ISLE OF MAN, United Kingdom--(BUSINESS WIRE)--Eros International Plc (NYSE: EROS) (“Eros” or “the Company”), a leading global Indian film and digital studio, today announced unaudited financial results for the three months ended June 30, 2018.
Financial Highlights:
| Q1 FY 2019 Highlights |
|
(1) A reconciliation of the non-GAAP financial measures discussed within this release to our GAAP operating results are included at the end of this release. See also “Non-GAAP Financial Measures.”
Key Business Highlights:
- As of June 30, 2018, Eros Now worldwide paying subscribers increased by 248.3% year-over-year and 27.8% sequentially to 10.1 million. The Company is reiterating its guidance of 16 million paying subscribers by fiscal year end 2019.
- As of June 30, 2018, Eros Now has exceeded 113 million registered users worldwide across APP, WAP and Web.
- Over the next year, Eros Now is planning to launch a stable of feature films, made-for-digital originals films and over 20 original episodic programs, all of which will be available exclusively on Eros Now to paying subscribers. Three original series, Side Hero, Flip and Smoke, will be launched in the next few weeks. Originals will feature popular names like Rohan Sippy, Kunal Roy Kapoor, Rajat Kapoor, Siddharth Anand and Pavan Kriplani in various capacities.
- Eros Now announced a partnership with InMobi, a leading global digital marketing platform. The partnership will for the first time enable advertisers to directly monetise on Eros Now’s video platform.
- Eros Now reinforced its mission of non-stop entertainment, anytime, anywhere with one-of-a-kind brand campaign ‘Bolo Kya Dekhogey.’ The campaign, which rolled out three television commercials, reiterates Eros Now’s leadership position in the movie category, offering its extensive movie library across languages.
- Eros released 14 films in Q1 FY2019 (one medium budget and 13 small budget films) as compared to five films in Q1 FY2018 (one high budget, one medium budget and three small budget films). This is in line with Eros’ strategy of developing its own intellectual property and concentrating on content-driven films rather than high budget star-driven films.
- Bhavesh Joshi (Hindi), Meri Nimmo (Digital release), Blackmail (Overseas), Haami (Bengali), Goodnight City (Bengali), Alinagarer Golokdhadha (Bengali) and others were the main revenue contributing films during the first quarter.
- Reliance Industries Ltd (“RIL” or “Reliance”) completed its acquisition of a 5% equity stake in Eros at a price of $15 per share for a total cash consideration of $46.6 million on August 6, 2018.
- On a pro forma basis including the $46.6 million equity investment from RIL, Eros’ net debt as of June 30, 2018 is $140.2 million and the net leverage ratio is 1.71x.
- Eros formed a ground-breaking joint venture with V. Vijayendra Prasad, one of India’s top screen-writers and directors. The exclusive collaboration will build a quality content pipeline through joint development of scripts and production and distribution of films and web-series.
- Eros also partnered with Phars Film, one of the UAE’s largest film distribution and exhibition networks. Eros also intends to partner with Pana Film, one of the largest Turkish film studios for Indo-Turkish co-productions.
- Eros releases ‘Bajrangi Bhaijaan’ in Turkey across 190 screens after over $45 million in box office collection in China.
- Eros also has a distribution partnership with Central Partnership in Russia, which may open new markets for Eros releases. These strategic partnerships not only help Eros augment its in-house content production model, but also expand the geographical canvas for content monetization.
Kishore Lulla, Eros’ Group Executive Chairman and Chief Executive Officer, stated:
“We delivered a strong set of results this quarter, underscoring our market leadership, solid business fundamentals and continued growth in our digital platform, Eros Now. As we continue to develop our digital offering and adapt to the dynamic global media landscape we operate in, I want to reflect on the journey we have taken so far. At our core we are, and always have been, a content company delivering premium Indian filmed entertainment to the masses with unparalleled distribution capacity. Almost 20 years ago, Eros developed the first vertically integrated film studio model in India. We combined premium content production and acquisition abilities with best-in-class international distribution reach. Over the last decade we have witnessed many of the major Hollywood studios make their entries into India. It is a testament to our content offering, brand strength and people that we have been able to maintain and grow our market share in the face of this competition.
We are also proud to have one the deepest and richest Indian content libraries in the world. Over the last 10 years Eros has been responsible for 30 of the top 100 highest grossing box office films in India. We must not forget that even in the digital age, premium content is still immensely valuable. Our industry relationships spanning over 40 years allow us access to the best talent across the nation. Our library is constantly evolving and replenished every year with new and innovative content that appeals to all consumers.
We continue to focus on appropriate budget films promising high IRR’s based on our unique portfolio approach. As we increase production across genres and languages, the stories we tell are driven and backed by pre-sale potential with reduced reliance on box office success. The real star of today is the story being told on screen. We are especially excited about our upcoming theatrical slate this year, in addition to our upcoming slate of Eros Now original releases. Our content partnership with Reliance, new venture with V. Vijayendra Prasad and continued relationship with Aanand Rai are all instrumental to our future and will be keys to our success.”
Rishika Lulla, Chief Executive Officer, Eros Digital who received the award for ‘Women leadership in Industry’ at the Times National Awards for Marketing Excellence, commented:
“The continued strength of our digital entertainment offering was once again a significant driving force behind our solid start to Fiscal 2019. With our diversified and unparalleled library we continue to see growing consumer appetite for compelling content. We are excited to have the largest paying and registered users, beating our own target of 2 million every quarter to be at 10.1 million paying subs this quarter. Our new partnership with InMobi will also allow us to start monetising our 113 million plus registered user base while still being an SVOD model. Living up to our core philosophy of innovative and non-intrusive ad formats, we will also be experimenting with new concepts such as allowing brands to engage seamlessly with branded and high quality digital content.
We truly believe that Eros Now’s extensive content bouquet will satisfy the insatiable appetite of our audiences and further enhance our commitment to be the source of entertainment with penetration in 100 cities across India. This is a significant expansion and with the best talent on board in our industry for movies and originals, we aim to capture an even larger audience with our upcoming star studded ‘Originals’ slate starting with ‘Side Hero’, the first ever Indian original comedy-drama featuring Kunal Roy Kapoor and directed by Rohan Sippy.
India is undergoing a digital revolution which is further fuelled by Reliance Giga venture and other telcos bringing consumers a seamless connectivity experience, where Indian OTT players are now leaving no stone unturned to lure the viewers to sign up. Eros Now with its matchless proposition of 52 weeks of 52 premiers across genre and languages is uniquely positioned to execute a wide distribution strategy with a library of over 11,000 films spread across over nine Indian languages. According to our proprietary data, the longest content format is the most engaging where the best movies on Eros Now gets viewed in less than two sessions and an engaged viewer returns at least three times a week, spending a minimum of 40 Minutes, making it safe to say that Eros Now is the best engagement platform.”
Prem Parameswaran, Group Chief Financial Officer and President of North America, also commented:
“I am pleased with our first quarter performance, highlighted by strong margin expansion, continued balance sheet strength and solid subscriber additions out of our Eros Now business. We believe the Company is now firing on all cylinders as our Adjusted EBITDA growth and margin expansion is at 21.5% and 587 bps respectively. This coupled with our conservative balance sheet with net debt leverage ratio of 2.28x has us poised for growth in the coming fiscal year.
Having reached over 10.1 million paying subscribers in Eros Now through the end of the First Quarter, we are confident in continuing to grow our subscriber base over the next few years, especially given our premium content offering coupled with the large Indian and global market opportunities.”
Business Outlook
- Eros has a compelling film slate planned for the rest of Fiscal Year 2019, including films such as Çolor Yellow Productions “Happy Phir Bhaag Jayegi”, Anurag Kashyap’s “Manmarziyan”, Namaste England (Overseas), Helicopter Eela (Overseas), trilingual “Haathi mere Saathi.” Eros looks forward to releasing Hindi, Bengali, Marathi, Tamil, Punjabi, and Malayalam films during the year.
- Eros’ first Indo-China film is starting production next year. The Company is currently in pre-production, completing the writing and casting developments.
Eros Now
Partnerships & Developments:
- Eros Now, in association with Dab Gaming Ltd, launched Eros Now Betz, a unique app created for millions of football lovers globally. The app allows users to be a part of the on-going matches and experience victory as their teams also win along. This association also offered Eros Now Betz’s users the accessibility to Eros Now’s unparalleled movie library of 11,000 plus films, free for a period of one month.
