ISLE OF MAN, United Kingdom--(BUSINESS WIRE)--Eros International Plc (NYSE:EROS) (“Eros” or “the Company”), a leading global company in the Indian film entertainment industry, today reported its quarterly financial results for the three and six months ended September 30, 2015.
Financial Highlights
Three Months Ended September 30, 2015
- Revenues increased by 97.9% to $98.8 million, compared to $49.9 million in the prior year period.
- Currency comparable revenues increased by 129.6%.
- Adjusted EBITDA increased by 159.5% to $36 million, compared to $13.9 million in the prior year period.(1)
- Net income increased by 154.7% to 11.0 million, compared to $4.3 million in the prior year period.
Six Months Ended September 30, 2015
- Revenues increased by 56.2% to $148.8 million, compared to $95.3 million in the prior year period.
- Currency comparable revenues increased by 81.5%.
- Adjusted EBITDA increased by 116.7% to $47.6 million, compared to $22 million in the prior year period.(1)
- Net income increased by 751.5% to $14.8 million, compared to $1.7 million in the prior year period.
| (1) | A reconciliation of the non-GAAP financial measures discussed within this release to our IFRS net income is included at the end of this release. See also “Non-GAAP Financial Measures”. |
Jyoti Deshpande, Eros’ Managing Director and Chief Executive Officer commented, "It gives me great pleasure to report our second quarter fiscal 2016 results which demonstrate that our business is strong. Fiscal year 2016 has been one of our best years yet in terms of film slate performance as Eros films currently hold three out of the top four box office positions in India. With revenues up by 97.9% to $98.8 million and Adjusted EBITDA up by 159.5% to $36 million in the three months ended September 30, 2015, we can safely say this has been a blockbuster quarter.
The foundations of our business are very strong. We are confident that our 3000 plus film library, our expansive global distribution network, our dominant market share position and last but not the least, our unique Eros Now OTT platform will continue to serve as meaningful growth drivers for our Company well into the future.
Our future slate for the remainder of the year and fiscal 2017 continues to be exciting and we believe that our strong balance sheet and improving cash flow from operations will help us to stay in line with our strategy. In the face of adversity, the unwavering support some of our shareholders have shown towards us is indeed overwhelming and for that we are thankful.”
Prem Parameswaran, Group Chief Financial Officer and President of North America also commented:
"While the Audit Committee review is ongoing, our results for the second quarter ended September 30, 2015 clearly show the strong growth in our revenues and profitability. We remain well-funded with just $14.6 million negative free cash flow at the end of September 30, 2015 and we believe that we are on target to become free cash flow positive by the end of this fiscal year, as we have previously projected. Our goal is to increase working capital efficiencies by collecting overdue receivables with a receivables target of $150-$160 million by the end of fiscal 2016 while also not exceeding our target spend of $225 million on content. Our EBITDA margins have increased from 27.8% in the three months ended September 30, 2014 to 36.5% in the three months ended September 30, 2015 and we believe will maintain our growth momentum into the 2017 fiscal year."
Operational Highlights
- Robust release of strong portfolio of films supported by healthy contribution from theatrical, overseas, satellite and other revenue streams. Theatrical revenues during the quarter were driven by worldwide releases such as ‘Bajrangi Bhaijaan’, ‘Srimanthudu’ (Telugu), ‘Welcome Back’, ‘Hero’, ‘Life of Josutty’(Malayalam) and other regional language releases.
- Bajrangi Bhaijaan released in the quarter ended September 30, 2015 crossed $77 million worldwide, smashing multiple records and Welcome Back grossed $20 million box office worldwide. 8 out of the top 15 films in CY 2015 as of September 30, 2015 are Eros films including Top 2 films.
- The Company released a total of 20 films in the three months ended September 30, 2015, of which three were high budget films (two Hindi and one Telugu), three were medium budget films and the rest were low budget films.
- Trinity Pictures, the Company’s exclusive franchise studio division is developing five big universes, characters within those universes and stories based around those characters. Three of those Universes are Kids and Teens, Action and Adventure and Gods and Kings which have films under development including a couple of scripts specifically tailor-made for Indo-China co-productions. The Company hopes to produce and release at least 3-4 films under the Trinity label in fiscal 2017.
- The Company shared detailed milestones for Eros Now, its OTT platform, at the Company’s maiden investor day on October 13, 2015. The Company’s new pricing in India and internationally is now live, as are many new product features. Eros Now's flagship feature, offline viewing, will be live before the end of this calendar year and with its Eros Now originals slated to launch in January 2016, the Company will continue to build marketing momentum.
- The Company’s third quarter has an exciting release of the much anticipated magnum opus of Sanjay Leela Bhansali‘Bajirao Mastani’ which is a Christmas release and the remainder of the fiscal year has a string of high profile movies that include the Tamil film, Suriya’s ‘24’; Telugu films, ‘Dictator’ and Pawan Kalyan’s ‘Sardar Gabbar Singh’ and the much travelled film festival favorite, ‘Aligarh’. We have also picked up momentum in the regional markets with releases lined up in Punjabi, Marathi, Bengali and Malayalam.
