Entertainment One Regulatory News (ETO)

Date: 27 September 2018On behalf of: Entertainment One Ltd.

(the "Company", "eOne", "Entertainment One" or the "Group")

Embargoed until: 0700 hours

Entertainment One Ltd.

Trading update

Entertainment One provides the following update on the Group's performance as it completes the six-month period ending 30 September 2018.

Summary

· Trading for the Group over the first six months has been consistent with trends outlined at the start of the financial year. The Group anticipates full year financial performance will be in line with management expectations, with a similar H1/H2 weighting to FY18

· Family & Brands continues to perform strongly, driven by ongoing consumer product roll-outs across a growing number of licensing contracts and SVOD deals

· In Film & Television a number of new scripted and unscripted television series were delivered during the period, with a robust pipeline of new series set up for development with partners. Film continues to transition from distribution to production activities, reflecting the ongoing changes across the industry

· Independent library valuation increased to US$2.0 billion as at 31 March 2018 (2017: US$1.7 billion), including the impact of a £64 million one-off charge (of which £60 million is non-cash) largely related to the impairment of certain assets in the film distribution business

Operating performance

Family & Brands

The Family & Brands business delivered revenue and earnings growth during the first half of the year, with almost 1,700 live licensing contracts across the portfolio of brands (2017: over 1,300).

Peppa Pig remains strong in its core markets, benefiting from the delivery of new episodes of the show to broadcasters in FY18; additional new Peppa Pig episodes will be delivered in spring 2019, further supporting the Group's licensing activities. As well as licensing and merchandising, the brand continues to generate revenues from multiple sources, such as SVOD (subscription video on demand), AVOD (ad-funded video on demand) and experiential formats.

In China, Peppa Pig episodes currently air on the CCTV and Hunan TV networks and across major VOD platforms Tencent, Youku and iQIYI. A broader licensing programme was launched to consumers in the territory, supported by licensees including Alpha Toys, Penguin, Unilever and Kimberly-Clark and with retail sales generated from 74 live licensing agreements continuing to ramp up. The theatrical release of Peppa Pig: My First Movie Experience is being co-produced with Alibaba and will benefit from a wide launch in theatres in early 2019, just ahead of celebrations for the Chinese Year of the Pig.

Entertainment One's partnership with Merlin Entertainments also continues to develop, with Peppa Pig themed areas and accommodation already in place in Merlin parks in Italy (where there have been over 1 million riders so far on four new Peppa Pig attractions) and Germany; both parks have experienced increased attendance in Peppa Pig's target demographic. New standalone Peppa Pig World of Play interactive play areas will launch in Shanghai and Dallas in late 2018, and roll-outs in Beijing, Michigan and New York are anticipated during 2019.

PJ Masks is also growing in its markets, with a full licensing programme rolled out internationally supported by new content. Season 2 is currently broadcasting on Disney Junior (achieving all-time high ratings for the show) and Season 3 is currently in production. PJ Masks has made a strong broadcast start in China, airing on the major VOD platforms and generating 1.4 billion views in the first five months. The Chinese consumer products programme for the brand will be launched in October 2018, led by toy licensee Alpha Toys and supported by a limited range of publishing and apparel products. A wider consumer launch will take place in China in 2019.

The Group has also made progress in launching new family brands. Cupcake & Dino General Services started broadcasting on Netflix in July 2018 and Ricky Zoom will make its broadcast debut in spring/summer 2019 with a soft launch of toy lines in autumn 2019 from master toy partner Tomy. Eight other properties are currently in development.

Film & Television

The Group is focused on controlling content rights around the world, its pure-play content approach enabling it to sell to all buyers while the ongoing transition in Film to production activities reduces the risks associated with the lower-margin film distribution business. In line with its previously-communicated strategic plans, eOne continued to align its management teams across film and television, as well as across The Mark Gordon Company and Sierra/Affinity. This will drive operating efficiencies across physical production, finance, accounting, legal and operations.

Following management changes at the end of the last fiscal year, the Group acquired the outstanding stake in Sierra/Affinity and appointed Nick Meyer as President of Film, centralising content creation under executives with strong industry track records and excellent talent relationships. Additionally, the Division acquired a majority stake in Whizz Kid Entertainment, a UK-based non-scripted television production company, with which it has partnered on the US adaptation of Ex on the Beach for MTV.

In the scripted drama business, Sharp Objects premiered on HBO and ranked as the network's second highest rating drama of the 2017/18 season-to-date (just behind Westworld) with the finale bringing in a series high of 2.6 million viewers in the US. The Rookie, starring Nathan Fillion (Castle, Firefly), premieres on ABC on 16 October, is sold around the world by eOne and is supported by strong international sales. Designated Survivor season 3 received a 10-episode order from Netflix and is expected to be released globally in 2019 as a Netflix Original. Canadian series Burden of Truth season 1 premiered in the US on The CW Television Network and in the UK on Universal, while CBC in Canada renewed the series for a second season. Additional scripted series on air include Ransom season 2 and Private Eyes season 3.

The non-scripted businesses had a very busy first half of the year. Key franchise series include: Ex on the Beach, Siesta Key and Growing Up Hip Hop. New series include: Ladygang, Hustle in Brooklyn, Ladies Night and The Campbells. Renegade83 continues the delivery of its Naked and Afraid franchise, with three new shows commissioned in the half year.

