Entertainment One Regulatory News (ETO)

Entertainment One Ltd.

Results Announcement for the Financial Year Ended 31 March 2014

 Strong Growth with Inaugural Dividend Declared

Entertainment One Ltd. ("Entertainment One", "eOne", "the Group" or "the Company") is pleased to announce its results for the financial year ended 31 March 2014.

Financial Highlights

Operational Highlights

- Growth in revenues and underlying EBITDA reflecting a strong underlying performance across the Group, including the first full year of results for Alliance which was acquired on 8 January 2013

- The Film Division released 275 titles theatrically (2013 pro forma: 311), delivering improved margins driven by the realisation of Alliance synergies and has a strong slate of films in place for future years, including those from the renewal of key output agreements and its own production slate

- The Television Division delivered 317 half hours of television programming (2013: 295 half hours) and signed new distribution agreements with AMC Networks and El Rey Network, and has a strong pipeline of new network orders and renewals already commissioned

- Peppa Pig continues to grow its international presence with licensing agreements now numbering more than 300 globally - and is expanding further into new markets including Latin America, China, South-East Asia, France and Germany

Strategic Highlights

- The Company transferred the listing category of all of its common shares from the standard listing segment to the premium listing segment of the Official List of the Financial Conduct Authority on 1 July 2013

- Entertainment One became a constituent member of the UK's FTSE 250 Index on 23 September 2013

- The directors have declared a final dividend for the financial year of 1.0 pence per share, being the Company's inaugural dividend

Darren Throop, Chief Executive Officer, commented:

"It has been another very positive year for Entertainment One and I am delighted to report a year of growth and higher margins. This strong operating performance again demonstrates the strength of our strategy of investing in content rights and exploiting them across multiple territories and multiple consumer platforms. The Company's entry into the FTSE 250 and the payment of an inaugural dividend mark another milestone in eOne's development and continues our track record of delivering an improved return on investment for our shareholders."

Allan Leighton, Chairman, commented:

"I am delighted to be joining Entertainment One at a time when the business is in such a robust position. eOne's multi-territory, multi-platform strategy ideally positions the Group to benefit from growing consumer demand for high-quality exclusive content."

For further information, please contact:

A presentation to analysts will take place on Tuesday, 20 May 2014 at 9.30am BST at Entertainment One's offices at 45 Warren Street, London W1T 6AG.

Cautionary statement

This Results 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. 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 Results Announcement should be construed as a profit forecast.

A copy of this Results Announcement for the year ended 31 March 2014 can be found on our website at www.entertainmentone.com. Copies of the Annual Report and Accounts for the year ended 31 March 2014 will be available to shareholders shortly.

BUSINESS PERFORMANCE AND FINANCIAL REVIEW

OVERVIEW

Delivering the strategy

Following the successful integration of the Alliance business, which was acquired in January 2013, the Group has now reached a size and scale where it can more fully realise its potential through delivering on its strategy. The financial strength of the enlarged Group has enabled eOne to increase its investment in exclusive film and television content, while delivering higher EBITDA margins in both the Film and Television Divisions. The Film business is now the leading independent distributor in its core territories and the expansion of the Television business, including Peppa Pig's international presence, has further increased the geographical footprint of the Group's revenues.

The Group's goal remains the same - to become the world's leading independent entertainment group through the production and acquisition of entertainment content rights for exploitation across all consumer media throughout the world - and the business continues to focus on its three strategic pillars:

· Grow content portfolio: create future value by growing a diversified film and television rights portfolio

Investment in acquired content rights and productions increased by 27% to £271.2 million (2013 pro forma: £214.2 million). Based on the independent valuation dated March 2013, the Group's content library has increased in value by 85% to over US$650 million (2013: over US$350 million)

· Extend global content reach: expand reach of content by both geography and content platform

As well as taking market leading positions in its core territories during the year, the Group has continued to grow its international business (outside these territories), which now delivers over 23% of Group revenues (2013 pro forma: 18%). eOne's Television business distributes programming to over 150 countries and the Group has re-launched its International Film business to also exploit film rights outside its core territories

· Enhance investment returns: use size and scale to drive improved financial return

Digital sales, which now account for 21% of Group revenues, increased 38% year-on-year to £172.0 million (2013 pro forma: £124.5 million) and synergies from the Alliance acquisition, which have delivered ahead of the C$20 million target, helped increase EBITDA margin to 11.3% (2013 pro forma: 9.3%)

As we execute on these strategic pillars, our performance will be reflected in the achievement of our long-term financial objectives, which include growing adjusted earnings per share, return on capital employed and cash conversion.

The success of the Group's strategy is reflected in another strong financial performance in the year delivering EBITDA of £92.3 million on revenues of £819.6 million and the business enters the new financial year well-positioned in both Divisions and in all of its core territories.

Premium listing and FTSE inclusion

Entertainment One transferred the listing category of all of its common shares from the standard listing segment to the premium listing segment of the Official List of the Financial Conduct Authority on 1 July 2013 and became a constituent member of the FTSE UK Index Series on 23 September 2013.

The Company's premium listing has broadened its range of investors and enhanced the liquidity of its shares.

Declaration of dividend

The directors have declared a final dividend for the financial year of 1.0 pence per share, being the Company's inaugural dividend under its progressive dividend policy, reflecting the Board's confidence in Entertainment One's medium and long-term prospects.

Outlook

Based on the foundation of strong financial performance and consistently delivering on its strategy, the Group outlook for the new financial year is very positive.

The Film Division has a strong slate of over 275 films set for release in the coming year and a much larger library of titles for exploitation.

In Television Production & Sales there is continued growth in the roster of new programming and renewals and, against the backdrop of healthy demand for content from digital platforms and traditional television networks, revenues from its new output agreements will start to be delivered during the new financial year. Family remains focused on growing its international licensing and marketing presence with its existing properties, while building its portfolio through the development of new properties.

DIVISIONAL REVIEWS

The Group continues to report its revenues in two segments, Film Division and Television Division. Unless otherwise stated, comparative information for the year ended 31 March 2013 in the Divisional Reviews is stated on a pro forma and constant currency basis to provide a like-for-like comparison of performance.

Film

Overview & strategy

The Group's Film business, which comprises operations in the UK, Canada, the US, Spain, Benelux and Australia, is the largest independent film distributor in the world. The Division's focus is on the acquisition of exclusive film content rights and the exploitation of these rights on a multi-territory basis across all media channels.

eOne is also developing its own film production capability which enables it to retain upside in a film's performance, whilst reducing its financial exposure to a level comparable to a typical third-party produced content acquisition. During the year, the Group also re-launched its International Film business under new leadership to improve access to new content and to enable the Group to benefit from the exploitation of film content rights outside its core territories.

This financial year was a period of consolidation in the Film Division, with a planned rationalisation of the Group's activities in Canada and the UK, where the legacy Alliance and eOne businesses had competing operations. A reduction in the number of theatrical and home entertainment releases removed the overlap in film release slates, and the combination of back-office departments and rationalisation of suppliers delivered cost savings in excess of the Group's synergy targets. The Group will continue to drive economies of scale and operational efficiencies in this current financial year.