- The Company's slate visibility is a key strategy, and upcoming tentative releases for fiscal 2017 include:
| Film Name | Star Cast/(Director) | ||
| Housefull 3 | Akshay Kumar, Abhishekh Bachchan, Rietesh Deshmukh (Sajid-Farhad) | ||
| Dishoom | Varun Dhawan, John Abraham, Jacqueline Fernandez (Rohit Dhawan) | ||
| Shivay | Ajay Devgn (Ajay Devgn) | ||
| Singham - 3 (Tamil) | Suriya, Anushka Shetty, Shruti Haasan (Hari) | ||
| Banjo | Riteish Deshmukh, NargisFakhri (Ravi Jadhav) | ||
| Raabta | Sushant Singh Rajput (Dinesh Vijayan and Homi Adajania) | ||
| Chaar Sahib Zaade 2 (Punjabi) | Sequel to the Chaar Sahib Zade, 3D animation (Harry Baweja) | ||
| Guru Tegh Bhadur (Punjabi) | 3D Animation (Harry Baweja) | ||
| Baar Baar Dekho | Siddharth Malhotra, Katrina Kaif (Nitya Mehra) | ||
| Rock on 2 | Farhan Akhtar, Arjun Rampal, Shraddha Kapoor (Farhan Akhtar) | ||
| Reunion | Various artistes (Sujoy Gosh) | ||
| Farzi | (Raj Nidimoru and Krishna D.K.) | ||
| Bhavesh Joshi | Harshvardhan Kapoor (Vikramaditya Motwane) | ||
| AK Vs SK | Shahid Kapoor (Vikramaditya Motwane) | ||
| Happy Bhaag Jayegi | Abhay Deol, Diana Penty, Ali Fazal (Mudassar Aziz) | ||
| Untitled | (Anand Rai) | ||
| Untitled | (Sanjay Leela Bhansali) | ||
| Untitled | (Kabir Khan) |
The list of films set forth in the table above is not a complete list of all the films in our forthcoming slate.
Financial Highlights:
We are a leading global company in the Indian film entertainment industry, and we co-produce, acquire and distribute Indian language films in multiple formats worldwide. Our success is built on the relationships we have cultivated over the past 30 years with leading talent, production companies, exhibitors and other key participants in our industry.
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Three Months Ended September 30, |
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Six Months Ended |
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| (dollars in thousands) | 2015 | 2014 | % change | 2015 | 2014 | % change | |||||||||||
| Revenue | $ | 98,791 | $ | 49,915 | 97.9 | $ | 148,834 | $ | 95,277 | 56.2 | |||||||
| Gross Profit | 45,216 | 20,410 | 121.5 | 62,303 | 32,548 | 91.4 | |||||||||||
| Operating profit | 26,152 | 8,475 | 208.6 | 30,282 | 10,647 | 184.4 | |||||||||||
| Adjusted EBITDA(1) | 36,038 | 13,888 | 159.5 | 47,588 | 21,956 | 116.7 | |||||||||||
(1) A reconciliation of the non-GAAP financial measures discussed within this release to our IFRS net income is included at the end of this release. See also “Non-GAAP Financial Measures”.
Constant comparable revenue for the three and six months ended September 30, 2014 is $43.9 million and $83.1 million respectively, based on the average rate of exchange for the three months ended September 30, 2015 and six months ended September 30, 2015, respectively. In the three and six months ended September 30, 2015, the average rate of exchange used to convert Indian Rupee to U.S. dollars was INR 64.2 to US $1.00.
Financial Results for three months and six months ended September 30, 2015
Revenue
Revenue increased by 97.9% to $98.8 million in the three months ended September 30, 2015, compared to $49.9 million in the three months ended September 30, 2014. For the six months ended September 30, 2015, revenue increased by 56.2% to $148.8 million compared to $95.3 million in the six months ended September 30, 2014. Eros released 36 new films in the six months ended September 30, 2015, compared to 30 films in the six months ended September 30, 2014, which were comprised of the following:
| Three months ended | ||||||||
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June 30, 2015 |
September 30, 2015 |
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| High budget film releases | 2 | 3 | ||||||
| Medium budget film releases | 3 | 3 | ||||||
| Low budget film releases | 11 | 14 | ||||||
| Total new film releases | 16 | 20 | ||||||
| Three months ended | ||||||||
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June 30, 2014 |
September 30, 2014 |
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| High budget film releases | 1 | 1 | ||||||
| Medium budget film releases | 3 | 3 | ||||||
| Low budget film releases | 5 | 17 | ||||||
| Total new film releases | 9 | 21 | ||||||
The Company’s primary revenue streams are derived from three channels: theatrical, television syndication and digital and ancillary. For the three months ended September 30, 2015, the aggregate revenues from theatrical, television syndication and digital and ancillary were $61.0 million (61.7% of revenues), $23.2 million (23.5% of revenues) and $14.6million (14.8% of revenues), respectively, compared to $17.2 million (34.5% of revenues), $23.6 million (47.3% of revenues) and $9.1 million (18.2% of revenues), respectively, for the three months ended September 30, 2014.
For the six months ended September 30, 2015, the aggregate revenues from theatrical, television syndication and digital and ancillary were $94.7million (63.7% of revenues), $33.2 million (22.3% of revenues) and $20.9 million (14.0% of revenues), respectively, compared to $36.3 million (38.1% of revenues), $39.1 million (41.0% of revenues) and $19.9 million (20.9% of revenues), respectively, for the six months ended September 30, 2014.
The total revenue increase of 97.9% in the three months ended September 30, 2015 compared to September 30, 2014 reflects the mix of films released in each period as reflected in the table above. The increase in theatrical revenues in the three months ended September 30, 2015 reflects the strong box office performance of our three high budget films Bajrangi Bhaijaan (Hindi), Welcome Back (Hindi) and Srimanthudu (Telugu) as well as strong theatrical performance of our other films.
The total revenue increase of 56.2% in the six months ended September 30, 2015 from September 30, 2014 reflects the mix and total number of films released in each period as reflected in the table above. The substantial increase in theatrical revenues in the six months ended September 30, 2015 reflects the performance of our five high budget films: Hindi films Bajrangi Bhaijaan and Welcome Back, No.1 and No.4 respectively in the Indian box office for 2015, Tamil films Uttama Villian and Masssand Telugufilm Srimanthudu,which is the second highest grossing Telugu film. Following the strong theatrical performance of these films, television and digital and ancillary revenues along with catalog monetization also contributed towards the growth in revenues.
