Entertainment One Regulatory News (ETO)

Entertainment One Ltd.

Interim results

for the six MONTHS ended 30 september 2015

Strong growth in half year profit, STRATEGY ON TRACK

Strong financial performance

- Group reported underlying EBITDA up 43% to £52.0 million (£52.3 million on a pro forma basis)

- Group reported profit before tax up 654% at £18.1 million (up 42% to £39.9 million on an adjusted basis)

- Diluted earnings per share up 4.2 pence to 4.6 pence per share (up 1.5 pence to 9.3 pence per share on an adjusted basis)

- Group reported revenues up 2% to £337.1 million (up 1% to £340.9 million on a pro forma basis)

Strategy on track to double the size of the business by 2020

- Acquisition of a 70% controlling stake in Astley Baker Davies Limited ("ABD"), the creators of Peppa Pig, completed in October 2015 giving the Group an 85% effective ownership of Peppa Pig and the ability to control the brand's strategic development

- Completion, in October 2015, of the supporting £201 million rights issue positions the Group for targeted corporate acquisitions and investments

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

- Peppa Pig remains the number one rated show on Nick Jr in the US, with the toy range and apparel ranges outperforming expectations at all key retailers, and the brand is also outperforming expectations in France

- The launch in China on CCTV will be followed by the launch of a full digital programme, and a licensing and merchandising rollout in 2016

- Over 700 Peppa Pig licensing deals now in place, driving growth across the globe, and production underway on 52 new episodes, with delivery commencing in June 2016

- Very strong debut for PJ Masks in the US on Disney Channel and Disney Junior

Creating a global television business

- 442 half hours of new programming acquired/produced in the period (compared to 245 half hours on a pro forma basis) with over 1,000 half hours of programming expected for the full year

- Continued success from AMC relationship and a significant number of new development deals announced

Mark Gordon acquisition delivering strong performance

- Continued strong cash generation from existing library participations

- Very positive television production slate, with two new series green-lit by major US networks for first seasons, and a number of film projects under development

Positioning Film for the future

- 96 theatrical releases in the period (compared to 134 in the comparative period), driven by delayed release schedules across all territories with around 210 theatrical releases expected for the full year

- Continued development of relationships with film makers and distribution partners, including a multi-year renewal of the deal with Amazon Instant Video in the UK covering all new eOne releases

Corporate

- The value of the Group's content library, as at 31 March 2015, had increased to over US$1 billion with further upside to come following the ABD transaction

- The Group continues to explore debt financing options to support its growth strategy

Outlook

- Outlook for the remainder of the financial year is positive, with full year Group underlying earnings in line with management expectations

Darren Throop, Chief Executive, commented:

The first half of the financial year has seen very strong growth in eOne's Television business and this has supported a robust set of results at the Group level, despite lower activity in the period for the Film business. The Group's profitability has improved significantly, with our broad portfolio of entertainment assets continuing to protect the bottom line against the cyclical nature of the market. The strong growth in the Group's television activities provides greater balance to the Group's portfolio whilst enhancing the Group's mix of revenues towards higher margin activities.

Peppa Pig continues to deliver strong cash flows and our acquisition of a further stake in the property gives eOne enhanced control over the development of the brand as we continue on our journey to double its retail sales by growing existing markets and developing new markets.

Great content is at the heart of Entertainment One - our pipeline for the second half of the year and next financial year is strong and we continue to focus on the premium television series, film and speciality genres which are being demanded by consumers. The entertainment market continues to evolve and our differentiated strength as a producer, owner and distributor of content positions eOne as a key beneficiary of the changes that we are seeing in the landscape, and underpins our long term growth prospects.

Having completed our £201 million rights issue, we now enter the second half of the year with a positive outlook and the firepower to reach our target of doubling the size of the Group by 2020, through organic growth and targeted acquisitions.

FINANCIAL SUMMARY

[1] Pro forma financial results include the results of Phase 4 Films, Paperny Entertainment and Force Four Entertainment (which were acquired on 3 June 2014, 31 July 2014 and 28 August 2014 respectively) as if those businesses had been acquired on the first day of the comparative period. In addition, pro forma results have been adjusted to take into account The Mark Gordon Company, where the accounting treatment was changed to reflect its consolidation as a subsidiary effective 19 May 2015 as if it had been fully consolidated from 1 April 2014. Pro forma financial results also include the impact of Astley Baker Davies Limited ("ABD") as if that business had been acquired on the first day of the comparative period. The ABD acquisition was completed on 22 October 2015, however due to the terms of the sales and purchase agreement ("SPA") and a new co-production agreement signed on 30 September 2015, royalty savings have been recognised in the six months ended 30 September 2015, and therefore to show a like-for-like comparison pro forma financial results include those cost savings as if they had occurred from 1 April 2014. Comparative figures are translated at 2015 actual foreign exchange rates.

2 Underlying EBITDA is operating profit before one-off items, amortisation of acquired intangible assets, depreciation and amortisation of software, share-based payment charge, and tax, finance costs and depreciation related to joint ventures. Underlying EBITDA is reconciled to operating profit in the "Other Financial Information" section of this Interim Results Announcement.

3 Adjusted profit before tax is the reported measure before amortisation of acquired intangible assets, share-based payment charge, tax, finance costs and depreciation related to joint ventures, operating one-off items and one-off items relating to the Group's financing arrangements. Adjusted diluted earnings is adjusted for the tax effect of these items and other one-off tax items.

4 The Group defines "free cash flow" as cash generated from operations less purchase of investment in productions, net of grants received, purchase of investment in acquired content rights, purchase of acquired intangibles, purchase of property, plant and equipment and purchase of software. Comparative numbers for 2014 have been restated to exclude tax paid from the definition of free cash flow and adjusted free cash flow in line with the methodology adopted for the year ended 31 March 2015. Adjusted free cash flow is underlying EBITDA adjusted for content and production investment/amortisation gap, joint venture adjustments, working capital, and net drawdown of interim production financing and production cash.

Group reported revenues were 2% higher at £337.1 million (2014: £330.5 million), driven by strong growth, up 46%, in the Television Division, partly offset by lower revenues in the Film Division, down 14%. Group pro forma revenues of £340.9 million were 1% higher than the comparative period (2014: £338.8 million).

Group reported underlying EBITDA was 43% higher at £52.0 million (2014: £36.3 million), driven by strong growth, up 185%, in the Television Division, partly offset by lower underlying EBITDA in the Film Division, down 47%. Group pro forma underlying EBITDA was 5% lower at £52.3 million (2014: £55.0 million), reflecting increased profitability in the Television Division, offset by the Film Division driven primarily by a delayed film release slate.

Group investment in acquired content and productions in the period amounted to £104.9 million, 26% lower than the comparative period (2014 reported: £142.3 million; 2014 pro forma: £141.6 million), driven by lower investment in the Film Division as a result of the delayed film release slate.

Reported profit before tax was 654% higher in the period, at £18.1 million (2014: £2.4 million). Adjusted profit before tax for the period increased by 42% to £39.9 million (2014: £28.1 million) in line with the increase in underlying EBITDA, partly offset by higher net finance charges from higher acquisition debt following the acquisition of The Mark Gordon Company in January 2015.

Group free cash outflow improved by 73% to £16.2 million (2014: £59.4 million outflow) reflecting higher underlying EBITDA, lower investment in content spend, particularly in the Film Division, and lower one-off cash costs partially offset by increased working capital outflows in the Television Division reflecting growth in the international sales business and the impact from acquisitions of The Mark Gordon Company and Astley Baker Davies Limited. Adjusted free cash outflow at £15.5 million (2014: £16.0 million outflow) is in line with prior year period.

