TIDMEROS
RNS Number : 0615Q
Eros International PLC
01 November 2012
EROS INTERNATIONAL PLC
("Eros" or the "Company")
INTERIM RESULTS FOR THE 6 MONTHS ENDED SEPTEMBER 30 2012
FINANCIAL HIGHLIGHTS
-- Revenue on a constant currency basis up 4.4% to $86.4 million (2011: $82.8 million)
-- Underlying EBITDA on a constant currency basis up 3.7% to
$68.0 million (2011: $65.6 million)
-- Underlying Operating profit on a constant currency basis down
34.8% to $19.1 million ($29.3million)
-- Reported revenue down 6.1% to $86.4 million (2011: $92.0 million)
-- Reported Underlying EBITDA down 6.2% to $68.0 million (2011: $72.5 million)
-- Reported Underlying Operating profit down 40.9% to $19.1 million (2011: $32.3 million)
-- Basic EPS down 62.4% to 7.0 cents (2011: 18.6 cents)
OPERATIONAL HIGHLIGHTS
-- Since our syndication strategy greatly relies on bundling
library content with current and high profile films, the timing of
catalogue revenues have a typical second half financial year
skew
-- Major film releases in the period included; Housefull 2,
Cocktail, Teri Meri Kahaani and Vicky Donor. eight Hindi films out
of the 42 films released in the period with Housefull 2 grossing
over $27.4 million (Rs 150 crore) worldwide
-- Major television syndication deal announced with Viacom 18
including a mixture of library, current and forthcoming titles.
Further television licensing deals were secured with Zee TV and
Star TV during the period
-- Pre-sales continues to be an integral part of our strategy
where with we not only conclude music and television licensing
deals prior to the theatrical release of a film but also secure
minimum guarantee fees against certain theatrical distribution
territories within India and internationally
-- International progress maintained, with distribution deals in
new markets such as China, Taiwan, Korea, Romania, Malaysia,
Mynmar, Nigeria and other countries, since our syndication strategy
greatly relies on bundling library content with current and high
profile films, the timing of catalogue revenues have a typical
second half financial year skew
-- ErosNow, the on-demand entertainment portal, accessible via
internet-enabled devices, went live during the period with a
commercial launch. The platform is currently available on I-Pads
globally and will be optimised further for Android and other
devices. The services carries several hundred full length films,
thousands of music videos and music tracks and we will shortly be
extending the offering with Tamil movies
-- Increasing demand for digital consumption is illustrated by
our content on Youtube passing two billion views in July 2012 and
over 500 million views in the six months to ended September 30
2012. Music monetization continued to be strong with a combination
of licensing and releases through our Eros Music label
-- Led by the successful release of English Vinglish, which was
received well by critics and audiences alike, catalogue and new
release revenues will be second half weighted with high profile
festive season releases such as Son of Sardaar, Khiladi 786,
Dabangg 2, Table 21, Attacks of 26/11 and Kochadaiyaan. These
releases combined with our remaining slate give us full visibility
of our releases up until March 2013
OUTLOOK
-- Very positive underpinned by scheduled Q3/Q4 theatrical releases and the impact of digitisation in India which
significantly plays to Eros' strengths
Kishore Lulla, Executive Chairman of Eros International,
commented:
"I remain very positive about the outlook of the business and
the vast opportunities unfolding within the Indian entertainment
landscape at a global level. Our business has historically had a
second half skew due to major high profile releases being released
around the Indian festival and holiday season and the same is true
for this year.
"As we continue to capitalise on our market leading position, we
will also focus on our strong fundamentals such as continuing to
develop our content slate and generating strong cash flows through
monetisation across our multiple distribution channels worldwide as
well as accessing equity capital through the NYSE listing as
intended."
Jyoti Deshpande Group Chief Executive Officer & Managing
Director's statement:
"I am pleased to report that Eros has seen a 4.4% increase in
constant currency revenues. The 6.2% decrease in reported
underlying EBITDA against a 3.7% increase on a constant currency
basis reflects the 21.0% devaluation of the Indian Rupee when
comparing the two periods. We have a number of major releases in
the period to 31 March 2013 comprising Khiladi 786, Son of Sardaar
and Kochadaiyaan, and we have already released English Vinglish and
Maattrraan.
"The fundamentals of the Indian film industry continue to be
strong with further growth in multiplex digital screens and
corresponding ticket prices driving box office revenues and
creating space for showcasing more content. Regulatory ruling of
compulsory cable digitisation by December 2014 is driving the
demand for premium content such as films for broadcast on
television. While digital monetisation is stronger in established
platforms internationally, we see rising demand and connectivity
within India as well, especially with 3G and 4G launches in the
horizon, and are proud to pioneer the Eros Now initiative to offer
official content online in HD quality to our worldwide customers.
Along with our new releases we continue to seek opportunities to
monetise our content library through traditional and new media
distribution channels not only within India but in countries around
the world by dubbing them in various foreign languages.
"With respect to the Company's public filing dated May 2, 2012
with the United States Securities and Exchange Commission ("SEC")
in connection with its proposed listing on the NYSE, the Board
continues to believe that the listing will give the Company a
strategic advantage while giving access to additional equity
capital and liquidity as well as trading with a more comparable
peer group with broader analyst coverage. To this end, I am pleased
to report that post the upcoming US elections and holiday season,
the Company intends to re-launch the US listing process beginning
with the updating of the public filing with the SEC and hopes to
take the transaction to its logical conclusion thereafter."