The Film business is now well-positioned in each of its international territories and is of a scale where it can more fully realise the potential of its strategy. Investment in content is set to grow to over £200 million in the new financial year, targeted on maintaining the Group's presence in its existing territories, with growing International Film and Film Production to bring further content into the portfolio.

The number of multi-territory theatrical titles released during the year continued to expand in line with the Group's operating strategy and key output agreements were signed or renewed with Relativity Media and CBS Films during the year, and with The Weinstein Company in April 2014, helping to secure the baseline for future release schedules.

The combination of the enlarged Film business, eOne's portfolio approach of delivering a significant number of releases spread across its six territories, together with upfront visibility of US box office performance, results in a low-risk model which means that the Group is not reliant upon the success of a small number of titles. Whilst it is expected that the performance of individual titles will vary, the effect of the portfolio is to deliver a consistent margin performance at the overall Film Division level.

Summary financial performance: Film

* In order to provide like-for-like comparisons, the above table includes the prior year figures on a pro forma and constant currency basis. For the purposes of this analysis, pro forma includes the results of Alliance, which was acquired on 8 January 2013 as if that business had been acquired on the first day of the comparative period. Constant currencies have been calculated by retranslating the comparative figures using monthly average exchange rates for the year to 31 March 2014.

On a reported basis, revenue increased by 33% to £686.9 million (2013: 518.0 million) and underlying EBITDA increased by 50% to £74.1 million (2013: £49.3 million), supported by increased investment in acquired content and productions, up 104% to £194.6 million (2013: £95.4 million).

On a pro forma basis, primarily driven by the rationalisation of the Canadian business, revenues were 1% lower (2013: £696.4 million). However, the delivery of operating efficiencies and synergies drove an increase in pro forma underlying EBITDA of 19% to £74.1 million (2013: £62.5 million), with EBITDA margins higher at 10.8% (2013 pro forma: 9.0%). Pro forma investment in acquired content rights and productions was 43% higher at £194.6 million (2013: £136.3 million), reflecting underlying growth in the UK, Canada, Benelux and Australia, and the timing of MG payments at the year end.

Changes in the overall mix of revenues in the Film business reflect the rationalisation of the theatrical and home entertainment slate and the anticipated market shift of physical to digital distribution, as well as growth in other sales which include the Film Production business, reflecting the increased focus on this area of the Film Division.

Operating performance

Theatrical

The Group released 275 titles theatrically in the year (2013: 311), generating box office takings of US$540 million (2013: US$609 million) and delivering theatrical revenues that were 11% lower than the prior year and comprising 19% of overall film revenues.

Theatrical revenues were lower in the UK, partly driven by the exceptional performance of The Twilight Saga: Breaking Dawn - Part 2 in the prior year, and Canada where the planned rationalisation of the combined film slate of the eOne and Alliance businesses resulted in fewer releases. Lower performance in the UK and Canada was partially offset by growth in Benelux and Australia which was particularly strong with eOne's investment strategy driving increases in theatrical revenues of 44% and 82%, respectively.

The Hunger Games: Catching Fire and Divergent opened as number one at the box office in Canada, whilst number one releases in the UK included Prisoners, Need for Speed and Academy Award winner 12 Years a Slave. Other key theatrical releases in the year included Now You See Me, Rush, American Hustle, The Butler, 2 Guns, Philomena, Blue Jasmine, Dallas Buyers Club, Red 2and Behind the Candelabra. Additionally, Insidious: Chapter 2, which was produced as well as distributed by eOne, opened as number one at the box office in the US, Canada and the UK and grossed over US$150 million in global box office revenues.

Based on box office takings for 2013 calendar year, eOne was the leading independent distributor in Canada, the UK, Benelux and Spain. Canada remains the Group's largest territory where its box office share is over 20%.

The Group plans to release over 275films theatrically during the next financial year, including Hunger Games: Mockingjay Part 1, Paddington, Suite Française, Insurgent, St. Vincent de Van Nuys, The Water Diviner, Nativity 3 and Expendables 3.

Home entertainment

The Group handled 611 home entertainment releases in the year (2013: 777) with overall revenues 14% lower than the prior year, comprising 41% of overall Film revenues.

The lower revenue was primarily driven by the overall anticipated market decline, reflecting the move from physical to digital formats, and by the planned rationalisation of the Group's home entertainment release schedule in Canada, following the Alliance acquisition.

The UK and Australia saw growth in their respective home entertainment sales reflecting box office release timings, but performance in all other territories reflected the general market trends and was in line with management expectations. This decline was partly offset by the significant increase in digital revenues, reflecting the anticipated growth in demand from new media channels for entertainment content.

Key releases included Safe Haven, Red 2, Welcome to the Punch, Django Unchained, Silver Linings Playbook, The Impossible, Quartet, Prisoners, Warm Bodies, Now You See Me and The Hunger Games: Catching Fire.

The Group plans over 575 home entertainment releases during the next financial year, including 12 Years a Slave, Divergent,Hunger Games: Mockingjay Part 1, Paddington, Expendables 3 and Need for Speed.

Broadcast and Digital

The Group's combined broadcast and digital revenues increased by 15% year-on-year, with growth in all core territories, and now accounts for 32% of overall Film revenues (2013: 28%).

In the UK, digital revenues increased as the combined business now has ongoing agreements in place with both LOVEFiLM and Netflix. The year also saw new broadcast deals with Channel 4 and the BBC. In Benelux, digital revenues were higher than the previous year because of increased revenue from Netflix, which launched in the territory during the year.

Australian television and digital sales continue to grow, reflecting the increased investment in content since acquisition in 2011, which helped the business conclude a three-year agreement with local broadcaster, Foxtel.

Canadian broadcast revenues were in line with prior year despite the extension of the Bell Media contract only being concluded in April 2014 and therefore falling outside the current financial year. Digital revenues were supported by a new library deal which was agreed with Netflix for Canadian titles.

Key broadcast/digital releases in the year included The Twilight Saga: Breaking Dawn - Part 2, Now You See Me, The Woman in Black, Looper, The Impossible, Nativity 2, The Sweeney, Warm Bodies, The Perks of Being a Wallflower, Song for Marion, Sinister, Riddick, and Gnomeo & Juliet.

Film Production

eOne's Film Production business has had a good first full year. The Group's biggest success in the period, Insidious: Chapter 2, opened as number one at the box office in the US, the UK and Canada and has delivered over US$150 million in global box office revenues. Other productions delivering revenues for the business during the current year were Dark Skies and The Woman in Black.

Films produced by eOne are managed through a combination of owned and joint-venture production companies and are financed in a way that ensures eOne retain upside in the performance of each title, whilst reducing its financial exposure to a level comparable to a typical third-party produced content acquisition.