On a reported basis, diluted earnings per share increased 4.2 pence to 4.6 pence (2014: 0.4 pence) and reflected a higher adjusted profit after tax in the current period. Diluted adjusted earnings per share were up 1.5 pence to 9.3 pence (2014: 7.8 pence).

The Group's second dividend of 1.1p per share (2014: 1.0p per share) was paid on 10 September 2015.

OUTLOOK

The outlook for the remainder of the financial year is positive. Improvement is expected in Film Division performance, with a stronger release slate in the second half, further growth in Television programming and continued progress in the Family & Licensing business. The Mark Gordon Company's development pipeline is expected to translate into a higher level of active productions in 2016.

The directors look forward to delivering full year Group underlying earnings in line with management expectations and seeing year-on-year improvement in free cash flow generation, particularly in the Film Division.

Having successfully completed its £201 million rights issue in October 2015, the Group is well-positioned for targeted corporate acquisitions and investments. In addition, Entertainment One continues to explore debt financing options.

STRATEGY

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 our global distribution capabilities

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

Sell: Using the Group's distribution network, 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 continues to target a doubling in the size of the Group by 2020 through its growth strategy which aims to 'bring the best content to the world' by:

- partnering with the best creative talent

- being the world's leading independent distributor through a locally-deep, globally connected network

The strategy focuses on building a more balanced content and brand business which will see significant revenue growth in the Television Division in both Production & Sales and Family & Licensing, while Film continues to focus on improving its operating margins.

Following the Group's investments in The Mark Gordon Company in January 2015 and in Peppa Pig in October 2015, the business expects to achieve the target of doubling its size through organic growth and targeted acquisitions, including television and film production investments and territorial expansion.

Strategic progress

The Group's recent acquisition of a controlling stake in Astley Baker Davies Limited aligns with the Group's broader strategic plans of growing its portfolio of content rights, continuing to partner with the best creative talent, extending its global reach into new markets, and enhancing investment returns. Peppa Pig is a key strategic driver for the Family & Licensing business and the acquisition gives the Group control of the brand's development as it builds Peppa Pig into the world's leading pre-school property. Peppa Pig is a proven, successful and well-recognised asset that eOne knows well and where the Group believes the opportunity exists to double retail sales in the medium term.

The strong growth in the Group's television activities provides greater balance to the Group's portfolio whilst enhancing the Group's mix of revenues towards higher margin activities.

In parallel, the Group continues to focus on driving margins in the Film Division, including delivering cost-saving initiatives, exploring opportunities for driving economies of scale in the Group's distribution network and developing new revenue streams.

As the revenue mix of the business evolves, there is an increased focus on digital revenue streams, particularly in the Television Division - these deliver higher margin revenues to the Group and future-proof its multi-channel business model.

The valuation of the Group's film, television and music library as at 31 March 2015 had increased to over US$1 billion, with the valuation for 2015 having been carried out on a fully consolidated basis, including all of the Group's content assets.

DIVISIONAL OPERATIONAL & FINANCIAL REVIEW

Television

Overview

The Television Division comprises the Production & Sales business, the Family & Licensing operation, The Mark Gordon Company, the Group's Music label and also incorporates the results of Secret Location, eOne's digital investment. The Division's focus is on the production of television programming, the acquisition of television content rights, and the exploitation of branded properties through licensing and merchandising activities.

The strategy for Television is to focus on partnering with the best creative talent through building on the success of the business in Canada to expand its television production activities into the US, the UK and Australia. The current period has seen the consolidation of the Group's recent acquisitions of Paperny Entertainment, Force Four Entertainment and The Mark Gordon Company ("MGC"), which were completed last financial year.

The Group's acquisition of a 51% stake in MGC in January 2015 has significantly increased the profile of eOne in the global television production market and brought one of the world's most prolific and successful producers of television and film content to the Group. The deal provides eOne with exclusive rights to distribute all new content from MGC on a worldwide basis. Through the acquisition, the Group also benefits from the cash generation of the company's existing content library, which includes titles such as Grey's Anatomy, Criminal Minds and Ray Donovan. MGC's development slate is significant, both from a television and a film perspective.

The Group's international sales distribution capability is a key competitive advantage for eOne, with our current network reaching over 500 broadcasters and digital platforms in more than 150 territories. As well as distributing our own productions, we also sell content from output deal partners such as AMC and Sundance TV and other third party acquisitions across this infrastructure.

Within Family & Licensing, the acquisition of a 70% stake in Astley Baker Davies Limited ("ABD"), the creator of Peppa Pig (which was completed in October 2015), gives the Group economic benefit of 85% ownership of Peppa Pig from 1 August 2015 and the ability to control the property's strategic development as eOne aims to double the size of the brand. The brand continues to be rolled-out into a range of new markets with broadcasting agreements supported by licensing and merchandising programmes, as well as a significant online presence. As traction for the brand grows among consumers we carefully manage the pace of its retail programmes to ensure we maximise the brand's longevity.

In addition to managing the growth of Peppa Pig, the Family & Licensing business is also developing a balanced portfolio of complementary family brands for other demographics. Ben & Holly's Little Kingdom continues to develop in a number of new territories, PJ Masks saw a very strong debut in the US on Disney Channels and the Group is in development on a number of new brands with major broadcasting partners.

Financial Review

Pro forma revenues for the year to date were 31% higher at £144.1 million (2014: £110.2 million) driven by continued growth in Family & Licensing and Television Production & Sales revenues. Pro forma underlying EBITDA increased by 25% to £42.4 million (2014: £34.0 million), primarily driven by the performance of Television Production & Sales.

5 Pro forma financial results include the results of Paperny Entertainment and Force Four Entertainment (which were acquired on 31 July 2014 and 28 August 2014 respectively) as if those businesses had been acquired on the first day of the comparative period. In addition, pro forma results have been adjusted to take into account The Mark Gordon Company, where the accounting treatment was changed to reflect its consolidation as a subsidiary effective 19 May 2015 as if it had been fully consolidated from 1 April 2014. Pro forma financial results also include the impact of Astley Baker Davies Limited ("ABD") as if that business had been acquired on the first day of the comparative period. The ABD acquisition was completed on 22 October 2015, however due to the terms of the sales and purchase agreement ("SPA") and a new co-production agreement signed on 30 September 2015, royalty savings have been recognised in the six months ended 30 September 2015 and therefore to show a like-for-like comparison pro forma financial results include those cost savings as if they had occurred from 1 April 2014. Comparative figures are translated at 2015 actual foreign exchange rates.

6 In the current period certain inter-segment sales have been adjusted to recognise third party music label sales made by the Film Distribution business within the Music business. Consequently, the prior year period inter-segment sales and inter-segment sales eliminations previously reported have been restated to reflect this change.

Pro forma investment in acquired content and productions was 19% higher at £70.7 million (2014: £59.6 million). At 30 September 2015, contracted sales not yet recognised as revenue were approximately £59 million (2014: £41 million).

Adjusted free cash outflow in the period of £4.8 million primarily reflects £22.5 million of increased investment in content and production compared to amortisation in the period and working capital movements associated with increased Television Sales, the release of royalty provisions relating to the ABD transaction and the increased accruals associated with MGC participation revenue.

television Production & Sales

Pro forma revenues for the period were up 74% to £81.6 million (2014: £46.8 million) driven by increased production and higher international sales. Pro forma underlying EBITDA increased to £7.7 million (2014: £2.1 million).