For further information, please contact:
Eros International Plc Eros International Plc
Sean Hanafin Jamie M.M. Kirkwood
Chief Corporate & Strategy Officer Group Communications & Investor
T: +44 (0) 20 7258 9909 Relations
T: +44 (0) 20 7258 9906
Investec Bank plc Peel Hunt LLP
Nominated Adviser & Joint Broker Joint broker
Patrick Robb / Jeremy Ellis / Richard Kauffer / Dan Harris /
Carlton Nelson Andy Crossley
T: +44 (0) 20 7597 5000 T: +44 (0) 20 7418 8900
Pelham Bell Pottinger
Nick Lambert / Victoria Geoghegan / Elizabeth Snow
T: +44 (0) 20 7861 3232
Operating and Financial Review
This financial review is primarily based upon the comparison of
our results for the six months ended September 30, 2012 with those
for the six months ended September 30 2011. Unless otherwise stated
percentage growth relates to the percentage comparison between
these two periods.
Overview
We distribute our film content, which is our one operating
segment, globally across three channels: theatrical, television
syndication and digital and ancillary sources. The contribution
from these three distribution channels can fluctuate year over year
based on, among other things, our mix of films and budget levels,
the size of our television syndication deals and our ability to
license music in any particular year.
A summary of the results for the period;
Underlying Results* Reported Results
------------------- ---------------------------------------- ----------------------------------------
(in millions) 6 months 6 months Change 6 months 6 months Change
to September to September to September to September
30, 2012 30, 2011 30, 2012 30, 2011
Constant
Currency
------------------- -------------- -------------- -------- -------------- -------------- --------
Revenue $ 86.4 $ 82.8 4.4% $ 86.4 $ 92.0 (6.1%)
------------------- -------------- -------------- -------- -------------- -------------- --------
Underlying
EBITDA* 68.0 65.6 3.7% 68.0 72.5 (6.2%)
------------------- -------------- -------------- -------- -------------- -------------- --------
Gross Profit 29.1 38.4 (24.2%) 29.1 42.4 (31.4%)
------------------- -------------- -------------- -------- -------------- -------------- --------
Operating Profit* 19.1 29.4 (35.0%) 18.3 31.8 (42.5%)
------------------- -------------- -------------- -------- -------------- -------------- --------
*Underlying EBITDA represents profit before depreciation of
tangible assets, amortisation of intangible assets, finance costs,
other gains and losses and income tax and share based payment
charges. Operating profit represents profit before net finance
costs, other gains and losses and income tax.
We released 42 films in the six months ended September 30, 2012
compared to 42 in the six months ended September 30, 2011. Two high
profile films were released in both the periods. The two high
profile globally released films in the six months ended September
30, 2012 were Housefull 2 and Cocktail.
Content Pipeline
Film Name Star Cast ( Director) Scheduled Release (Fiscal
Year)
Maattrraan Suriya Kajal Agarwal Released
(K. V. Anand)
English Vinglish Sridevi, Priya Anand, Released
Mehdi Nebbou (Gauri
Shinde)
Student of the Siddharth Malhotra, Released
Year Varun Dhawan, Alia
Bhatt (Karan Johar)
Chakravyuh Arjun Rampal, Abhay Released
Deol, Esha Gupta.
(Prakash Jha)
Bhoot-2 Manish Koirala (Ram Released
Gopal Verma)
Son Of Sardar Ajay Devgan, Sonakshi FY13
Sinha,
Sanjay Dutt (Ashwani
Dhir)
Khiladi 786 Akshay Kumar, Paresh FY13
Rawal (Ashish R Mohan)
Dabangg-2 Salman Khan, Sonakshi FY13
Sinha (Arbaaz Khan)
Attacks of 26/11 (Ram Gopal Varma) FY13
Kochadaiyaan (Tamil,Hindi,Telugu) Rajinikanth, Deepika FY13
Padukone Music - A.R.
Rehman (Soundarya
Rajinikanth)
Dishkiyaaoon Sanjay Dutt, Harman FY13
Baweja, (Sanamjit
Singh Talwar)
3G Neil Nitin Mukesh, FY13
Sonal Chauhan (Shantanu
Ray, Sheershak Anand)
Go Goa Gone Saif Ali Khan, Kunal FY13
Khemu, Vir Das, Puja
Gupta (Krishna DK,
Raj Nidimoru)
Table no.21 Paresh Rawal, Rajeev FY13
Khandelwal. (Aditya
Dutt)
Dekh Tamasha Dekh Satish Kaushik & others FY13
(Feroz Khan)
Sadi Love Story Jimmi Shergill and FY 13
Amrinder Gill (Dheeraj
Ratan)
Film Name Star Cast ( Director) Scheduled Release (Fiscal
Year)
Rangeeley (Punjabi) Jimmi Shergill and FY13
others (Nananiat Singh)
Warning (3D) Santosh Barmola, Madhurima FY13
Tuli Manjari Phadnis
(Anubhav Sinha)
Peddlers Gulshan Devaiah, Kirti FY13
Malhotra(Vasant Bala)
Selected for International
Critic week, Cannes
2012
Yeh Jawwani Hai Ranbir Kapoor, Deepika FY 14
Deewani Padukone (Ayan Mukherjee)
Ranjhna Dhanush, Sonam Kapoor FY14
(Anand Rai)
Ram Leela Ranvir Singh, Deepika FY14
Padukone (Sanjay Leela
Bhansali)
Tanu Weds Manu R. Madhavan, Kangana FY14
Season 2 Ranaut (Anand Rai)
Krrish-3 Hrithik Roshan (Rakesh FY14
Roshan)
Namak Shahid Kapoor (Prabhu FY14
Deva)
Illuminati Films-Untitled Saif Ali Khan(Saket FY14
Chaudhary)
Akele Akele Arjun Rampal (Vikram FY14
Jeet Singh)
Purani Jeans (Tanushree Basu) FY14
Sarkar 3 Amitabh Bachchan, FY14
Abhishek Bachchan
(Ram Gopal Varma)
(Rohit Dhawan)
Rana (Tamil, Hindi, Rajnikant and Deepika FY14
Telugu) Padukone(K.S.Ravikumar)
Revenue
Revenue was $86.4 million for the six months ended September 30,
2012, compared to $92.0 million for the six months ended September
30, 2011 a decrease of $5.6 million, or 6.1%. On a constant
currency basis revenues increased by 4.4%.
