Entertainment One Regulatory News (ETO)

Entertainment One Ltd.

Trading Update

POSITIVE START TO THE FINANCIAL YEAR

Trading performance in line with management expectations in quarter to 30 June 2015

· Group revenues for the period were 1% higher on a reported basis (2% lower on a pro forma1 and constant currency basis), with strong Television performance offset by lower Film, driving improved underlying Group EBITDA margin

· Independent valuation of the Group's content library has increased to overUS$1 billion2 as at 31 March 2015

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

· Peppa continues to be the number one pre-school brand in the UK, Spain, Italy, Australia, Brazil and Mexico, with continued growth in international territories such as the US and France, and has had a positive television launch in China with CCTV

· The Group's new CGI animated series, PJ Masks, has its broadcast debut on the Disney Channel and Disney Junior in the US on 18 September 2015

Creating a global television business

· Very strong international sales supported by third party content acquired in the period, with a strong pipeline of production deliveries in the balance of the year

· 235 half hours of content produced/acquired in the period (compared to 115 in the prior year period)

Positioning Film for the future

· Box office takings lower at US$64 million (2014: US$72 million), reflecting a lower number of releases overall (44 box office releases, compared to 74 in the prior year period)

· Strong pipeline for the remainder of the financial year

Positive outlook

· Full year underlying earnings continue to be in line with management expectations, but reported revenues and earnings remain subject to continued pressure from the appreciation of pounds sterling 

Darren Throop, Chief Executive, commented:

"The Group has had a good start to the financial year with Television performing very well and the continued success of Peppa Pig across the globe. With an exciting pipeline of film and television programming and a continued focus on acquisition opportunities we look forward to updating investors on further progress against our growth strategy during the remainder of the financial year."

Trading Performance

The Group performance in the period is in line with management expectations, with Group reported revenues up 1% (2% lower on a pro forma1 and constant currency basis). The year-to-date financial results have been driven by a strong performance across all of the operations of the Television Division, offset by Film performance that reflects a lower number of theatrical and DVD releases in the first quarter compared to the prior year period.

As a result of the Group's reporting currency being pounds sterling, the revenues and earnings of the Group have been impacted by the appreciation of pounds sterling against the plan rates for the Canadian dollar, the euro and the Australian dollar. Full year underlying earnings continue to be in line with management expectations, but reported revenues and earnings remain subject to continued pressure from the appreciation of pounds sterling.

In order to provide fuller information to investors on the Group's content library, an independent valuation has been carried out that includes all of the Group's film, television, music and family assets, including the Group's TV Production assets, recent television acquisitions and The Mark Gordon Company. As at 31 March 2015 the overall value of the Group's content library valuation had increased to over US$1 billion2 (2014: US$801 million).

As previously noted, The Mark Gordon Company ('MGC') has been fully consolidated as a subsidiary from 19 May 2015.

Film

Film revenues were 9% lower compared to the same period last year on a pro forma1 and constant currency basis, reflecting the impact of timing of releases and the phasing of film production deliveries. The Group continues to focus on cost efficiencies and restructuring opportunities to improve profitability in the Film Division.

Total box office takings of US$64 million (2014: US$72 million) were higher on average by release, but reflected a lower number of releases overall (44 box office releases, compared to 74 in the prior year period), and included The Divergent Series: Insurgent, The Water Diviner, Age of Adaline, Mr. Holmes and Child 44. There were 110 DVD releases during the period (compared to 177 in the prior year period) including Nightcrawler, St. Vincent, Lost River, The Woman in Black: Angel of Death, Gascoigne, Paddington and Mortdecai.

eOne Features, the Group's film production and international sales business, had releases for two films during the period, Suite Française and Insidious: Chapter 3, and also released Sinister 2 in August 2015. To-date these titles have generated over US$165 million at the box office globally.

The Group's film slate for the rest of the year includes The Hunger Games: Mockingjay Part 2, The Hateful Eight (from Quentin Tarantino), The Divergent Series: Allegiant Part 1, Sicario and The Last Witch Hunter (with Vin Diesel), as well as eOne Features titles including Eye in the Sky, Spotlight, Captain Fantastic, Message from the King, It's Only the End of the World and Trumbo. The Group is on track to deliver around 230 film releases in the full year, marginally lower than the previous estimate driven by the movement of a small number of multi-territory titles which were due for release in the final quarter.