- Eros Now announced a strategic partnership with Xiaomi Mi TV, enhancing Eros Now’s distribution to the larger screen in India and then across Asia. Eros Now is now available within Patchwall on all Mi TVs sold in India, giving all users access to its compelling bouquet of Bollywood and regional language films, entertainment shows, music videos and originals.
- Eros Now partnered with Sri Lanka’s premier connectivity provider, Dialog Axiata, for best in regional content allowing users to seamlessly browse through over 20,000 hours of original Indian content in over 10 languages. Available via the Dialog ViU app, Eros Now gives subscribers access to a high-quality content library which comprises of over 11,000 plus movies with multi language subtitles, originals, music and entertainment shows in High Definition (HD).
- With a base of over 113 million registered users, Eros’ partnership with InMobi will enable brands to advertise to their target audiences through Eros Now for the first time. Over 95% viewership on the platform belongs to the core target audience (M/F 18-30).
- Eros Now reinforced its mission of non-stop entertainment, anytime, anywhere with one-of-a-kind brand campaign ‘Bolo Kya Dekhogey.’ The campaign, which rolled out three television commercials, reiterated Eros Now’s leadership position in the movie category, offering its extensive movie library across languages.
- Eros Now is engaged with the best social media fan base in the country, with less than 1% dropout from Instagram and Facebook traffic driven to the platform.
- Eros Now announced a partnership with Gold’s Gym in India, offering Gold’s Gym members a 60% discount on Eros Now’s annual subscription. The partnership offers Gold’s Gym’s 134 fully equipped gyms across 85 cities in India.
- Eros Now successfully closed multiple marketing partnerships with Natures Basket, Voonik and Paytm (Kicking off a 70% cash back offer).
Content:
This quarter Eros Now successfully premiered 11 movies across five Indian languages: Hindi, Marathi, Tamil, Telegu and Gujarati. Eros continues to invest in a diverse range of content to fulfill penetration across 100 cities in India.
| Eros Now Q1 FY19 Premieres | |||
| Film Title |
Language |
||
| Zindagi Virat | Marathi | ||
| Meri Nimmo | Hindi | ||
| Mukkabaaz | Hindi | ||
| Mo | Tamil | ||
| Chitthi | Marathi | ||
| Duniyadari | Gujarati | ||
| Dhol Taashe | Marathi | ||
| Aav Taru Kari Nakhu | Gujarati | ||
| Madura Veeran | Tamil | ||
| Gavthi | Marathi | ||
| Oru Kidayin Karunai Manu | Tamil | ||
Eros successfully premiered India’s first straight-to-digital film, Anand L Rai’s first Eros Now original Meri Nimmo, on the platform and is excited for its slate of originals that are being produced internally in partnership with the best talent. Global concepts that will entertain audiences are being produced internally. A selection of upcoming titles includes:
- Side Hero with Rohan Sippy: Featuring Kunaal Roy Kapur as a fictionalised version of himself – the less successful younger brother of a hotshot Bollywood producer and star – this comedy-drama follows Kunaal trying to land a leading role in a bid to prove that his profession of acting is not just a ‘hobby.’ (Target release September 2018)
- Smoke: An unflinching look at the politics within the drug mafia that resides in the intoxicant riddled underbelly of its tropical paradise, Goa. Smoke is led by an all-star cast including Jim Sarbh, Gulshan Devaiah, Kalki Koechlin, Mandira Bedi, Tom Alter amongst others. (Target release October 2018)
- Dashavatar with Anirudh Pathak: When mankind became corrupt and greedy, Vishnu, the protector of the realms, incarnated to vanquish evil and save the world. Dashavatar tells this fascinating story of Vishnu’s reincarnations. (Target release December 2018/January 2019)
- Ponnyin Selvin with Krish Jagarlamudi: A multi-seasonal, multi-lingual show based on the famous Tamil novels. Written in five volumes, Ponniyin Selvan narrates the story of Arulmozhivarman – later crowned as Rajaraja Chola I - one of the kings of the Chola Dynasty, during the 10th and 11th centuries. (Target release March 2019)
- Flesh with Siddharth Anand: An eight-year-old girl goes missing and her NRI parents are forced to seek the help of a suspended female cop in their search for her. An ex-human trafficker is blackmailed to join the search or else risk his sinful past catching with him. (Target release March 2019)
- Mrityulok with Zeishan Qadri: A story that shows a mirror to the ruthless, selfish face of the society and how we all are culprits in a system that offers no incentive to “be good”. (Target release March 2019)
- Bhumi with Pavan Kripilani: A survival thriller set in a dystopian version of Delhi which begs the question, how far is our reality from this supposedly fictional dystopia? (Target Release April 2019)
- Crisis with Nikhil Advani and Gaurav Chawla: On the day of his 50th birthday, Dr Gopichand Wadhwani – one of India’s top cardiologists – decides to follow his childhood dream and become a rapper. Crisis is a story of two generations coming together to help each other get from life what they want. (Target Release May 2019)
- Sanyasi Raja with Prakash Jha: A fictional depiction of the infamous Bhawal case of West Bengal, in which a possible imposter claimed to be the prince of Bhawal, who was at that point presumed dead for over a decade. (Target release June 2019)
- Kurukshetra: The tribals thought they were Gods. The army thought they were militants. What they turn out to be, are five children with ‘superpowers’ emerging from a genetic mutation. And with destinies that, almost uncannily, resemble the trajectory of the Mahabharata. (Target release TBD)
- Blue Oak Academy: A teen-drama thriller that follows one young boy’s quest to exact revenge with the most prestigious academic institution of the nation. (Target release June 2019)
Apart from this, Eros also has a selection of upcoming short form content and short film anthologies to accompany this slate.
Theatrical Release Slate
Eros has a solid stable of upcoming theatrical releases covering many genres and regional languages. Selected key titles include:
| Tentative | |||||||||||||||
| Film Name | Star Cast/(Director/Producer) | Language | Release | ||||||||||||
| Happy Phir Bhaag Jayegi | Sonakshi Sinha, Abhay Deol, Jimmy Shergill (Mudassar Aziz / Colour Yellow Productions) | Hindi | Q2 FY2019 | ||||||||||||
| Manmarziyaan | Abhishek Bachchan, Vicky Kaushal, Tapsee Pannu (Anurag Kashyap / Colour Yellow Productions) | Hindi | Q2 FY2019 | ||||||||||||
| Helicopter Eela (Overseas) | Kajol, Riddhi Sen, Tota Roy Chowdhury (Pradeep Sarkar) | Hindi | Q2 FY2019 | ||||||||||||
| Tumbbad | Sohum Shah, Harish Khanna (Colour Yellow Productions/ A Little Town Productions) | Hindi | Q3 FY2019 | ||||||||||||
| Namaste England (Overseas) | Arjun Kapoor, Parineeti Chopra (Vipul Amrutlal Shah) | Hindi | Q3 FY2019 | ||||||||||||
| Boyz II | (Everest Entertainment) | Marathi | FY2019 | ||||||||||||
| Haathi Mere Saathi | Rana Dugabatti (Prabhu Soloman) | Hindi / Tamil / Telugu | FY2019 | ||||||||||||
| Ticket to Bollywood | Amyra Dastoor, Diganth Manchale / (Eros) | Hindi | FY2019 | ||||||||||||
| Kaptan | Saif Ali Khan, Zoya and others (Navdeep Singh / ColourYellow Productions) | Hindi | FY2019 | ||||||||||||
| Mumbai Pune Mumbai 3 | Swapnil Joshi, Mukta Barve | Marathi | FY2019 | ||||||||||||
| Nervazhi | Nayanthara (Bharath Krishna) | Tamil | FY2019 | ||||||||||||
| Guru Tegh Bahadur | (Harry Baweja) | Punjabi | FY2019 | ||||||||||||
| Kaamiyab | Drishyam Films | Hindi | FY2019 | ||||||||||||
| Cobra | Gautam Ghulati, Tarun Khanna, Nyra Banerjee, Ruhi Singh, Director - Munesh Rawal | Hindi | FY2019 | ||||||||||||
| Untitled | Ravi Vasudevan | Malayalam | FY2019 | ||||||||||||
| Annum Pennum | Rajish Parameshwaran | Malayalam | FY2019 | ||||||||||||
| Untitled | Vijith Nambiar | Malayalam | FY2019 | ||||||||||||
| Untitled | (Homi Adajania / Maddock Films) | Hindi | FY2019 | ||||||||||||
| Jaita | Harman Baweja (Harry Baweja) | Hindi | FY2019 | ||||||||||||
| Ankhen 2 | Amitabh Bachchan & Others | Hindi | FY2020 | ||||||||||||
| Shubh Mangal Savdhan - 2 | (Colour Yellow Productions) | Hindi | FY2020 | ||||||||||||