The primary geographic areas from which we derive revenue are
India, Europe and North America, with the remainder of our revenue
generated from an area that we report as the Rest of World. Outside
of India, we distribute films to South Asian expatriate populations
and in countries where we release Indian films that are subtitled
or dubbed in local languages. Due to the underlying growth factors
driving media and entertainment in India, we expect the proportion
of revenue contribution from India to continue to grow, but we will
continue to pursue new international market opportunities.
Higher Indian Rupee revenues when translated to our US Dollar
reporting currency were offset by the negative impact of foreign
exchange rate movements with the devaluation of the Indian Rupee by
21.0% against the US dollar when comparing the two periods.
(in millions) Reported Reported Increase Constant Increase
6 months 6 months / Decrease currency / Decrease
to September to September (%) 6 months
30 30 to September
30
2011 Over Constant
currency
------------------- ------------ --------------
2012 2011 %
------------------- --------------- -------------- ------------ -------------- ---------------
India $ 62.4 $ 51.4 21.4% $ 42.3 47.5%
------------------- --------------- -------------- ------------ -------------- ---------------
Europe 5.0 14.8 (66.2%) 14.7 (66.0%)
------------------- --------------- -------------- ------------ -------------- ---------------
North America 5.1 4.4 15.9% 4.4 15.9%
------------------- --------------- -------------- ------------ -------------- ---------------
Rest of the World 13.9 21.4 (35.1%) 21.4 (35.1%)
------------------- --------------- -------------- ------------ -------------- ---------------
Total $ 86.4 $ 92.0 (6.1%) $ 82.8 4.4%
------------------- --------------- -------------- ------------ -------------- ---------------
Revenue by customer location from India was $62.4 million in the
six months ended September 30, 2012, compared to $51.4 million in
the six months ended September 30, 2011, an increase of $11.0
million, or 21.4% principally reflecting the growth in theatrical
revenue and strong music revenues. On a constant currency basis
revenue from Europe was $5.0 million in the six months ended
September 30 2012, compared to $14.7 million in the six months
ended September 30 2011, a decrease of $9.7 million, or 66.0%,
principally reflecting the timing of catalogue and other
syndication revenues as compared to the prior period. Revenue from
North America was $5.1 million in the six months ended September 30
2012, compared to $4.4 million in the six months ended September 30
2011, an increase of $0.7 million, or 15.9%, principally reflecting
higher digital revenues. Revenue from the Rest of the World was
$13.9 million in the six months ended September 30 2012, compared
to $21.4 million in the year ended September 30 2011, a decrease of
$ 7.5 million, or 35.1%, principally reflecting the timing of
syndication and catalogue revenue as with European sales.
Our revenue growth was primarily attributable to an increase in
theatrical revenue in the six months ended September 30 2012, as a
result of the increased number of high profile films with
recognized star casts resulting in higher Indian and international
revenue. In addition Agent Vinod, which was released in the final
week of the year ended March 31, 2012 contributed to the revenues
recognised in the six months ended September 30, 2012. The higher
revenue in India was generated from wider screen releases, higher
than average ticket prices resultingfrom the continued increase in
multiplex and digital screens in India, and the timing of
theatrical releases. Television syndication continued to be strong
with the high profile films helping us continue to syndicate
attractive bundles of new and catalogue films. As well as Viacom 18
we also signed television licensing deals with Star TV and Zee TV
in the six months ended September 30, 2012. Music and mobile
monetisation from the music tracks of high profile artists
continued to be strong. Television and music pre-sales formed an
important part of the Company's monetization strategy and
contributed towards de-risking content investment. Our business has
historically had a second half skew due to major high profile
releases being released around the Indian festival and holiday
season and the same is true for this year with upcoming releases
such as Son of Sardaar, Khiladi 786, Dabangg 2 and Kochadaiyaan
slated for release in the period to March 31, 2013.
Cost of sales
Cost of sales increased by $7.8 million, or 15.6%, for the six
months ended September 30 2012 to the six months ended September
30, 2011. The increase was primarily due to an increase in film
amortization costs of $8.6 million in the period, driven by the
continued growth in content assets. This increase also was partly
offset by a drop in $0.8 million in advertising costs and print
costs.
Gross profit
Gross profit was $29.1 million in the six months ended September
30 2012, compared to $42.4 million in the six months ended
September 30 2011, a decrease of $13.3 million, or 31.4%, mainly
due to the proportionate decrease in reported revenue. On a
constant currency basis gross profit declined from $38.4 million in
the six months ended September 30, 2011 a decrease of $ 9.3
million, or 24.2%. As a percentage of revenue, our gross profit
margin reduced to 33.6% for the six months ended September 30, 2012
from 46.1% (46.4% on a constant currency basis) in the six months
ended September 30, 2011. Excluding amortisation costs the margin
of Underlying EBITDA was 78.6% for six months ended September 30,
2012, compared to 78.9% for 6 months ended September 30, 2011 and
79.2% on a constant currency basis.