Pro forma investment in acquired content and productions was higher than prior year period levels at £67.0 million (2014: £58.0 million), driven by higher acquisitions in the international sales business.

Adjusted free cash outflow of £8.9 million (2014: £2.5 million inflow) is driven primarily by timing in working capital movements due to strong performance in Television Sales, resulting in higher accrued income and higher investment in content compared to amortisation in the period.

7 Pro forma financial results include the results of Paperny Entertainment and Force Four Entertainment (which were acquired on 31 July 2014 and 28 August 2014 respectively) as if those businesses had been acquired on the first day of the comparative period. Comparative figures are translated at 2015 actual foreign exchange rates.

On a pro forma basis, 442 half hours of new programming was acquired/produced in the period compared to 245 half hours in the comparative period, driven by a higher number of half hours delivered and a significantly higher number of half hours acquired.

Key deliveries included season 3 of Rogue, season 4 of Saving Hope and season 5 of Hell on Wheels. Also included were 87 half hours of programming delivered by Paperny Entertainment and Force Four Entertainment which were acquired in 2014. Programming delivered by these acquisitions in the period included season 2 of Coldwater Cowboys and season 3 of Chopped and Yukon Gold, as well as new commissions Keeping Canada Alive and First Dates. Key acquisitions for the Group included season 6 of The Walking Dead, Fear The Walking Dead, and second seasons of From Dusk Till Dawn, Halt and Catch Fire, Welcome to Sweden and Turn.

The Group's exclusive distribution agreement with AMC Networks continues to drive revenues and the three key shows Turn, The Red Road and Halt and Catch Fire have all been renewed for second seasons with strong international sales. Halt and Catch Fire has recently been renewed by AMC for a third season.

The Walking Dead continues to enjoy very strong ratings - the third episode of season 6 saw significant increase in broadcast numbers to 18.2 million viewers in total - and on the back of these ratings, AMC has announced that The Walking Dead will return for a seventh season in October 2016. AMC's Fear The Walking Dead (the companion series to The Walking Dead) set a new ratings record for its cable premiere in August 2015 and is being distributed in partnership with AMC through the Group's sales team who have recently concluded a multi-territory deal with Amazon Instant Video. AMC have announced a 15-episode order for season 2 of Fear the Walking Dead, which will air in 2016. eOne will also distribute two highly anticipated new series: Into the Badlands for AMC and Hap and Leonard for Sundance.

David Attenborough's Great Barrier Reef which is being distributed internationally by eOne has seen very strong press and media coverage, with his televised discussion with President Obama at The White House being broadcast on BBC America and in fifty other countries around the world.

eOne continues to close deals in the digital space, including a deal with Hulu for the exclusive streaming rights in the US for The Enfield Haunting, a three-part drama - the deal was acquired through the first-look television deal that eOne signed with producers Eleven Film to broaden its UK television operations. In Australia, a new subscription video on demand agreement was closed in June with Presto, which allows their viewers access to complete seasons of eOne's premium programming.

eOne's production of The Book of Negroes for BET received an Emmy® nomination and won the Cablefax 2015 Best Mini-Series in Cable Award, the Banff World Media Festival Diversity Award and five Directors Guild of Canada awards.

The Television slate is strong for the remainder of the financial year with over 1,000 half hours of programming expected to be acquired/produced in the full year, including deliveries of productions for Nelly Reunion, season 2 of FAME-ISH, season 4 of Yukon Gold and Saving Hope, season 3 of Timber Kings, Chopped and Rogue, season 5 of Mary, Mary and acquisitions of Tornado Hunters and Klondike Trappers. Recently greenlit new scripted shows include the 13-episode network drama The Code starring Jason Priestley and Direct TV's 10-episode comedy You, Me, Her, both of which have started filming. Bitten has been renewed for a third season on Syfy Channel and Paradise Ranch is in pre-production for Hallmark.

eOne's reality business has performed well during the period, supported by the acquisitions of Paperny Entertainment and Force Four Entertainment in 2014. Shows in production include: Million-Dollar Challenge for ESPN, Race to Escape for Science Channel, About the Business and Nellyville for BET, season 1 and 2 of Fameless for TruTV and Growing Up Hip Hop for WeTV.

New development deals have included a first look agreement with veteran unscripted television and film producers Mark Ford/Kevin Lopez and their Creature Films banner, an expanded relationship with award-winning producer Ilana Frank and her production company ICF FILMS (with a new three-year overall deal) and the creation of a television venture with Creative England to attract and nurture new and original UK creators and to develop, finance and produce drama content for worldwide audiences. In Canada, eOne have announced the creation of the Canadian Film Centre/eOne TV Adaptation Lab, a unique initiative that aims to workshop and develop pilot scripts based on underlying literary works and creative properties with strong adaptation potential for a television series.

Investment in acquired content and productions is set to grow to around £120 million for the full financial year.

Family & Licensing

Pro forma revenues for the period were up 4% to £32.7 million (2014: £31.4 million) and continue to be driven by the strong performance of Peppa Pig. Underlying EBITDA increased 16% to £25.1 million (2014: £21.7 million), reflecting increased revenues, sales mix in the first half and in particular, improved margins from digital exploitation.

Adjusted free cash inflow conversion at £5.4 million was lower than prior year period driven primarily by the impact of the ABD transaction. Due to the terms of the SPA and a new co-production agreement signed on 30 September 2015, royalty savings have been recognised in the period to 30 September 2015, resulting in an outflow from the release of the royalty payable accrual.

8 Pro forma financial results include the impact of Astley Baker Davies Limited ("ABD") as if that business had been acquired on the first day of the comparative period. The ABD acquisition was completed on 22 October 2015, however due to the terms of the SPA and a new co-production agreement signed on 30 September 2015, royalty savings have been recognised in the six months ended 30 September 2015, and therefore to show a like-for-like comparison pro forma financial results include those cost savings as if they had occurred from 1 April 2014. Comparative figures are translated at 2015 actual foreign exchange rates.

Family & Licensing has performed very strongly with the continued success of Peppa Pig. The franchise generated US$1 billion of retail sales in the 2015 financial year and over 200 new broadcast and licensing agreements have been concluded in the current period. As at 30 September 2015, the Group had almost 800 live licensing and merchandising contracts across its portfolio, including Peppa Pig and Ben & Holly's Little Kingdom.

Peppa Pig's core UK market continues to perform well, winning the Best Pre-School Licensed Property at the British Licensing Awards for the sixth year running, and the international marketing programme continues to roll-out in the US, Latin America, Brazil, France and Russia. The outlook in the US continues to be positive with broadcaster Nick Jr continuing to support Peppa Pig by airing episodes seven days a week on prime slots, with Peppa Pig remaining the number one rated show on the channel, and a strong retail programme. The Peppa Pig toy range is now available in all key retailers, including Walmart and Target, with sales feedback exceeding expectations in all cases. The Peppa Pig clothing range is also outperforming, with a recent promotion in Target selling out, and with suppliers now air-freighting stock to meet demand. Publishing is performing strongly with over a million books sold by Scholastic to-date and the Peppa Pig stage show, which launches in November 2015, generating a strong demand for tickets and a doubling of the number of venues on the tour.