Revenue from India increased 139.1% to $61.4 million in the three months ended September 30, 2015, compared to $25.7 million in the three months ended September 30, 2014. The increase reflects the strong theatrical performance of the films released in the quarter in the Indian box office. In the six months ended September 30, 2015, revenue from India increased by 74.8% to $94.6 million, compared to $54.1 million in the six months ended September 30, 2014.
Revenue from Europe increased 82.8% to $12.5 million in the three months ended September 30, 2015, compared to $6.8 million in the three months ended September 30, 2014. The increase reflects the strong theatrical performance of the films released in the quarter. In the six months ended September 30, 2015, revenue from Europe increased by 34.7% to $16.6 million, compared to $12.3 million in the six months ended September 30, 2014.
Revenue from North America increased 341.4% to $6.7 million in the three months ended September 30, 2015, compared to $1.5 million in the three months ended September 30, 2014. The increase in revenues reflects the strong theatrical performance of the films in North America. In the six months ended September 30, 2015, revenue from North America increased by 253.4% to $9.9 million, compared to $2.8 million in the six months ended September 30, 2014.
Revenue from the rest of the world increased 14.9% to $18.3 million in the three months ended September 30, 2015, compared to $15.9 million in the three months ended September 30, 2014. Theatrical revenues increased in rest of the world due to strong performance of our new release slate in those markets combined with catalogue monetization. In the six months ended September 30, 2015, revenue from the rest of the world increased by 6.6% to $27.8 million, compared to $26.1 million in the six months ended September 30, 2014.
Cost of sales
Cost of sales increased by 81.6% to $53.6 million in the three months ended September 30, 2015, compared to $29.5 million in the three months ended September 30, 2014, primarily due to an increase in amortization costs of $11.8 million from $24.2 million in the three months ended September 30, 2014 to $36.0 million for the three months ended September 30, 2015 due to a higher number of high budget films in the current quarter (3 films) as compared to the corresponding quarter (1 film) last year. The increase in direct cost was also attributable to higher advertising and distribution costs as well as accrued overages to co-producers on account of our hit films.
Cost of sales increased by 37.9% to $86.5 million in the six months ended September 30, 2014, compared to $62.7 million, primarily due to an increase in amortization costs of $13.7 million from $50.7 million in the six months to September 30, 2014 to $64.6 million for the six months ended September 30, 2015. The increase in amortization cost is due to higher number of films (36 films) including high budget films (5 films) in the current six month period as compared to the corresponding period last year, where the number of films (30 films) including high budget films (2 films) were lower. The increase in direct costs was also attributable to higher advertising and distribution costs as well as accrued overages to co-producers on account of our hit films.
Gross profit
Gross profit was $45.2 million in the three months ended September 30, 2015, compared to $20.4 million in the three months ended September 30, 2014. The increase is primarily attributable to increased revenues in proportion to costs generated by the new release slate, as well as increase in revenue from catalog sales. As a percentage of revenues, our gross profit margin was 45.8% in the three months ended September 30, 2015, compared to 40.9% in the three months ended September 30, 2014.
Gross profit was $62.3 million in the six months ended September 30, 2015, compared to $32.5 million in the six months ended September 30, 2014. The increase is primarily attributable to increased revenues in proportion to costs generated by the new release slate, as well as increase in revenue from catalog sales. As a percentage of revenues, our gross profit margin was 41.9% in the six months ended September 30, 2015, compared to 34.2% in the six months ended September 30, 2014.
Income Taxes
The provisions for income taxes were $7.6 million and $3.1 million for the three months ended September 30, 2015 and 2014, respectively, and $9.9 million and $4.7 million for the six months ended September 30, 2015 and 2014, respectively. The increase in tax expense is due to a change in the Indian tax rate from 33.99% to 34.61% which created an additional tax charge in first quarter on re-measurement of opening deferred tax liability and higher tax expense on net profit earned during the three and six months period ended September 30 2015. Effective income tax rates were 24.1% and 25.1% for September 30, 2015 and 2014, respectively, excluding non-deductible share-based payment charges.
Adjusted EBITDA
Adjusted EBITDA increased by 159.5% to $36.0 million in the three months ended September 30, 2015, compared to $13.9 million in the three months ended September 30, 2014. In the six months ended September 30, 2015, Adjusted EBITDA increased by 116.7% to $47.6 million, compared to $22.0 million in the six months ended September 30, 2014.The increase reflects the strong performance of the Company's new film release slate as well as catalog monetization across theatrical, television and digital platforms.
Content
Content investment comprises film and content rights of $497.3 million and content advances of $261.2 million as at September 30, 2015, compared to $479.0 million and $240.2 million, respectively, as at March 31, 2015.
Acquisition of subsidiary
On August 1, 2015, Eros' subsidiary Eros International Media Limited ("EIML") acquired 100% of the shares and voting interests in Universal Power Systems Private Limited ("Techzone"). This will enable the Group to utilize Techzone’s billing integration and distribution, which is in place across major telecom operators. With average transaction traffic of over 25 million monthly users over the past three years, we expect this acquisition to complement our existing Eros Now service.
Conference Call
Eros will host a conference call today at 8:30 a.m. ET. To access the call please dial 212-444-0481 from the United States, or +44 (0) 20 3478 5300 from outside the U.S. The conference call I.D. number is 3400497. Participants should dial in 5 to 10 minutes before the scheduled time.
A replay of the call can be accessed through November 24, 2015 by dialing (347)-366-9565 from the U.S., or +44 (0) 20 3427 0598 from outside the U.S. The conference call I.D. number is 3400497. The call will be available as a live webcast, which can be accessed at Eros’ Investor Relations website. A replay of the webcast recording will be available until November 17, 2016.