| Panda (Indo-China) | (Kabir Khan) | Hindi | FY2020 | ||||||||||||
| Tannu Weds Manu 3 | Anand L Rai | Hindi | FY2020 | ||||||||||||
| Roam Rom Mein | Nawazuddin Siddiqui & others (Tanishtha Chatterjee / Rising Star Entertainment) | Hindi | FY2020 | ||||||||||||
| Chandamama Door Ke | Sushant Singh Rajput, Nawazuddin Siddiqui (Sanjay Puran Singh) | Hindi | FY2020 | ||||||||||||
| Pitch White | (Vipul Shah) | Hindi | FY2020 | ||||||||||||
| Untitled | (Rahul Dholakia / Next Gen Films) | Hindi | FY2020 | ||||||||||||
| Heer | (Colour Yellow Productions) | Hindi | FY2020 | ||||||||||||
| Fake | (Raj & DK) | Hindi | FY2020 | ||||||||||||
| Re-Union | (Sujoy Ghosh) | Hindi | FY2020 | ||||||||||||
| Hera Pheri -3 | Suniel Shetty and others | Hindi | FY2020 | ||||||||||||
| Phobia 2 | (Next Gen Films - Pawan Kriplani) | Hindi | FY2020 | ||||||||||||
| 2 Guns | (Krishna Jagarlamudi) | Hindi | FY2020 | ||||||||||||
| R. Rajkumar 2 | (PrabhuDeva / Next Gen Films) | Hindi | FY2020 | ||||||||||||
| Khalifey | Sanjay Dutt, SaifAli Khan, Arshad Warsi (Prakash Jha) | Hindi | FY2020 | ||||||||||||
| Make in India | (Next Gen Films) | Hindi | FY2020 | ||||||||||||
| Jugaadu | Harman Baweja | Hindi | FY2020 | ||||||||||||
| 1234 (Part 2) | SunielShetty, Paresh Rawal (Ashwni Dhir) | Hindi | FY2020 |
Eros International Plc Financial Highlights:
| Three Months Ended | ||||||||
|
June 30 |
||||||||
| (dollars in millions) | 2018 | 2017 | % change | |||||
| Revenue | 60.2 | $ | 60.8 | (1.0) | ||||
| Gross profit | 23.6 | 25.9 | (8.9) | |||||
| Operating profit | 10.4 | 11.7 | (11.1) | |||||
| Adjusted EBITDA(1) | 19.2 | 15.8 | 21.5 | |||||
| Adjusted Gross EBITDA(1) | 47.7 | 47.8 | (0.2) | |||||
(1) A reconciliation of the non-GAAP financial measures discussed within this release to our GAAP operating results are included at the end of this release. See also “Non-GAAP Financial Measures.”
Financial Results for the Three Months Ended June 30, 2018
Revenue
In the three months ended June 30, 2018, the Eros’ film slate was comprised of 14 films of which one was medium budget film and 13 were low budget films as compared to five films in the three months ended June 30, 2017, of which one was high budget, one was medium budget and three were low budget films.
In the three months ended June 30, 2018, the Company’s slate of 14 films comprised of three Hindi films, two Tamil films and nine regional language films as compared to the same period last year where its slate of five films comprised one Hindi film, one Tamil film and three regional films.
| Three months ended | High | Medium | Low | Total | |||||||||||||||
| June 30, 2018 | 1 | 13 | 14 | ||||||||||||||||
| June 30, 2017 | 1 | 1 | 3 | 5 |
The gross revenue for June 30, 2018 is $64.3 million compared to $60.8 million for the three months ended June 30, 2017. But due to credit impairment loss adjustment amounting to $4.1 million on adoption of IFRS 9, the reported net revenue is $60.2 million for the three months ended June 30, 2018.
For the three months ended June 30, 2018, aggregate theatrical revenues decreased by 36.9% to $14.9 million from $23.6 million for the three months ended June 30, 2017, primarily due to the mix of films.
For the three months ended June 30, 2018, aggregate revenues from television syndication increased by 7.5% to $18.7 million from $17.4 million for the three months ended June 30, 2017, mainly due to increased catalogue revenues.
For the three months ended June 30, 2018, the aggregate revenues from digital and ancillary increased by 34.3 % to $26.6 million from $19.8 million for the three months ended June 30, 2017 primarily on account of contribution from catalogue revenues and revenues from digital business .
Revenue from India decreased by 13.4% to $22.0 million in the three months ended June 30, 2018, compared to $25.4 million in the three months ended June 30, 2017 primarily due to the mix of films .
Revenue from Europe increased by 59.4% to $15.3 million in the three months ended June 30, 2018, compared to $9.6 million in the three months ended June 30, 2017. This was due to higher contribution from the monetization of catalogue films.
Revenue from North America increased by 50% to $0.3 million in the three months ended June 30, 2018, compared to $0.2 million in the three months ended June 30, 2017.
Revenue from the rest of the world decreased by 12.1% to $22.6 million in the three months ended June 30, 2018, compared to $25.7 million in the three months ended June 30, 2017. This was on account of relatively lower theatrical revenue from the film slate.
Cost of sales
For the three months ended June 30, 2018, cost of sales increased by 4.6% to $36.6 million compared to $35.0 million in the three months ended June 30, 2017. The increase was mainly due to higher marketing and advertising costs, partially offset on account of lower amortization cost of film intangibles and content rights.
Gross profit
For the three months ended June 30, 2018, gross profit decreased by 8.9% to $23.6 million, compared to $25.9 million in the three months ended June 30, 2017. As a percentage of revenues, the Company’s gross profit margin was 39.2% in the three months ended June 30, 2018, compared to 42.6% in the three months ended June 30, 2017. The decrease was mainly due to higher marketing costs and credit impairment loss adjustment amounting to $4.1 million on adoption of IFRS 9, partially offset on account of lower amortization cost of film intangibles and content rights.
Administrative costs
For the three months ended June 30, 2018, administrative costs decreased by 7.0 % to $ 13.2 million compared to $14.2 million for the three months ended June 30, 2017. The administrative costs for the three months ended June 30, 2018 is after considering charge of credit impairment amounting to $1.6 million on adoption of IFRS 9. Thus, gross administrative costs has been decreased by $2.6 million mainly on account of reduction in other administrative costs and decrease in share based compensation costs.
EBIT (Non- GAAP)
For the three months ended June 30, 2018, gross EBIT is $16.2 million compared to $11.7 million in the three months ended June 30, 2017. But due to credit impairment charge on revenue and administrative cost amounting to $4.1 million and $1.6 million respectively on adoption of IFRS 9, the net EBIT is $10.4 million for the three months ended June 30, 2018
Adjusted EBITDA (Non- GAAP)
For the three months ended June 30, 2018, Adjusted EBITDA increased by 21.5% to $19.2 million compared to $15.8 million in the three months ended June 30, 2017 mainly due to lower amortization cost of intangible film and content rights, partially offset on account of higher marketing and advertisement cost.
Net finance costs
For the three months ended June 30, 2018, net finance costs decreased by 57.4% to $2.3 million, compared to $5.4 million in the three months ended June 30, 2017 mainly due to unwinding of credit impairment loss by $2.1 million and reduction in borrowing costs.
Income tax expense
For the three months ended June 30, 2018, income tax expenses decreased by 3.3% to $2.9 million, compared to $ 3 million in the three months ended June 30, 2017. Effective income tax rates were 15.0% and 30.5% for June 30, 2018 and June 30, 2017, respectively excluding non-deductible share-based payment charges and gain/loss on fair valuation of financial instrument including derivatives. The change in effective rate principally reflects a change in the mix of the profits earned from taxable and non- taxable jurisdictions.
Trade Receivables
As of June 30, 2018, trade receivables decreased to $208.5 million from $225.0 million as of March 31, 2018.
Net Debt
As of June 30, 2018, net debt decreased by 1.3% to $186.8 million from $189.2 million as of March 31, 2018.
Conference Call:
The Company will host a conference call on Thursday, August 23, 2018, at 8:30 AM Eastern Standard Time.
To access the call please dial 929-477-0448 or 888-254-3590 from the United States, or 44 (0) 330 336 9411 or 44 (0) 800 279 7204 from outside the U.S. The conference call I.D. number is 5688153. Participants should dial in 5 to 10 minutes before the scheduled time.