Administrative costs
Administrative costs, including rental, legal, travel and audit
expenses, were $10.7 million in the six months ended September 30,
2012, compared to $10.6 million in the six months ended September
30, 2011, an increase of $0.1 million, or 0.9%, which was due to an
increase of $0.3 million of share based payment charges compared to
the six months ended September 30, 2011, and the impact of foreign
exchange. As a percentage of revenue, administrative costs were
12.4% in the six months ended September 30, 2012, compared to 11.5%
in the six months ended September 30 2011. As at September 30,
2012, costs incurred in respect of the anticipated listing on the
New York Stock Exchange, excluding costs in relation to employees,
has been deferred and is shown within prepaid charges in trade and
other receivables.
Underlying EBITDA
Underlying EBITDA was $68.0 million in the six months ended
September 30, 2012, compared to $72.5 million in the six months
ended September 30, 2011, a decrease of $4.5 million, or 6.2%,
driven primarily by the reduced revenues as a result of the impact
of foreign currency movements. On a constant currency basis the
Underlying EBITDA for the six months ended September 30, 2012 was
higher by 3.6% as compared to $ 65.6 million for six months ended
September 30, 2011. As a percentage of revenue, our underlying
EBITDA profit margin decreased slightly to 78.6% from 78.9% in the
six months ended September 30, 2012 from September 30 2011.
Including share based payment charges, EBITDA during the six months
ended September 30, 2012 was also marginally higher than EBITDA on
constant currency basis, for six months ended September 30,
2011.
Underlying operating profit
Underlying operating profit was $19.1 million in the six months
ended September 30, 2012, compared to $32.3 million in the six
months ended September 30 2011, a decrease of $13.2 million, or
40.9%. As a percentage of revenue, underlying operating profit
reduced to 22.1% from 35.1% in the six months ended September 30,
2012 and September 30, 2011 respectively, mainly due to an
increased amortisation charge and shifting of syndication and
catalogue revenues, as a result of our natural second half
weighting in the business.
Net finance costs
Net finance cost in the six months ended September 30, 2012 was
$1.5 million, compared to net finance costs of $1.1 million in the
six months ended September 30, 2011, a movement of $0.4 million.
The change is primarily attributable to provision of interest on
hedge borrowings.
Other gains and losses
Other losses in the six months ended September 30, 2012 of $4.3
million principally comprise of non cash costs which include a $2.9
million interest rate hedging charge, and a net foreign exchange
loss of $1.1 million. In the six months ended September 30, 2011 we
had a foreign exchange loss of $1.8 million. The foreign exchange
loss in both the six month periods was mainly derived from the
devaluation of the rupee and the impact that this had on a dollar
denominated loan in our Indian subsidiary. The hedging loss of $2.9
million arose from the refinancing of our revolving credit facility
in January 2012 and a change in our interest hedging strategy at
this time.
Income Tax Expense
Income tax expense in the six months ended September 30, 2012
was $2.6 million, compared to $5.1 million in the six months ended
September 30, 2011, a decrease of $2.5 million, or 49.0%. Our
effective tax rate was 20.5% in the six months ended September 30,
2012, compared to 17.7% in the six months ended September 30 2011.
The ongoing increases in the effective rate reflect the increase in
the taxable profits of our Indian subsidiary in the six months
ended September 30 2012. Our income tax expense in the six months
ended September 30 2012 included $0.3 million of estimated current
tax expense and $2.3 million of estimated deferred tax expense.
Earnings per share
Basic EPS in the six months ended September 30, 2012 was 7.0
cents, compared to 18.6 cents in the six months ended September 30,
2011, a decrease of 62.4%. Fully diluted EPS in the six months
ended September 30, 2012 was 6.9 cents, compared to 18.4 cents in
the six months ended September 30, 2011, a decrease of 62.5%. The
EPS calculation excludes the 6,000,492 JSOP shares issued as
explained in note 4 later in the document.
Other financial information
Our reporting currency is the US dollar. Transactions in foreign
currencies are translated at the exchange rate prevailing at the
date of the transaction. Monetary assets and liabilities in foreign
currencies are translated into US dollars at the exchange rates at
the applicable balance sheet date. For the purposes of
consolidation of foreign operations, all income and expenses are
translated at the quarterly average rate of exchange during the
periods covered by the applicable statement of income and assets
and liabilities are translated at the exchange rate prevailing on
the balance sheet date. When the US dollar strengthens against a
foreign currency, the value of our sales and expenses in that
currency converted to US dollars decreases. When the US dollar
weakens, the value of our sales and expenses in that currency
converted to US dollars increases.
Recently, there have been periods of higher volatility in the
Indian Rupee and U.S. dollar exchange rate, including the six
months ended September 30, 2012. This volatility is illustrated in
the table below for the periods indicated and shows the Indian
Rupees rate to the U.S. dollar:
Year ended Period End Average (1) High Low
September 30
2011 49.08 45.11 49.45 44.06
September 30
2012 52.85 54.58 57.13 49.01
(1) Represents the average rates used in the period.