Non-GAAP Financial Measures
Net Income
The Company uses the term Net Income, as the International Financial Reporting Standards (“IFRS”) define the term as synonymous with profit for the period.
Adjusted EBITDA
In addition to the results prepared in accordance with IFRS provided in this release, the Company has presented Adjusted EBITDA. The Company uses “Adjusted Earnings before Interest, Tax, Depreciation and Amortization”(“Adjusted EBITDA”) along with other IFRS measures, to evaluate operating performance. Adjusted EBITDA is defined by the Company as net income before interest expense, income tax expense and depreciation and amortization (excluding amortization of capitalized film content and debt issuance costs), adjusted for impairments of available-for-sale financial assets, profit/loss on held for trading liabilities (including profit/loss on derivatives), share based payments and transaction costs relating to equity transactions.
Adjusted EBITDA, as used and defined by us, may not be comparable to similarly-titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. Adjusted EBITDA should not be considered in isolation or as a substitute for operating income, net income, cash flows from operating investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. Adjusted EBITDA provides no information regarding a company’s capital structure, borrowings, interest costs, capital expenditures and working capital movement or tax position. However, our management team believes that Adjusted EBITDA is useful to an investor in evaluating our results of operations because this measure:
• is widely used by investors to measure a company’s operating performance without regard to items excluded from the calculation of such term, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors;
• helps investors to evaluate and compare the results of our operations from period to period by removing the effect of our capital structure from our operating structure; and
• is used by our management team for various other purposes in presentations to our board of directors as a basis for strategic planning and forecasting.
See the supplemental financial schedules for a reconciliation of non-GAAP financial measures to IFRS measures.
Cautionary Statement Concerning Forward-Looking Statements
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 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 but not limited to market conditions and economic 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 our Annual Report on Form 20-F for the fiscal year ended March 31, 2015, filed with the U.S. Securities and Exchange Commission on July 8, 2015. Eros undertakes no obligation to revise the forward-looking statements included 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.
Seasonality
The financial position and results of operations of Eros and its subsidiaries (together with Eros, the “Group”) for any period fluctuate due to film release schedules. Film Release schedules take account of holidays and festivals in India and elsewhere, competitor film releases and sporting events.
About Eros International, Plc
Eros International Plc (NYSE: EROS) is a leading global company in the Indian film entertainment industry that acquires, co-produces and distributes Indian films across all available formats such as cinema, television and digital new media. Eros International Plc became the first Indian media company to list on the New York Stock Exchange. Eros International has experience of over three decades in establishing a global platform for Indian cinema. The Company has an extensive and growing movie library comprising of over 2,300 films, which include Hindi, Tamil, and other regional language films for home entertainment distribution. For further information please visit: www.erosplc.com
Eros Now, the company’s on-demand entertainment portal accessible via internet-enabled devices, was launched in 2012 and includes a selection of hundreds of movies and thousands of music videos. We expect that Eros Now will eventually include the company’s full film library, as well as further third party content. For further information please visit: www.erosnow.com
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EROS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (In thousands) |
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| As at September 30, | As at March 31, | |||||||||
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2015 (unaudited) |
2015 | |||||||||
| ASSETS | ||||||||||
| Non-current assets | ||||||||||
| Property, plant and equipment | $ | 9,878 | $ | 9,272 | ||||||
| Goodwill | 3,140 | 1,878 | ||||||||
| Intangible assets - trade name | 14,000 | 14,000 | ||||||||
| Intangible assets - content | 758,500 | 719,214 | ||||||||
| Intangible assets - others | 4,440 | 2,204 | ||||||||
| Available-for-sale financial assets | 30,147 | 29,917 | ||||||||
| Trade and other receivables | 5,823 | 5,692 | ||||||||
| Tax Receivable | 2,780 | - | ||||||||
| Restricted deposits held with banks | 1,066 | 613 | ||||||||
| Deferred tax assets | 321 | 151 | ||||||||
| Total Non-current assets | 830,095 | $ | 782,941 | |||||||
| Current assets | ||||||||||
| Inventories | $ | 444 | $ | 475 | ||||||
| Trade and other receivables | 225,490 | 209,676 | ||||||||
| Current tax receivable | 11 | 455 | ||||||||
| Cash and cash equivalents | 150,453 | 153,664 | ||||||||