A replay of the call can be accessed through August 30, 2018 by dialing 719-457-0820 or 888-203-1112 from the U.S., or 44 (0) 207 660 0134 or 44 (0) 808 101 1153 from outside the U.S. The conference call I.D. number is 5688153. The call will be available as a live webcast, which can be accessed at Eros’ Investor Relations website.
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 3,000 films, which include Hindi, Tamil, and other regional language films. The Company also owns the rapidly growing OTT platform Eros Now which has rights to over 11,000 films across Hindi and regional languages. For further information, please visit: www.erosplc.com.
| EROS INTERNATIONAL PLC | ||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | ||||||||||
| (Amounts in thousands, except share and per share data) | ||||||||||
| June 30, | March 31, | |||||||||
| Note | 2018 | 2018 | ||||||||
| ASSETS | ||||||||||
| Non-current assets | ||||||||||
| Property and equipment | $ | 9,760 | $ | 10,013 | ||||||
| Goodwill | 3,800 | 3,800 | ||||||||
|
Intangible assets - trade name |
14,000 | 14,000 | ||||||||
|
Intangible assets - content |
5 | 1,004,763 | 998,543 | |||||||
|
Intangible assets - others |
4,795 | 5,280 | ||||||||
| Available-for-sale financial assets | 27,337 | 27,257 | ||||||||
| Trade and other receivables | 1 | 8,401 | 9,144 | |||||||
| Income tax receivable | 1,252 | 1,269 | ||||||||
| Restricted deposits | 1,505 | 1,100 | ||||||||
| Deferred income tax assets | 74 | 351 | ||||||||
| Total non-current assets | $ | 1,075,687 | $ | 1,070,757 | ||||||
| Current assets | ||||||||||
| Inventories | $ | 80 | $ | 353 | ||||||
| Trade and other receivables | 1 | 224,518 | 245,079 | |||||||
| Cash and cash equivalents | 86,054 | 87,762 | ||||||||
| Restricted deposits | 6,695 | 6,368 | ||||||||
| Total current assets | 317,347 | 339,562 | ||||||||
| Total assets | $ | 1,393,034 | $ | 1,410,319 | ||||||
| LIABILITIES | ||||||||||
| Current liabilities | ||||||||||
| Trade and other payables | $ | 75,560 | $ | 72,142 | ||||||
| Acceptances | 3 | 8,464 | 8,898 | |||||||
| Short-term borrowings | 2 | 160,229 | 151,963 | |||||||
| Current income tax payable | 8,879 | 6,324 | ||||||||
| Total current liabilities | $ | 253,132 | $ | 239,327 | ||||||
| Non-current liabilities | ||||||||||
| Long-term borrowings | 2 | $ | 112,628 | $ | 124,983 | |||||
| Other long-term liabilities | 2,884 | 3,073 | ||||||||
| Deferred income tax liabilities | 35,560 | 39,519 | ||||||||
| Total non-current liabilities | $ | 151,072 | $ | 167,575 | ||||||
| Total liabilities | $ | 404,204 | $ | 406,902 | ||||||
| EQUITY | ||||||||||
| Share capital | 4 | $ | 36,472 | $ | 35,334 | |||||
| Share premium | 491,357 | 453,997 | ||||||||
| Reserves | 398,044 | 422,992 | ||||||||
| Other components of equity | (55,333 | ) | (48,649 | ) | ||||||
| JSOP reserve | (15,985 | ) | (15,985 | ) | ||||||
| Share application money pending allotment |
- |
18,000 | ||||||||
| Equity attributable to equity holders of Eros International Plc | $ | 854,555 | $ | 865,689 | ||||||
| Non-controlling interest | 134,275 | 137,728 | ||||||||
| Total equity | $ | 988,830 | $ | 1,003,417 | ||||||
| Total liabilities and shareholder’s equity | $ | 1,393,034 | $ | 1,410,319 | ||||||
| EROS INTERNATIONAL PLC | ||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||
| (Amounts in thousands, except share and per share data) | ||||||||||
| Three Months Ended | ||||||||||
| June 30, | ||||||||||
| Note | 2018 | 2017 | ||||||||
| Revenue | 8 | $ | 60,212 | $ | 60,832 | |||||
| Cost of sales | (36,571 | ) | (34,955 | ) | ||||||
| Gross profit | 23,641 | 25,877 | ||||||||
| Administrative cost | (13,219 | ) | (14,186 | ) | ||||||
| Operating profit | 10,422 | 11,691 | ||||||||
| Financing costs | (4,927 | ) | (5,818 | ) | ||||||
| Finance income | 2,579 | 434 | ||||||||
| Net finance costs | (2,348 | ) | (5,384 | ) | ||||||
| Other gains/(losses) | 9 | (14,685 | ) | (1,523 | ) | |||||
| (Loss)/Profit before tax | (6,611 | ) | 4,784 | |||||||
| Income tax | (2,879 | ) | (2,986 | ) | ||||||
| (Loss)/Profit for the period | $ | (9,490 | ) | $ | 1,798 | |||||
| Attributable to: | ||||||||||
| Equity holders of Eros International Plc | $ | (13,591 | ) | $ | (1,327 | ) | ||||
| Non-controlling interest | 4,101 | 3,125 | ||||||||
| (loss) per share(cents) | ||||||||||
| Basic (loss) per share | 7 | (20.2 | ) | (2.2 | ) | |||||
| Diluted (loss) per share | 7 | (20.3 | ) | (2.3 | ) | |||||
| EROS INTERNATIONAL PLC | ||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||
| (Amounts in thousands, except share and per share data) | ||||||||
| Three Months Ended | ||||||||
| June 30, | ||||||||
| 2018 | 2017 | |||||||
|
(Loss)/Profit for the period |
$ | (9,490 | ) | $ | 1,798 | |||
| Other comprehensive Income: | ||||||||
| Items that will be subsequently reclassified to profit or loss | ||||||||
| Exchange differences on translating foreign operations | (11,147 | ) | (398 | ) | ||||
| Reclassification of the cash flow hedge to the statement operations, net of tax |
- |
187 | ||||||
| Total other comprehensive income/(loss) for the period | $ | (11,147 | ) | $ | (211 | ) | ||
| Total comprehensive income for the period, net of tax | $ | (20,637 | ) | $ | 1,587 | |||
| Attributable to: | ||||||||
| Equity holders of Eros International Plc | $ | (20,241 | ) | $ | (1,289 | ) | ||
| Non-controlling interest | (396 | ) | 2,876 | |||||
| EROS INTERNATIONAL PLC | ||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
| (Amounts in thousands, except share and per share data) | ||||||||||
| Three Months Ended | ||||||||||
| June 30, | ||||||||||
| Note | 2018 | 2017 | ||||||||
| Cash flows from operating activities: | ||||||||||
| (Loss)/Profit before tax | $ | (6,611 | ) | $ | 4,784 | |||||
| Adjustments for: | ||||||||||
| Depreciation | 248 | 263 | ||||||||
| Share based payment | 6 | 4,430 | 5,189 | |||||||
| Amortization of intangible film and content rights | 28,495 | 32,012 | ||||||||
| Amortization of other intangibles assets | 471 | 369 | ||||||||
| Other non-cash items | 10 | 20,678 | 1,482 | |||||||
| Net finance costs | 4,444 | 5,384 | ||||||||
| Loss on sale of property and equipment |
- |
4 | ||||||||
| Movement in trade and other receivables | (37,921 | ) | (21,810 | ) | ||||||
| Movement in inventories | 264 | 5 | ||||||||
| Movement in trade and other payables | 5,299 | 6,318 | ||||||||
| Cash generated from operations | 19,797 | 34,000 | ||||||||
| Interest paid(*) | (3,094 | ) | (5,948 | ) | ||||||
| Income taxes paid | (1,580 | ) | 98 | |||||||
| Net cash generated from operating activities | $ | 15,123 | $ | 28,150 | ||||||
| Cash flows from investing activities: | ||||||||||
| Purchases of property and equipment | (200 | ) | (107 | ) | ||||||
| Investment in restricted deposits held with banks | (1,102 | ) | (31 | ) | ||||||
| Purchase of intangible film and content rights (*) | (15,429 | ) | (35,037 | ) | ||||||
| Purchase of other intangible assets | (108 | ) |
- |
|||||||
| Interest received | 461 | 890 | ||||||||
| Net cash (used in) investing activities | $ | (16,378 | ) | $ | (34,285 | ) | ||||
| Cash flows from financing activities: | ||||||||||
| Proceeds from issue of share capital | 33 | 448 | ||||||||
| Proceeds from issue of shares by subsidiary | 20 |
- |
||||||||
| Proceeds from short-term debt | 20,786 | 20,327 | ||||||||
| Repayment of short-term debt | (18,300 | ) | (9,936 | ) | ||||||
| Proceeds from long-term debt | 76 |
- |
||||||||
| Repayment of long-term debt | (2,556 | ) | (3,067 | ) | ||||||
| Net cash generated from financing activities | $ | 59 | $ | 7,772 | ||||||
| Net increase/(decrease) in cash and cash equivalents | (1,196 | ) | 1,637 | |||||||
| Effect of exchange rate changes on cash and cash equivalents | (512 | ) | 813 | |||||||
| Cash and cash equivalents, beginning of period | 87,762 | 112,267 | ||||||||
| Cash and cash equivalents at the end of period | $ | 86,054 | $ | 114,717 | ||||||
(*)The cash outflow towards intangible film and content right includes, interest paid and capitalized during the period ended June 30, 2018 and June 30, 2017 of $3,115 and $,3,681 respectively.