A new focus on China and South East Asia has seen Peppa Pig's debut on CCTV, the Chinese state broadcaster and new digital deals increasing Peppa Pig's exposure beyond traditional television. Performance in other South East Asian markets, including Hong Kong, Singapore and The Philippines has been strong. New licensing deals have been concluded in China and Taiwan and we expect to see strong growth in these markets as the brand develops - the China launch with Toys'R'Us has been aided by promotions and social media support from We Chat and we expect momentum to build steadily. The launch in China on CCTV will be followed by the launch of a full digital programme, and a licensing and merchandising rollout in 2016.

Production on Series 4 of Peppa Pig is underway with the delivery of 52 new episodes expected between June 2016 and June 2017, which will continue to provide new licensing opportunities for the property in the long term, and takes the total number of Peppa episodes to over 260.

Ben & Holly's Little Kingdom continues to have high ratings in its television slots and last year's UK toy re-launch has started to drive retail sales supported by a significant television advertising campaign. Ben & Holly's Little Kingdom is gaining traction internationally with toy launches in Australia, Spain and Italy, and the recent broadcast agreement with Nick Jr in the US will support a future US licensing programme.

Other Family & Licensing properties are progressing well with production continuing on the two shows that were green-lit last financial year, Winston Steinburger and Sir Dudley Ding Dong and PJ Masks.

PJ Masks, the latest animated series produced by the Family & Licensing business, premiered on Disney Channels in the US in September 2015 to very strong ratings - the show attracted 1.6 million unique viewers across its Disney Channel and Disney Junior premieres and won an average audience share of 29% among 2-5 year olds. The premiere episode took a top five slot for pre-school age programming during its first week of transmission. The series will launch on Disney Channel and Disney Junior worldwide throughout 2016, as well as selected terrestrial networks such as France 5. The Group is planning a licensing and merchandising programme for the property next financial year.

Winston Steinburger and Sir Dudley Ding Dong complete production of all episodes in June 2016 and will first broadcast in Australia from January 2016. The Group is also developing other properties, including Bobby and the Bike Buddies with major broadcasters attached.

The MArK Gordon company

Pro forma revenues for the period were up 2% to £11.7 million (2014: £11.5 million) and continue to be driven by strong participation revenues from existing series. Pro forma underlying EBITDA increased 3% to £9.4 million (2014: £9.1 million). Adjusted free cash flow conversion is impacted by the timing of participation revenue earned to 30 September 2015, which is due for payment in December 2015.

9 Pro forma results have been adjusted to take into account the change in accounting treatment to reflect its consolidation as a subsidiary effective 19 May 2015 as if it had been fully consolidated from 1 April 2014. Comparative figures translated at 2015 actual foreign exchange rates.

MGC currently has five US series in production, airing on both network and premium cable. Criminal Minds season 11 started airing on ABC on 30 September 2015, Criminal Minds: Beyond Borders completes production in December and will air later this financial year on CBS, Grey's Anatomy season 12 continues to have a strong audience with recent viewership at over 8 million, Quantico has just received a nine-episode back order and Ray Donovan has been picked up for season 4 by Showtime.

In June 2015 MGC's long term overhead deal with ABC ended, marking its move to an independent studio and freeing it up to develop, produce and distribute, through eOne, its own shows. MGC's development pipeline is very strong with over thirty projects in active development, spread across network, cable and over the top platforms. Projects under development include a terrorism crime drama for ABC loosely inspired by the achievements and expertise of Ray Kelly, the longest serving Police Commissioner in New York City's history, a limited series based on the hit novel, The Ambassador's Wife, with Anne Hathaway attached to star in and produce, Fina Ludlow, based on the novels by Ingrid Thoft, and Conviction, the story of the rebellious daughter of a Clinton-like political family who is blackmailed into taking a job as the head of Los Angeles' newly created Conviction Integrity Unit.

MGC has also brought new film projects to the Group, including the biopic Steve Jobs, which released nationwide in the US in late October. The studio has a number of film productions underway including Arms and the Dudes, in post-production, Sand Castle, in production in Jordan, and All the Old Knives. MGC is also close to finalising the script for Narnia and are in the late stages of development for Murder on the Orient Express. Following on from the success of Grey's Anatomy, MGC has re-teamed with Grey's showrunner Shonda Rhimes to produce My Husband's Ex-wife.

Effective 19 May 2015, MGC has been consolidated as a subsidiary of the Group where previously it was accounted for as a joint venture. The change in accounting has driven the differential between the reported revenues and reported EBITDA for the period, as revenues prior to the change in accounting are not consolidated.

Music

Pro forma revenues for the period were down 12% at £18.1 million (2014: £20.5 million), with pro forma underlying EBITDA down 82% at £0.2 million (2014: £1.1 million). Adjusted free cash flow outflow of £1.6 million (2014: £2.1 million inflow) is driven by timing of releases with increases in receivables at 30 September 2015.

10 Comparative figures translated at 2015 actual foreign exchange rates.

The Group's independent label continues to have success in its respective genres: Pop Evil's single Footsteps took a number one spot in the Active Rock Radio chart, The Game's Documentary 2 topped the iTunes charts and eOne Music's Nashville operation had nine nominations at the GMA Dove Awards, covering nominations for Contemporary Gospel, Traditional Gospel, Rap and Hip-Hop, and included two nominations for Gospel Artist of the Year. Dr. Dre's album The Chronic has been sold exclusively to Apple for streaming and downloading on iTunes.

The number of albums released in the period was lower, at 32 versus 41 in 2014. The Group's current roster of artists continues to be strong and is expected to deliver a content release schedule for the full year that is consistent with last financial year, with an exciting pipeline including platinum-selling metal act Drowning Pool's follow-up to Resilience which was released in 2013.

SECRET LOCATION

Secret Location, eOne's digital investment, has had a strong start to the financial year delivering revenues of £1.6 million. Work is underway on a number of projects including digital extensions for season 2 of Gaming Show with Family Channel, season 2 of Wild Canada with CBC, a virtual reality project for General Electric in China and an original scripted drama, Halcyon, for IPF and SyFy.

Secret Location also won a Prime Time Emmy® Award for The Sleepy Hollow: VR Experience created last year to promote the second season of the hit Fox TV series. The historic win marks the first time a virtual reality project has ever been awarded an Emmy® Award or any major entertainment award.

Secret Location continues to develop innovative new products in the online space including a large, original serialised virtual reality project, Insomnia, with Stephen King, and a hybrid television/digital project called Sweat the City. In October 2015 Secret Location announced the launch of DitchTV, a new way of consuming YouTube content by combining channel surfing with interactive controls and an intuitive interface. eOne's joint venture with this innovative content studio for emerging platforms positions eOne at the forefront of developing technologies as the media landscape evolves.

Film

Overview

The Group's Film Division is comprised of its Film Distribution business and Entertainment One Features, its production and international sales business.

The Group's Film Distribution business has a local presence in the UK, Canada, Spain, the Benelux, Australia and New Zealand as well as in the US and a global digital rights business operating under the Momentum Pictures brand. On a combined basis, eOne is one of the largest independent film distributors in the world.

The Film Distribution business acquires exclusive film content rights and exploits these rights on a multi-territory basis across all media channels. These rights are acquired both through output deals with independent production studios and through single picture acquisitions. The majority of film titles are acquired on a single-picture basis but the Group continues to seek output deals with other producers on attractive commercial terms, where appropriate.