| Restricted deposits held with banks | 1,364 | 2,322 | ||||||||
| Total current assets | $ | 377,762 | $ | 366,592 | ||||||
| Total assets | $ | 1,207,857 | $ | 1,149,533 | ||||||
| LIABILITIES | ||||||||||
| Current liabilities | ||||||||||
| Trade and other payables | $ | 45,455 | $ | 29,453 | ||||||
| Short-term borrowings | 102,846 | 96,397 | ||||||||
| Current tax payable | 7,532 | 2,631 | ||||||||
| Total current liabilities | $ | 155,833 | $ | 128,481 | ||||||
| Non-current liabilities | ||||||||||
| Long-term borrowings | $ | 207,655 | $ | 218,273 | ||||||
| Other long-term liabilities | 362 | 354 | ||||||||
| Derivative financial instruments | 20,368 | 19,284 | ||||||||
| Deferred tax liabilities | 29,480 | 27,086 | ||||||||
| Total Non-current Liabilities | $ | 257,865 | $ | 264,997 | ||||||
| Total liabilities | $ | 413,698 | $ | 393,478 | ||||||
| EQUITY | ||||||||||
| Share capital | $ | 31,037 | $ | 30,622 | ||||||
| Share premium | 357,406 | 345,385 | ||||||||
| Reserves | 409,510 | 389,682 | ||||||||
| Other components of equity | (51,706) | (43,881 | ) | |||||||
| JSOP reserve | (17,169) | (24,474 | ) | |||||||
| Equity attributable to equity holders of Eros International Plc | $ | 729,078 | $ | 697,334 | ||||||
| Non-controlling interest | 65,081 | 58,721 | ||||||||
| Total equity | $ | 794,159 | $ | 756,055 | ||||||
| Total liabilities and shareholders’ equity | $ | 1,207,857 | $ | 1,149,533 | ||||||
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EROS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited; in thousands, except per share amounts) |
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| Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||
| Revenue | $ | 98,791 | $ | 49,915 | $ | 148,834 | $ | 95,277 | ||||
| Cost of sales | (53,575) | (29,505) | (86,531) | (62,729) | ||||||||
| Gross profit | 45,216 | 20,410 | 62,303 | 32,548 | ||||||||
| Administrative cost | (19,064) | (11,935) | (32,021) | (21,901) | ||||||||
| Operating profit | 26,152 | 8,475 | 30,282 | 10,647 | ||||||||
| Financing costs | (3,676) | (1,970) | (7,542) | (4,443) | ||||||||
| Finance income | 1,127 | 1,255 | 2,850 | 2,108 | ||||||||
| Net finance costs | (2,549) | (715) | (4,692) | (2,335) | ||||||||
| Other losses | (5,016) | (288) | (940) | (1,887) | ||||||||
| Profit before tax | 18,587 | 7,472 | 24,650 | 6,425 | ||||||||
| Income tax expense | (7,572) | (3,148) | (9,868) | (4,689) | ||||||||
| Profit for the period | $ | 11,015 | $ | 4,324 | $ | 14,782 | $ | 1,736 | ||||
| Attributable to: | ||||||||||||
| Equity holders of Eros International Plc | $ | 7,611 | $ | 2,923 | $ | 7,826 | $ | (936) | ||||
| Non-controlling interest | 3,404 | 1,401 | 6,956 | 2,672 | ||||||||
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| Earnings per share(cents) | ||||||||||||
| Basic earnings/(loss) per share | 13.2 | 5.3 | 13.6 | (1.8) | ||||||||
| Diluted earnings/(loss) per share | 12.3 | 5.2 | 12.7 | (2.0) | ||||||||
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EROS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) (Unaudited; in thousands) |
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| Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||
| Profit for the period | $ | 11,015 | $ | 4,324 | $ | 14,782 | $ | 1,736 | ||||
| Other comprehensive loss: | ||||||||||||
| Items that will be subsequently reclassified to profit or loss | ||||||||||||
| Exchange differences on translating foreign operations | (6,906) | (4,551) | (10,627) | (5,738) | ||||||||
| Reclassification of the cash flow hedge to the statement of operations | 201 | 201 | 402 | 402 | ||||||||
| Total other comprehensive loss for the period | $ | (6,705) | $ | (4,350) | $ | (10,225) | $ | (5,336) | ||||
| Total comprehensive income/(loss) for the period net of tax | $ | 4,310 | $ | (26) | $ | 4,557 | $ | (3,600) | ||||
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| Attributable to: | ||||||||||||
| Equity holders of Eros International Plc | $ | 2,255 | $ | 89 | $ | - | $ | (4,741) | ||||
| Non-controlling interest | 2,055 | (115) | 4,557 | 1,141 | ||||||||
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EROS INTERNATIONAL PLC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) |
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Six Months Ended September 30, |
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| 2015 | 2014 | |||||||||
| Cash flows from operating activities: | ||||||||||
| Profit/(loss) before tax | $ | 24,650 | $ | 6,425 | ||||||
| Adjustments for: | ||||||||||
| Depreciation | 422 | 606 | ||||||||
| Share based payment | 16,276 | 10,248 | ||||||||
| Amortization of intangible film and content rights | 64,181 | 50,450 | ||||||||
| Amortization of other intangibles assets | 464 | 247 | ||||||||
| Other non-cash items | 1,002 | 2,198 | ||||||||
| Net finance costs | 4,692 | 2,335 | ||||||||
| Gain on sale of property, plant and equipment | (2) | (3 | ) | |||||||
| Movement in trade and other receivables | (13,916) | (18,004 | ) | |||||||
| Movement in inventories | (31) | 12 | ||||||||
| Movement in trade and other payables | 7,032 | (8,436 | ) | |||||||
| Cash generated from operations | 104,770 | 46,078 | ||||||||
| Interest paid | (12,299) | (4,029 |
) |
|||||||
| Income taxes paid | (1,242) | (3,078 |
) |
|||||||
| Net cash generated from operating activities | $ | 91,229 | $ | 38,971 | ||||||
| Cash flows from investing activities: | ||||||||||