6 months 6 months 6 months
to September to September to September
30, 2012 30, 2011 30, 2011
Reported Reported Unaudited Variance
Constant
Currency
Revenue $ 86.4 $ 92.0 $ 82.8 $ (9.2)
Cost of sales (57.3) (49.6) (44.4) 5.2
-------------- -------------- -------------- ---------
Gross profit 29.1 42.4 38.4 (4.0)
-------------- -------------- -------------- ---------
Administrative costs (10.7) (10.6) (9.5) 1.1
-------------- -------------- -------------- ---------
Operating profit $ 18.4 $ 31.8 $ 28.9 $ (2.9)
============== ============== ============== =========
The impact of the decline in the Rupee to the US Dollar is
detailed in the above table which shows that on a constant currency
basis the gross profit for the year ended September 30 2011 would
have been reduced by $4.0 million or 9.4%.
Sources and Uses of Cash
(in millions)
2012 2011
Net cash from operating activities $ 49.4 $ 58.6
Net cash used in investing activities $ (83.1) $ (94.3)
Net cash from financing activities $ (6.7) $ 21.5
Net cash from operating activities in the six months ended
September 30 2012 was $49.4 million, compared to $58.6 million in
the six months ended September 30 2011, a decrease of $9.2 million,
or 15.7%, because of increase in income taxes and interest paid in
the six months ended September 30, 2012 of $1.8 million and $0.4
million, respectively. In addition, there was an increase in
working capital of $6.3 million due to an increase in trade
receivables of $7.7 million increase and $1.1 million in trade
payables in the six months ended September 30, 2012 compared to an
increase in trade receivables of $19.0 million and increase of
$15.8 million in trade payables and in the six months ended
September 30, 2011.
Net cash used in investing activities in the six months ended
September 30, 2012 was $83.1 million, compared to $94.3 million in
the six months ended September 30, 2011, a decrease of $11.2
million, or 11.9%, reflecting a decrease in our investment in film
content in the six months ended September 30, 2012 and marginally
by realisation of proceeds from disposal of property plant and
equipment combined with an increase in interest received. Our
investment in film content in the six months ended September 30,
2012 was $86.5 million, compared to $96.1 million in the six months
ended September 30, 2011 a decrease of $9.6 million, or 9.9%,
reflecting the forward investment in film slate in the six months
ended September 30, 2011 as we change the mix of acquired and
co-produced films, of films released in the period and films
scheduled for future release, to more high profile Hindi films and
ongoing investments in our film library.
Net cash used in financing activities in the six months ended
September 30, 2012 was $6.7 million, compared to net cash from
financing activities of $21.5 million in the six months ended
September 30, 2011, mainly due to reduction in working capital
borrowings.
Net Debt
The Net Debt of the company as on September 30, 2012 was $ 139.1
million as compared to $ 115.8 million as on September 30, 2011 and
$ 103.9 million as on March 31, 2012 ($ 72.8 million March 31,
2011).
A registration statement relating to Eros' A Ordinary Shares has
been filed with the United States Securities and Exchange
Commission, but has not yet become effective. These securities may
not be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This press release shall
not constitute an offer to sell or a solicitation of an offer to
buy nor shall there be any offer or sale of these securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of such jurisdiction.
Some of the information presented in this press release and in
related comments by Eros' management contains forward-looking
statements. In some cases, these forward-looking statements are
identified by terms and phrases such as "aim," "anticipate,"
"believe," "feel," "contemplate," "intend," "estimate," "expect,"
"continue," "should," "could," "may," "plan," "project," "predict,"
"will," "future," "goal," "objective," and similar expressions and
include references to assumptions and relate to Eros' future
prospects, developments and business strategies. Similarly,
statements that describe Eros' strategies, objectives, plans or
goals and statements regarding the proposed offering and the
anticipated costs of these transactions are forward-looking
statements and are based on information available to Eros as of the
date of this press release. Forward-looking statements are subject
to risks, uncertainties and assumptions that could cause actual
results to differ materially from those contemplated by the
relevant statement. Such risks and uncertainties include a variety
of factors, some of which are beyond Eros' control, including
market conditions. Information concerning these and other factors
that could cause results to differ materially from those contained
in the forward-looking statements is contained under the caption
"Risk Factors" in Eros' Registration Statement on Form F-1 filed
with the U.S. Securities and Exchange Commission. Eros undertakes
no obligation to revise the forward-looking statements included in
herein to reflect any future events or circumstances, except as
required by law. Eros' actual results, performance or achievements
could differ materially from the results expressed in, or implied
by, these forward-looking statements.