Momentum Pictures is a distinct label within eOne focused on distributing multi-platform film, television and special interest content for digital and ancillary exploitation in the US and around the world. This business is building to an average of two titles per month as global digital releases, the first global title of which is Imba Means Sing, an independent documentary feature film through the eyes of the Grammy nominated African Childrens Choir which releases in December 2015.

Entertainment One Features looks to access content earlier in the production process and provides the Group with benefits from the exploitation of film content rights on a global basis, in addition to in its core territories.

The Film Division's strategy is focused on two areas:

- Development of closer relationships with the best creative talent in the film industry, giving the Group access to the best new independent film projects

- Increasing the size and scale of the Group's global distribution network, which is an important competitive advantage in the film industry

There has been good progress in developing and maintaining closer relationships with creative talent in the period, with an extension to our output deal with CBS in Canada and Sony in Spain and new partnerships with film makers including Open Road Films where a new output deal was signed.

Financial Review

Film pro forma revenues were down 13% to £221.6 million (2014: £255.0 million) driven by lower Film Distribution revenue, partly offset by higher eOne Features revenue. Film pro forma underlying EBITDA was down 46% period-on-period driven by lower activities in the Film Distribution business.

[1]1 Pro forma financial results include the results of Phase 4 Films, which was acquired on 3 June 2014, as if that business had been acquired on the first day of the comparative period, with comparative figures translated at 2015 actual foreign exchange rates.

Adjusted free cash outflow at £10.1 million has significantly improved in relation to the comparative period despite the reduced underlying EBITDA, driven by lower working capital movements including reduced receivables and inventories reflecting the lower revenues in the period. In addition, the prior year included one-time acquisition related outflows which have not occurred in the current period. In addition the Film Distribution's investment in acquired content gap in the current period is positive as a result of delayed investment spend as fewer titles have been delivered than the prior year period.

film distribution

Film Distribution pro forma revenues decreased by 22% to £196.4 million (2014: £252.8 million). This was primarily driven by the lower theatrical activity, down 26%, and the resulting impact of lower theatrical releases on the home entertainment window, down 29%.

Theatrical

Overall theatrical pro forma revenues decreased reflecting lower box office takings, which were down by 26% to US$98 million (2014: US$132 million). This was driven primarily by a reduced volume of releases period-on-period (96 compared to 134 in 2014). The quality of the slate improved compared to the prior year period with the average box office per film increasing. Key releases included The Water Diviner, Insidious: Chapter 3, Mr. Holmes, Southpaw, Miss You Already, A Walk in the Woods, Age of Adaline and The Divergent Series: Insurgent.

With the deferral of some releases into the next financial year, the Group now expects to deliver around 210 film releases in the full year and full year investment in acquired content is now expected to reach around £125 million. The theatrical release slate for the second half of the financial year includes a number of strong titles, such as Sicario, Dirty Grandpa, Love the Coopers, Secret in Their Eyes, Oscar-hopeful Spotlight, Trumbo, Quentin Tarantino's The Hateful Eight, Pride and Prejudice and Zombies, London Has Fallen, The Divergent Series: Allegiant Part 1 and the highly anticipated final instalment of The Hunger Games: Mockingjay Part 2.

There is excitement about the slate for the next financial year which will include releases for Now You See Me: The Second Act and The BFG, directed by Steven Spielberg, as well as The Girl on the Train, based on the best-selling book and David Brent: Life on the Road, starring Ricky Gervais reprising his character from the original UK version of The Office, Message from the King, The Divergent Series: Allegiant Part 2, Eye in the Sky, Nativity 4 and Captain Fantastic.

Home entertainment

Home entertainment pro forma revenues decreased by 29% reflecting the continuing migration from physical to digital formats, as well as the flow-through impact of fewer theatrical releases on the home entertainment window. In total, 279 DVDs were released (2014: 399 on a pro forma basis) including Gascoigne, Foxcatcher, The Good Lie, Nightcrawler, St. Vincent, Paddington and Woman in Black 2: Angel of Death and The Divergent Series: Insurgent which were both number one DVD releases.

The Group expects to release between 500 and 550 titles in the full year, with planned releases in the second half of the financial year including The Hunger Games: Mockingjay Part 2, Miss You Already, Insidious: Chapter 3, Sinister 2 and Mr Holmes.

Broadcast and Digital

The Group's combined broadcast and digital pro forma revenues were 17% lower reflecting the flow-through impact of lower revenues in 2015 on the broadcast and digital windows but continue to represent an increasing proportion of overall Film Distribution revenues at 41% of the total (2014: 38%).

Key broadcast/digital releases in the period included A Most Wanted Man, The Butler, Source Code, Begin Again, The Hundred Foot Journey, Nightcrawler and What If. In total, the Group had sales of over 20,000 titles to broadcasters and digital platforms in the period.

The global digital market continues to be dominated by iTunes, Amazon Instant Video and Netflix, but with local players becoming increasingly active in markets. The Group has recently announced a renewed content deal with Amazon Instant Video, giving Amazon Prime members in the UK exclusive access to all eOne new release movies from its future feature film slate, as well as new deals with Proximus and BE TV in the Benelux.

eOne's presence on Sky in the UK is expected to increase with its launch of "Buy & Keep" and the Group is showing increasing traction in Canada with a new deal with Shomi in May which will add more than 175 movies to Shomi's viewing catalogue and a landmark joint deal with Shomi and Shaw for the entire Divergent franchise. In addition output arrangements have been renewed with Bell and Telus in Canada.

Entertainment one features

eOne Features pro forma revenues increased by 357% to £26.5 million (2014: £5.8 million).

In the period, eOne Features released Suite Française, Sinister 2 and Insidious: Chapter 3 generating global box office revenues of US$181 million to-date (2014: nil, 2014 releases were made in the second half of the year). Eye in the Sky, starring Helen Mirren and Aaron Paul, was delivered to worldwide distributors in September 2015 and received strong reviews from its premiere at the Toronto International Film Festival. Message from the King is currently in post-production with delivery expected in early 2016.

eOne Features' international sales business has seen a strong performance in the period with significant sales of the international rights of Trumbo, Captain Fantastic and Spotlight. The pipeline for 2016 includes a number of exciting projects. David Brent: Life on the Road, written by and starring Ricky Gervais, is expected to be delivered in summer 2016, and will be released by eOne in the UK, Canada, the Benelux, Spain and Australia and will sell the remaining rights internationally - a wide-release commitment has already been obtained for the US. Additionally, eOne will distribute acclaimed director Xavier Dolan's latest project It's Only the End of the World, which is expected to be delivered in the first half of 2016.

Investment in productions in eOne Features is expected to amount to around £15 million for the full financial year.

OTHER FINANCIAL INFORMATION

Adjusted operating profit (which excludes amortisation of acquired intangibles, share-based payment charge, tax, finance costs and depreciation related to joint ventures and one-off items) increased by 44% to £49.9 million (2014: £34.6 million) reflecting the growth in underlying EBITDA. Adjusted profit before tax increased by 42% to £39.9 million, in line with increased adjusted operating profit. Reported operating profit increased by £20.1 million to £29.0 million with the Group reporting a profit before tax of £18.1 million (2014: £2.4 million).

Amortisation of acquired intangibles

Amortisation of acquired intangibles decreased by £0.7 million to £10.5 million. This is primarily due to intangibles that had been fully amortised by 31 March 2015, offset partly by increased amortisation of intangibles acquired on the acquisition of Phase 4 Films, Paperny Entertainment, Force Four Entertainment and The Mark Gordon Company.