| EROS INTERNATIONAL PLC | ||||||||||||
| (Amounts in thousands, except share and per share data) | ||||||||||||
| Reconciliation of Liabilities arising from Financing activities: | ||||||||||||
| Long term | Short term | |||||||||||
|
debt(*) |
debt | Total | ||||||||||
| As at March 31, 2018 | $ | 188,909 | $ | 87,755 | $ | 276,664 | ||||||
| Considered in cash flow (net) | (2,480 | ) | 2,486 | 6 | ||||||||
| Net finance cost | 3,000 |
- |
3,000 | |||||||||
| Movement in derivative financial instruments | 282 |
- |
282 | |||||||||
| Borrowing for purchase of property and equipment | 99 |
- |
99 | |||||||||
| Shares issued in lieu of convertible note | (19,391 | ) |
- |
(19,391 | ) | |||||||
| Convertible notes measured at fair value through profit and loss | 21,323 |
- |
21,323 | |||||||||
| Amortization of debt issuance cost | (153 | ) |
- |
(153 | ) | |||||||
| Exchange adjustment | (5,603 | ) | (3,370 | ) | (8,973 | ) | ||||||
| As at June 30, 2018 | $ | 185,986 | $ | 86,871 | $ | 272,857 | ||||||
(*) including current portion and derivative financial instruments
| EROS INTERNATIONAL PLC | ||||||||||||||||||||||||||||||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||||||||||||||||||||||||||||||||||||||||||
| (Amounts in thousands, except share and per share data) | ||||||||||||||||||||||||||||||||||||||||||
| Other components of equity | Reserves | |||||||||||||||||||||||||||||||||||||||||
| Equity | ||||||||||||||||||||||||||||||||||||||||||
| Available | Attributable to | |||||||||||||||||||||||||||||||||||||||||
| for sale | Shareholders | |||||||||||||||||||||||||||||||||||||||||
| Share | Currency | fair | Reverse | Share | of EROS | Non- | ||||||||||||||||||||||||||||||||||||
| Share | premium | translation | value | Revaluation | Hedging | acquisition | Merger | Retained | JSOP | Application | International | controlling | Total | |||||||||||||||||||||||||||||
| capital | account | reserve | reserves | reserve | reserve | reserve | reserve | earnings | reserve | Reserve | PLC | interest | equity | |||||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||||||||||||||||||
| Balance as at March 31, 2018 | $ | 35,334 | $ | 453,997 | $ | (56,722 | ) | $ | 6,238 | $ | 1,835 | $ |
- |
$ | (22,752 | ) | $ | 70,484 | $ | 375,260 | $ | (15,985 | ) | $ | 18,000 | $ | 865,689 | $ | 137,728 | $ | 1,003,417 | |||||||||||
| Adoption of IFRS 9 (Refer Note 3) |
- |
- |
(34 | ) |
- |
- |
- |
- |
- |
(14,270 | ) |
- |
- |
(14,304 | ) | (3,520 | ) | (17,824 | ) | |||||||||||||||||||||||
| Balance as at April 1, 2018 | $ | 35,334 | $ | 453,997 | $ | (56,756 | ) | $ | 6,238 | $ | 1,835 | $ |
- |
$ | (22,752 | ) | $ | 70,484 | $ | 360,990 | $ | (15,985 | ) | $ | 18,000 | $ | 851,385 | $ | 134,208 | $ | 985,593 | |||||||||||
| (Loss)/Profit for the period |
- |
- |
- |
- |
- |
- |
- |
- |
(13,591 | ) |
- |
- |
(13,591 | ) | 4,101 | (9,490 | ) | |||||||||||||||||||||||||
| Other comprehensive income/(loss) for the period |
- |
- |
(6,650 | ) |
- |
- |
- |
- |
- |
- |
- |
- |
(6,650 | ) | (4,497 | ) | (11,147 | ) | ||||||||||||||||||||||||
| Total comprehensive income/(loss) for the period |
- |
- |
(6,650 | ) |
- |
- |
- |
- |
- |
(13,591 | ) |
- |
- |
(20,241 | ) | (396 | ) | (20,637 | ) | |||||||||||||||||||||||
|
Shares issued on exercise of employee stock options and awards |
35 | 1,072 |
- |
- |
- |
- |
- |
- |
(1,074 | ) |
- |
- |
33 |
- |
33 | |||||||||||||||||||||||||||
| Share based Compensation |
- |
- |
- |
- |
- |
- |
- |
- |
4,264 |
- |
- |
4,264 | 166 | 4,430 | ||||||||||||||||||||||||||||
|
Changes in ownership interests in subsidiaries that do not result in a loss of control |
- |
- |
- |
- |
- |
- |
- |
(277 | ) |
- |
- |
- |
(277 | ) | 297 | 20 | ||||||||||||||||||||||||||
| Shares pending for allotment | 524 | 17,476 |
- |
- |
- |
- |
- |
- |
- |
- |
(18,000 | ) |
- |
- |
- |
|||||||||||||||||||||||||||
| Shares issued in lieu of convertible notes | 579 | 18,812 |
- |
- |
- |
- |
- |
- |
- |
- |
- |
19,391 |
- |
19,391 | ||||||||||||||||||||||||||||
| Balance as at June 30, 2018 | $ | 36,472 | 491,357 | (63,406 | ) | 6,238 | 1,835 |
- |
(22,752 | ) | 70,207 | 350,589 | (15,985 | ) |
- |
854,555 | 134,275 | 988,830 | ||||||||||||||||||||||||
| EROS INTERNATIONAL PLC | |||||||||||||||||||||||||||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | |||||||||||||||||||||||||||||||||||||||
| (Amounts in thousands, except share and per share data) | |||||||||||||||||||||||||||||||||||||||
| Other components of equity | Reserves | ||||||||||||||||||||||||||||||||||||||
| Equity | |||||||||||||||||||||||||||||||||||||||
| Available | Attributable to | ||||||||||||||||||||||||||||||||||||||
| for sale | Shareholders | ||||||||||||||||||||||||||||||||||||||
| Share | Currency | fair | Reverse | of EROS | Non- | ||||||||||||||||||||||||||||||||||
| Share | premium | translation | value | Revaluation | Hedging | acquisition | Merger | Retained | JSOP | International | controlling | Total | |||||||||||||||||||||||||||
| capital | account | reserve | reserves | reserve | reserve | reserve | reserve | earnings | reserve | PLC | interest | equity | |||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||||||||||||
| Balance as at April 1, 2017 | $ | 31,877 | $ | 399,686 | $ | (55,810 | ) | $ | 6,238 | $ | 1,829 | $ | (375 | ) | $ | (22,752 | ) | $ | 70,275 | $ | 389,474 | $ | (15,985 | ) | $ | 804,457 | $ | 79,091 | $ | 883,548 | |||||||||
| Profit for the period |
- |
- |
- |
- |
- |
- |
- |
- |
(1,327 | ) |
- |
(1,327 | ) | 3,125 | 1,798 | ||||||||||||||||||||||||
| Other comprehensive income/(loss) for the period |
- |
- |
(144 | ) |
- |
(5 | ) | 187 |
- |
- |
- |
- |
38 | (249 | ) | (211 | ) | ||||||||||||||||||||||
| Total comprehensive income/(loss) for the period |
- |
- |
(144 | ) |
- |
(5 | ) | 187 |
- |
- |
(1,327 | ) |
- |
(1,289 | ) | 2,876 | 1,587 | ||||||||||||||||||||||
| Share based compensation |
- |
- |
- |
- |
- |
- |
- |
- |
5,064 |
- |
5,064 | 125 | 5,189 | ||||||||||||||||||||||||||
| Shares issued on exercise of employee stock options and awards | 5 | 469 |
- |
- |
- |
- |
- |
- |
(474 | ) |
- |
- |
- |
- |
|||||||||||||||||||||||||
| Changes in ownership interests in subsidiaries that do not result in a loss of control |
- |
- |
- |
- |
- |
- |
- |
6,512 |
- |
- |
6,512 | 16,955 | 23,467 | ||||||||||||||||||||||||||
| Balance as at June 30, 2017 | $ | 31,882 | 400,155 | (55,954 | ) | 6,238 | 1,824 | (188 | ) | (22,752 | ) | 76,787 | 392,737 | (15,985 | ) | 814,744 | 99,047 | 913,791 | |||||||||||||||||||||