SUMMARISED UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS OF SEPTEMBER 30, 2012 AND 2011
As at March
As at September 30 31
---------------------------------------- ----------------
Note 2012 2011 2012
(in thousands)
ASSETS
Non-current assets
Property, plant and equipment $ 11,251 $ 12,797 $ 12,622
Goodwill 1,878 1,878 1,878
Intangible assets - trade name 14,000 14,000 14,000
Intangible assets - content 5 507,568 466,126 473,092
Intangible assets - others 1,809 1,346 1,870
Available-for-sale financial assets 29,876 25,554 30,385
Deferred tax assets 482 326 407
566,864 522,027 $ 534,254
Current assets
Inventories $ 782 $ 1,390 $ 1,130
Trade and other receivables 85,137 73,959 78,650
Current tax receivable 4,616 4,070 4,937
Other financial assets - - 1,573
Cash and cash equivalents 102,061 105,551 145,422
192,596 184,970 231,712
Total assets 759,460 706,997 $ 765,966
LIABILITIES
Current liabilities
Trade and other payables $ 28,166 $ 36,040 $ 27,239
Short-term borrowings 55,351 64,018 68,527
Other financial liabilities - 3,001 1,538
Current tax payable 204 823 2,610
83,721 103,882 $ 99,914
Non-current liabilities
Long-term borrowings $ 185,829 $ 155,694 $ 180,768
Other financial liabilities 19,344 - 11,027
Deferred tax 20,650 16,564 20,009
225,823 172,258 211,804
Total liabilities 309,544 276,140 311,718
Net assets 449,916 430,857 $ 454,248
EQUITY
Equity attributable to equity holders of the
parent
Share capital 6 $ 22,653 $ 21,367 $ 21,687
Share premium 159,546 128,680 135,008
Translation reserve (26,130) (20,315) (20,534)
Reverse acquisition reserve (22,752) (22,752) (22,752)
Other reserves 26,848 58,470 59,781
Retained earnings 251,242 227,500 242,975
411,407 392,950 416,165
Non controlling interest 38,509 37,907 38,083
Total equity 449,916 430,857 $ 454,248
SUMMARISED UNAUDITED CONSOLIDATED INCOME STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2012 AND 2011
Six months ended Year ended
September 30 March 31
Note 2012 2011 2012
(in thousands,
except per share
amounts)
Revenue 1 $ 86,418 $ 91,993 $ 206,474
Cost of sales (57,362) (49,606) (117,044)
__---------------- __---------------- __----------------
________ _________ __________
Gross profit 29,056 42,387 89,430
Administrative costs (10,729) (10,559) (27,992)
__---------------- __-------------_ ____------------------____
Operating profit 18,327 31,828 61,438
Financing costs (4,872) (3,740) (5,697)
Finance income 3,325 2,681 4,688
__---------------- __-------------_ ____-------------------------____
Net finance costs 2 (1,547) (1,059) (1,009)
Other gains/(losses) 3 (4,331) (1,784) (6,790)
__---------------- __---------------- __----------------
Profit before tax 12,449 28,985 53,639
Income tax expense (2,552) (5,143) (10,059)
Profit for the year 9,897 23,842 $ 43,580
Attributable to:
Owners of the parent 8,267 21,661 37,406
Non-controlling interest 1,630 2,181 6,174
9,897 23,842 $ 43,580
Earnings per share (cents)
Basic earnings per share 4 7.0 18.6 31.9
Diluted earnings per share 4 6.9 18.4 31.4
SUMMARISED UNAUDITED CONSOLIDATED STATEMENTS
OF OTHER COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2012 AND 2011
Six months ended Year ended
September 30 March 31
------------------------- ---------------
Note 2012 2011 2012
(in thousands,
except per share
amounts
Profit for the year 9,897 $ 23,826 $ 43,580
Reclassification adjustment relating
to available-for-sale financial
assets --- --- 1,230
Fair value adjustment of available-for-sale
financial assets --- 1,548 4,829
Exchange differences on translating
foreign operations (7,027) (20,418) (30,049)
Reclassification of gains on
cash flow hedges (1,988) --- 4,405
Change in fair value of cash
flow hedges (5,441) --- (3,847)
Total comprehensive income for
the year (4559) 4,956 $ 20,148
Attributable to non-controlling
interests (199) 2,166 $ 1,602
Attributable to owners of Eros
International Plc (4,758) 2,790 $ 18,546
SUMMARISED AUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE SIX MONTHS ENDED SEPTEMBER 30, 2012 AND 2011
Six months ended Year ended
September 30 March 31
---------------------- --------------
2012 2011 2012
(in thousands)
Cash flow from operating activities
Profit before tax 12,449 28,985 $ 53,639
Adjustments for:
Depreciation 484 704 1,275
Share based payment 810 496 5,289
Amortization of intangibles 48,340 39,516 86,804
Non cash items 2,910 5,511
Net finance charge 1,547 1,060 1,009
Movement in trade and other receivables (7,702) (18,997) (27,689)
Movement in inventories 310 91 341
Movement in trade payables 1,089 15,840 5,861
Loss on sale of property, plant
and equipment 383 --- 239
Cash generated from operations 60,620 67,696 132,279
Interest paid (6,413) (6,009) (10,368)
Income taxes paid (4,820) (3,072) (4,208)
Net cash generated from operating
activities 49,387 58,615 $ 117,703
Cash flows from investing activities
Purchase of property, plant and
equipment (435) (276) (1,224)
Proceeds from disposal of property,
plant and equipment 512 --- 8
Purchase of intangible film rights
and related content (86,527) (96,139) (142,675)
Purchase of intangible assets others (242) (565) (1,572)
Interest received 3,609 2,681 3,796
Net cash used in investing activities (83,083) (94,299) $ (141,667)
Cash flows from financing activities
Net proceeds from issue of share
capital by subsidiary 36 --- 1,498
Net proceeds from issue of share
capital --- --- 15
Proceeds/(repayment) of short-term
borrowings (11,282) 15,092 19,588
Proceeds/(repayment) from long-term
borrowings 4,546 6,384 30,655