Suite Française is currently in post-production and due for release in late 2014 and the business has other productions in the pipeline including Sinister 2, The Woman in Black: Angel of Death and Insidious: Chapter 3.

International Film

eOne's International Film business is a full service agent for independent producers and directors, and connects eOne's global Film activities including Film Production and worldwide acquisitions. It provides an integrated financing and investment model to offer film producers a more efficient and concentrated route to market for their films, supported by external funding relationships and leveraging eOne distribution territories.

For eOne, the business delivers earlier access to content creators to acquire worldwide rights and secure distribution for eOne territories and supports the monetisation of productions through its international distribution network.

Collaboration with eOne's own Film business territories allows the Group to maximise distribution potential of films and improve margins.

Following its re-launch in January 2014, eOne has announced international distribution deals for Trumbo and Eye in the Sky.

Television

Overview & strategy

The Group's Television Division comprises the North American-based Television Production & Sales business and the UK-based Family business. It also incorporates the results of the Group's US-based music label.

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 Production & Sales business has had a strong financial year. As well as increasing its own programming output and library sales during the year, eOne signed significant new distribution agreements with AMC Networks and El Rey Network. As the Production & Sales business continues to grow, the Group will continue to look for new output, co-production and co-development deals to supplement its own programming output.

For the first time, syndication opportunities for Rookie Blue are now being explored, and these are expected to take 18-24 months to come to fruition - however, once in place, these agreements will further improve margins in the Television Production business.

The Family business has seen particularly strong growth in the year, with the continued international expansion of Peppa Pig and its other existing properties. Licensing agreements now number more than 450 globally, and the Group continues to develop new properties for exploitation, supported by strong broadcasting partnerships.

Summary financial performance: Television

On a reported basis, revenue increased by 22% to £162.2 million (2013: 133.4 million) and underlying EBITDA increased by 35% to £24.3 million (2013: £18.0 million), with investment in acquired content rights and productions marginally lower at £76.6 million (2013: £79.6 million).

Revenues were 28% higher on a constant currency basis. Underlying EBITDA was up 44% to £24.3 million (2013: £16.9 million) driven by higher EBITDA margins at 15.0% (2013: 13.3%). Investment in acquired content rights and productions was broadly in line with prior year at £76.6 million (2013: £77.9 million) reflecting an increase in investment in Television Production & Sales offset by a reduction in Music (which included the acquisition of Death Row Records in the prior year) and Family.

Operating performance

Television Production & Sales

Television Production & Sales comprises the Group's production and international distribution businesses.

Increased production activities resulted in another year of revenue and underlying EBITDA growth with eOne continuing to strengthen its position as a leading North American independent producer. Production revenues increased due to the higher number of half hours of production delivered (317 half hours versus 295 half hours in 2013) and improved library sales, with EBITDA margin increasing year-on-year.

Good progress was made in obtaining renewals for existing shows and commissioning new programmes. 40% of deliveries related to new commissions (2013: 51%) indicating a positive inflow of new production to drive future renewals. Current year renewals accounted for 60% (2013: 49%) representing 190 half hours compared to 146 in the previous year. The pipeline remains robust. Whilst contracted sales not yet recognised at the year end relating to work in progress were lower at £15 million (2013: £35 million), this was because two significant renewals for Hell on Wheels and Haven, which together total £31 million, were concluded in April 2014 and therefore fell outside the 2014 financial year.

Significant digital subscription on demand sales were made during the year, with digital revenues now comprising 12.9% of revenues (2013: 2.4%).

Highlights of new commissions have included Klondike, the Discovery Channel's first scripted project (which helped drive Discovery Channel to deliver its most-watched Monday primetime to-date and best ever month for viewership), and Bitten, which premiered on Syfy and Space.

Other major primetime shows delivered during the year included season two of Saving Hope, season two of Rogue, season three of Hell on Wheels and season four of Haven.eOne's most successful show to-date, Rookie Blue, commenced delivery of a new season in March 2014. Deliveries of movies of the week for the Hallmark Channel included Window Wonderland, My Gal Sunday and Riverboat Mystery Cruise. Non-scripted deliveries included Undercover Boss, Mary Mary 3, Sisters with Voices and The Sheards.

The new financial year's production slate already includes commissioned renewals for season three of Saving Hope, season four of Hell on Wheels and seasons five of Haven and Rookie Blue, as well as new commission Book of Negroes for Black Entertainment Television. Commissions for eOne's most successful shows have renewed with expanded orders - Hell on Wheels renewed with 13 episodes (up from ten episodes), Rookie Blue renewed with 22 episodes (up from 13 episodes) and Haven renewed for a double season of 26 episodes. Television movies commissioned include Mother's Day Off and The Memory Book ordered by the Hallmark Channel.

Revenues from international television sales of the Group's own productions and third-party content continued to develop well. Exclusive multi-year television distribution agreements for original scripted series with US-based AMC Networks' AMC and Sundance Channel and the recently-launched El Rey Network were concluded during the year and are expected to deliver strong international sales revenues in the new financial year through productions including Halt and Catch Fire and Turn.

Family

The Family business had a strong year of growth in licensing and merchandising sales. Revenues were more than double prior year levels, driven by increased international sales, and delivered strong growth in EBITDA. The cumulative number of Peppa Pig licensing agreements have now reached more than 300 globally, with a further 150 agreements for the Group's other licensing properties.

Peppa Pighas held its position as the leading pre-school toy licensed property in the UK (winning the award for Best Pre-school Licensed Property for the fourth time at the Annual Licensing Awards) and delivered its highest level of UK royalties to-date. Demand remains strong enabling eOne to continue to retain good support from existing and new licensees.

Peppa is also the number one property in Italy, Spain and Australia. In Italy, Peppa has experienced significant growth with support from our local broadcasting partners RAI YOYO and Disney Jr.

March 2014 saw Peppa increase its US television presence, where it now airs for three hours on Nick Jr. on a daily basis. In March 2014, the first Peppa Pig DVD launched in the US, shipping to key retailers including Wal-Mart, Target and Toys'R'Us with sales far exceeding initial forecasts. Peppa toys launched in January 2014 on Amazon.com and will launch on Walmart.com in the third quarter, adding to the range of Peppa merchandise already available online and in stores at Toys'R'Us.

Peppa's international marketing for the next two years will be focused on Latin America, China, South-East Asia, France and Germany.

Revenues from Ben & Holly's Little Kingdom have grown in the year, supported by strong broadcast ratings in the UK, and a new Character Options toy line will launch in the autumn. Ben & Holly has also been launched exclusively in Australia via ABC stores and in Spain with eOne's existing broadcaster and agent.

The acquisition of Art Impressions (a Los Angeles-based brand and licensing agency), in July 2013, marks an expansion of eOne Family's licensing business into the 'lifestyle' segment. Key brands owned and managed by Art Impressions are So So Happy and Skelanimals, both of which are teen/tween brands driven by design concepts rather than television programming. So So Happy branded products are featured in specialty shops around the world and were also launched in Walmart Canada during the year.