Television

Television revenues were up 32% on a pro forma1 and constant currency basis over the comparative period, driven by strong international sales and production deliveries, as well as strong licensing revenues from Family. 235 half hours of content were produced/acquired in the period (compared to 115 in the prior year period).

In Television Production & Sales there is a strong pipeline of programming, including season scripted-drama renewals of Saving Hope (season 4) and Rogue (season 3), and ratings have been strong, including for the premiere of season 5 of Hell on Wheels. Recently greenlit new scripted shows include 13-episode network drama The Code, starring Jason Priestley, and Direct TV's 10-episode comedy You, Me, Her. The non-scripted business also continues to grow well both in Canada and the US. In the International Sales operation, the Group's exclusive distribution agreement with AMC Networks continues to drive very strong revenues. AMC's Fear The Walking Dead (the companion series to The Walking Dead) set a new ratings record for its cable premiere in August 2015 and is being distributed in partnership with AMC through the Group's sales team who have recently concluded a multi-territory deal with Amazon.

The Group is on track to produce/acquire over 1,000 half hours of content in the full year, with lower growth in the balance of the year expected in the Group's reality business, offset by a higher proportion of acquired programming.

The Group's partnership with Mark Gordon continues to provide exciting opportunities for eOne. Production has commenced on Quantico and Criminal Minds: Beyond Borders and a number of film projects including the biopic Steve Jobs and Arms and The Dudes have completed production. Following MGC's exit from its Disney deal earlier in the year, the business continues to develop its own extensive development slate including The Ambassador's Wife, with Anne Hathaway producing and starring in the television series.

Peppa Pig remains the leading pre-school brand in the UK, Spain, Italy, Australia, Brazil and Mexico, and continues to build internationally, performing well in its key international territories. Licensing data for the US rollout is positive, signalling strong sales for Q3 and Q4. In Latin America, sales in Mexico are particularly strong. The launch of Peppa in China is progressing well with four episodes being broadcast back-to-back on CCTV every weekday, following the broadcast debut in June 2015. The Group's new CGI animated series, PJ Masks, has its broadcast debut on the Disney Channel and Disney Junior in the US on 18 September 2015 and on France 5, in France, later this autumn.

Financing and Corporate Development

Net debt as at 30 June 2015 was £323 million, broadly in line with 31 March 2015 (£314 million), whilst higher than 30 June 2014 (£227 million) mainly driven by the acquisition of Paperny Entertainment (July 2014), Force Four Entertainment (August 2014) and The Mark Gordon Company (January 2015).

eOne continues to explore acquisition opportunities in support of the Group's growth strategy.

The Company's Annual General Meeting will be held on 16 September 2015 and copies of the 2015 Annual Report and AGM Circular have been sent to shareholders.

1. Pro forma financial results for the period have been adjusted to take into account The Mark Gordon Company as if it had been consolidated from 1 April 2015 and pro forma financial results for the prior year period have been adjusted to take into account Phase 4 Films, Paperny Entertainment, Force Four Entertainment and The Mark Gordon Company as if they had been acquired on the first day of the prior year period. Pro forma comparative figures are translated at actual 2015 foreign exchange rates.

2. The Group's independent library valuation for 2015 has been carried out on a fully consolidated basis, including all of the Group's content assets (2014: excluding television assets, where security is not held in respect of eOne's corporate banking facility, and acquisitions made during 2015), and calculated using the Group's published post-tax weighted average cost of capital (8.3%) and a 6% overhead allocation (reflecting management's estimate of the Group's cost of managing its content library).

Notes to Editors:

About Entertainment One

Entertainment One Ltd. (LSE:ETO) is a leading international entertainment company that specialises in the acquisition, production and distribution of film and television content. The Company's comprehensive network extends around the globe including Canada, the US, the UK, Ireland, Spain, Benelux, France, Germany, Scandinavia, Australia, New Zealand and South Africa.

Through established Film and Television Divisions, the Company provides extensive expertise in film distribution, television and music production, family programming, merchandising and licensing, and digital content. Its current rights library is exploited across all media formats and includes more than 40,000 film and television titles, 4,500 hours of television programming and 45,000 music tracks.

Further information is available at www.entertainmentone.com  or email Redleaf Communications at eOne@redleafpr.com