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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Eros International Plc | NYSE:EROS | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 2.56 | 0 | 01:00:00 |
Reports Revenue of $32.3 Million and Adjusted EBITDA(1) of $7.8 Million
Eros Now Paying Subscribers Grow 81% to Reach 23.5 Million
Eros International PLC (NYSE:EROS) (“Eros” or the “Company”), a global Indian entertainment company, today announced unaudited financial results for the second quarter fiscal year 2020.
(USD in millions)
Q2 FY20
Q2 FY19
Q1 FY20
Q4FY19
Q3FY19
Revenue
32.3
63.4
43.5
69.7
76.7
Y/Y % Growth
-49.1%
0.2%
-27.7%
-3.1%
17.6%
Q/Q % Growth
-25.7%
5.3%
-37.6%
-9.1%
21.0%
Operating Profit/(loss)
-13.6
8.4
1.0
-4.4
13.2
Operating Profit Margin
-42.1%
13.2%
2.3%
-6.3%
17.2%
Adjusted EBITDA (1)
7.8
27.5
18.6
13.1
35.8
Adjusted EBITDA Margin
24.1%
43.4%
42.8%
18.8%
46.7%
Global Paid EN Memberships
23.5
13.0
21.1
18.80
15.90
Y/Y Growth
80.8%
251.4%
108.9%
138.0%
218.0%
Q/Q Growth
11.4%
28.7%
12.2%
18.2%
22.3%
Global EN Registered Users
177.7
128
166
154.7
142
Paid / Registered Users
13.2%
10.2%
12.7%
12.2%
11.2%
Films Released
11
17
12
16
25
Cash
$99.4
$134.9
$80.8
$135.8
$134.9
Gross Debt
212.0
297
220.9
280.8
294.0
Net Debt
112.6
162.1
140.1
145.0
159.1
The Company made the following statement:
“This quarter we generated $32.3 million of top-line revenue and $7.8 million in adjusted EBITDA. Our Eros Now business continues to ramp up and grow its paid user base worldwide, supported by one of the largest libraries of Indian movies, along with its unparalleled market position and brand name. As of September 30, 2019 our Eros Now OTT platform reached 23.5 million paid monthly subscribers and 177.7 million registered users, increases of 81% and 39%, respectively, over the same period last year. This represents net additions of 4.7 million paid subscribers and 23 million registered users during the first half of Fiscal Year 2020. Eros Now currently garners viewership from over 150 countries around the world. Eros has a strong slate of films and original series scheduled for release over the coming quarters, and we expect this to help drive continued growth in our Eros Now business as well as box-office revenue.
We have several high-profile upcoming film releases, including Kaamiyab, Pagalpanti, Marjaavaan, Pati Patni Aur Wo, The Body, the trilingual remake of Haathi mere Saathi as well as a host of regional releases. In addition, Eros Now has a strong slate of originals scheduled to release in the coming quarters, including Flesh, Halahal, Avatar: The Legend of Vishnu, Metro Park 2 and Crisis.
In September, we announced a ground-breaking commercial partnership with Microsoft with the goal of transforming the content streaming experience for consumers globally. This collaboration will help Eros Now develop a new intuitive online video platform to ensure seamless delivery of content across countries and languages. It will also create a host of new interactive voice offerings for customers including video search experiences, voice search for video content across multiple Indian languages, and create personalized content. This collaboration will help our Eros Now platform enhance and strengthen its reach across globe and increase engagement with consumers.
As we see new players enter the Indian OTT market and international players such as Apple, Disney, Fox and Amazon redoubling their focus on India, we believe our market-leading offering built through years of investment and innovation puts us in a very fortunate position. We are one of the first OTT services to develop in India and are now benefiting from the foresight we had years ago to pioneer the market.
For the full fiscal year 2020, we are reiterating our consolidated revenue guidance in the range of $200-220 million, and Adjusted EBITDA of $80-$95 million. We have a healthy balance sheet with net debt of $112.6 million and $99.4 million of cash and cash equivalents.”
Global Strategy
At the core of our strategy has always been the goal to make local stories a global experience. Investing in unique, compelling content to adapt, exploit and expand great stories for consumers around the world is something we have always been very excited about. Great stories transcend languages and cultures and can come from anywhere. We are, therefore, very focused on increasing our distribution and partnership channels outside of India, with a goal to bring people the best and most diverse offering of Indian language content in any format. Our recent successes in China and other overseas markets underscore the appeal of quality content in new markets, and it also highlights the longevity of our content and ability to monetize in new markets and windows.