Depreciation

Depreciation, which includes the amortisation of software, has increased by £0.4 million to £2.1 million, reflecting the higher level of investment in software and assets over the past years as the Group grows.

Share-based payment charge

The share-based payment charge of £1.8 million is in line with the prior year period.

One-off items

One-off items totalled £6.5 million, down £6.3 million on the prior year period and included strategy-related restructuring costs in respect of the North American Film restructuring of £2.8 million, £1.0 million of acquisition costs previously capitalised in relation to the acquisition of The Mark Gordon Company (acquired on 7 January 2015), £2.4 million in relation to the acquisition of a 70% controlling interest in Astley Baker Davies Limited and £0.3 million of costs associated with a number of other corporate projects.

Net finance charges

Reported net finance charges increased by £4.4 million to £10.9 million. Excluding one-off net finance charges of £0.9 million in the current period, adjusted finance charges of £10.0 million were £3.5 million higher in the current period, reflecting higher senior debt levels. The weighted average interest rate was 4.3% compared to 3.9% in the prior year period, representing higher headline interest rates in the current period.

Tax

On a reported basis the Group's tax charge of £3.0 million (2014: £1.2 million), which includes the impact of one-off items, represents an effective rate12 of 21.3% compared to 46.2% in the prior year period and 22.6% for the year to 31 March 2015. On an adjusted basis, the effective rate is 24.0% compared to 19.4% in the prior year 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 anticipated to be approximately 23.5%.

[1]2 The Group calculates the effective tax rate after adjusting for the share of results of joint ventures of £4.0 million. The Group calculates adjusted effective tax rate after adjusting for profit before tax relating to joint ventures of £6.1 million and the related underlying income tax charge of £2.6 million (excluding a one-off tax income of £0.5 million recognised during the period). 

cash flow

The overall movement in the net debt at £14.5 million outflow is £84.0 million better than the movement in the prior year comparative period driven primarily by improved free cash flow, lower acquisition related cash flows and favourable foreign exchange movements.

Adjusted free cash outflow at £15.5 million was in line with the prior year period, with significant improvement in Film Division offset by the Television Division. These movements are explained in more detail within the Divisional Operational & Financial Review.

Purchase of other non-current assets increased by £4.7 million to £6.8 million, mainly driven by office refurbishment on the consolidation of the Group's Toronto offices into a single premises.

Overall free cash flow at £16.2 million outflow was 73% better than the comparative prior year period driven by the adjustment for interim production financing movements within adjusted free cash flow which primarily reflects the impact of the weakening Canadian Dollar against the pounds sterling in the current period and the timing of production deliveries around the half year closes in both periods.

The net cash inflow from the acquisition of subsidiaries was £8.0 million. The inflow is due to bringing £7.7 million of opening cash balances onto the balance sheet for The Mark Gordon Company from 19 May 2015 on change of control (acquired 7 January 2015) and £0.3 million due to finalisation of the Paperny Entertainment working capital position.

Exchange differences of £11.5 million (2014: £2.9 million loss) occurred during the period. In the current period, the movements are primarily related to the translation impact of the strengthening of pounds sterling against the Canadian dollar.

Financing

Net debt balances at 30 September comprise the following:

Adjusted net debt was £250.0 million, an increase of £69.5 million from the previous period. The increase is driven primarily by the acquisition of a stake in The Mark Gordon Company using debt, that was completed on 7 January 2015. On 30 September 2015, the LTM pro forma underlying EBITDA adjusted net debt leverage ratio was 1.8 times.

Production debt decreased by £4.4 million to £78.7 million, primarily reflecting the strengthening of the pound against the Canadian dollar as at 30 September 2015 as compared to the comparative date in the prior year. This financing is independent of the Group's senior credit facility and is excluded from the calculation of adjusted net debt as it is secured over the assets of individual production companies within the Production businesses. It represents shorter-term working capital financing that is arranged and secured on a production-by-production basis.

Financial position and going concern basis

The Group's net assets increased by £17.3 million to £382.1 million at 30 September 2015 (31 March 2015: £364.8 million). The increase primarily reflects the £15.1 million profit for the period.

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

Statement of Directors' Responsibility

The directors confirm that to the best of their knowledge:

• the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union; and

• the Interim Management Report includes a fair review of information required by DTR 4.2.7R and DTR 4.2.8R of the Disclosure and Transparency Rules of the Financial Conduct Authority.

By order of the Board

Giles Willits

Director

16 November 2015

A presentation to analysts will take place at 9.00am on Tuesday, 17 November at eOne's UK office (45 Warren Street, London, W1T 6AG). For more information, or to register to attend, contact Redleaf Communications (+44 20 7382 4735 or eOne@redleafpr.com).

For further information please contact:

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 2015 can be found on our website at www.entertainmentone.com.

condensed consolidated income statement 

for the six MONTHS ended 30 september 2015

All activities relate to continuing operations.

CONDENSED Consolidated Statement of comprehensive Income

for the Six months ended 30 September 2015

condensed consolidated balance sheet

at 30 September 2015

These condensed consolidated financial statements were approved by the Board of Directors on 16 November 2015.

Giles Willits

Director

CONDENSED Consolidated statement of changes in equity

for the six months ended 30 September 2015

condensed Consolidated Cash Flow Statement

for the six months ended 30 September 2015

Notes to the condensed Consolidated Financial Statements 

for the six months ended 30 September 2015

1. Nature of operations and general information

Entertainment One is a leading independent entertainment group focused on the acquisition, production and distribution of film, television, family 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 have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting, as adopted by the European Union.

These condensed consolidated financial statements have also been prepared in accordance with the accounting policies and methods of computation which the Group expects to adopt for the year ended 31 March 2016. Except for the adoption of new, amended and revised Standards as set out below, these policies are consistent with the principal accounting policies which were set out in the Group's latest annual audited consolidated financial statements.

Preparation of the condensed consolidated financial statements on the going concern basis

The Group meets its day-to-day working capital requirements and funds its investment in content through a revolving credit facility which matures in January 2018 and is secured on assets held by the Group. Under the terms of the facility the Group is able to draw down in the local currencies of its operating businesses.

The facility is subject to a series of covenants including fixed charge cover, gross debt against underlying EBITDA and capital expenditure. The Group has a track record of cash generation and is in full compliance with its existing bank facility covenant arrangements. At 30 September 2015, the Group had £68.8 million of cash and cash equivalents, £250.0 million of adjusted net debt and undrawn amounts under the senior debt facility of £25.6 million.

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 the facility with sufficient headroom against the covenants for the foreseeable future. For these reasons the directors continue to adopt the going concern basis in preparing the 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, net debt, adjusted net debt and production net debt. 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. The terms 'underlying', 'one-off items' and 'adjusted' may not be comparable with similarly titled measures reported by other companies.

The Group defines "underlying EBITDA" as profit/(loss) for the period before income tax charge; net finance costs; one-off items; amortisation of acquired intangible assets; depreciation and amortisation of software; share-based payment charge; and tax, finance costs and depreciation related to joint ventures.

The terms "adjusted profit before tax" and "adjusted earnings per share" refer to 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; one-off items relating to the Group's financing arrangements; and in the case of adjusted earnings per share, the tax effect of these items and other one-off tax items.

The Group defines "net debt" as interest-bearing loans and borrowings net of cash and cash equivalents. Interest-bearing loans and borrowings include bank borrowings net of deferred finance charges, interim production financing, bank overdrafts and other interest-bearing loans.