In addition, eOne is in production on a new animated show for 6-12 year-olds, called Winston Steinburger and Sir Dudley Ding Dong, for broadcast in association with Teletoon Canada and ABC3 Australia.

Two more shows are currently in production and will be announced when the series are closer to delivery. One is a pre-school property with strong licensing potential for boys that will complement well the girl-skewed licensing programmes for Peppa Pig and Ben & Holly's Little Kingdom. The second is an action adventure property aimed at boys in the 5-8 year-old age group, again with strong licensing potential. eOne has worldwide licensing rights for both of these properties, including television, digital and licensing on a global basis.

Both of these properties demonstrate the strategy of the Family business which is to develop, produce and brand-manage strong properties targeting every key demographic of the licensing industry.

Music

Revenue in eOne's music label was 11% higher than the prior year, benefitting from the 2013 purchase of the rights to the Death Row Records catalogue and a higher level of digital sales. There were strong catalogue sales in the year on the label from 2Pac's album All Eyez on Me, as well as major releases from DJ Drama, Pop Evil, Snoop Dogg and Jake Miller. The new financial year will see releases from Kelly Price, The Game, Michelle Williams and Ace Frehley.

FINANCIAL REVIEW

The Group delivered strong growth in the year, increasing reported revenue by 30% to £819.6 million (2013: £629.1 million) and reported underlying EBITDA (operating profit before operating one-off items, share-based payment charge, depreciation and amortisation of acquired intangibles) by 48% to £92.3 million (2013: £62.5 million). This was driven by a full year's ownership of the Alliance business compared to only three months in the prior year, delivery of synergies and a strong underlying performance, particularly in Television. On a pro forma constant currency basis (including the results of Alliance, which was acquired on 8 January 2013, as if that business had been acquired on the first day of the comparative period) Group revenues and underlying EBITDA increased by 2% and by 24%, respectively.

Adjusted operating profit (which excludes amortisation of acquired intangibles, share-based payment charges and operating one-off items) increased by 50% to £89.7 million (2013: £59.9 million) reflecting the growth in underlying EBITDA, helping drive a 45% increase in adjusted profit before tax to £77.9 million.

The Group's reported profit before tax of £21.0 million (2013: £5.5 million) increased by 282% on the prior year.

Amortisation of acquired intangibles

Amortisation of acquired intangibles increased by £17.8 million to £36.0 million, reflecting the full year charge following the increase in acquired intangible assets resulting from the Alliance acquisition.

Capital expenditure and depreciation

Capital expenditure increased by 45% to £4.2 million (2013: £2.9 million), driven by systems and leasehold property spending as a result of the integration of the Alliance businesses. Depreciation, which includes the amortisation of software, was in line with the prior year at £2.6 million.

Share-based payment charge

During the year a new Long Term Incentive Plan ("LTIP") was implemented by the Group. The new scheme has been extended to an increased number of employees. Two grants were made under the LTIP during the year covering approximately 100 employees which have resulted in the share-based payment charge increasing by £1.5 million to £2.7 million for the year ended 31 March 2014.

One-off items

One-off items totalled £22.1 million and included £19.5 million of net Alliance-related costs and £2.6 million of other corporate projects and acquisition costs, mainly related to the transfer of the listing category of all of the Company's common shares from the standard listing segment to the premium listing segment of the Official List of the Financial Conduct Authority.

The Alliance-related costs comprise £14.2 million of restructuring expenditure and a charge of £5.3 million resulting from a reassessment of the amount of contingent consideration payable in respect of box office targets, net of provisions for under-performing titles, related to the Alliance acquisition.

Net finance charges

Reported net finance charges were £7.9 million. These included one-off gains of £3.9 million relating primarily to the revaluation of certain monetary assets and liabilities acquired as part of the Alliance acquisition and also on the implementation of a finance structure. Excluding one-off gains adjusted finance charges of £11.8 million were £5.7 million higher in the current year, reflecting the full year impact of the higher average net debt levels since the Alliance acquisition.

The weighted average interest cost was 5.1% compared to 5.2% in the prior year, giving a cash interest cover of 8.6 times underlying EBITDA (2013: 9.9 times).

Tax

The reported tax charge for the year was £1.3 million (2013: £6.6 million) giving an effective tax rate of 6.2% (2013: 120.0%). On an adjusted basis (excluding operating one-off items, amortisation of acquired intangibles, share-based payment charges and one-off items in net finance costs and the tax effect of excluded items), the effective tax rate was 24.9% (2013: 27.9%). The year-on-year decrease in the effective tax rate is due to the impact of a lower UK tax rate and changes in the mix of profits between jurisdictions with differing tax rates.

Earnings per share

Reported basic earnings per share was 7.1 pence (2013: loss of 0.5 pence). The increase reflects the strong underlying EBITDA performance in the year. On an adjusted basis, profit after tax was £58.5 million, 51% ahead of the prior year with adjusted diluted earnings per share up 31% at 20.9 pence (2013: 15.9 pence). This reflects a higher adjusted profit after tax which is partially offset by the impact of a higher weighted average number of shares compared to the prior year.

Dividends

The directors have declared a final dividend for the year ended 31 March 2014 of 1.0 pence per share, which is expected to result in a total payment to shareholders of £2.9 million. It will be paid on or around 9 September 2014 to shareholders who are on the register of members on 11 July 2014 (the record date). This dividend is expected to qualify as an eligible dividend for Canadian tax purposes. The dividend will be paid net of withholding tax, based on the residency of the individual shareholder. The directors did not recommend the payment of a dividend for the year ended 31 March 2013.

Cash flow

Net cash from operating activities of £258.3 million was 45% ahead of the previous year, reflecting the improved underlying EBITDA and strong cash generation from the enlarged business and the Group's content acquisition and production activities.

Consistent with the Group's strategy to grow its content portfolio, investment in acquired content rights and productions totalled £271.2 million, compared to £175.0 million in the prior year.

Free cash outflow is £13.0 million higher at £17.1 million (2013: £4.1 million) as a result of higher investment in acquired content rights and productions, partly offset by higher cash from operating activities.

¹ Other non-current assets comprise property, plant and equipment and intangible software.

The net cash outflow from the acquisition of subsidiaries was £6.1 million. £3.9 million related to the acquisition of Art Impressions Inc. (£6.4 million including acquired debt), £1.8 million was paid into an escrow account in relation to the Alliance box office target and £0.4 million was paid in respect of other smaller acquisitions.

Foreign exchange movements of £24.2 million are non-cash movements and primarily relate to the translation impact of the strengthening of pounds sterling against the Canadian dollar.

Financing

The net debt balances at 31 March 2014 comprise the following:

Adjusted net debt was £111.1 million, up £23.3 million from the previous year. The increase is driven primarily by the increase in investment in acquired content rights and productions, partly offset by strong cash flow from operating activities. Adjusted net debt leverage reduced year-on-year to 1.2x (2013: 1.4x).

