Television Divisions and £0.1m of foreign exchange movement on accrued redundancy costs.

Acquisition costs of £2.2m were due to the re-assessment of contingent consideration in relation to the Renegade 83 acquisition of £0.6m, and banking and legal costs of £1.6m associated with the creation and set-up of MAKEREADY in the period.

Other costs of £0.3m related to costs associated with aborted corporate projects during the period.

One-off gains incurred during the six months ended 30 September 2016 of £1.4m included £5.7m of costs related to the restructuring of the physical distribution business, acquisition gains of £9.0m including a £2.1m credit on the acquisition accounting for Secret Location, a £7.1m credit from the re-assessment of contingent consideration of prior year acquisitions and £0.2m of costs related to acquisitions made during the period, and other items of £1.9m in respect of one-off foreign exchange charge relating to the alignment of the TV business with the Group hedging process.

5. FINANCE INCOME AND FINANCE COSTS