The Group defines "adjusted net debt" as interest bearing loans and borrowings net of cash and cash equivalents but excluding production net debt. The Group defines "production net debt" as interest bearing loans and borrowings relating to the Group's film and television production business, net of cash and cash equivalents relating to the Group's film and television production business.

New Standards and amendments, revisions and improvements to Standards adopted during the period

During the six months ended 30 September 2015 the following new, amended and revised standards have been adopted by the Group:

The adoption of these new, amended and revised Standards had no material impact on the Group's financial position, performance or its disclosures.

New, amended and revised Standards issued but not adopted during the period

At the date of authorisation of these condensed consolidated financial statements, the following standards, which have not been applied in these condensed consolidated financial statements, are in issue but not yet effective for periods beginning 1 April 2015:

The above pronouncements have been implemented by the International Accounting Standards Board ("IASB") effective from the dates described above, but have not yet been endorsed for use in the EU. The Group is currently assessing the new, amended and revised standards and currently plans to adopt the new standards on the required effective dates as prescribed by the EU.

Financial instruments

The Group uses derivative financial instruments to reduce its exposure to foreign exchange and interest rate 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 ("MG") payments in the US, Canada, the UK, Australia, the Benelux and Spain and hedging of other significant financial assets and liabilities. Interest rate swaps are put in place by the Group in order to limit interest rate risk.

As at 30 September 2015 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, and there has been no significant change to the basis of determining the fair value measurements disclosed within the Group's annual consolidated financial statements for the year ended 31 March 2015.

Other

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 annual consolidated financial statements for the year ended 31 March 2015 which were prepared in accordance with International Financial Reporting Standards and International Financial Reporting Interpretations Committee interpretations, as adopted by the European Union.

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 16 November 2015.

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. Also, revenues 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. 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. Within the Television Division, revenues from television productions are driven by contracted delivery dates with primary broadcasters and can fluctuate significantly from period-to-period.

Operating segments

For internal reporting and management purposes, the Group is organised into two main reportable segments based on the types of products and services from which each segment derives its revenue - Film and Television. These divisions are the basis on which the Group reports its operating segment information. The types of products and services from which each reportable segment derives its revenues are as follows:

- Film - the production, acquisition and exploitation of film content rights across all media.

- Television - the production, acquisition and exploitation of television, family and music content rights across all media.

Inter-segment sales are charged at prevailing market prices.

Segment information for the six months ended 30 September 2015 is presented below:

Segment information for the six months ended 30 September 2014 is presented below:

1 In the current period certain inter-segment sales have been adjusted to recognise third party music label sales made by the Film Distribution business for the Music business. Consequently, the prior year period inter-segment sales and eliminations previously reported have been restated to reflect this change. The impact of the change for the six months ended 30 September 2014 was an increase in Television and Eliminations inter-segment sales by £9.6m.

4. One-off items

One-off items are items of income and expenditure that are non-recurring and, in the judgement of the directors, should be disclosed separately on the basis that they are material, either by their nature or their size, to provide a better understanding of the Group's underlying financial performance and enable comparison of underlying financial performance between periods. Items of income or expense that are considered by management for designation as one-off are as follows:

One-off costs incurred during the six months ended 30 September 2015 included £2.8 million of costs incurred in relation to staff redundancies and the closure of properties as part of the North America restructuring, £1.0 million of acquisition costs previously capitalised on the acquisition of The Mark Gordon Company (see Note 6 for further details), £2.4 million of acquisition costs relating to the acquisition of Astley Baker Davies Limited (see Note 9 for further details) and £0.3 million in respect of other corporate projects.

Costs incurred during the six months ended 30 September 2014 included £7.6 million of US Film-related restructuring costs as a result of an assessment of the carrying value of investment in acquired content rights in the legacy US film business following the acquisition of Phase 4 Films, and the subsequent refocus of the Group's strategy of the combined US film operations. £2.1 million of restructuring costs related to the Alliance acquisition (completed in January 2013). £1.4 million of costs related to the acquisitions made in the year ended 31 March 2015 which included Phase 4 Films (acquired on 3 June 2014), Paperny Entertainment (acquired on 31 July 2014), Force Four Entertainment (acquired on 28 August 2014) and the strategic investment in Secret Location (completed on 28 May 2014). The Group also considered a number of potential acquisitions which did not ultimately complete. The Group incurred costs of £1.7 million in respect of such items.

5. Earnings per share

Basic earnings per share is calculated by dividing earnings for the period attributable to shareholders by the weighted average number of shares in issue during the period, excluding own shares held by the Employee Benefit Trust ("EBT") which are treated as cancelled.

Adjusted basic earnings per share is calculated by dividing adjusted earnings for the period attributable to shareholders by the weighted average number of shares in issue during the period, excluding own shares held by the EBT which are treated as cancelled. Adjusted earnings are the gain or loss for the period attributable to shareholders adjusted to exclude amortisation of acquired intangibles; share-based payment charge; tax, finance costs and depreciation related to joint ventures; operating one-off items; one-off items relating to the Group's financing arrangements; and one-off tax items.

Diluted earnings per share and adjusted diluted earnings per share are calculated after adjusting the weighted average number of shares in issue during the period to assume conversion of all potentially dilutive shares.

The weighted average number of shares used in the earnings per share calculations are set out below:

As noted above, shares held by the EBT, classified as own shares, are excluded from basic earnings per share and adjusted basic earnings per share.

Adjusted earnings per share

The directors believe that the presentation of adjusted earnings per share helps to explain the underlying performance of the Group. A reconciliation of the earnings used in the diluted earnings per share calculation to earnings used in the adjusted diluted earnings per share calculation is set out below:

6. Business combinations

Deluxe Pictures (The Mark Gordon Company)

On 7 January 2015, the Group acquired a 51% stake in The Mark Gordon Company ("MGC") for consideration of £86.3 million, comprising £83.0 million in cash and £3.3 million in Entertainment One Ltd. common shares, with the opportunity to acquire the remaining 49% after an initial seven-year term. As part of the acquisition, the Group obtained the exclusive worldwide right to distribute the film and television outputs of the venture.

MGC is an LA-based independent studio that develops and produces premium television and film content for the major US networks and international distribution, including the production of studio films. Mark Gordon, who founded MGC in 1987, is an award-winning film and television producer with an outstanding track record of hits. As part of the original acquisition in January 2015, Mark Gordon entered into a new long term employment agreement with MGC.

From 7 January 2015 to 18 May 2015 the Group's interest in MGC was accounted for using the equity method in the consolidated financial statements. £1.0 million of acquisition related costs were capitalised against the carrying value of the investment. For accounting purposes, the fair value of the common shares issued in the Company was based on 1,082,568 common shares at the fair value of those equity instruments at the date of exchange.

On 19 May 2015, the Group entered into an amendment to the shareholders agreement in respect of its shareholding in MGC. Under the amendment, the Company now has control over certain key board and shareholder decisions of MGC, whereas previously all such decisions were made on a joint control basis between the Company and Mark Gordon (the holder of the remaining 49% interest).

As a result of this amendment to the shareholders agreement, MGC has been fully consolidated into the Group's condensed consolidated financial statements as a subsidiary from 19 May 2015 and going forward, a change to the accounting treatment shown in the consolidated financial statements for year ended 31 March 2015. The acquisition costs previously recognised have been written off to the condensed consolidated income statement during the period.

