27 Sep 2017 07:00
Entertainment One Ltd.
Trading Update
Entertainment One Ltd. provides the following trading update on the Group's performance as it completes the six month period ended 30 September 2017 ahead of its Annual General and Special Meeting today.
Summary
· Operating performance to-date on track across all Divisions
· The Group anticipates full year financial performance will be in line with management
expectations with a similar H1/H2 weighting to FY17
· Independent library valuation increased to US$1.7 billion (2016: US$1.5 billion)
Operating Performance
Family
The number of live licensing and merchandising contracts across the Family portfolio of brands has increased to over 1,300 (March 2017: almost 1,100).
Peppa Pig retail revenues continue to perform well in established territories, with growing momentum in its newer markets such as the US and China. In the UK, the brand benefited from the release of Peppa Pig: My First Cinema Experience, which generated box office revenues of £3.6 million in the territory (as well as A$2.2 million in Australia and New Zealand) and consolidated its position as an 'evergreen' brand in the market. In the US, the licensing programme continues to build, supported by the recruitment of a Retail Director as part of the investment in Peppa Pig's management infrastructure previously announced. In China, the brand is building rapidly, with initial revenue performance ahead of expectations as the licensing and merchandising activities have expanded across a number of categories, including toys, clothing, FMCG and home/furnishings. This has been driven by nationwide broadcast on the CCTV network and through more than 34 billion views on Chinese social media platforms since the launch of the brand in September 2015.
The retail rollout of PJ Masks consumer products, which started in September 2016 in the US and some EMEA territories, has continued during the current year. During the first half of the year, there have been further rollouts across Europe and Australia. Asia will follow during the second half of the year and a full launch in China is planned for the following financial year. Consumer uptake in all markets has been strong and production has started on PJ Masks season 2, with a stage show launched in the US.
A licensing programme for Ben & Holly's Little Kingdom was launched in the US in August 2017 across toys, apparel and publishing in Target stores nationwide. The brand's retail performance in its other key markets was stable during the period.
Television
The first half of the year was a busy period for the scripted drama business, with the delivery of the second season of Private Eyes, which has been renewed for a third season and is being supported by strong international sales. Other current eOne scripted series in production include the second season of Ice, the third season of You Me Her and new series Burden of Truth. Another new series, The Detail, commenced delivery during the period as well as eOne Television's first Australian production, The Other Guy, which was delivered and aired to strong reviews. The second season of Cardinal will commence production in the second half of the financial year. AMC shows delivered included the third season of Fear The Walking Dead and fourth seasons of Halt & Catch Fire and Turn.
The US unscripted business is delivering the third season of Growing Up Hip Hop; the sixth and final season of Mary Mary; and new productions Siesta Keys and Ex On The Beach. Renegade83 started the year with deliveries of a new season of Naked and Afraid as well as new shows Scared Famous and Tupac. Production has started on a new show Romesh in America, starring UK comedian Romesh Ranganathan, to deliver in the second half. The business also received eOne Television's first Emmy nomination for LA Burning: The Riots 25 Years Later. The strong start to the year in the US unscripted business has been balanced by a weaker performance in the Canadian unscripted business and as such, it is currently anticipated that eOne Television will deliver around 900 half hours of produced/acquired content for the full year.
The Mark Gordon Company ('MGC') continues to perform well, with five renewed series in production. During the period, the company's heritage shows were all in production or on broadcast in the US. Production on the 14th season of Grey's Anatomy began; with 293 episodes at the end of Season 13, the show became the longest running scripted prime-time show currently airing on the ABC network, a notable achievement. Following its network broadcast Criminal Minds was also renewed for a 13th season, with Ray Donovan (season five), Quantico (season two; renewed for season three as well) and Criminal Minds: Beyond Borders (season two) all broadcast in the US in the first half of the year.
After a very strong audience performance over the first season, Designated Survivor was renewed for a second season by ABC. MGC began production during the period and has started delivery of new episodes, with the ABC season premiere for Designated Survivor Season 2 airing on 27 September 2017. Overall, the television and film slate remains busy, with many projects in active development currently under way for cable, premium and digital networks, and film studio distributors.