Overall, the Group has 60 television shows set up for development with various broadcast, network and digital platforms, with over 1,000 half hours of produced/acquired content currently anticipated to be delivered in the full year.

eOne continues to decrease the number of theatrical releases in line with previous guidance. As a result of the ongoing transition from lower-margin film distribution towards production activities, the Group released 59 films theatrically, down 17 from the same period during the prior year. Key releases include the comedy I Feel Pretty, starring Amy Schumer and Michelle Williams and family feature The House with a Clock in its Walls from Amblin, based on the best-selling children's book series and starring Jack Black and Cate Blanchett. Overall year-to-date box office revenues in eOne's distribution territories were US$64 million (2018 comparable period: US$82 million), with average box office per title slightly up due to a focus on fewer, more impactful properties.

A strong slate for the second half includes: Green Book from Participant Media, starring Viggo Mortensen and Mahershala Ali, which premiered at the Toronto International Film Festival, winning the People's Choice Award; Vice from Annapurna Pictures, starring Amy Adams, Christian Bale, and Steve Carell; and eOne-produced film Stan and Ollie which will be released by Sony Pictures Classics in the US, eOne in its direct territories and sold throughout the rest of the world by newly consolidated Sierra/Affinity.

eOne's Makeready will be begin shooting its next feature, Queen and Slim, in January. Written and produced by Emmy-award-winner Lena Waithe, and starring Get Out lead actor Daniel Kaluuya, the film will be released by eOne in its direct territories including the UK and Canada and by Universal in the world, including the US. The group is currently in production on Scary Stories to Tell in the Dark. The film is being produced by Academy award-winner Guillermo del Toro and is co-financed by CBS who will handle US distribution, with eOne distributing in its direct territories and Sierra/Affinity managing sales throughout the rest of the world. Post production titles include: Official Secrets, starring Kiera Knightley; and Poms, starring Diane Keaton.

Music continues its strategy of diversifying its portfolio beyond recorded product to include music publishing and artist management while laying the foundations for a growing live division. In Recorded Music there were number one albums from artists across a number of genres including World Music, Gospel, Metal and R&B. The recorded catalogue from artists such as The Lumineers, Dr. Dre, DJ Khaled, and Snoop Dogg continues to contribute significant margin as the streaming universe continues to grow. Management client Jax Jones has sustained his radio success with his fourth consecutive hit single Ring Ring which has achieved over 50 million streams globally since release. The Group's live division, Round Room, announced two new events during the period: the Thank You Canada tour (a national tour featuring the Canadian Olympic Figure Skating team) and The Nelson Mandela Exhibit, launching in London in February 2019. In addition, it continues to experience success with the PJ Masks live show Time to be a Hero with sell-out shows across the US and tickets now on sale for shows in Australia.

Other

The outlook for the underlying financial performance for the full year remains in line with management expectations. Group net debt:EBITDA is anticipated to be approximately 1.8x at the end of the current financial year in line with previous guidance.

Corporate

The annual independent library valuation has been completed and the value of the Group's library assets has increased to US$2.0 billion as at 31 March 2018 (2018: US$1.7 billion), driven by a broad improvement across the Group's Family & Brands and Television operations and reflects the changes in film distribution referenced below.

Changes in consumer behaviour within the content industry are accelerating at an unprecedented level. Entertainment One continues to respond to these changes through the ongoing reshaping of its Film businesses, transitioning away from a content acquisition and distribution model to focus increasingly on production activities. Commensurate with these changes, Entertainment One will record a one-off charge of £64 million primarily related to the impairment of certain assets within its film distribution businesses, including investment in older and slow-moving library content, home entertainment inventory and related costs. Approximately £60 million of this charge is non-cash related.

Darren Throop, Chief Executive, commented:

"Entertainment One continues to execute its strategy to build a portfolio of the highest quality content. We continue to seek out strong creative partnerships, in line with our vision of building the leading talent-driven entertainment company in the world. Our momentum remains strong, supported by long term industry trends and new territorial opportunities.

The Group's ongoing commitment to investing in its content portfolio has driven current year earnings and created future value, reflected in another increase in the independent library valuation.

The financial performance of the business remains in line with management expectations for the year."

Note: Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of MAR) prior to its release as part of this announcement. The person responsible for arranging release of this information on behalf of Entertainment One is Edward Parry.

Notes to Editors:

Entertainment One Ltd. (LSE: ETO) is a global independent studio that specialises in the development, acquisition, production, financing, distribution and sales of entertainment content. The Company's diversified expertise spans across film, television and music production and sales, family programming, merchandising and licensing, and digital content. Through its global reach and expansive scale, powered by deep local market knowledge, the Company delivers the best content to the world. 

Entertainment One's robust network includes Makeready with Brad Weston; content creation venture Amblin Partners with Steven Spielberg, DreamWorks Studios, Participant Media, and Reliance Entertainment; unscripted television production companies Whizz Kid Entertainment and Renegade 83; live entertainment leaders Round Room Entertainment; world-class music labels Dualtone Music Group and Last Gang; and award-winning emerging content and technology studio Secret Location.

The Company's rights library, valued at US$2.0 billion (as at 31 March 2018), is exploited across all media formats and includes about 80,000 hours of film and television content and approximately 40,000 music tracks.

www.entertainmentone.com