Production net debt, which comprises interim production financing in relation to the Group's film and television production businesses, decreased by £12.9 million year-on-year to £43.8 million. This financing is independent of the Group's senior credit facility. It is excluded from the calculation of adjusted net debt as it is secured over the assets of individual film and television production companies and 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 decreased £23.4 million to £307.4 million at 31 March 2014 (2013: £330.8 million). The decrease primarily reflects the significant foreign exchange movements year-on-year, particularly the weakening of the Canadian dollar against pounds sterling.

The directors acknowledge guidance issued by the Financial Reporting Council relating to going concern. The directors consider it appropriate to prepare the accounts on a going concern basis, as set out in Note 3 to this Results Announcement.

Statement of Directors' Responsibility

The directors are responsible for preparing the Annual Report and Accounts and the consolidated financial statements in accordance with applicable law and regulations.

The directors are required to prepare the consolidated financial statements in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union and Article 4 of the IAS Regulation. The directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Group and of the profit or loss of the Group for that period. In preparing these consolidated financial statements, International Accounting Standard 1 requires that directors:

· properly select and apply accounting policies;

· present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

· provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

· make an assessment of the Group's ability to continue as a going concern.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial information differs from legislation in other jurisdictions.

Responsibility statement

We confirm that to the best of our knowledge:

· the consolidated financial statements, prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group as a whole;

· the Business Performance and Financial Review on pages 4 to 16 includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that they face; and

· the Annual Report and Accounts and the consolidated financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group's performance, business model and strategy.

By order of the Board

Giles Willits

Director

19 May 2014

Independent Auditor's Report to the Members of Entertainment One Ltd.

Opinion on the consolidated financial statements of Entertainment One Ltd.

In our opinion the consolidated financial statements:

· give a true and fair view of the state of the Group's affairs as at 31 March 2014 and of the Group's profit for the year then ended; and

· have been properly prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union.

The consolidated financial statements comprise the consolidated income statement, the consolidated statement of comprehensive income, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated cash flow statement and the related Notes 1 to 35. The financial reporting framework that has been applied in their preparation is applicable law and IFRSs as adopted by the European Union.

Going concern

We have reviewed the directors' statement contained within Note 3 to the consolidated financial statements that the Group is a going concern. We confirm that:

· we have concluded that the directors' use of the going concern basis of accounting in the preparation of the consolidated financial statements is appropriate; and

· we have not identified any material uncertainties that may cast significant doubt on the Group's ability to continue as a going concern.

However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group's ability to continue as a going concern.

Our assessment of risks of material misstatement

The assessed risks of material misstatement described below are those that had the greatest effect on our audit strategy, the allocation of resources in the audit and directing the efforts of the engagement team:

Independent Auditor's Report to the Members of Entertainment One Ltd. (continued)

Independent Auditor's Report to the Members of Entertainment One Ltd. (continued)

The Audit Committee's consideration of these risks is set out in their Report.

Our audit procedures relating to these matters were designed in the context of our audit of the consolidated financial statements as a whole, and not to express an opinion on individual accounts or disclosures. Our opinion on the consolidated financial statements is not modified with respect to any of the risks described above, and we do not express an opinion on these individual matters.

Our application of materiality

We define materiality as the magnitude of misstatement in the consolidated financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work.

We determined materiality for the Group to be £2.9m, which is approximately 7.5% of normalised adjusted profit before tax. Normalised adjusted profit before tax is adjusted profit before tax, as defined and analysed in Note 3, adding back the deductions made for amortisation of acquired intangibles and share-based payment charges. We use this normalised profit as a base for materiality measure as it is a key measure of underlying business performance for the Group.

We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £58,000, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the consolidated financial statements.

An overview of the scope of our audit

Our Group audit scope was based on a quantitative risk assessment considering metrics including revenue and adjusted profit before tax as well as a qualitative risk assessment, considering significant risks of material misstatement and our assessment of local market risk.

In selecting the business units in scope each year, we update our understanding of the Group and its environment, its principal risks, performance, and our understanding of the Group's system of internal controls, in order to check that the business units selected provide an appropriate basis on which to undertake audit work to address the identified risks of material misstatement. Such audit work represents a combination of procedures, all of which are designed to target the Group's identified risks of material misstatement in the most effective manner possible.

Our Group audit scope focused primarily on the Group's UK and Canadian business units. Of the Group's fourteen business units, five were subject to a full scope audit, and seven were subject to focused audit procedures where the extent of our testing was based on our assessment of the risks of material misstatement and of the materiality of the Group's operations at those locations. The five full scope divisions represent the principal business units and account for approximately 70% of the Group's revenue and 93% of the Group's adjusted profit before tax. They were also selected to provide an appropriate basis for undertaking audit work to address the risks of material misstatement identified above. Our audit work at the different locations was executed at levels of materiality applicable to each individual entity which were lower than Group materiality.

At the parent entity level we also tested the consolidation process and carried out analytical procedures to confirm our conclusion that there were no significant risks of material misstatement of the aggregated financial information of the remaining components not subject to audit or audit of specified account balances.

The Group audit team continued to follow a programme of planned visits that has been designed so that the Senior Statutory Auditor or senior member of the Group audit team visits each of the locations where the Group audit scope was focused at least once a year.

Independent Auditor's Report to the Members of Entertainment One Ltd. (continued)

Matters on which we are required to report by exception

Corporate Governance Statement

Under the Listing Rules we are also required to review the part of the Corporate Governance Statement relating to the Company's compliance with nine provisions of the UK Corporate Governance Code. We have nothing to report arising from our review.

Our duty to read other information in the Annual Report and Accounts

Under International Standards on Auditing (UK and Ireland), we are required to report to you if, in our opinion, information in the Annual Report and Accounts is:

· materially inconsistent with the information in the audited consolidated financial statements; or

· apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group acquired in the course of performing our audit; or

· otherwise misleading.

In particular, we are required to consider whether we have identified any inconsistencies between our knowledge acquired during the audit and the directors' statement that they consider the Annual Report and Accounts are fair, balanced and understandable and whether the Annual Report and Accounts appropriately disclose those matters that we communicated to the Audit Committee which we consider should have been disclosed. We confirm that we have not identified any such inconsistencies or misleading statements.

Respective responsibilities of directors and auditor

As explained more fully in the Statement of Directors' Responsibilities, the directors are responsible for the preparation of the consolidated financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the consolidated financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. We also comply with International Standard on Quality Control 1 (UK and Ireland). Our audit methodology and tools aim to ensure that our quality control procedures are effective, understood and applied. Our quality controls and systems include our dedicated professional standards review team, strategically focused second partner reviews and independent partner reviews.

This report is made solely to the Company's members, as a body, in accordance with Disclosure and Transparency Rule 4.1. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's 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 and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Scope of the audit of the consolidated financial statements

An audit involves obtaining evidence about the amounts and disclosures in the consolidated financial statements sufficient to give reasonable assurance that the consolidated financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the consolidated financial statements. In addition, we read all the financial and non-financial information in the Annual Report and Accounts to identify material inconsistencies with the audited consolidated financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

19 May 2014

Consolidated Income Statement

for the year ended 31 March 2014

All activities relate to continuing operations. All of the profit/(loss) for the year is attributable to the owners of the ultimate parent company.