| Advance given to an undertaking | — | (2,465 | ) | |||||||
| Purchases of property, plant and equipment | (609) | (312 | ) | |||||||
| Proceeds from disposal of property, plant and equipment | — | 22 | ||||||||
| Proceeds from restricted deposits held with banks | 371 | — | ||||||||
| Acquisition of cash and cash equivalent in a subsidiary | 263 | — | ||||||||
| Purchase of available for sale Investments | (230) | — | ||||||||
| Purchase of intangible film and content rights | (104,695) | (102,508) | ||||||||
| Purchase of other intangible assets | (1,107) | — | ||||||||
| Interest received | 1,672 | 1,059 | ||||||||
| Net cash used in investing activities | $ | (104,335) | $ | (104,204 |
) |
|||||
| Cash flows from financing activities: | ||||||||||
| Proceeds from issue of share capital | 5,400 | 92,337 | ||||||||
| Proceeds from issue of shares by subsidiary | 80 | 1,126 | ||||||||
| Proceeds from issue out of treasury shares | 6,293 | — | ||||||||
| Proceeds in respect of prospective allotment of shares | — | 10,000 | ||||||||
| (Repayment)/Proceeds from short term debt with maturity less than three months (net) | 9,132 | (15,689 | ) | |||||||
| Proceeds from short term debt | 33,714 | 11,301 | ||||||||
| Repayment of short term debt | (34,103) | — | ||||||||
| Proceeds from long term borrowings | 2,374 | 12,284 | ||||||||
| Repayment of long term borrowings | (12,703) | (14,099 | ) | |||||||
| Net cash generated from financing activities | $ | 10,187 | $ | 97,260 | ||||||
| Net decrease in cash and cash equivalents | (2,919) | 32,027 | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | (292) | (811 | ) | |||||||
| Cash and cash equivalents, beginning of period | 153,664 | 145,449 | ||||||||
| Cash and cash equivalents, end of period | $ | 150,453 | $ | 176,665 | ||||||
| Supplemental financial Data | ||||||||||||||
| REVENUES | ||||||||||||||
|
Three months ended September 30, |
Six months ended |
|||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||
| (in thousands) | ||||||||||||||
| Revenue by region of domicile of customer's location | ||||||||||||||
| India | $ | 61,250 | $ | 17,329 | $ | 94,076 | $ | 42,183 | ||||||
| Europe | 5,768 | 7,412 | 8,209 | 14,827 | ||||||||||
| North America | 6,660 | 4,750 | 10,187 | 6,292 | ||||||||||
| Rest of the world | 25,113 | 20,424 | 36,362 | 31,975 | ||||||||||
| Total Revenue | $ | 98,791 | $ | 49,915 | $ | 148,834 | $ | 95,277 | ||||||
|
Three months ended September 30, |
Six months ended |
|||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||
| (in thousands) | ||||||||||||||
| Revenue by region of domicile of group’s operation | ||||||||||||||
| India | $ | 61,381 | $ | 25,674 | $ | 94,558 | $ | 54,096 | ||||||
| Europe | 12,461 | 6,817 | 16,600 | 12,325 | ||||||||||
| North America | 6,660 | 1,509 | 9,895 | 2,800 | ||||||||||
| Rest of the world | 18,289 | 15,915 | 27,781 | 26,055 | ||||||||||
| Total Revenue | $ | 98,791 | $ | 49,915 | $ | 148,834 | $ | 95,277 | ||||||
|
RECEIVABLES |
||||||||||
| As at | ||||||||||
|
September 30, |
March 31, |
|||||||||
| (in thousands) | ||||||||||
| Trade accounts receivables | 211,467 | 198,066 | ||||||||
| Trade accounts receivables reserve | (118) | (250) | ||||||||
| Trade accounts receivables net | $ | 211,349 | $ | 197,816 | ||||||
| Other receivables | 7,775 | 8,581 | ||||||||
| Prepaid charges | 6,366 | 3,279 | ||||||||
| Trade and other receivables | $ | 225,490 | $ | 209,676 | ||||||
|
The age of financial assets that are past due but not impaired were as follows: |
||||||||||
|
|
As at | |||||||||
|
September 30, |
March 31, |
|||||||||
| (in thousands) | ||||||||||
| Not more than three months | 30,516 | 19,677 | ||||||||
| More than three months but not more than one year | 34,140 | 11,726 | ||||||||
| More than one year | 5,970 | 5,906 | ||||||||
| Trade accounts receivables net | $ | 70,626 | $ | 37,309 | ||||||
Subsequent to September 30, 2015, the Company further collected $19.1 million of trade receivables.
| BORROWINGS | |||||||||||||||
| An analysis of long-term borrowings is shown in the table below. | |||||||||||||||
| Nominal | As at | ||||||||||||||
| Interest Rate | Maturity |
September 30, |
March 31, |
||||||||||||
| (in thousands) | |||||||||||||||
| Asset backed borrowings | |||||||||||||||
| Term Loan | 10.0% - 16.0% | 2017-18 | $ | 267 | $ | 147 | |||||||||
| Term Loan | BPLR+1.8% | 2016-17 | 8,901 | 12,032 | |||||||||||
| Term Loan | BPLR+2.75% | 2017-18 | 2,241 | 2,974 | |||||||||||
| Term Loan | BPLR+2.85% | 2019-20 | 9,118 | 10,808 | |||||||||||
| Term Loan | BPLR+2.85% | 2020-21 | 2,290 | - | |||||||||||
| $ | 22,817 | $ | 25,961 | ||||||||||||
| Retail bond | 6.5% | 2021-22 | $ | 75,574 | $ | 74,228 | |||||||||
| Revolving facility |
LIBOR +1.90% - 2.90% and |
2016-17 | 132,500 | 141,250 | |||||||||||
| Other borrowings | 10.5% | 2021-22 | 7,513 | 8,013 | |||||||||||
| $ | 215,587 | $ | 223,491 | ||||||||||||
| Nominal value of borrowings | $ | 238,404 | $ | 249,452 | |||||||||||
| Cumulative effect of unamortized costs | (2,476) | (2,940 | ) | ||||||||||||
| Installments due within one year | (28,273) | (28,239 | ) | ||||||||||||
| Long-term borrowings — at amortized cost | $ | 207,655 | $ | 218,273 | |||||||||||
Bank prime lending rate (“BPLR”) is the Indian equivalent to LIBOR. Asset backed borrowings are secured by fixed and floating charges over certain Group assets.