Net cash (used)/generated from financing
activities (6,700) 21,476 $ 51,756
Net increase in cash and cash equivalents (40,396) (14,208) 27,792
Effects of exchange rate changes
on cash and cash equivalents (2,965) (6,408) (8,537)
Cash and cash equivalents at beginning
of period 145,422 126,167 126,167
Cash and cash equivalents at end
of period 102,061 105,551 $ 145,422
SUMMARISED AUDITED CONSOLIDATED STATEMENTS OF CHANGES IN
EQUITY
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2012
Share Reverse Non-
Share Premium Translation Retained Acquisition Other Controlling Total
Capital Account Reserve Earnings Reserve Reserves Total Interest Equity
(in thousands)
Balance at March
31, 2011 $21,687 $135,008 $(20,534) $242,975 $(22,752) $59,781 $416,165 $38,083 $454,248
Reclassification
of gain on cash
flow hedges --- --- --- --- --- (1,988) (1,988) --- (1,988)
Fair value
adjustment of
cash flow hedge --- --- --- --- --- (5,441) (5,441) --- (5,441)
Exchange
difference on
translating
foreign
operations --- --- (5,596) --- --- --- (5,596) (1,431) (7,027)
Other
comprehensive
income --- --- (5,596) --- --- (7,429) (13,025) (1,431) (14,456)
Profit for the
year --- --- --- 8,267 --- --- 8,267 1,630 9,897
Total
comprehensive
income for the
period (5,596) 8,267 (7,429) (4,758) 199 (4,559)
Shares issued by
subsidiaries(1) --- --- --- --- --- ---- ---- 36 36
Shares issued
under JSOP
scheme 966 24,538 --- --- --- (25,504) ---- ---- ---
Share based
payment --- --- --- --- --- --- --- 191 191
Balance at
September 30,
2012 $22,653 $159,546 $(26,130) $251,242 $(22,752) $26,848 $411,407 $38,509 $449,916
====== ====== ====== ====== ====== ====== ====== ====== ======
SUMMARISED AUDITED CONSOLIDATED STATEMENTS OF CHANGES IN
EQUITY
FOR THE SIX MONTHS ENDED SEPTEMBER 31, 2011
Share Reverse Non-
Share Premium Translation Retained Acquisition Other Controlling Total
Capital Account Reserve Earnings Reserve Reserves Total Interest Equity
(in thousands)
Balance at
March 31, 2011 $ 21,349 $ 128,296 $ 102 $ 205,745 $ (22,752) $ 56,893 $ 389,633 $ 35,742 $425,375
Reclassification
of loss on
cash flow hedges - - - - - 1,577 1,577 - 1,577
Fair value
adjustment
of cash flow
hedge - - - - - - - - -
Exchange
difference
on translating
foreign
operations - - (20,418) - - (20,418) (12) (20,430)
Other
comprehensive
income - - (20,418) - - 1,577 (18,841) (12) (18,853)
Profit for
the year - - - 21,660 - - 21,660 2,177 23,837
Total
comprehensive
income for
the period - - (20,418) 21,660 - 1,577 2,819 2,165 4,984
Shares issued - - - - - - - - -
Share based
payment 18 384 - 95 - - 497 --- 497
Balance at
September 30, $ (22,752
2011 $ 21,367 $ 128,680 $ (20,316) $ 227,500 ) $ 58,470 $ 392,949 $ 37,907 $ 430,856
1. BUSINESS SEGMENTAL DATA
Eros acquires, co-produces and distributes Indian films in
multiple formats worldwide. Film content is monitored and strategic
decisions around the business operations are made based on the film
content, whether it is new release or catalogue. Hence, management
identifies only one operating segment in the business, film
content. We distribute our film content to the Indian population in
India, the South Asian diaspora worldwide and to non-Indian
consumers who view Indian films that are subtitled or dubbed in
local languages. As a result of these distribution activities, Eros
has identified four geographic markets, India, North America,
Europe and the Rest of the World.
Revenues are presented based on the customer location:
Six months ended September Year ended
30 March 31
2012 2011 2012
(in thousands)
Revenue by customer location
India $ 62,434 $ 51,456 $ 136,942
Europe 5,047 14,791 26,852
North America 5,066 4,383 8,379
Rest of the world 13,871 21,363 34,301
Total Revenue $ 86,418 $ 91,993 $ 206,474
There were no significant non-cash expenses during the year
except the loss on sale of assets, share based incentives,
depreciation, derivative interest and amortisation disclosed above
and a share based payment charge of $ 810,000 in the six months
ended September 30, 2012 (2011: $ 496,000).
2. FINANCE CHARGES AND INCOME
Six months ended September Year ended
30 March 31
--------------------------------- ---------------
2012 2011 2012
(in thousands)
Interest on bank overdrafts and loans $ 5,682 $ 4,527 $ 9,341
Interest on other borrowings 567 --- 120
__________ ________ ________
Total interest expense for financial liabilities
not classified at fair value through profit
or loss 6,249 4,527 9,461
Reclassification of gains on hedging previously
recognized in other comprehensive income (176) 1,772 2,223
(2,559
Capitalized interest on filmed content (1,201) ) (5,987)
4,872 3,740 5,697
Less: Interest Received (3,325) (2,681) (4,688)
1,547 $ 1,059 $ 1,009
3. OTHER GAINS AND LOSSES
Six months ended Year ended
September 30 March 31
----------------------- ----------------
2012 2011 2012
(in thousands)
Loss on disposal of property,
plant and equipment 383 $ - $ 239
Net foreign exchange (gains)/losses 1,038 1,784 1,057
Net loss on held for trading
financial liabilities --- --- 4,264
Hedge ineffectiveness on cash
flow hedges 2,910 --- ----
Reclassification adjustment relating
to available-for-sale financial
assets --- --- 1,300
Foreign exchange (gain)/loss
on available-for sale financial
assets --- --- (70)
4,331 $ 1,784 $ 6,790
The net loss on held for trading financial liabilities in the
year ended March 31, 2012 principally relates to losses arising on
a previously effective interest swap as a result of a change in
hedging strategy.