|
EROS INTERNATIONAL PLC |
||||||||
|
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS |
||||||||
|
(Amounts in thousands, except share and per share data) |
||||||||
|
1. TRADE AND OTHER RECEIVABLES |
||||||||
| As at | ||||||||
| June 30, | March 31, | |||||||
| 2018 | 2018 | |||||||
| Trade accounts receivables | $ | 238,137 | $ | 235,191 | ||||
| Credit impairment (loss) | (29,615 | ) | (10,193 | ) | ||||
| Trade accounts receivables net | 208,522 | 224,998 | ||||||
| Other receivables* | 19,909 | 20,933 | ||||||
| Share option receivables | 43 | — | ||||||
| Prepaid charges | 389 | 2,700 | ||||||
| Accrued revenues | 4,056 | 5,592 | ||||||
| Trade and other receivables | $ | 232,919 | $ | 254,223 | ||||
| Current | 224,518 | 245,079 | ||||||
| Non-current | 8,401 | 9,144 | ||||||
| $ | 232,919 | $ | 254,223 | |||||
|
2. BORROWINGS |
|||||||||||
|
An analysis of long-term borrowings is shown in the table below. |
|||||||||||
| As at | |||||||||||
| Nominal | June 30, | March 31, | |||||||||
| Interest Rate | Maturity | 2018 | 2018 | ||||||||
| Asset backed borrowings | |||||||||||
| Vehicle loan | 7.5% - 10.25% | 2017-21 | $ | 572 | $ | 560 | |||||
| Term loan | 9.12% - 11.66% | 2018-22 | 101 | — | |||||||
| Term loan | BPLR+2.85% | 2019-20 | 2,737 | 3,453 | |||||||
| Term loan | BPLR+2.55% - 3.4% | 2020-21 | 7,549 | 8,767 | |||||||
| Term loan | 13.75% | 2022-23 | 8,416 | 9,580 | |||||||
| Term loan | MCLR+3.45% | 2021-22 | 10,693 | 11,976 | |||||||
| $ | 30,068 | $ | 34,336 | ||||||||
| Unsecured borrowings | |||||||||||
| Retail bond | 6.5% | 2021-22 | $ | 66,033 | 70,055 | ||||||
| Convertible notes | 14.2% | 2020-21 | 90,942 | 86,010 | |||||||
| $ | 156,975 | $ | 156,065 | ||||||||
| Nominal value of borrowings | $ | 187,043 | $ | 190,401 | |||||||
| Cumulative effect of unamortized costs | (1,057) | (1,210) | |||||||||
| Installments due within one year | (73,358) | (64,208) | |||||||||
| Long-term borrowings | $ | 112,628 | $ | 124,983 | |||||||
Bank prime lending rate (“BPLR”) and Marginal Cost based lending rate (“MCLR”) is the Indian equivalent to LIBOR. Asset backed borrowings are secured by fixed and floating charges over certain Group assets.
| EROS INTERNATIONAL PLC | |||||||||
| NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS | |||||||||
| (Amounts in thousands, except share and per share data) | |||||||||
| Analysis of short-term borrowings | |||||||||
| As at | |||||||||
| Nominal | June 30, | March 31, | |||||||
| interest rate (%) | 2018 | 2018 | |||||||
|
|
|||||||||
| Asset backed borrowings | |||||||||
| Export credit bill discounting and overdraft | BPLR+1-3.5% | $ | 52,864 | $ | 43,518 | ||||
| Export credit and overdraft | LIBOR+4.5% | 20,958 | 21,226 | ||||||
| Short term loan | 13-14.25% | 13,049 | 11,537 | ||||||
| Other short-term loan | 10.20% |
- |
11,474 | ||||||
| $ | 86,871 | $ | 87,755 | ||||||
| Unsecured borrowings | |||||||||
| Installments due within one year on long-term borrowings | 73,358 | 64,208 | |||||||
| Short-term borrowings | $ | 160,229 | $ | 151,963 | |||||
Fair value of the long-term borrowings as at June 30, 2018 is $175,938 (March 31, 2018: $172,788). Fair values of long-term financial liabilities except retail bonds and convertible notes have been determined by calculating their present values at the reporting date, using fixed effective market interest rates available to the respective entities within the Group. As at June 30, 2018, the fair value of retail bond amounting to $59,694 (March 31, 2018: $58,218) has been determined using quoted prices from the London Stock Exchange (LSE). As at June 30, 2018, the fair value of convertible notes amounting to $90,942 has been determined using implied cost of debt as on the issue date. Carrying amount of short-term borrowings approximates fair value.
|
3. ACCEPTANCES |
|||||||
| June 30, | March 31, | ||||||
| 2018 | 2018 | ||||||
| Payable under the film financing arrangements | $ | 8,464 | $ | 8,898 | |||
| $ | 8,464 | $ | 8,898 | ||||
Acceptances comprise of short – term credit availed from financial institutions for payment to film producers for film co-production arrangement entered by the group. The carrying value of acceptances are considered a reasonable approximation of fair value.
|
4. ISSUED SHARE CAPITAL |
|||||||
|
Number of Shares |
GBP | ||||||
| Authorized | |||||||
| Ordinary shares of 30p each at March 31, 2018 | 100,000,000 | 30,000 | |||||
| Ordinary shares of 30p each at June 30, 2018 | 100,000,000 | 30,000 | |||||
| EROS INTERNATIONAL PLC | |||||||||||
| NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS | |||||||||||
| (Amounts in thousands, except share and per share data) | |||||||||||
| Number of Shares | USD | ||||||||||
| A Ordinary | B Ordinary | ||||||||||
| Allotted, called up and fully paid |
30p Shares(*) |
30p Shares(*) |
(in thousands) | ||||||||
| As at March 31, 2017 | 41,312,202 | 19,379,382 | $ | 31,877 | |||||||
| Issue of shares in the quarter ended June 30, 2017 | 12,000 |
- |
5 | ||||||||
| Issue of shares in the quarter ended September 30, 2017 | 288,291 |
- |
114 | ||||||||
| Issue of shares in the quarter ended December 31, 2017 | 1,681,520 |
- |
657 | ||||||||
| Transfer of B Ordinary to A Ordinary share | 9,666,667 | (9,666,667 | ) |
- |
|||||||
| Issue of shares in the quarter ended Mar 31, 2018 | 2,757,743 | 2,681 | |||||||||
| As at March 31, 2018 | 55,718,423 | 9,712,715 | $ | 35,334 | |||||||
| Issue of shares in the quarter ended June 30, 2018 | 2,747,645 |
- |
1,138 | ||||||||
| As at June 30, 2018 | 58,466,068 | 9,712,715 | 36,472 | ||||||||
The Company issued A Ordinary shares as follows:
| No. of shares | |||||||||||
| June 30, | March 31, | ||||||||||
| 2018 | 2017 | 2018 | |||||||||
| Issuance to Founders Group (**) | 1,225,323 |
- |
1,421,520 | ||||||||
| Issuance towards settlement of Convertible notes | 1,436,369 |
- |
2,624,668 | ||||||||
| Exercise against Restricted Stock Unit/ Management scheme | 76,370 | 12,000 | 683,158 | ||||||||
| 2015 Share Plan (***) | 9,583 |
- |
10,208 | ||||||||
| Total | 2,747,645 | 12,000 | 4,739,554 | ||||||||
(**) Average exercise price of $14.69 (June 2017 Nil and March 2018 $11.6)
(***)Average exercise price of $7.93 (June 2017 Nil and March 2018 $8.71)
(*) Each A ordinary shares is entitled to one vote on all matters and each B shares is entitled to ten votes.
Subsequent to the balance sheet date, the Company issued 3,111,088 A ordinary shares (to Reliance Industries Limited) for a total consideration of $46,666.
|
5. INTANGIBLE CONTENT ASSETS |
|||||||||||
| Gross | |||||||||||
| Content | Accumulated | Net Content | |||||||||
| Assets | Amortization | Assets | |||||||||
| As at June 30, 2018 | |||||||||||
| Film and content rights | $ | 1,504,465 | $ | (858,247 | ) | $ | 646,218 | ||||
| Content advances | 342,550 |
- |
342,550 | ||||||||
| Film productions | 15,995 |
- |
15,995 | ||||||||
| Non-current content assets | $ | 1,863,010 | $ | (858,247 | ) | $ | 1,004,763 | ||||
| As at March 31, 2018 | |||||||||||
| Film and content rights | $ | 1,493,099 | $ | (854,991 | ) | $ | 638,108 | ||||
| Content advances | 349,568 |
- |
349,568 | ||||||||
| Film productions | 10,867 |
- |
10,867 | ||||||||
| Non-current content assets | $ | 1,853,534 | $ | (854,991 | ) | $ | 998,543 | ||||
| EROS INTERNATIONAL PLC | |||||||
| NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS | |||||||
| (Amounts in thousands, except share and per share data) | |||||||
|
6. 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 | |||||||
| June 30, | |||||||
| 2018 | 2017 | ||||||
| IPO India Plan | $ | 428 | $ | 370 | |||
| JSOP Plan |
- |
615 | |||||
| Option award scheme 2012 |
- |
101 | |||||
| 2014 Share Plan | 47 | 259 | |||||
| 2015 Share Plan | 7 | 36 | |||||
| Other share option awards* | 1,461 | 1,568 | |||||
| Management scheme (staff share grant) | 2,487 | 2,240 | |||||
| $ | 4,430 | $ | 5,189 | ||||
(*) includes Restricted Share Unit (RSU) and Other share option plans.
In respect of 2,370 units/options granted towards RSU during the period ended June 30, 2018, grant date fair value approximates intrinsic value.
|
EROS INTERNATIONAL PLC |
||||||||||||||||
|
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS |
||||||||||||||||
|
(Amounts in thousands, except share and per share data) |
||||||||||||||||
|
7. EARNINGS PER SHARE |
||||||||||||||||
| Three months ended June 30, | ||||||||||||||||
| 2018 | 2017 | |||||||||||||||
| Basic | Diluted | Basic | Diluted | |||||||||||||
| (Loss) attributable to the equity holders of the parent | $ | (13,591 | ) | (13,591 | ) | $ | (1,327 | ) | (1,327 | ) | ||||||
| Potential dilutive effect related to share based compensation scheme in subsidiary undertaking | (115 | ) |
- |
(123 | ) | |||||||||||
| Adjusted (loss) attributable to equity holders of the parent | $ | (13,591 | ) | (13,706 | ) | $ | (1,327 | ) | (1,450 | ) | ||||||
| Number of shares | ||||||||||||||||
| Weighted average number of shares | 67,362,810 | 67,362,810 | 60,628,345 | 60,628,345 | ||||||||||||
| Potential dilutive effect of Senior Convertible Bonds and share based compensation scheme in subsidiary undertaking |
- |
75,383 |
- |
1,221,584 | ||||||||||||
| Adjusted earnings/(loss) attributable to equity holders of the parent | 67,362,810 | 67,438,193 | 60,628,345 | 61,849,929 | ||||||||||||
| Earnings per share | ||||||||||||||||
| Earning attributable to the equity holders of the parent per share (cents) | (20.2 | ) | (20.3 | ) | (2.2 | ) | (2.3 | ) | ||||||||
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.
|
8. BUSINESS SEGMENTAL DATA |
|||||||
| Three months ended | |||||||
| June 30, | |||||||
| 2018 | 2017 | ||||||
| Revenue by customer's location | |||||||
| India | $ | 25,831 | $ | 26,999 | |||
| Europe | 312 | 1,226 | |||||
| North America | 1,349 | 1,169 | |||||
| Rest of the world | 32,720 | 31,438 | |||||
| Total Revenue | $ | 60,212 | $ | 60,832 | |||
| Three months ended | |||||||
| June 30, | |||||||
| 2018 | 2017 | ||||||
| Revenue by group's operation | |||||||
| India | $ | 21,954 | $ | 25,368 | |||
| Europe | 15,296 | 9,566 | |||||
| North America | 297 | 180 | |||||
| Rest of the world | 22,665 | 25,718 | |||||
| Total Revenue | $ | 60,212 | $ | 60,832 | |||
|
EROS INTERNATIONAL PLC |
||||||||
|
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS |
||||||||
|
(Amounts in thousands, except share and per share data) |
||||||||
|
9. OTHER GAINS/(LOSSES) |
||||||||
| Three months ended | ||||||||
| June 30, | ||||||||
| 2018 | 2017 | |||||||
| Foreign exchange (loss)/gain, net | $ | 3,361 | $ | (1,702 | ) | |||
| (Loss) on sale of property and equipment |
- |
(4 | ) | |||||
| Reversal of expected credit loss | 4,581 |
- |
||||||
| Net losses on de-recognition of financial assets measured at amortized cost, net* | (1,304 | ) |
- |
|||||
| Gain /(Loss) on financial liability (convertible notes) measured at fair value through profit and loss | (21,323 | ) |
- |
|||||
| Others |
- |
183 | ||||||
| $ | (14,685 | ) | $ | (1,523 | ) | |||
(*) arising on assignment and novation of trade receivables and trade payables with no-recourse. Derecognition of aforesaid financial assets/liabilities measured at amortized cost is to mitigate both credit risk and liquidity risk
|
10. NON-CASH EXPENSE/(INCOME) |
||||||||
|
Significant non-cash expenses/(income) except loss on sale of assets, share based compensation, depreciation, derivative interest and amortization were as follows: |
||||||||
| Three months ended | ||||||||
| June 30, | ||||||||
| 2018 | 2017 | |||||||
| Net losses on de-recognition of financial assets measured at amortized cost, net | $ | 1,304 | $ |
- |
||||
| Expected credit loss, net | 1,412 |
- |
||||||
| Unrealized foreign exchange loss/(gain) | (3,361 | ) | 1,665 | |||||
| Loss on financial liability (convertible notes) measured at fair value through profit and loss | 21,323 |
- |
||||||
| Other |
- |
(183 | ) | |||||
| $ | 20,678 | $ | 1,482 | |||||
|
EROS INTERNATIONAL PLC |
||||||||
|
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS |
||||||||
|
(Amounts in thousands, except share and per share data) |
||||||||
|
11. NON GAAP-FINANCIAL MEASURES |
||||||||
|
Adjusted EBITDA (Non-GAAP) |
||||||||
| Three months ended June 30, | ||||||||
| 2018 | 2017 | |||||||
| (in thousand) | ||||||||
| Net income (GAAP) | $ | (9,490 | ) | $ | 1,798 | |||
| Income tax expense | 2,879 | 2,986 | ||||||
| Net finance costs | 2,348 | 5,384 | ||||||
| Depreciation | 248 | 263 | ||||||
| Amortization(1) | 471 | 369 | ||||||
| EBITDA | (3,544 | ) | 10,800 | |||||
| Share based payment(2) | 4,430 | 5,189 | ||||||
| Loss on sale of property and equipment |
|
4 | ||||||
| Reversal of expected credit loss | (4,581 | ) |
|
|||||
| Loss on de-recognition of financial assets measured at amortized cost, net | 1,304 |
|
||||||
|
Closure of derivative asset |
249 |
|
||||||
|
Loss / (Gain) on financial liability (convertible notes) measured at fair value through profit and loss |
21,323 |
|
||||||
| Others | (183 | ) | ||||||
| Adjusted EBITDA (Non-GAAP) | $ | 19,181 | $ | 15,810 | ||||
| Amortization of intangible film and content rights | 28,495 | 32,012 | ||||||
| Gross Adjusted EBITDA (Non-GAAP) | 47,676 | 47,822 | ||||||
(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.
EROS INTERNATIONAL PLC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
12. NEW STANDARDS ADOPTED AS AT APRIL 1, 2018
Adoption of IFRS 15, "Revenue from Contracts with Customers"
On April 1, 2018, the Company adopted IFRS 15, “Revenue from Contracts with Customers” (‘IFRS 15’), using the modified retrospective method applied to all contracts as of April 1, 2018. Results for reporting periods beginning after April 1, 2018 are presented under IFRS 15, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under IAS 18, Revenues (‘IAS 18’).
As a result of adopting IFRS 15, amounts reported under IFRS 15 were not materially different from amounts that would have been reported under the previous revenue guidance of IAS 18, as such, cumulative adjustment to retained earnings is not material.
The Company generates all of its revenue from contracts with customers. The Company recognizes revenue when it satisfies a performance obligation by transferring control of the promised services to a customer in an amount that reflects the consideration that we expect to receive in exchange for those services. The Company determines revenue recognition through the following steps:
| 1. | Identification of the contract, or contracts, with a customer. | |
| 2. | Identification of the performance obligations in the contract. | |
| 3. | Determination of the transaction price. | |
| 4. | Allocation of the transaction price to the performance obligations in the contract | |
| 5. | Recognition of revenue when, or as, we satisfy a performance obligation. |
At contract inception, the Company assesses the services promised in our contracts with customers and identify a performance obligation for each promise to transfer to the customer a service (or bundle of services) that is distinct. To identify the performance obligations, the Company considers all of the services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. The Company allocates the entire transaction price to a single performance obligation.
Five conditions must be met before revenue can be recognized: (i) there is persuasive evidence that an arrangement exists, (ii) the film is complete and has been delivered, (iii) the license period has begun, (vi) the price is fixed or determinable, and (v) collection is reasonably assured.
Adoption of IFRS 9, "Financial Instruments"
On April 1, 2018, the Company adopted IFRS 9, “Financial Instruments” (‘IFRS 9’), using the modified retrospective method applied as of April 1, 2018. IFRS 9 Financial Instruments replaces IAS 39 ‘Financial Instruments: Recognition and Measurement’ requirements with effect from April 1, 2018. When adopting IFRS 9, the Group elected not to restate prior periods. Rather, differences arising from the adoption of IFRS 9 in relation to classification, measurement, and impairment are recognised in opening retained earnings as at 1 April 2018.
Major changes in IFRS 9 as compared to IAS 39 is on account of introduction of the expected credit loss model and the changes in categories of financial assets and financial liabilities.
The adoption of IFRS 9 has mostly impacted the following areas:
- The classification and measurement of the Group’s financial assets. Management holds most financial assets to hold and collect the associated cash flows.
- The impairment of financial assets applying the expected credit loss model. This applies now to the Group’s trade receivables and other receivables. For contract assets arising from IFRS 15 and trade receivables, the Group applies a simplified model of recognising lifetime expected credit losses as these items do not have a significant financing component. For all other financial assets, expected credit losses are measured at an amount equal to the twenty-four month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL.
- the measurement of available for sale equity investments at cost less impairment. This investment is now measured at fair value with changes in fair value presented in other comprehensive income.
- the recognition of gains and losses arising from the Group’s from own credit risk. The Group continues to elect the fair value option for certain financial liabilities which means that fair value movements from changes in the Group’s own credit risk are now presented in other comprehensive income rather than profit or loss.
EROS INTERNATIONAL PLC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
Details showing the Classification and measurement of the Company’s financial instruments on adoption of IFRS 9 as of April 1, 2018.
| Total | Total | ||||||||||
| IAS 39 Category | IFRS 9 Category | carrying value | fair value | ||||||||
| Financial Assets | |||||||||||
| Cash and cash equivalents | Loans and Receivables | At amortized cost | 87,762 | 87,762 | |||||||
| Restricted deposits | Loans and Receivables | At amortized cost | 7,468 | 7,468 | |||||||
| Available for sale financial assets | At cost less impairment | Financial assets at FVTOCI* | 27,257 | 27,257 | |||||||
| Trade and other receivables | Loans and Receivables | At amortized cost | 235,726 | 235,726 | |||||||
| Total | 358,213 | 358,213 | |||||||||
| Total | Total | ||||||||||
| IAS 39 Category | IFRS 9 Category | carrying value | fair value | ||||||||
| Financial Liabilities | |||||||||||
| Total borrowings(excluding convertible notes) | At amortized cost | At amortized cost | 190,936 | 174,533 | |||||||
| Convertible notes | Financial liabilities at FVTPL | Financial liabilities at FVTPL** | 86,010 | 86,010 | |||||||
| Trade and other payables | At amortized cost | At amortized cost | 72,142 | 72,142 | |||||||
| Acceptances | At amortized cost | At amortized cost | 8,898 | 8,898 | |||||||
| Total | 357,986 | 341,583 | |||||||||
* FVTOCI – Fair value through other comprehensive income.
** FVTPL - Fair value through profit and loss.
EROS INTERNATIONAL PLC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Amounts in thousands, except share and per share data)
The cumulative effect of the changes made to our consolidated April 1, 2018 balance sheet for the adoption of IFRS 9, Financial Instruments were as follows:
| Balance at | ||||||||||||
| March 31, | Balance at | |||||||||||
| 2018 | Adjustment | April 1, | ||||||||||
| Assets | (Reported) | Due to IFRS 9 | 2018 | |||||||||
| Trade and other receivables | $ | 254,223 | $ | (18,497 | ) | $ | 235,726 | |||||
| Liabilities and Shareholders' Equity | ||||||||||||
| Currency translation reserve | (56,722 | ) | (34 | ) | (56,756 | ) | ||||||
| Retained earnings | 375,260 | (14,270 | ) | 360,990 | ||||||||
| Deferred income tax liabilities | 39,519 | (673 | ) | 38,846 | ||||||||
| Non-controlling interests | 137,728 | (3,520 | ) | 134,208 | ||||||||
The impact of adoption of IFRS 9 on our consolidated statement of financial position as at June 30, 2018 was as follow.
| Balance at | ||||||||||||
| June 30, 2018 | ||||||||||||
| (Without | Balance at | |||||||||||
| adoption of IFRS | Adjustment | June 30, 2018 | ||||||||||
| Assets | 9) | Due to IFRS 9 | (Reported) | |||||||||
| Trade and other receivables | $ |
252,788 |
$ |
(19,969 |
) | $ | 232,919 | |||||
| Liabilities and Shareholders' Equity | ||||||||||||
| Currency translation reserve | (63,397 | ) | (9 | ) | (63,406 | ) | ||||||
| Retained earnings | 366,757 | (16,168 | ) | 350,589 | ||||||||
| Deferred income tax liabilities | 36,233 | (673 | ) | 35,560 | ||||||||
| Non-controlling interests |
137,294 |
(3,019 |
) | 134,275 | ||||||||
The impact of adoption of IFRS 9 on our consolidated statement of income as at June 30, 2018 was as follow.
| Three Months | ||||||||||||
| Ended | ||||||||||||
| Three Months | June 30, 2018 | |||||||||||
| Ended | Adjustments | (without | ||||||||||
| June 30, 2018 | on adoption | adoption | ||||||||||
| (reported) | of IFRS 9 | of IFRS 9) | ||||||||||
| Revenue | 60,212 | 4,130 | 64,342 | |||||||||
| Cost of sales | (36,571 | ) |
- |
(36,571 | ) | |||||||
| Gross profit | 23,641 | 4,130 | 27,771 | |||||||||
| Administrative cost | (13,219 | ) | 1,680 | (11,539 | ) | |||||||
| Operating profit | 10,422 | 5,810 | 16,232 | |||||||||
| Financing costs | (4,927 | ) |
- |
(4,927 | ) | |||||||
| Finance income | 2,579 | 273 | 2,852 | |||||||||
| Net finance costs | (2,348 | ) | 273 | (2,075 | ) | |||||||
| Other gains/ (losses) | (14,685 | ) | (4,581 | ) | (19,266 | ) | ||||||
| (Loss)/Profit before tax | (6,611 | ) | 1,502 | (5,109 | ) | |||||||
| Income tax | (2,879 | ) |
- |
(2,879 | ) | |||||||
| (Loss)/ Profit for the period | (9,490 | ) | 1,502 | (7,988 | ) | |||||||
| Attributable to: | ||||||||||||
| Equity holders of Eros International Plc | (13,591 | ) | 1,898 | (11,693 | ) | |||||||
| Non-controlling interest | 4,101 | (396 | ) | 3,705 | ||||||||