In MGC's film division, a number of titles have completed production, including Molly's Game (being distributed internationally by eOne and in the US by STX Entertainment with a release date of 22 November 2017) as well as Murder on the Orient Express and The Nutcracker and the Four Realms which have been slated for cinematic release towards the end of current calendar year. Projects currently in development include Chronicles of Narnia: The Silver Chair, The Killer (directed by John Woo and due to start production this November), Cowboy Ninja Viking, Tomorrow & Tomorrow and Battle of the Midway.
eOne Music has continued to maintain the momentum from FY17, with management success for Arkells and Lights. Last Gang's international label footprint has been enhanced through a series of key releases for Death From Above, Emily Haines and The Bloody Beetroots, all of whom are benefiting from top-tier play listings across Spotify and Apple Music. eOne Music is also working closely with other eOne business units, supervising music across Film, Television and Family properties.
Film
In addition to releasing Detroit and Valerian in the first six months, films from high profile directors Kathryn Bigelow and Luc Besson respectively, the Film Division experienced successful releases with two local Canadian films, Bon Cop Bad Cop 2 and Le Pere en Flic 2. Overall year-to-date box office revenues in eOne's distribution territories were US$82 million (2016 year-to-date: US$151 million) reflecting the lower profile and number of releases during the period; the Group anticipates releasing 76 theatrical titles in the first half of the financial year (2016: 88 releases). Atomic Blonde, produced by Sierra Pictures and starring Charlize Theron, had its release this summer and is expected to achieve global box office revenues of US$100 million.
A strong slate for the second half includes the Steven Spielberg-directed film The Post, Paddington 2, A Bad Moms Christmas and Molly's Game, Aaron Sorkin's directorial debut produced by The Mark Gordon Company which premiered at the Toronto International Film Festival.
The Film Division is committed to its strategic plan of investing in quality content. Since the launch of MAKEREADY in May, Brad Weston, whose past successes include 12 Years a Slave, Birdman and The Revenant, has hired industry veterans Pam Abdy and Scott Nemes and now has a slate of 15 films, TV and short form projects in development.
In addition to premiering The Ritual at the Toronto International Film Festival and having Stan & Ollie in post-production, eOne Features is in varying stages of development on projects with successful filmmakers such as Neal Moritz (Fast and Furious), Plan B (12 Years a Slave), Andy and Barbara Muschetti (It), 21 Laps (Night at the Museum) and Dan Mazer (Dirty Grandpa).
Outlook
The outlook for underlying financial performance for the full year continues to be in line with management expectations. Group net debt: EBITDA is anticipated to be around 1.2x at the end of the FY18 financial year, in line with guidance given when the Group reported its FY17 full year results.
Corporate
The Group's annual independent library valuation has been completed, including all of eOne's television, family, film and music assets. As at 31 March 2017 the overall value of the Group's content library had increased to US$1.7 billion (2016: US$1.5 billion) including new properties such as PJ Masks and Designated Survivor.
The Group has gained significant momentum in positioning the organisation for growth with the integration of Film and Television into a single combined studio, as announced with full year results. Initiatives include the creation of business efficiencies and centralising a number of internal support functions.
Further details will be provided when the Group reports its results for the six months ended 30 September 2017 on 21 November 2017.
The Company's Annual General and Special Meeting takes place at the Group's Toronto offices at 11am EST/4pm BST today.
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 film and television studio The Mark Gordon Company; content creation venture Amblin Partners with Steven Spielberg, DreamWorks Studios, Participant Media, and Reliance Entertainment; newly-launched MAKEREADY with Brad Weston; leading feature film production and global sales company Sierra Pictures; unscripted television production company Renegade 83; world-class music labels Dualtone Music Group and Last Gang; and award-winning digital agency Secret Location.
The Company's rights library, valued at US$1.7 billion (as at 31 March 2017), is exploited across all media formats and includes around 80,000 hours of film and television content and around 40,000 music tracks.
www.entertainmentone.com