|
Analysis of short-term borrowings |
|||||||||
| Nominal | As at | ||||||||
| interest rate (%) |
September 30, |
March 31, 2015 |
|||||||
| (in thousands) | |||||||||
| Asset backed borrowings | |||||||||
| Export credit and overdraft | BPLR+1-3.5% | $ | 9,243 | $ | 17,346 | ||||
| Export credit and overdraft | LIBOR+3.5% | 27,404 | 25,144 | ||||||
| Short term loan | 2.0% - 3.0% | 8,161 | — | ||||||
| $ | 44,808 | $ | 42,490 | ||||||
| Unsecured borrowings | |||||||||
| Commercial paper | 10.0% - 13.0% | 29,765 | 25,668 | ||||||
| Installments due within one year on long-term borrowings | 28,273 | 28,239 | |||||||
| Short-term borrowings - at amortized cost | $ | 102,846 | $ | 96,397 | |||||
|
ISSUED SHARE CAPITAL |
|||||
|
Number of Shares |
GBP | ||||
| (in thousands) | |||||
| Authorized | |||||
| A ordinary shares of 30p each at September 30, 2015 and March 31, 2015 | 57,778,113 | 17,333 | |||
| B ordinary shares of 30p each at September 30, 2015 and March 31, 2015 | 25,555,220 | 7,667 | |||
| Number of Shares | USD | |||||||||
| Allotted, called up and fully paid |
A Ordinary 30p Shares |
B Ordinary 30p Shares |
(in thousands) | |||||||
| As at March 31, 2014 | 23,519,340 | 25,555,220 | 26,322 | |||||||
| Issue of shares on July 15, 2014 | 6,675,000 | — | 3,434 | |||||||
| Issue of shares on July 23, 2014 | 112,445 | — | 58 | |||||||
| Issue of shares on September 9, 2014 | 36,000 | — | 18 | |||||||
| Issue of shares on November 24, 2014 | 331,551 | — | 156 | |||||||
| Issue of shares on November 25, 2014 | 668,449 | — | 315 | |||||||
| Issue of shares on December 1, 2014 | 487,500 | — | 246 | |||||||
| Issue of shares on January 16, 2015 | 18,600 | — | 9 | |||||||
| Issue of shares on March 10, 2015 | 133,603 | — | 64 | |||||||
| As at March 31, 2015 | 31,982,488 | 25,555,220 | 30,622 | |||||||
| Issue of shares on July 16,2015 | 300,000 | — | 138 | |||||||
| Issue of shares on August 18, 2015 | 3,500 | — | 2 | |||||||
| Shares awarded, yet to be issued | 600,000 | — | 275 | |||||||
| As at September 30, 2015 | 32,885,988 | 25,555,220 | 31,037 | |||||||
On June 9, 2015, the Board of Directors approved a grant of 580,000 ‘A’ ordinary shares to certain executive directors with a fair market value of $21.34 per share. Subject to continued employment, these awards with Nil exercise price, vest over a period of three years. On the same date,10,000 ‘A’ ordinary shares each were awarded to a non- executive director and a consultant with par value exercise price and a fair market value of $21.34 per share. Subject to continued employment, these awards vest on June 9, 2016.These shares are yet to be issued. As at September 30, 2015, none of the awards were forfeited
On June 25, 2015, the Company received $5,400,000 in respect of an issue of 300,000 ‘A’ ordinary shares at $18.00 per share to a non-executive director. These shares were subsequently issued on July 16, 2015.
On June 5, 2014, the Board of Directors approved a grant of 525,000 ‘A’ ordinary share awards to certain executive directors and members of senior management with a fair market value of $14.95 per share. These awards vest subject to certain share price conditions being met on or before May 31, 2015 and the employees remaining in service until May 31, 2015. All these awards have since vested. On August 18, 2015, 3,500 shares were issued on exercise of option by an employee.
SHARE BASED COMPENSATION PLANS
The compensation cost recognized with respect to all outstanding plans and by grant of shares, which are all equity settled instruments, is as follows:
|
Three months ending September 30, |
Six months ending September 30, |
||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||
| (in thousands) | |||||||||||||||
| IPO India Plan | $ | 481 | $ | 49 | $ | 860 | $ | 98 | |||||||
| JSOP Plan | 599 | 359 | 889 | 862 | |||||||||||
| Option award scheme 2012 | 544 | — | 1,101 | — | |||||||||||
| 2014 Share Plan | 850 | — | 1,103 | — | |||||||||||
| 2015 Share Plan | 275 | — | 433 | — | |||||||||||
| Management scheme (staff share grant) | 4,570 | 5,058 | 6,739 | 9,288 | |||||||||||
| Other share option awards | 2,063 | — | 5,151 | — | |||||||||||
| $ | 9,382 | $ | 5,466 | $ | 16,276 | $ | 10,248 | ||||||||
In its meeting dated June 9, 2015, the Board of Directors approved the following grants:
300,000 ‘A’ ordinary share awards to the Group CFO with a fair market value of $21.34 per share. Subject to continued employment, these awards with par value exercise price, vest annually from June 9, 2016 in three equal tranches.
580,000 ‘A’ ordinary share awards to certain executive directors with a fair market value of $21.34 per share. Subject to continued employment, these awards with Nil exercise price, vest over a period of three years. None of the awards were forfeited during the period.
10,000 'A' ordinary share awards to non-executive directors and a consultant each with a fair market value of $21.34 per share. Subject to continued term with the Company, these awards with par value exercise price, vest on June 9, 2016.
On September 4, 2015, the Company entered into an employment exit agreement with an employee pursuant to which the Board approved a grant of 20,000 ‘A’ ordinary share awards with Nil exercise price and a fair market value of $33.66 per share.
The charge for the aforementioned awards has been accrued under 'Other share option awards'.
In its meeting dated June 9, 2015, the Board of Directors approved the following grants:
500,000 'A' ordinary share options to a non-executive director with a fair market value of $8.44 per option. Subject to continued employment, these options with $18.00 exercise price, vest annually in five equal tranches from June 9, 2016. The charge for the grant has been accrued under 'Management scheme'.