To that end, here are some recent highlights and proof points of our global strategy:
Eros Now Distribution & Technology:
Eros Now has continued to expand its distribution partnerships both domestically and globally. We continue to be a front-runner from India and South Asia platforms in regards to distribution deals and alliances around the World. Technology has always been a core focus for Eros Now and in this quarter we announced an important partnership with Dolby. Movies on Eros Now have been Dolby enabled and our Dolby enabled partnership with One Plus TV was the first of its kind for an Indian OTT company. Eros Now also launched a refurbished version of progressive Web Apps in order to improve the funnel conversion into paid subscribers, and early results have been very encouraging.
We closed two meaningful distribution partnerships in India this quarter with Jio and Walmart-owned Indian ecommerce Giant Flipkart. We were one of the first partners to be integrated on the new Jio set top boxes. Our partnership with Flipkart brings entertainment to their millions of daily shoppers tying together the world of entertainment and ecommerce.
This September we announced an alliance with Microsoft to develop a cloud powered online video platform and new AI powered solutions to redefine the video viewing experience for South Asian consumers. This partnership will enable our customers with easy viewing and easy discovery with many personalization options.
The partnership will cover three areas:
Deep personalisation and localisation will help us target a 50m+ paying subscriber universe as well as serving content to the micro-niches of the world beyond India in a language and environment in which the consumer feels most comfortable.
With a goal of increasing our higher-paying international direct to consumer subscribers, we recently closed on several meaningful distribution partnerships in the Middle East including Zain Telecom in Bahrain, Kuwait, Jordan & Oman. We also look forward to the imminent launch of Eros Now across the global Apple plus platform, we are the only non-US entertainment partner during initial launch.
We recognise the size and importance of the Chinese market which has been a major focus for us. Given recent successes of Indian content in the Chinese box office we believe this is a market ready for Eros Now consumption. In September 2018 we finalised a licensing agreement with digital leader iQiyi which marked our entry point into the digital space in China. Our next step in China was a digital distribution deal with Wasu Media, a large state-owned culture media group, signed earlier this year. The Wasu Group is one of the biggest comprehensive digital content service operator and service provider across interactive TV, 3G / 4G mobile TV and Internet TV in China. Wasu’s services cover approximately 100 cities in 29 provinces in China with cable network as well as covering the three major telecom operators and several million Internet users. The Eros Now service will go live beginning the week of 18th November, 2019 on Wasu.
We will continue to focus on deep experiences to ensure we are able to drive value to both domestic and international subscribers across geographies and multiple distribution channels.
Eros Now Marketing:
Eros Now ran an innovative and expansive Indian Independence Day campaign in August – promoting 73 of India’s Biggest Films on the 73rd Indian Independence Day. A large focus this quarter for Eros Now was to improve the digital marketing funnel, re-marketing and subscriber CRM. Eros Now was recognized by Media Brand Awards with a Gold Award for the Best Promo in OTT Video for Side Hero, and a Silver Award for Metro Park in the Original Series Category
In September 2019, Eros Now and KPMG India published a report on online video in conjunction with FICCI and Creative First. Several key highlights of the report include:
Eros Now Content:
We launched 120 new films on Eros Now in Q2 Fy 2019 in 6 different Indian languages. In addition we released over 2,600 music audio files on Eros Now and 97 units of short form and Eros Now Quickie Content. A unique innovation in Content formats with Singham Returns, Zindagi 50/50 were converted into short form Quickie Movies. Eros Now also celebrated Quickie Festival and Original Series Festivals supported by a large push on social and marketing. Eros now also launched its first lifestyle original : Yoga Vibes with Mansi Gulati, a world renowned face yoga expert. Lastly, we announced a partnership last year with Fashion TV whereby content from the channel will be available to Eros Now consumers. This has been proven successful, and Eros Now remains the first OTT player to venture into the fashion and lifestyle segment.
In addition, Eros Now has a strong slate of originals scheduled to release in the coming quarters, including:
Conference Call
The Company will host a conference call on Friday, November 15, 2019, at 8:30 AM Eastern Standard Time.
To access the call please dial +1 (888) 753-4238 from the United States, or +1 (706) 643-3355 from outside the U.S. The conference call I.D. number is 4282928. Participants should dial in 5 to 10 minutes before the scheduled time.
A replay of the call can be accessed through November 29, 2019 by dialing +1 (800) 585-8367 from the U.S., or +1 (404) 537-3406 from outside the U.S. The conference call I.D. number is 4282928. 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) a Global Indian Entertainment company that acquires, co-produces and distributes Indian films across all available formats such as cinema, television and digital new media. Eros International Plc was 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 12,000 films across Hindi and regional languages. For further information, please visit: www.erosplc.com.