Consolidated Statement of Comprehensive Income

for the year ended 31 March 2014

All of the total comprehensive (loss)/income for the year is attributable to the owners of the ultimate parent company.

Consolidated Balance Sheet

at 31 March 2014

The restatement of the consolidated balance sheet at 31 March 2013 relates to a reclassification between investment in productions and investment in acquired content rights and is further explained in Note 17.

These consolidated financial statements were approved by the Board of Directors on 19 May 2014.

Giles Willits

Director

Consolidated Statement of Changes in Equity

for the year ended 31 March 2014

1 See Note 30 for further details.

Consolidated Cash Flow Statement

for the year ended 31 March 2014

The restatement of the consolidated cash flow statement for the year ended 31 March 2013 relates to (i) a £1.9m reclassification between amortisation of investment in productions and amortisation of investment in acquired content rights and is further explained in Note 17 and (ii) the bifurcation of amortisation of other intangible assets between software and acquired intangibles to match with the current year's presentation.

Notes to the Consolidated Financial Statements

for the year ended 31 March 2014

1. Nature of operations and general information

Entertainment One Ltd. is a leading independent entertainment group focused on the acquisition, production and distribution of film and television 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 175 Bloor Street East, Suite 1400, North Tower, Toronto, Ontario, M4W 3R8. On 1 July 2013, the Company transferred the listing category of all of its common shares from the standard listing segment to the premium listing segment of the Official List of the Financial Conduct Authority. Segmental information is disclosed in Note 5.

Entertainment One Ltd. presents its consolidated financial statements in pounds sterling, which is also the functional currency of the parent company. These consolidated financial statements were approved for issue by the directors on 19 May 2014.

2. New, amended, revised and improved Standards

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

During the year, the following were adopted by the Group:

The above items have 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 year

At the date of authorisation of these consolidated financial statements, the following Standards, which have not been applied in these consolidated financial statements, are in issue but not yet effective for periods beginning 1 April 2013:

The directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the Group's financial statements in the period of initial application.

3. Significant accounting policies

Use of additional performance measures

The Group presents underlying EBITDA, one-off items, adjusted profit before tax and adjusted earnings per share information. These measures are used by the Group for internal performance analysis and incentive compensation arrangements for employees. The terms 'underlying', 'one-off items' and 'adjusted' may not be comparable with similarly titled measures reported by other companies. The term 'underlying EBITDA' refers to operating profit or loss excluding operating one-off items, share-based payment charges, depreciation and amortisation of other intangible assets. The terms 'adjusted profit before tax' and 'adjusted earnings per share' refer to the reported measures excluding operating one-off items, amortisation of acquired intangibles, one-off items relating to the Group's financing arrangements, share-based payment charges and, in the case of adjusted earnings per share, one-off tax items.

Basis of preparation: (i) Preparation of the consolidated financial statements on the going concern basis

The Group's activities, together with the factors likely to affect its future development are set out in the Business Performance and Financial Review on pages 4 to 16.

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 amounts drawn down by currency at 31 March 2014 are shown in Note 23.

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 31 March 2014 the Group had £37.1m of cash and cash equivalents, £154.9m of net debt and undrawn amounts under the facility of £97.2m.

The Group is exposed to uncertainties arising from the economic climate and also 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 and provide headroom against the covenants for the foreseeable future. For this reason the directors continue to adopt the going concern basis in preparing the consolidated financial statements.

Basis of presentation: (ii) Other

These consolidated financial statements have been prepared under the historical cost convention (except for derivative financial instruments and share-based payment charges that have been measured at fair value) and in accordance with applicable International Financial Reporting Standards as adopted by the EU and IFRIC interpretations ("IFRS"). The Group's financial statements comply with Article 4 of the EU IAS Regulation.

Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company (Entertainment One Ltd.) and its subsidiaries (the "Group"). The financial statements of the subsidiaries are prepared for the same reporting periods as the parent company, using consistent accounting policies. Subsidiaries are fully consolidated from the date of acquisition and continue to be consolidated until the date of disposal. All intra-group balances, transactions, income and expenses and unrealised profits and losses resulting from intra-group transactions that are recognised in assets, are eliminated in full.

Business combinations

Business combinations are accounted for using the acquisition method. The cost of a business combination is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. For each business combination, the acquirer measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree's identifiable net assets.

3. Significant accounting policies (continued)

The cost of a business combination is measured as the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in the consolidated income statement as incurred.

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, is recognised either in the consolidated income statement or as a change to other comprehensive income. If the contingent consideration is classified as equity, it is not re-measured until it is finally settled within equity.

Goodwill arising on a business combination is recognised as an asset and initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests over the fair value of net identifiable assets acquired (including other intangible assets) and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary or business acquired, any negative goodwill is recognised immediately in the consolidated income statement.

Revenue recognition

Revenue represents the amounts receivable for goods and services provided in the normal course of business, net of discounts and excluding value added tax (or equivalent). Revenue is derived from the licensing, marketing and distribution of feature films, television, video programming and music rights. Revenue is also derived from film and television production and licensing and merchandising sales. The following summarises the Group's main revenue recognition policies:

· Revenue from the exploitation of film and music rights is recognised based upon the contractual terms of each agreement.

· Revenue is recognised where there is reasonable contractual certainty that the revenue is receivable and will be received.

· Revenue from television licensing represents the contracted value of licence fees which is recognised when the licence term has commenced, the production is available for delivery, substantially all technical requirements have been met and collection of the fee is reasonably assured.

· Revenue from the sale of own or co-produced film or television productions is recognised when the production is available for delivery and there is reasonable contractual certainty that the revenue is receivable and will be received.

· Revenue from the sale of home entertainment and audio inventory is recognised at the point at which goods are despatched. A provision is made for returns based on historical trends.

· Revenue from licensing and merchandising sales represents the contracted value of licence fees which is recognised when the licence terms have commenced and collection of the fee is reasonably assured.

Pension costs

Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.

Operating leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement. Rentals payable under operating leases are charged to the consolidated income statement on a straight-line basis over the lease term.

Borrowing costs

Borrowing costs, including finance costs, are recognised in the consolidated income statement in the period in which they are incurred. Borrowing costs are accounted for using the effective interest rate method.

Borrowing costs directly attributable to the acquisition or production of a qualifying asset (such as investment in productions) form part of the cost of that asset and are capitalised.

3. Significant accounting policies (continued)

Foreign currencies

Within individual companies

The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each Group company are expressed in pounds sterling, which is the functional currency of the Company and the presentation currency for the consolidated financial statements.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency are recorded at the rates of exchange prevailing on the dates of the transactions. Foreign exchange differences arising on the settlement of such transactions and from translating monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in the income statement.