300,000 'A' ordinary share options to the Group CFO with a fair market value of $6.90 per option. Subject to continued employment, these options with $18.30 exercise price, vest annually in three equal tranches from June 9, 2015.
300,000 'A' ordinary share options to a certain employee with a fair market value of at $7.00 per option. Subject to continued employment, these options with $18.50 exercise price, vest annually in three equal tranches from June 9, 2015.
The charge for the aforementioned grants has been accrued under '2014 Share Plan'.
Following grants were approved in its subsequent meetings as under:
On August 4, 2015, the Company’s Employee Benefit Trust entered into a Joint ownership deed (the “2015 JSOP deed”) with certain employees in respect of 380,000‘A’ ordinary shares. These options issued at a strike price of $24.00 and fair value of $15.66. Subject to continued employment and market conditions set out in the 2015 JSOP deed and vests in May 2017.
The vesting and service conditions of all other plans are consistent with the arrangements disclosed in the audited consolidated financial statements and related notes included within the Amended Annual Report on Form 20-F filed with SEC on August 20, 2015.
|
EARNINGS PER SHARE |
||||||||||||||||||||||||||
| Three months ended September 30, | Six months ended September 30, | |||||||||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||||||||||
| (in thousands, except number of shares and earnings per share) | ||||||||||||||||||||||||||
| Basic | Diluted | Basic | Diluted | Basic | Diluted | Basic | Diluted | |||||||||||||||||||
| Earnings/(loss) attributable to the equity holders of the parent | $ | 7,611 | 7,611 | $ | 2,923 | 2,923 | $ | 7,826 | 7,826 | $ | (936) |
|
(936) | |||||||||||||
| Potential dilutive effect related to share based compensation scheme in subsidiary undertaking | — | (180) | — | (49) | — | (299) | — | (83) | ||||||||||||||||||
| Adjusted earnings/(loss) attributable to equity holders of the parent |
$ |
7,611 | 7,431 | $ | 2,923 | 2,874 | $ | 7,826 | 7,527 | $ | (936) | (1,019) | ||||||||||||||
| Number of shares | ||||||||||||||||||||||||||
| Weighted average number of shares | 57,839,364 | 57,839,364 | 54,855,355 | 54,855,355 | 57,535,047 | 57,535,047 | 51,948,580 | 51,948,580 | ||||||||||||||||||
| Potential dilutive effect related to share based compensation scheme | — | 2,426,773 | — | 541,111 | — | 1,672,854 | — | — | ||||||||||||||||||
| Adjusted weighted average number of shares | 57,839,364 | 60,266,137 | 54,855,355 | 55,396,466 | 57,535,047 | 59,207,901 | 51,948,580 | 51,948,580 | ||||||||||||||||||
| Earnings per share | ||||||||||||||||||||||||||
| Earning attributable to the equity holders of the parent per share (cents) | 13.2 | 12.3 | 5.3 | 5.2 | 13.6 | 12.7 | (1.8) | (2.0) | ||||||||||||||||||
The above table does not split the earnings per share separately for the ‘A’ ordinary 30p shares and the ‘B’ ordinary 30p shares as there is no variation in their entitlement to participate in undistributed earnings.
|
OTHER (LOSSES)/GAINS |
|||||||||||||
|
Three months ended |
Six months ended |
||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||
| (in thousands) | |||||||||||||
| Gains on disposal of property, plant and equipment | $ | 2 | $ | — | 2 | $ | 3 | ||||||
| Net foreign exchange (losses)/gains | (19) | (598) | 142 | 205 | |||||||||
| Net (losses)/gains on held for trading financial liabilities | (4,999) | 396 | (1,084) | (2,009) | |||||||||
| Transaction costs related to equity transactions | — | (86) | — | (86) | |||||||||
| $ | (5,016) | $ | (288) | $ | (940) | $ | (1,887) | ||||||
The net (losses)/gains on held for trading financial liabilities in the three and six months ended September 30, 2015 and 2014, respectively, principally relate to derivative instruments not designated in a hedging relationship.
SIGNIFICANT NON-CASH EXPENSES
Significant non-cash expenses except loss on sale of assets, share based compensation, depreciation, derivative interest and amortization were as follows:
|
Six months ended |
|||||||
| 2015 | 2014 | ||||||
| (in thousands) | |||||||
| Net (gains)/losses on held for trading financial liabilities | $ | 1,084 | $ | 2,009 | |||
| Others | (82) | 189 | |||||
| $ | 1,002 | $ | 2,198 | ||||
| Three months ended September 30, |
|
Six months ended September 30, |
||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||
| (in millions) | ||||||||||||
| Net income | $ | 11,015 | $ | 4,324 | $ | 14,782 | $ | 1,736 | ||||
| Income tax expense | 7,572 | 3,148 | 9,868 | 4,689 | ||||||||
| Net finance costs | 2,549 | 715 | 4,692 | 2,335 | ||||||||
| Depreciation | 243 | 364 | 422 | 606 | ||||||||
| Amortization(1) | 278 | 181 | 464 | 247 | ||||||||
| Share based payments(2) | 9,382 | 5,466 | 16,276 | 10,248 | ||||||||
| Net losses/(gains) on held for trading financial liabilities | 4,999 | (396) | 1,084 | 2,009 | ||||||||
| Transaction costs related to equity transactions | - | 86 | - | 86 | ||||||||
| Adjusted EBITDA | $ | 36,038 | $ | 13,888 | $ | 47,588 | $ | 21,956 | ||||
| (1) | Includes only amortization of intangible assets other than intangible content assets. | |
| (2) | Consists of compensation costs recognized with respect to all outstanding plans and all other equity settled instruments. |