The following table summarises the fair values, as at 19 May 2015, of the assets acquired, the liabilities assumed and the total consideration transferred as part of this acquisition. Information provided below is calculated based on current information available.

1 None of the goodwill is expected to be deductible for income tax purposes.

2 The directors do not consider there to be a material difference in the fair value of the previously held equity interest at the date of change of control on 19 May 2015 and the fair value of the equity interest as at the date of the initial acquisition of the 51% stake in MGC on 7 January 2015 plus the Group's share of the profits during the interim period.

If the acquisition of MGC had all been completed on 1 April 2015, Group revenue for the six months ended 30 September 2015 would have been £340.9 million and Group's profit before tax would have been £28.2 million.

MGC contributed £7.9 million to the Group's revenue and £3.6 million to the Group's profit before tax for the period from the date of the acquisition on 19 May 2015 to 30 September 2015.

The Group has created a new CGU for MGC, being the smallest identifiable Group of assets that generate cash flows that are largely independent of the cash flows from other groups of assets. Goodwill has been allocated between the MGC and Television CGUs.

Paperny Entertainment

On 31 July 2014, the Group acquired 100% of the issued share capital of the Paperny Entertainment group of companies ("Paperny") for a total consideration of £15.1 million, comprising £6.3 million cash consideration and £8.8 million share consideration. During the year ended 31 March 2015 cash paid totalled £6.6 million, of which £0.3 million related to final working capital adjustments which were returned to the Group during the six months ended 30 September 2015.

7. risks and uncertainties

The Board considers risk assessment, identification of mitigating actions and internal control to be fundamental to achieving the Group's strategic objectives. The Corporate Governance section on pages 40 to 48 of the Annual Report and Accounts for the year ended 31 March 2015 describes the systems and processes through which the directors manage and mitigate risks. The Board recognises that the nature and scope of the risks can change and so reviews the risks faced by the Group as well as the systems and processes to mitigate them. The Board considers the principal risks to achieving its objectives to be:

- Strategy formulation and execution - Creating and executing the best strategy for the Group;

- Recruitment and retention of employees - Finding the best people for the business to deliver its strategy;

- Source and select the right content at the right price - Building a valuable content portfolio;

- Protection of intellectual property rights - Protecting content and brands;

- Regulatory compliance - Operating within the law and seeking to maximise tax efficiency;

- Information security/data protection - Protecting eOne and stakeholders' data;

- Business continuity planning - Maintaining operations in the event of an incident or crisis; and

- Financial risk - Seeking and maintaining financing to support the delivery of the Group's strategic objectives.

As part of its financial risk management the Group monitors foreign currency movements. The movement in foreign currency exchange rates during the period has an impact on the reporting of the financial performance of the Group. In particular, the different functional currencies of the Group (US dollars, Canadian dollars, euros, pounds sterling and Australian dollars) result in consolidation translation gains and losses as the Group reports its financial results in pounds sterling. During the six months ended 30 September 2015 a loss of £14.8 million (2014: gain of £1.0 million) has been charged to the currency translation reserve, reflecting the impact of the stronger pounds sterling on translation of the Group's non-sterling net assets. The Group looks to balance local currency borrowings with the net assets of individual operating units to help mitigate the impact of currency movements in relation to the Group's consolidated net assets.

The financial results of individual businesses within the Group are not significantly impacted by foreign currency movements other than in relation to the investment in acquired content rights which is generally transacted in US dollars. The Group reduces its exposure to risk in relation to foreign currency movements in these circumstances through hedging instruments and internal currency offsets where available.

In the view of the Board there is no material change in risk factors since 31 March 2015. Further details of these risks are provided on pages 33 to 35 of the Annual Report and Accounts for the year ended 31 March 2015, a copy of which is available on the Company's website at www.entertainmentone.com.

8. Related party transactions

James Corsellis who is a partner of Marwyn Capital LLP, partner of Marwyn Investment Management LLP, director of Marwyn Partners Limited and director of Marwyn Investments Group Limited stepped down from the Board of the Company on 15 July 2015. As a result these entities are no longer deemed to be related parties of Entertainment One Ltd. as there are no common directors or members.

Marwyn Value Investors L.P. sold their entire holding of common shares in the Company during the six months ended 30 September 2015. As at 31 March 2015 and 30 September 2014, 79,424,894 common shares were held, amounting to 26.9% and 27.2% respectively of the issued share capital of the Company. As a result Marwyn Value Investors L.P. are no longer deemed a related party of Entertainment One Ltd.

During the period from 1 April 2015 to the date Marwyn Capital LLP ceased to be a related party of the Group, the Company paid fees of less than £0.1 million (six months ended 30 September 2014 less than £0.1 million) to Marwyn Capital LLP for corporate finance advisory services.

Canadian Pension Plan Investment Board held 52,924,894 common shares in the Company at 30 September 2015 (31 March 2015 and 30 September 2014, nil), amounting to 17.9% of the issued share capital of the Company. Canadian Pension Plan Investment Board are now deemed a related party of Entertainment One Ltd. by virtue of their significant shareholding. There have been no transactions with Canadian Pension Plan Investment Board during the period.

With the exception of the items noted above the nature of related parties disclosed in the consolidated financial statements for the Group as at and for the year ended 31 March 2015 has not changed.

9. post balance sheet events

On 30 September 2015, the Group entered into a share purchase agreement to acquire 70% of the entire issued share capital of Astley Baker Davies Limited ("ABD"), the BAFTA-award winning UK based creator of Peppa Pig, that jointly holds the ownership rights to Peppa Pig with the Group. By virtue of the acquisition, the Group increased its interest in the related share of earnings from the exploitation of Peppa Pig from 50% to 85% and ABD became a subsidiary of the Group. From 22 October 2015, the date of completion its financial statements will be fully consolidated into the Group's consolidated financial statements.

For the year ended 31 March 2015, the Group accrued an amount of £17 million in relation to royalties payable to ABD, which was included as an expense in the Group's Underlying EBITDA for the period. By virtue of the acquisition, ABD will become a subsidiary of the Company following completion, and therefore the royalty expense will not be accrued in relation to Peppa Pig in the Group's consolidated financial statements going forward. The Group will make distributions to the minority shareholders of ABD going forward in respect of their 15% interest in Peppa Pig.

Further, on 30 September 2015 the Group announced that it intended to fund the acquisition and associated expenses through the net proceeds of a fully underwritten 4 for 9 renounceable rights issue of 131,476,173 new common shares at 153.0 pence per new common share. Net of expenses the total amount raised was £192.0 million.

On 20 October 2015 the Group announced that under the terms of the rights issue it had received valid acceptances of 95.87% of the total number of new common shares offered to qualifying shareholders pursuant to the rights issue. J.P Morgan Cazenove and Credit Suisse have procured subscribers for the remaining new common shares not taken validly taken up under the rights issue.

Following the successful completion of the rights issue, the purchase of ABD was completed on 22 October 2015 for a total consideration of £140.5 million which included £140.2 million payable on completion, representing the purchase price of £140.0 million, £0.2 million of interest payable and £0.3 million representing outstanding royalties payable to the previous owners of ABD at the completion date which is expected to be payable during the six months ended 30 March 2016. The initial accounting for the business combination was incomplete at the time these condensed financial statements were authorised for issue.

INDEPENDENT REVIEW REPORT TO ENTERTAINMENT ONE LTD.

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2015 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement and related notes 1 to 9. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in Note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2015 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLPChartered Accountants and Statutory Auditor

London, United Kingdom16 November 2015