Retranslation within the consolidated financial statements

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the exchange rate ruling at the date of each transaction during the period. Foreign exchange differences arising, if any, are classified as equity and transferred to the Group's translation reserve. Such translation differences are recognised as income or expenses in the period in which the operation is disposed of.

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, in order to provide a better understanding of the Group's underlying financial performance and enable comparison of financial performance between years.

Tax

Income tax

The income tax charge/credit represents the sum of the income tax currently payable and deferred tax.

The income tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's asset or liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax assets and liabilities

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition of other assets and liabilities in a transaction (other than in a business combination) that affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

3. Significant accounting policies (continued)

In the UK and the US, the Group is entitled to a tax deduction for amounts treated as compensation on exercise of certain employee share options or vesting of share awards under each jurisdiction's tax rules. A share-based payment charge is recorded in the consolidated income statement over the vesting period of the relevant options and awards. As there is a temporary difference between the accounting and tax bases, a deferred tax asset is recorded. The deferred tax asset arising is calculated by comparing the estimated amount of tax deduction to be obtained in the future (based on the Company's share price at the balance sheet date) with the cumulative amount of the share-based payment charge recorded in the consolidated income statement. If the amount of estimated future tax deduction exceeds the cumulative amount of the compensation expense at the statutory rate, the excess is recorded directly in equity, against retained earnings.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the consolidated income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities. This applies when they relate to income taxes levied by the same tax authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Goodwill

Goodwill arising on a business combination is recognised as an asset and initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests over the fair value of net identifiable assets acquired (including other intangible assets) and liabilities assumed. Transaction costs directly attributable to the acquisition form part of the acquisition cost for business combinations prior to 1 January 2010 but from that date such costs are written-off to the consolidated income statement and do not form part of goodwill. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.

Goodwill is allocated to cash generating units ("CGUs") which are tested for impairment annually or more frequently if there are indications that goodwill might be impaired. The CGUs identified are the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash inflows from other groups of assets. Gains or losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Other intangible assets

Other intangible assets acquired by the Group are stated at cost less accumulated amortisation. Amortisation is charged to administrative expenses in the consolidated income statement on a straight-line basis over the estimated useful life of intangible fixed assets unless such lives are indefinite.

Other intangible assets mainly comprise amounts arising on consolidation of acquired subsidiaries such as exclusive content agreements and libraries, trade names and brands, exclusive distribution agreements, customer relationships and non-compete agreements. Other intangible assets also include amounts relating to costs of software.

3. Significant accounting policies (continued)

Other intangible assets are generally amortised over the following periods:

Investment in productions

Investment in productions that are in development and for which the realisation of expenditure can be reasonably determined are classified and capitalised in accordance with IAS 38 Intangible Assets as productions in progress within investment in productions. On delivery of a production, the cost of investment is reclassified as productions delivered. Also included within investment in productions are programmes acquired on acquisition of subsidiaries.

Amortisation of investment in productions, including government grants credited, is charged to cost of sales unless it arises from revaluation on acquisition of subsidiaries in which case it is charged to administrative expenses. The maximum useful life is considered to be ten years.

Government grants

A government grant is recognised and credited as part of investment in productions when there is reasonable assurance that any conditions attached to the grant will be satisfied and the grants will be received and the programme has been delivered. Government grants are recognised at fair value.

Property, plant and equipment

Property, plant and equipment are stated at original cost less accumulated depreciation. Depreciation is charged to write off cost less estimated residual value of each asset over their estimated useful lives using the following methods and rates:

The carrying amounts of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying amounts may not be recoverable. The Group reviews residual values and useful lives on an annual basis and any adjustments are made prospectively.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the derecognition of the asset (determined as the difference between the sales proceeds and the carrying amount of the asset) is recorded in the consolidated income statement in the period of derecognition.

Interests in joint ventures

The Group has interests in joint ventures which are jointly controlled entities. The Group recognises its interest in joint ventures using proportionate consolidation, under which the Group combines its share of each of the assets, liabilities, income and expenses of the joint venture with similar items, line-by-line, in its consolidated financial statements. The financial statements of the Group's joint ventures are generally prepared for the same reporting period as the Group. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

3. Significant accounting policies (continued)

Impairment of non-financial assets

The carrying amounts of the Group's non-financial assets are tested annually for impairment (as required by IFRS, in the case of goodwill) or when circumstances indicate that the carrying amounts may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. The recoverable amount is the higher of an asset's or CGU's fair value less costs to sell and its value-in-use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered to be impaired and is written down to its recoverable amount. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators.

Inventories

Inventories are stated at the lower of cost, including direct expenditure and other appropriate attributable costs incurred in bringing inventories to their present location and condition, and net realisable value. The cost of inventories is calculated using the weighted average method. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Investment in acquired content rights

In the ordinary course of business the Group contracts with film and television programme producers to acquire content rights for exploitation. Certain of these agreements require the Group to pay minimum guaranteed advances ("MGs"), the largest portion of which often becomes due when the film or television programme is received by the Group, usually some months subsequent to signing the contract. MGs are recognised in the consolidated balance sheet when a liability arises, usually on delivery of the film or television programme to the Group.

Investments in acquired content rights are recorded in the consolidated balance sheet if such amounts are considered recoverable against future revenues. These costs are amortised to cost of sales on a revenue forecast basis over a period not exceeding 10 years from the date of initial release. Acquired libraries are amortised over a period not exceeding 20 years. Amounts capitalised are reviewed at least quarterly and any portion of the unamortised amount that appears not to be recoverable from future net revenues is written-off to cost of sales during the period the loss becomes evident. Balances are included within current assets if they are expected to be realised within the normal operating cycle of the Film and Television businesses. The normal operating cycle of these businesses can be greater than 12 months. In general 65%-75% of film and television programme content is amortised within 12 months of theatrical release/delivery.

Trade and other receivables

Trade receivables are generally not interest-bearing and are stated at their fair value as reduced by appropriate allowances for estimated irrecoverable amounts.

Cash and cash equivalents

Cash and cash equivalents in the consolidated balance sheet comprise cash at bank and in-hand. For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the consolidated balance sheet.

Interest-bearing loans and borrowings

All interest-bearing loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. Gains and losses are recognised in the consolidated income statement when the liabilities are derecognised, as well as through the amortisation process.

Interim production financing relates to short-term financing for the Group's film and television productions. Interest payable on interim production financing loans is capitalised and forms part of the cost of investment in productions.

3. Significant accounting policies (continued)

Deferred finance charges

All costs incurred by the Group that are directly attributable to the issue of debt are initially capitalised and deducted from the amount of gross borrowings. Such costs are then amortised through the consolidated income statement over the term of the instrument using the effective interest rate method.

Should there be a material change to the terms of the underlying instrument, any remaining unamortised deferred finance charges are immediately written-off to the consolidated income statement as a one-off finance item. Any new costs incurred as a result of the change to the terms of the underlying instrument are capitalised and then amortised over the term of the new instrument, again using the effective interest rate method.