4. EARNINGS PER SHARE
Year ended March
Six months ended September 30 31 2012
--------------------------------------------------- ------------------------------
2012 2011
Basic Diluted Basic Diluted Basic Diluted
(in thousands, except earnings per share)
Earnings
Earnings attributable to the
equity holders of the parent $8,267 $8,267 $21,660 $21,660 $ 37,406 $ 37,406
Potential dilutive effect
related to share based
compensation
scheme in subsidiary
undertaking (91) - (211) - (507)
Adjusted earnings attributable
to equity holders of the
parent 8,267 8,176 21,660 21,449 $ 37,406 $ 36,899
Number of shares
Weighted average number of
shares 118,317 118,317 116,205 116,205 117,227 117,227
Potential dilutive effect
related to share based
compensation
scheme - 187 187 - 187
Adjusted weighted average
number of shares 118,317 118,504 116,205 116,392 117,227 117,414
Earnings per share
Earnings attributable to the
equity holders of the parent
per share (cents) 7.0 6.9 18.6 18.4 31.9 31.4
Joint Share Ownership Plan
The assets and liabilities of the Joint share ownership
plan(JSOP) have been included in the Group accounts. Any assets
held by the JSOP cease to be recognised on the consolidated
statement of financial position when the assets vest
unconditionally in identified beneficiaries. The costs of
purchasing own shares held by the JSOP are shown as a deduction
against equity. The proceeds from the sale of own shares held
increase equity. Neither the purchase nor sale of own shares leads
to a gain or loss being recognised in the Group consolidated
statement of other comprehensive income.
The calculation of the basic earnings per share is based on the
earnings attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the year,
excluding shares held in the JSOP.
5. INTANGIBLE CONTENT ASSETS
Accumulated
Gross Content Assets Amortization Content Assets
(in thousands)
As at September 30,
2012
Film and content rights 666,506 (336,536) 329,970
Content advances 177,598 - 177,598
Non Current Content
assets $ 844,104 $ (336,536) $ 507,568
As at September 30,
2011
Film productions - - --
Film and content rights 535,326 (266,174) 269,152
Content advances 196,974 - 196,974
Non Current Content
assets 732,300 (266,174) 466,126
As at March 31, 2012
Film productions - - --
Film and content rights 599,172 (288,457) 310,715
Content advances 162,377 - 162,377
Non Current Content
assets 761,549 (288,457) 473,092
Changes in the main content assets are as follows:
Year ended March
Year ended March 31 31
2012 2011 2012
(in thousands)
Film productions
Opening balance $ - $ 170 $ 170
Additions - 22 22
Changes in foreign currency
translation - (22) (22)
Transfer to film and content
rights - (170) (170 )
Closing balance - $ - $ -
Content advances
Opening balance 162,377 163,365 $ 163,365
Additions 88,471 98,407 159,725
Changes in foreign currency
translation (3,539) (8,452) (13,489 )
Transfer to film and content
rights (69,711) (56,346) (147,224)
Closing balance 177,598 196,974 $ 162,377
Film and content rights
Opening balance 310,715 258,366 $ 258,366
Amortization (48,079) (39,494) (86,525)
Changes in foreign currency
translation (2,377) (6,066) (8,520)
Transfer from other content
assets 69,711 56,346 147,394
Closing balance 329,970 269,152 $ 310,715
6. ISSUED SHARE CAPITAL
Number of
Shares GBP
(in thousands)
Authorized
200,000,000 ordinary shares of 10p each ("Ordinary Shares") at March 31, 2012, and
March 31,
2011 200,000,000 20,000
Number of
Shares USD
(in thousands)
Allotted, called up and fully paid
As at March 31, 2011 116,133,758 21,349
Allotment of shares on 1 June 2011 107,776 18
Allotment of shares on 3 October 2011 2,075,340 320
As at March 31, 2012 118,316,874 21,687
Allotment of shares in respect of Joint
Share Ownership Plan on 20 April 2012 6,000,492 966
As at September 30, 2012 * 124,317,366 22,653
The allotment of shares on June 1, 2011 were shares issued for
employee bonus/remuneration issued at $3.60 a share based on the
mid-market price on May 31, 2011. The allotment on October 3, 2011
were shares issued to employees, directors and a charity as
bonus/remuneration/charitable donation at $3.20 a share based on
the mid-market price on October 3, 2011.
The allotment of shares on April 20, 2012 were 6,000,492
ordinary shares held in the Employee Benefit Trust, which have been
issued at GBP 2.64 per share, have been included in the share
capital and share premium of the company and a corresponding
opposite adjustment has been made to other reserves which has been
shown accordingly in the statement of other comprehensive
income.
7. Publications of non-statutory accounts
The financial information set out in this interim report does
not constitute statutory accounts as defined by the Isle Of Man
Companies Act 2006. The Group's statutory financial statements for
the year ended 31 March 2012, prepared under IFRS, have been filed
with the Isle of Man Financial Supervision Commission. The
auditor's report on those financial statements was unqualified.
8. Basis of preparation
These unaudited condensed consolidated interim financial
statements ('the interim financial statements') are for the six
months ended 30 September 2012. They do not include all of the
information required for full annual financial statements and
should be read in conjunction with the consolidated financial
statements of the Group for the year ended 31 March 2012.
These interim financial statements have been prepared in
accordance with accounting policies under the historical cost
convention, except for revaluation of certain properties and
financial instruments. They are based on the recognition and
measurement principles of IFRS in issue as adopted by the European
Union (EU).
The principal accounting policies have remained unchanged from
those set out in the consolidated financial statements of the Group
for the year ended 31 March 2012.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FSISMFFESELF
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