This release contains “forward-looking statements.” These statements include, among other things, the discussions of our business strategy and expectations concerning our market position, future operations, margins, profitability, liquidity and capital resources, tax assessment orders and future capital expenditures. All of our forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we are expecting, including, without limitation, the factors discussed in our most recent Form 20-F filed with the U.S. Securities and Exchange Commission on August 14th, 2019 (the “20-F”), including under the sections captioned “Risk Factors.” The forward-looking statements contained in this presentation are based on historical performance and management’s current plans, estimates and expectations in light of information currently available to us and are subject to uncertainty and changes in circumstances. There can be no assurance that future developments affecting us will be those that we have anticipated. Actual results may differ materially from these expectations due to changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors, many of which are beyond our control, as well as the other factors described in the 20-F under the sections captioned “Risk Factors.”
Eros International Plc Financial Highlights :
Three Months Ended September 30
Six Months Ended September 30
(dollars in millions)
2019
2018
% change
2019
2018
% change
Revenue
$
32.3
$
63.4
(49.1)
$
75.9
$
123.6
(38.6
)
Gross profit
15.5
25.3
(38.7
)
42.4
49.0
(13.5
)
Operating profit/(loss)
(13.6)
8.4
(261.9
)
(12.6)
18.8
(167.0
)
Adjusted EBITDA(1)
$
7.8
$
27.5
(71.6)
$
26.4
$
55.0
(52.0)
(1)
A reconciliation of the non-GAAP financial measures discussed within this release to our IFRS revenue and net income is included at the end of this release. See also “Non-GAAP Financial Measures”.
Financial Results for the Three and Six Months Ended September 30, 2019
Revenue
In the three months ended September 30, 2019, the Eros film slate was comprised of 11 films of which 11 were low budget as compared to 17 films in the three months ended September 30, 2018, of which four were medium budget and 13 were low budget.
In the three months ended September 30, 2019, the Company’s slate of 11 films comprised of two Hindi film and 9 regional films as compared to the same period last year where its slate of 17 films comprised five Hindi films and 11 regional films and one Tamil/Telugu regional films.
In the six months ended September 30, 2019, the Eros film slate was comprised of 23 films of which 23 were low budget films as compared to 31 films in the six months ended September 30, 2018, of which five films were medium budget, 26 were low budget. In addition Eros Now released five original series titled Modi: Journey of a Common Man, My name is Sheela, A Monsoon Date, That Man In The Picture and Maunn during the six months ended September 30, 2019.
In the six months ended September 30, 2019, the Company’s slate of 23 films comprised of three Hindi films and 20 regional films as compared to the same period last year where its slate of 31 films comprised of eight Hindi films, two Tamil/Telugu films and 21 regional films.
Three months ended
High
Medium
Low
Total
September 30, 2019
0
0
11
11
September 30, 2018
0
4
13
17
Six months ended
High
Medium
Low
Total
September 30, 2019
0
0
23
23
September 30, 2018
0
5
26
31
For the three months ended September 30, 2019, aggregate revenues from decreased by 49.1% to $32.3 million from $63.4 million for the three months ended September 30, 2018 mainly due to lower syndication revenue for the three months ended September 30, 2019, partially offset by increase in revenues from the Eros Now business for the three months ended September 30, 2019.
For the six months ended September 30, 2019, aggregate revenues from decreased by 38.6% to $75.9 million from $123.6 million for the six months ended September 30, 2018 mainly due to lower syndication revenue for the six months ended September 30, 2019, partially offset by increase in revenues from the Eros Now business for the six ended September 30, 2019.
Cost of sales
For the three months ended September 30, 2019, cost of sales decreased by 55.6% to 16.9 million compared to $38.1 million in the three months ended September 30, 2018 and in the six months ended September 30, 2019, cost of sales decreased by 55.2% to $33.5 million, compared to $74.7 million for the six months ended September 30, 2018. The decrease was mainly due to lower amortization costs.
Gross profit
For the three months ended September 30, 2019, gross profit decreased by 38.7% to $15.5 million, compared to $25.3 million in the three months ended September 30, 2018. The decrease was mainly due to lower amortization, marketing, advertising and distribution costs for the three months ended September 30, 2019 which is partially offset by increase in administrative cost.
In the six months ended September 30, 2019, gross profit decreased by 13.5% to $42.4 million, compared to $49 million for the six months ended September 30, 2018. The decrease was mainly due to decrease in amortization costs for the six months ended September 30, 2019.
Administrative cost
For the three months ended September 30, 2019, administrative cost increased by 72.2% to $29.1 million compared to $ 16.9 million in the three months ended September 30, 2018. For the six months ended September 30, 2019, administrative cost increased by 83.1% to $ 55.1 million, compared to $30.1 million for the six months ended September 30, 2018. The increase was mainly due to increase in expected credit loss accounted as per default method under IFRS 9.
Adjusted EBITDA (Non- GAAP)
For the three months ended September 30, 2019, Adjusted EBITDA decreased by 71.6% to $7.8 million compared to $27.5 million in the three months ended September 30, 2018. The decrease in Adjusted EBITDA is on account of increase in administrative costs due to expected credit loss expense accounted as per default method under IFRS 9.
In the six months ended September 30, 2019, adjusted EBITDA increased by 52% to $ 26.4 million, compared to $55.0 million for the six months ended September 30, 2018. The decrease in Adjusted EBITDA is on account of increase in administrative costs due to expected credit loss expense accounted as per default method under IFRS 9.
Net finance costs
For the three months ended September 30, 2019, net finance costs increased by 866.7% to $ 2.3 million, compared to $(0.3) million in the three months ended September 30, 2018 mainly due to increase in finance costs and reduction in interest income on account of unwinding of credit impairment loss.
In the six months ended September 30, 2019, net finance costs increased by 109.5% to $4.4 million, compared to $2.1 million for the six months ended September 30, 2018 mainly due to increase in finance costs and reduction in interest income on account of unwinding of credit impairment loss.
Income tax expense
For the six months ended September 30, 2019, income tax expenses decreased by 41.3% to $2.7 million, compared to $4.6 million in the six months ended September 30, 2018. Effective income tax rates were 16.8% and 11.6% for September 30, 2019 and September 30, 2018, respectively excluding non-deductible share-based payment charges and gain/loss on fair valuation of derivative liabilities. 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 September 30, 2019, Trade Receivables decreased to $189.8 million from $196.4 million as of March 31, 2019 after considering expected credit loss reserve upon adoption of new accounting standards during the period.
Net Debt
As of September 30, 2019, net debt decreased by 22.3% to $112.6 million from $145.0 million as of March 31, 2019 primarily on account of repayment of loans.
EROS INTERNATIONAL PLC UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Amounts in thousands, except share and per share data)
As at
Note
September 30, 2019
March 31, 2019
(in thousands)
ASSETS
Non-current assets
Property and equipment
$
10,187
$
10,921
Right of use assets
1,456
—
Intangible assets — content
5
739,589
706,572
Intangible assets — others
3,343
3,794
Investments
2,000
2,650
Trade and other receivables — amortised cost
1
8,577
10,065
Income tax receivable
1,561
1,284
Restricted deposits
115
756
Deferred income tax assets
1,243
1,263
Total non-current assets
$
768,071
$
737,305
Current assets
Inventories
$
—
$
435
Trade and other receivables — fair value
1
134,363
125,229
Trade and other receivables — amortised cost
1
62,927
79,916
Investments
200
1,042
Cash and cash equivalents
99,442
89,117
Restricted deposits
5,064
55,858
Total current assets
301,996
351,597
Total assets
$
1,070,067
$
1,088,902
LIABILITIES
Current liabilities
Trade and other payables
$
92,141
$
83,487
Acceptances
3
1,981
8,366
Short-term borrowings — fair value
2
53,797
68,349
Short-term borrowings — amortised cost
2
93,054
140,559
Derivative financial instruments
—
620
Lease liabilities
757
—
Current income tax payable
29,378
17,291
Total current liabilities
$
271,108
$
318,672
Non-current liabilities
Long-term borrowings — amortised cost
2
65,051
71,920
Lease liabilities
800
—
Other long - term liabilities
15,706
13,898
Deferred income tax liabilities
15,867
27,427
Total non-current liabilities
$
97,424
$
113,245
Total liabilities
$
368,532
$
431,917
EQUITY
Share capital
4
$
53,200
$
39,326
Share premium
629,988
580,013
Reserves
(16,227)
(2,202)
Other components of equity
(82,296)
(79,696
)
JSOP reserve
(15,985)
(15,985
)
Equity attributable to equity holders of Eros International Plc
$
568,680
$
521,456
Non-controlling interest
132,855
135,529
Total equity
$
701,535
$
656,985
Total liabilities and shareholder’s equity
$
1,070,067
$
1,088,902
EROS INTERNATIONAL PLC UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands, except share and per share data)
Three Months Ended September 30,
Six Months Ended September 30,
Note
2019
2018
2019
2018
Revenue
$
32,374
$
63,425
$
75,885
$
123,637
Cost of sales
(16,919)
(38,114
)
(33,463)
(74,685
)
Gross profit
15,455
25,311
42,422
48,952
Administrative cost
(29,082)
(16,894
)
(55,052)
(30,113
)
Operating (loss)/ profit
(13,627)
8,417
(12,630)
18,839
Financing costs
(5,568)
(4,395
)
(11,580)
(9,322
)
Finance income
3,315
4,679
7,180
7,258
Net finance costs
(2,253)
284
(4,400)
(2,064
)
Other gains/(losses),net
8
(11,326)
6,426
(3,275)
(8,259
)
Profit/(loss) before tax
(27,206)
15,127
(20,305)
8,516
Income tax
(891)
(1,711
)
(2,725)
(4,590
)
Profit/(loss) for the period
$
(28,097)
$
13,416
$
(23,030)
$
3,926
Attributable to:
Equity holders of Eros International Plc
$
(27,900)
$
12,569
$
(21,788)
$
(1,022
)
Non-controlling interest
$
(197)
847
(1,242)
4,948
Earning/(loss) per share(cents)
Basic earning/(loss) per share
7
(27.6)
17.7
(24.7)
(1.5
)
Diluted earning/(loss) per share
7
(27.6)
17.0
(24.7)
(1.5
)
EROS INTERNATIONAL PLC UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) (Amounts in thousands, except share and per share data)
Three Months Ended September 30,
Six Months Ended September 30,
2019
2018
2019
2018
(Loss)/Profit for the period
$
(28,097)
$
13,416
$
(23,030)
$
3,926
Other comprehensive Income:
Items that will be subsequently reclassified to profit or loss
Fair value loss on trade account receivable (FVTOCI)
1,225
—
1,225
—
Exchange differences on translating foreign operations
(5,329)
(12,803
)
(4,193)
(23,950
)
Total other comprehensive (loss) for the period
$
(4,104)
$
(12,803
)
$
(2,968)
$
(23,950
)
Total comprehensive (loss)/income for the period, net of tax
$
(32,201)
$
613
$
(25,998)
$
(20,024)
Attributable to:
Equity holders of Eros International Plc
$
(29,922)
$
4,776
$
(23,130)
$
(15,465
)
Non-controlling interest
(2,279)
(4,163
)
(2,868)
(4,559)
EROS INTERNATIONAL PLC UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands, except share and per share data)
Six Months Ended September 30,
2019
2018
Cash flows from operating activities:
Profit/(Loss) before tax
$
(20,305)
$
8,516
Depreciation and amortization
25,562
61,609
Non-cash charges
38,094
33,576
Changes in operating assets and liabilities
(40,518)
(86,876)
Net cash generated from operating activities
$
2,833
$
16,825
Cash flows from investing activities:
Purchase of intangible film and content rights
(30,049)
(54,060)
Other investing activities, net
54,696
(48,123)
Net cash from/(used in) investing activities
$
24,647
$
(102,183
)
Cash flows from financing activities:
Net cash generated from/(used in) financing activities
$
(23,848)
$
88,466
Net increase in cash and cash equivalents
3,632
3,108
Effect of exchange rate changes on cash and cash equivalents
6,693
(2,616
)
Cash and cash equivalents at beginning of period
89,117
87,762
Cash and cash equivalents at the end of period
$
99,442
$
88,254
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
September 30, 2019
March 31, 2019
Trade accounts receivables (net of credit impairment loss)
Trade accounts receivables at fair value
$
134,363
125,229
Trade accounts receivables at amortised cost
55,437
71,129
Total Trade accounts receivables
$
189,800
$
196,358
Other receivables at amortised cost
16,067
18,852
Total Trade and other receivables
205,867
215,210
Current
197,290
205,145
Non-current
8,577
10,065
$
205,867
$
215,210
The age of account receivables net of credit of credit impairment loss are past due but not impaired were as follows:
As at
September 30, 2019
March 31, 2019
Not more than three months
$
37,418
$
44,687
More than three months but not more than six months
45,604
15,948
More than six months but not more than one year
43,353
15,310
More than one year
7,126
8,796
$
133,501
$
84,741
The movement in the allowances for expected credit losses is as follows:
Year ended
September 30, 2019
Trade Receivables
Other Receivables
Total Receivables
Balance as on April 1, 2019
$
41,335
$
447
$
41,782
Charged to operations
26,543
—
26,543
Unwinding of expected credit loss (included in finance income)
(5,649)
—
(5,649)
Reversal of expected credit loss (included in other gains/(losses))
(3,274)
—
(3,274)
Translation adjustment
(536)
—
(536)
Bad debts
(2,649)
—
(2,649)
Balance as at September 30, 2019
$
55,770
$
447
$
56,217
EROS INTERNATIONAL PLC NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data)
Year ended
March 31, 2019
Trade Receivables
Other Receivables
Total Receivables
Balance on April 1, 2018
$
10,193
$
—
$
10,193
Impact of adoption of IFRS 9
18,050
447
18,497
Balance as on April 1, 2018
28,243
447
28,690
Charged to operations
60,208
7,284
67,492
Unwinding of expected credit loss (included in finance income)
(13,227
)
—
(13,227
)
Reversal of expected credit loss (included in other gains/(losses))
(20,698
)
—
(20,698
)
Translation adjustment
(160
)
—
(160
)
Bad debts
(13,031
)
(7,284
)
(20,315
)
Balance at the March 31, 2019
$
41,335
$
447
$
41,782
2.
BORROWINGS
An analysis of long-term borrowings is shown in the table below.
Nominal
As at
Interest Rate
Maturity
September 30, 2019
March 31, 2019
(in thousands)
Asset backed borrowings
Vehicle loan
2.5 - 9.5%
2017-22
$
207
$
382
Term loan
MCLR +3.2% - 4.50%
2019-22
10,352
12,947
Term loan
BR + 2.75%
2020-21
873
1,083
Term loan
10.39% - 13.75%
2020-23
—
251
$
11,432
$
14,663
Unsecured borrowings
Retail bond
6.50%
2021-22
61,508
65,215
Convertible notes
14.23%
2020-21
20,997
68,349
$
82,505
$
133,564
Cumulative effect of unamortised costs
(518)
(691
)
Installments due within one year:
Convertible notes
(20,997)
(68,349
)
Others
(7,371)
(7,267
)
$
65,051
$
71,920
Long-term borrowings at fair value
$
—
$
—
Long-term borrowings at amortised cost
$
65,051
$
71,920
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
Nominal
As at
interest rate (%)
September 30, 2019
March 31, 2019
(in thousands)
Asset backed borrowings
Export credit, bill discounting and overdraft
MCLR +.40% to 4.60%
$
39,864
$
32,078
Export credit, bill discounting and overdraft
Base Rate + 0.5% to 1%
3,572
3,533
Export credit, bill discounting and overdraft
6.01% - 15.25%
28,083
26,719
Convertible notes
9.96%
32,800
—
Short- term loan
3.25% - 15.75%
14,164
70,962
$
118,483
$
133,292
Unsecured borrowings
Installments due within one year on long-term borrowing
28,368
75,616
$
146,851
$
208,908
Short-term borrowings at fair value
53,797
68,349
Short-term borrowings at amortised cost
$
93,054
$
140,559
Bank prime lending rate and marginal cost lending rate (“BPLR” & “MCLR”) is the Indian equivalent to LIBOR. Asset backed borrowings are secured by fixed and floating charges over certain Group assets.
Eros International Plc.(“issuer”) issued Senior Convertible Notes ( convertible notes) on 25 September 2019 amounting to US$27,500 principal amount. The maturity date of convertible is September 26, 2020.
Reconciliation of fair value measurement of convertible notes:
September 30, 2019
Particulars
(in thousands)
As at March 31,2019
$
68,349
Interest
3,968
‘A’ ordinary shares issued in lieu of convertible notes
(52,677)
Receipt from convertible notes
25,000
Loss on fair value of convertible notes
9,157
As at September 30,2019
$
53,797
EROS INTERNATIONAL PLC NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data)
3.
ACCEPTANCES
September, 30
March, 31
2019
2019
(in thousands)
Payable under the film financing arrangements
$
1,981
$
8,366
$
1,981
$
8,366
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
(in thousands)
Ordinary shares of 30p each at March 31, 2019
150,000,000
45,000
Ordinary shares of 30p each at September 30, 2019 (*)
200,000,000
60,000
(*) The Company increased authorized number of shares to 200,000,000 on September 25, 2019.
Number of Shares
USD
Allotted, called up and fully paid
A Ordinary 30p Shares(*)
B Ordinary 30p Shares(*)
(in thousands)
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
Issue of shares in the quarter ended September 30, 2018
3,773,385
—
1,471
Issue of shares in the quarter ended December 31, 2018
1,659,767
—
641
Transfer of B Ordinary to A Ordinary share
1,500,000
(1,500,000
)
—
Issue of shares in the quarter ended March 31, 2019
1,892,518
—
742
As at March 31, 2019
67,291,738
8,212,715
$
39,326
Issue of shares in the quarter ended June 30, 2019
4,192,459
—
1,598
Issue of shares in the quarter ended September 30, 2019
25,956,283
7,044,210
12,276
97,440,480
15,256,925
53,200
(*) Each A ordinary shares is entitled to one vote on all matters and each B shares is entitled to ten votes.
The Company issued A and B Ordinary shares as follows:
A Ordinary
B Ordinary
As at
As at
September
30, 2019
March 31, 2019
September 30, 2019
March 31, 2019
Issuance to Founders Group(1)
—
1,769,911
4,878,050
—
Issuance towards settlement of Convertible notes(2)
29,203,396
4,411,359
—
—
Exercise against Restricted Share Unit/ Management scheme (3)
813,333
770,541
2,166,160
—
Issuance towards Reliance Industries Limited (4)
—
3,111,088
—
—
2015 Share Plan (5)
132,013
10,416
—
—
Total
30,148,742
10,073,315
7,044,210
—
EROS INTERNATIONAL PLC NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data)
(1) Average price of A Ordinary at NIL price (March 2019: $14.69)and B Ordinary at $1.64 (March 2019:Nil) (2) Average exercise price of A Ordinary $1.80 (March 2019: $11.28) (3) 813,333 A Ordinary shares (March 2019: 183,000) exercised at NIL price (March 2019: $0.39) and 2,166,160 B Ordinary shares exercised at Nil price (March 2019:Nil) (4) Average exercise price of A Ordinary NIL (March 2019: $15) (5) Average exercise price A Ordinary $2 (March 2019: $7.92)
5.
INTANGIBLE CONTENT ASSETS
Gross Content Assets
Accumulated Amortization
Impairment Loss
Content Assets
As at September 30, 2019
Film and content rights
$
1,703,797
$
(968,619)
$
(366,703
)
$
368,475
Content advances
395,182
—
(38,832)
356,350
Film productions
14,764
—
—
14,764
Non-current content assets
$
2,113,743
$
(968,619)
$
(405,535
)
$
739,589
As at March 31, 2019
Film and content rights
$
1,675,406
$
(954,628
)
$
(366,703
)
$
354,075
Content advances
378,268
—
(38,832
)
339,436
Film productions
13,061
—
—
13,061
Non-current content assets
$
2,066,735
$
(954,628
)
$
(405,535
)
$
706,572
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 ended September 30,
Six months ended September 30,
2019
2018
2019
2018
IPO India Plan
$
48
$
351
$
171
$
779
2014 Share Plan
—
—
—
47
2015 Share Plan
1,116
2,345
1,211
2,352
Other share option awards (*)
1,344
1,894
2,009
3,355
Management scheme (staff share grant)
3,209
2,096
5,992
4,583
$
5,717
$
6,686
$
9,383
$
11,116
(*) includes Restricted Share Unit (RSU) and Other share option plans
EROS INTERNATIONAL PLC NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data)
7.
EARNINGS PER SHARE (EPS)
Three months ended September 30,
Six months ended September 30,
2019
2018
2019
2018
Basic
Diluted
Basic
Diluted
Basic
Diluted
Basic
Diluted
Earnings/(loss) attributable to the equity holders of the parent
$
(27,900)
(27,900)
$
12,569
12,569
$
(21,788)
(21,788)
$
(1,022
)
(1,022
)
Potential dilutive effect of convertible notes
—
—
—
1,109
—
—
—
—
Potential dilutive effect related to share based compensation scheme in subsidiary undertaking
—
—
—
(36
)
—
—
—
(142
)
Adjusted earnings/(loss) attributable to equity holders of the parent
$
(27,900)
(27,900)
$
12,569
13,642
$
(21,788)
(21,788)
$
(1,022
)
(1,164
)
Number of shares
Weighted average number of shares
101,087,635
101,087,635
71,000,987
71,000,987
88,298,314
88,298,314
69,174,427
69,174,427
Potential dilutive effect related to share based compensation plan
—
7,167,528
—
9,457,270
—
5,222,771
—
2,034,547
Adjusted weighted average number of shares
101,087,635
108,255,163
71,000,987
80,458,257
88,298,314
93,521,085
69,174,427
71,208,974
Earnings/(loss) per share
Earnings/(loss) attributable to the equity holders of the parent per share (cents)
(27.6)
(27.6)
17.7
17.0
(24.7)
(24.7)
(1.5
)
(1.5
)
EROS INTERNATIONAL PLC NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Amounts in thousands, except share and per share data)
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.
The Company excludes options with exercise prices that are greater than the average market price from the calculation of diluted EPS because their effect would be anti-dilutive. In the six months ended September 30, 2019, 1,085,00 shares were not included in diluted earnings per share (September 30, 2018: 1,847,035) Further, the Company have excluded convertible notes 19,125,832 shares because their effect was anti-dilutive (September 30, 2018:7,197,804). During the three months ended September 30, 2019, 2,482,431 shares were not included in diluted earnings per share (September 30, 2018: 1,847,035) Since there is loss for the year, and for the quarter, the potential equity shares resulting from dilutive options are not considered as dilutive and hence, the Diluted EPS is same as Basic EPS.
8.
OTHER GAINS/(LOSSES), NET
Three months ended September 30,
Six months ended September 30,
2019
2018
2019
2018
Foreign exchange (loss)/gain,net
$
1,894
$
328
$
3,690
$
3,689
(Loss) on sale of property and equipment
—
—
(4)
—
Reversal of expected credit (loss)
1,987
5,982
3,274
10,563
Net losses on derecognition of financial assets measured at FVTPL(*)
(726)
(1,464
)
(996)
(2,768)
Loss of investments measured at FVTPL
(33)
—
(842)
—
Credit from Government of India
—
—
760
—
(Loss)/Gain on financial liability (convertible notes) measured at FVTPL
(14,142)
1,580
(9,157)
(19,743
)
Change in fair value of receivables
(306)
—
—
—
$
(11,326)
$
6,426
$
(3,275
)
$
(8,259)
(*) 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
9.
IFRS – 16 LEASES
Effective April 1, 2019, the Company adopted IFRS 16, Leases, which specifies how to recognize, measure, present and disclose leases. The standard provides a single accounting model, requiring the recognition of assets and liabilities for all major leases previously classified as “operational leases”. The company applied Modified Retrospective Approach on the date of initial application
The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, based on the initial amount of the lease liability. The assets are depreciated to the earlier of the end of the useful life of the right-of-use asset or the lease term using the straight-line method as this most closely reflects the expected pattern of consumption of the future economic benefits. The lease term includes periods covered by an option to extend if the Company is reasonably certain to exercise that option. In addition, the right-of-use asset is periodically adjusted for certain re-measurements of the lease liability. There is no impact on transition in opening balance of retained earnings as at April 1, 2019.
Operating leases
The Company has decided to use the approach that allows the right-of-use asset to be recognized at an amount equal to the liability as at the date of initial application. Based on such approach the Right-to-use (ROU) asset and lease liability as at April 1, 2019 have been created at $ 1,907 and $ 1,907, respectively. Unwinding of lease liability amounting $ 74 and amortization of Right-to-use asset amounting $ 681 have been recorded for the six months ended September, 30 2019 as against lease rent expenses recorded in the prior period/s. The weighted average incremental borrowing rate of 12% (for India) and 7.45% (for other locations) have been applied to lease liabilities recognized in the statement of financial position at the date of initial application.
Finance leases
As of April 01, 2019, Equipment amounting $ 243 has been reclassified to ROU from property and equipment and long-term and short-term borrowing amounting $153 and $ 98, respectively, have been reclassified to lease liabilities in relation to these finance lease. The Company has continued to discount the lease rental at interest rate implicit in these lease agreements, with unwinding of lease liability amounting $ 14 and amortization of ROU over the useful life amounting $ 59 for the six months ended September 30, 2019.
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.
Reconciliation of Adjusted EBITDA
In addition to the results prepared in accordance with IFRS, the Company has presented Adjusted EBITDA. The Company uses Adjusted EBITDA along with other IFRSs measures to evaluate operating performance. Adjusted EBITDA is defined as EBITDA adjusted for (gains)/impairments of available-for-sale financial assets, profit/loss on held for trading liabilities (including profit/loss on derivatives), transactions costs relating to equity transactions, share based payments, loss/(gain) on sale of property and equipment, Loss on de-recognition of financial assets measured at amortized cost, net, credit impairment loss, net, component loss on financial liability (convertible notes) measured at fair value through profit and loss, Loss on deconsolidation of a subsidiary and exceptional items such as impairment of goodwill, trademark, film & content rights and content advances.
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 changes or tax position. However, Eros’ management team believes that Adjusted EBITDA is useful to an investor in evaluating the Company’s results of operations because this measure:
See the supplemental financial schedules for reconciliations to IFRSs measures in the table below, which presents a reconciliation of Eros’ Adjusted EBITDA to net income.
Adjusted EBITDA
Three months ended September 30,
Six months ended September 30,
2019
2018
2019
2018
(in thousand)
Profit/(loss) for the period
$
(28,097)
$
13,416
$
(23,030)
$
3,926
Income tax expense
891
1,711
2,725
4,590
Net finance costs
2,253
(284)
4,400
2,064
Depreciation
454
279
845
527
Amortization(1)
224
288
448
759
EBITDA (Non- GAAP)
(24,275)
15,410
(14,612)
11,866
Share based payments(2)
5,717
6,686
9,383
11,116
Credit impairment losses/(gains)
13,089
2,657
23,894
4,576
Reversal of credit impairment losses/(gains)
(1,987)
(5,982)
(3,274)
(10,563
)
Adjustment towards arisen significant discounting, component
—
8,837
—
15,247
Net losses on de-recognition of financial assets measured at amortized cost, net
726
1,464
996
2,768
Loss/(Gain) on financial liability (convertible notes) measured at FVTPL
14,142
(1,580)
9,157
19,743
Closure of derivative asset
—
—
—
249
Loss on sale of property and equipment
—
—
4
—
Fair value of receivables
306
—
—
—
Net losses/(gains) of available- for- sale measured at FVTPL
33
—
842
—
Adjusted EBITDA (Non-GAAP)
$
7,751
$
27,492
$
26,390
$
55,002
Amortizaton of intangible and content rights
12,392
31,828
24,269
60,323
Gross Adjusted EBITDA
$
20,143
$
59,320
$
50,659
$
115,325
(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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20191115005220/en/
Mark Carbeck Chief Corporate and Strategy Officer Eros International PLC mark.carbeck@erosintl.com +44 207 258 9909 Erica Bartsch Sloane & Company 212-446-1875 ebartsch@sloanepr.com
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