Trade and other payables

Trade payables are generally not interest-bearing and are stated at their nominal value.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, where the obligation can be estimated reliably, and where it is probable that an outflow of economic benefits will be required to settle that obligation. Provisions are measured at the directors' best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to present value where the effect is material. Where discounting is used, the increase in the provision due to unwinding the discount is recognised as a finance expense.

Derivative financial instruments and hedging

Derivative financial assets and liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument.

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 consolidated balance sheet at fair value. Derivatives designated as hedging instruments are classified on inception as cash flow hedges, net investment hedges or fair value hedges.

Changes in the fair value of derivatives designated as cash flow hedges are recognised in equity to the extent that they are deemed effective. Ineffective portions are immediately recognised in the consolidated income statement. When the hedged item affects profit or loss then the amounts deferred in equity are recycled to the consolidated income statement.

Fair value hedges record the change in the fair value in the consolidated income statement, along with the changes in the fair value of the hedged asset or liability.

Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are immediately recognised in the consolidated income statement.

Dividends

Distributions to equity holders are not recognised in the consolidated income statement under IFRS, but are disclosed as a component of the movement in total equity. A liability is recorded for a dividend when the dividend is declared by the Company's directors.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

3. Significant accounting policies (continued)

Own shares

The Entertainment One Ltd. shares held by the Trustees of the Company's Employee Benefit Trust ("EBT") are classified in total equity as own shares and are recognised at cost. Consideration received for the sale of such shares is also recognised in equity, with any difference between the proceeds from sale and the original cost being taken to revenue reserves. No gain or loss is recognised on the purchase, sale, issue or cancellation of equity shares.

Share-based payments

The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. Fair value is measured by means of a binomial valuation model. The expected life used in the model has been adjusted, based on management's best estimate, for the effect of non-transferability, exercise restrictions, and behavioural considerations.

Segmental reporting

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 Group has two reportable segments: Film and Television, based on the types of products and services from which each segment derives its revenues.

The Film segment includes revenues from all of the Group's activities in relation to the production, acquisition and exploitation of film content rights.

The Television segment includes revenues from all of the Group's activities in relation to the production, acquisition and exploitation of television and music content.

4. Significant accounting judgements and key sources of estimation uncertainty

The preparation of consolidated financial statements under IFRS requires the Group to make estimates and assumptions that affect the amounts reported for assets and liabilities at the balance sheet date and amounts reported for revenues and expenses during the year. The nature of estimation means that actual outcomes could differ from those estimates.

Estimates and judgements are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects that period only, or in the period of the revision and future periods if the revision affects both current and future periods.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are discussed below.

Impairment of goodwill

The Group determines whether goodwill is impaired on at least an annual basis. This requires an estimation of the value-in-use of the CGUs to which the goodwill is allocated. Estimating a value-in-use amount requires the directors to make an estimate of the expected future cash flows from the CGU and also to choose a suitable discount rate in order to calculate the present value of those cash flows. At 31 March 2014, the carrying amount of goodwill was £191.9m (2013: £218.5m). Further details of goodwill are contained in Note 15.

4. Significant accounting judgements and key sources of estimation uncertainty (continued)

Acquired intangibles

The Group recognises intangible assets acquired as part of a business combination at fair value at the date of acquisition. The determination of these fair values is based upon the directors' judgement and includes assumptions on the timing and amount of future incremental cash flows generated by the assets and selection of an appropriate cost of capital. Furthermore, the directors must estimate the expected useful lives of intangible assets and charge amortisation on these assets accordingly. At 31 March 2014, the total carrying amount of the Group's acquired intangibles was £87.5m (2013: £126.5m). Further details of acquired intangibles are contained in Note 16.

Investment in productions and investment in acquired content rights

The Group capitalises investment in productions and investment in acquired content rights and then amortises these balances on a revenue forecast basis, recording the amortisation charge in cost of sales. Amounts capitalised are reviewed at least quarterly and any that appear to be irrecoverable from future net revenues are written-off to cost of sales during the period the loss becomes evident. The estimate of future net revenues depends on the directors' judgement and assumptions based on the pattern of historical revenue streams and the remaining life of each contract. At 31 March 2014, the carrying amount of investment in productions was £61.2m (2013: £70.2m, as restated) and the carrying amount of investment in acquired content rights was £230.1m (2013: £202.4m, as restated). Further details of investment in productions and investment in acquired content rights are contained in Notes 17 and 20, respectively.

Provisions for onerous film contracts

The Group recognises a provision for an onerous film contract when the unavoidable costs of meeting the obligations under the contract exceed the expected benefits to be received under it. The estimate of the amount of the provision requires management to make judgements and assumptions of future cash inflows and outflows and also an assessment of the least cost of exiting the contract. To the extent that events, revenues or costs differ in the future, the carrying amount of provisions may change. At 31 March 2014, the carrying amount of onerous film contracts was £13.7m (2013: £20.1m). Further details of onerous film contracts are contained in Note 26.

Share-based payments

The charge for share-based payments is determined based on the fair value of awards at the date of grant by use of the binomial model which requires judgements to be made regarding expected volatility, dividend yield, risk free rates of return and expected option lives. The list of inputs used in the binomial model to calculate the fair values is provided in Note 31.

Deferred tax

Deferred tax assets and liabilities require the directors' judgement in determining the amounts to be recognised. In particular, judgement is used when assessing the extent to which deferred tax assets should be recognised with consideration to the timing and level of future taxable income. At 31 March 2014, the Group had a net deferred tax asset of £2.1m (2013: £1.3m). Further details of deferred tax are contained in Note 12.

Income tax

The actual tax on the result for the year is determined according to complex tax laws and regulations. Where the effect of these laws and regulations is unclear, estimates are used in determining the liability for tax to be paid on past profits which are recognised in the consolidated financial statements. The Group considers the estimates, assumptions and judgements to be reasonable but this can involve complex issues which may take a number of years to resolve. The final determination of prior year tax liabilities could be different from the estimates reflected in the consolidated financial statements.

5. Segmental analysis

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 and music content across all media.

Inter-segment sales are charged at prevailing market prices.

Segment information for the year ended 31 March 2014 is presented below.

5. Segmental analysis (continued) 

Segment information for the year ended 31 March 2013 is presented below.

Geographical information

The Group's operations are located in Canada, the UK, the US, Australia, Benelux and Spain. The Film division is located in all of these geographies. The Group's Television operations are located in Canada, the US and the UK. The following table provides an analysis of the Group's revenue based on the location of the customer and the carrying amount of segment non-current assets by the geographical area in which the assets are located for the years ended 31 March 2014 and 2013.

1 Non-current assets by location exclude amounts relating to deferred tax assets.

6. Operating profit

Operating profit for the year is stated after charging/(crediting):

The restatement of amounts for the year ended 31 March 2013 relates to a reclassification of £1.9m between amortisation of investment in productions and amortisation of investment in acquired content rights and is further explained in Note 17.

The total remuneration during the year of the Group's auditor was as follows: