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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Ffi Holdings Plc | LSE:FFI | London | Ordinary Share | GB00BF04DT64 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 25.50 | 25.00 | 26.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMFFI
RNS Number : 9017K
FFI Holdings PLC
19 December 2018
FFI Holdings PLC
("FFI" or "the Company")
Interim results for the six months ended 30 September 2018
London, 19 December 2018 - FFI Holdings PLC (AIM: FFI), a world-leading provider in the provision of diversified services across the entertainment industry, is pleased to present its unaudited financial results for the six months ended 30 September 2018 (H1 2019).
Financial Highlights:
- Revenue up 91% to $45.6m (H1 2018: $24.0m), comprised of:
o Completion Contract revenues of $16.8m (H1 2018: $18.9m)
o Editing Equipment Rental revenues of $9.9m (H1 2018: $5.0m)
o Insurance Agency revenues of $10.9m, following acquisition of Reel Media in Dec 2017
o Technical Services revenues of $2.8m, following acquisition of Buff Dubs in Dec 2017
o Content Distribution revenues of $5.2m, following acquisition of Signature in April 2018
- Gross profit of $28.3m, an increase of 53% (H1 2018: $18.5m) - Underlying EBIT of $6.0m down 15% (H1 2018: $7.1m)* - Reported EBIT of $4.6m (H1 2018: -$2.1m) - Pre-tax profit of $4.7m (H1 2018: - $2.1m) - After-tax profit from continuing operations of $3.4m (H1 2018: -$3.7m) - Underlying FD EPS of 3.0c (H1 2018: 3.9c) - Underlying operating cash flow of $4.9m (H1 2018: $7.5m) - Cash at 30 September of $16.0m (H1 2018: $44.0m)
* Represents operating income, adjusted for exceptional costs of $1.0m, acquisition-related amortisation of $0.9m, less gain from sale of minority interest investment of $0.5m
Mid-Year Operational Highlights:
- Completion Contracts: Volume grew by 2% (77 titles in H1 2018 as compared to 74 titles in H1 2017). The Group maintained its average fee of production budgets. During H1 2019, fewer large budget productions resulted in the average budget per new order decreasing by 14% to $11.2 million in the period (H1 2018: $12.9m), which resulted in lower revenue despite providing more completion contracts in the period. The Group's pipeline shows more larger budget titles likely in H2 2019.
- Editing Equipment Rental: Pivotal Post and EPS-Cineworks continue to meet expectations, with growth in available editing suites and steady utilization rates.
- Insurance Agency: Reel Media continued to ramp up its business during H1 2019. The Group is experiencing more consistent cash flows with particularly strong growth expected in H2 2019. Reel Media is expected to exceed the Board's expectations through the end of the year.
- Technical Services: Buff Dubs is benefiting from strong demand from its streaming clients resulting from growth in Australia and Asia.
- Content Distribution: Signature Entertainment is experiencing an uptick in licensing deals, as it continues to meet demand for content from its distribution channels and streaming companies. IMAX Pandas documentary continues to receive rave reviews from viewers and critics. The roll out of the film has been slower than anticipated, with the Chinese release anticipated to occur in 2019. As previously disclosed, the ultimate timing of cash flows will be dependent on theatre availability and is subject to IMAX's release schedule, in particular the Group is awaiting schedule release dates for China. The Group now expects to start generating significant income from Panda in FY 2020 after recouping its initial distribution costs.
Commenting on the Group's results, Steven Ransohoff, CEO of FFI, said:
"We began the first half of fiscal 2019 with a diverse mix of revenues from across our platform. Our transformation reflects the successful acquisition strategy which began in 2017. This strategy, coupled with the rising demand for content, positions us well for future growth. FFI's deep industry knowledge, expertise and broad network of services provides us with a significant market advantage across our business verticals and uniquely positions us to capitalise on the opportunities available for servicing the diverse needs of content creators globally.
The businesses we acquired since the IPO have performed in accordance with and in some cases beyond our expectations. Equipment Rental, Insurance, Technical Services and Content have all performed very well and are expected to grow into the future. Whilst Completion Contracts continue to be an important part of our business, performance has been muted. Whilst we are involved with more productions in H1 2018, the films have lower budgets and we have experienced higher claims activity than in the last two years. Based on the pipeline of projects we expect the balance of the year should produce better performance in the Completion Contract business.
H1 numbers have begun to reflect the broadening of our sales mix, with material revenue contributions seen from our equipment rental, insurance agency and content distribution verticals, and we remain focused on continuing to grow these diversified business segments which have been performing at or above expectations. As has been historically the case, we expect a busy second half to our fiscal year, as we are seeing a strong completion contracts and entertainment insurance agency pipeline."
Steven Ransohoff, CEO
19 December 2018
About FFI Holdings PLC
FFI Holdings PLC is the holding company of Film Finances Inc., a leading provider of diversified services across the entertainment industry. FFI was formerly focused on completion contracts to the entertainment industry, and over successive decades, has grown globally to become a trusted, iconic brand at the centre of the film industry.
Founded in the 1950s, FFI soon established itself as the world leader in completion guarantees to the entertainment industry, offering assurance to financiers that productions will be completed on time and on budget. These guarantees serve to offload risks to production budgets and timelines for financiers, as well as for FFI through long-standing insurance relationships.
FFI listed on the AIM market in June 2017 and has diversified its business beyond completion contracts to provide services across the broader entertainment landscape. FFI is also present in China, where it provides a growing range of entertainment-related services including completion contracts to the domestic film making industry.
Headquartered in Los Angeles, USA, FFI has 11 offices globally, including in London, Stockholm, Toronto, New York, Cape Town, Cologne and Shanghai.
ENQUIRIES:
Hawthorn Advisors (Public Relations)
Victoria Ainsworth
+44 (0) 20 3745 3815
FFI Holdings PLC
David Sasso, Head of Investor Relations
+1 310 275 7323
Liberum (Nominated Adviser and Corporate Broker)
Steve Pearce
Joshua Hughes
+44 (0) 3100 2000
This announcement contains inside information.
Review of Operations
Group Overview
Group revenue for the first six months of the financial year increased by 91% YOY to $45.6m (H1 2018: $24.0m), as contributions from acquisitions in FY18 were realised. Adjusting for exceptional costs of $1.0m, acquisition-related amortisation of $0.9m, less gain from sale of minority interest investment of $0.5m, underlying EBIT for the Group was $6.0m (H1 2018: $7.1m). Reported EBIT was up to $4.6m versus a loss of $2.1m last year. The Group recorded an after-tax profit of $3.4m, up from a loss of $3.7m in H1 2018.
The Group reported positive operating cash flow in the period of $4.2m (H1 2018: -$4.9m). Cash decreased to $16.0m (H1 2018: $44.0m) due primarily to costs associated with acquisitions.
Whilst Completion Contract revenues continued to deliver the largest segmental contribution to Group sales, making up 37% of total revenue, this is down from 79% of total revenue last year. This reflects a significant broadening of FFI's sales mix, with new revenue contributions from Editing Equipment Rental, Technical Services, Insurance Agency and Content Distribution business segments.
Despite an increase in the number of new orders, Completion Contracts revenues reduced by 11% to $16.8m (H1 2018: $18.9m) as a result of a decrease in average film budgets in the period. Editing Equipment Rental revenues increased 97% to $9.9m (H1 2018: $5.0m), contributing to 22% of Group total, largely as a result of the acquisition of EPS-Cineworks. The acquisition of Buff Dubs in December 2017 resulted in revenues of $2.8m related to Technical Services (6% of total revenue). Insurance Agency comprised 24% of total Group revenue, at $10.9m, following the acquisition of Reel Media in December 2017. The addition of Signature Entertainment in April 2018 resulted in a Content Distribution contribution of 11% of overall Group revenues, at $5.2m for the period.
By geography, North America continued to be FFI's biggest market in terms of revenue (65% of total) increasing 71% to $29.9m from the previous year (H1 2018: $17.5m). This was followed by Europe which delivered revenue of $7.8m (17% of total), up from $2.9m last year and Asia, with $3.1m in revenues representing 7% of total revenue (H1 2018: $2.5m).
Hot Features
Premium
Six months ended Six months ended Year ended
30 September 30 September 31 March
2018 2017 2018
USD USD USD
---------------------- -------------------------------- -------------------------------- --------------------------
Asia 3,149,915 2,519,290 5,302,189
Australia 4,729,384 912,472 2,964,810
Europe 7,801,268 2,858,199 6,357,528
Middle East & Africa 69,747 139,541 146,179
North America 29,890,003 17,526,218 41,828,666
South America - - 2,000,000
45,640,317 23,955,720 58,599,372
---------------------- -------------------------------- -------------------------------- --------------------------
Completion Contracts
Despite an increase in the number of new orders (77 in H1 2019 versus 74 in H1 2018), the Group's Completion Contract business delivered reduced revenues of $16.8m for the period (H1 2018: $18.9m), including China revenues. This was primarily due to a reduction in the average film budget size from $12.9m (H1 2018) to $11.2m (H1 2019), as some larger projects started later than expected. New order fees were $13.9m (H1 2018: $15.2m). With the new captive insurance arrangement, gross insurance costs fell to 24.0% of net completion guarantee fees, excluding China (H1: 2018: 40.0%). Claims expense of $1.6m (H1 2018: $0.2m) was higher due to claim reserves on two projects.
Completion Contract New Order Fees*
--------------------------------------------------------
H1 2018 H1 2017
------------------------------------ -------- --------
Number of New Orders 77 74
Total Net Fees ($mn) 13.9 15.2
Total Bonded Budgets ($mn) 859.7 962.5
Average Budget per New Order ($mn) 11.2 13.0
* Excludes revenue related to China licensing arrangement
Editing Equipment Rental
Revenues from Pivotal Post (acquired in February 2017) and EPS-Cineworks (acquired in November 2017) made a contribution of $9.9m to the Group's revenue performance over the six-month period, representing an almost twofold increase from the previous year (H1 2018: $5m Pivotal Post only), in line with estimates. This has been supported by an increase in the average number of available equipment and suite rental units, at 521 and 289, respectively (up from 275 and 112 in H1 2018 - related to Pivotal only).
Technical Services
Buff Dubs was acquired by FFI in December 2017 and is a post-production services company based in Australia, with capabilities in encoding, transcoding, media duplication, and mastering for film and television productions. This is still a new operating segment for the Group, contributing $2.8m of revenue (6% of Group revenue).
Insurance Agency
The Group made two acquisitions in the area of entertainment insurance risk in FY18, including that of Reel Media (December 2017) and the motorsports book of business from All Risks Ltd (January 2018). In addition, FFI also signed a strategic partnership with Allianz Global Corporate & Speciality (January 2018). FFI's Insurance Agency segment delivered revenues of $10.9m in H1 2019, representing 24% of Group revenue. The division delivered total net commissions of $6.4m, and, with a strong pipeline for the rest of the year, is tracking to the Board's full year estimates.
Content Distribution
FFI's Content Distribution segment delivered revenues of $5.2m in the six-month period, representing 11% of total revenue, primarily from the acquisition of Signature Entertainment in April 2018. Signature is a film distributor in the UK and acts as an aggregator for streaming companies.
Outlook
The Board is pleased with the progress and integration of acquired businesses and operations in our Editing & Equipment Rental, Technical Services, and Insurance Agency businesses. These businesses are all trading in line with or even ahead of our original expectations. In that light, it is disappointing to report that Underlying EBIT for the Group for the full year is expected to be below previous expectations because of the impact of delays in the timing of revenues from certain larger budget titles within the Completion Contracts business and of revenues associated with the Pandas Documentary within the Content Distribution business. The Board looks forward to providing updates in this regard in due course. Separately, the Board is clearly disappointed by the Company's poor share price performance since IPO and is committed exploring the options to address this issue.
FFI Holdings Plc
Consolidated statement of
comprehensive
income
for the period ended
30 September
2018
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Note USD USD USD
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
Continuing
operations
Revenue 3 45,640,317 23,955,720 58,599,372
Costs related to
revenue (17,322,622) (5,438,706) (14,034,127)
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
Gross profit 28,317,695 18,517,014 44,565,245
Administrative and
other expenses (23,338,105) (11,932,789) (29,427,829)
Exceptional costs 4 (961,072) (8,874,975) (10,698,413)
Other income 606,823 197,668 588,403
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
Operating
profit/(loss) 4,625,341 (2,093,082) 5,027,406
Financing income 102,169 36,369 35,959
Finance costs (24,166) (1,034) (76,695)
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
4,703,344 (2,057,747) 4,986,670
Net profit from
joint venture 11,777 - 25,723
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
Profit/(loss) before
taxation 4,715,121 (2,057,747) 5,012,393
Taxation 6 (1,277,380) (1,687,389) (3,678,363)
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
Profit/(loss) for the
period from
continuing operations 3,437,741 (3,745,136) 1,334,030
Discontinued
operations
Profit for the
period from
discontinued
operations 20 45,371 136,994 157,679
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
Profit/(loss) for
the period 3,483,112 (3,608,142) 1,491,709
Total profit/(loss)
for the
period attributable
to:
Owners of the
Company 3,498,470 (3,682,918) 1,428,769
Non-controlling
interest (15,358) 74,776 62,940
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
Other comprehensive
(loss)/income
from continuing
operations, net of
income tax 3,483,112 (3,608,142) 1,491,709
Exchange difference
on translating
foreign
operations
attributable to
Owners of the
Company (214,991) 106,238 237,075
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
Total other
comprehensive
income
from continuing
operations
attributable to
Owners of the
Company (214,991) 106,238 237,075
Exchange difference
on translating
foreign
operations
attributable to
non-controlling
interests (2,901) 7,591 8,815
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
Total comprehensive
income/(loss)
for the
period from
continuing
operations 3,265,220 (3,494,313) 1,737,599
Total comprehensive
income/(loss)
attributable to:
Owners of the
Company 3,283,479 (3,576,680) 1,665,844
Non-controlling
interest (18,259) 82,367 71,755
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
3,265,220 (3,494,313) 1,737,599
Earnings/(loss) per share
attributable
to owners of the parent
Total
Basic (cents) 7 2.22 (2.51) 0.94
Diluted (cents) 7 2.21 (2.48) 0.93
Continuing
operations
Basic (cents) 7 2.18 (2.56) 0.88
Diluted (cents) 7 2.18 (2.52) 0.87
FFI Holdings Plc
Consolidated statement of
financial position
as at 30 September
2018
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
Unaudited Unaudited Audited
30 September 30 September 31 March
2018 2017 2018
Note USD USD USD
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
Assets
Non-current
Goodwill 11 35,283,256 9,871,423 31,215,954
Intangible assets 12 21,620,441 7,579,951 15,468,359
Film rights, net 13 5,803,590 - -
Investments - 283,113 283,113
Investment in a joint
venture 422,500 - 410,723
Other non-current
assets 2,271,342 909,220 1,490,890
Property, plant and
equipment 5,882,762 2,929,589 4,647,389
Deferred tax assets 1,702,744 1,954,389 1,626,893
--------------------- ----- ---------------------------- ----------------------------
Non-current assets 72,986,635 23,527,685 55,143,321
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
Current
Trade and other
receivables 14 33,563,129 7,779,423 18,512,663
Other current assets 3,792,767 2,595,298 2,631,936
Restricted cash 15 73,633,959 62,604,967 68,382,153
Cash and cash
equivalents 15,994,381 43,967,107 23,552,491
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
126,984,236 116,946,795 113,079,243
Assets classified as
held for sale - 216,044 -
Current assets 126,984,236 117,162,839 113,079,243
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
Total assets 199,970,871 140,690,524 168,222,564
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
Liabilities
Current
Trade and other
payables 16 55,100,703 21,289,930 28,004,345
Income tax payable 1,022,196 2,949,990 316,323
Payable to
productions 54,338,329 50,557,951 56,119,649
Provision for losses 2,121,203 663,749 609,556
Borrowings 17 107,114 1,954,137 3,783,419
Current liabilities 112,689,545 77,415,757 88,833,292
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
Non-current
Borrowings 17 432,661 486,629 379,415
Other payables 18 19,731,450 1,709,000 15,208,995
Deferred tax
liabilities 1,641,339 4,667,661 1,631,578
Non-current
liabilities 21,805,450 6,863,290 17,219,988
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
Total liabilities 134,494,995 84,279,047 106,053,280
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
Equity
Share capital 2,045,666 2,035,570 2,035,570
Share premium 38,539,508 38,539,508 38,539,508
Other reserve 14,731,074 14,731,074 14,731,074
Merger reserve (16,384,976) (16,384,976) (16,384,976)
Foreign exchange (302,283) (218,129) (87,292)
Share based payment
reserve 1,257,354 3,174,652 3,807,511
Retained earnings 25,467,156 14,312,291 19,423,978
Total equity attributable to
owners of the Company 65,353,499 56,189,990 62,065,373
---------------------------- ---------------------------- ---------------------------- ----------------------------
Non-controlling
interests 122,377 221,487 103,911
Total equity 65,475,876 56,411,477 62,169,284
--------------------- ----- ---------------------------- ---------------------------- ----------------------------
FFI Holdings Plc
Consolidated
statements of cash
flows
for the period ended
30 September 2018
---------------------- ---- ---------------------------- ---------------------------- ----------------------------
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Note USD USD USD
---------------------- ---- ---------------------------- ---------------------------- ----------------------------
Cash flows from
operating activities
Profit/(loss) before
taxation
including
discontinued
operations 4,760,492 (1,920,753) 5,144,349
Adjustments for:
Share based payments 10 281,270 3,174,652 3,807,511
Depreciation 981,997 569,883 1,680,328
Amortisation of
intangible assets 12 963,094 129,503 643,513
Finance costs - - 99,643
Gain on sale of
financial assets (516,887) - -
(Gain)/loss on
disposal of
subsidiary (45,371) 136,994 157,679
Net foreign exchange
(gain)/loss (217,892) 113,829 245,890
6,206,703 2,204,108 11,778,913
---------------------- ---- ---------------------------- ---------------------------- ----------------------------
Increase in working
capital:
Increase in restricted
cash 15 (7,033,126) (7,915,180) (6,851,698)
(Increase)/decrease in
accounts receivable (10,989,944) 1,391,696 (640,836)
(Increase)/decrease in
other assets (570,328) 1,434,291 2,202,656
Increase in film
rights, net (1,147,047) - -
Increase/(decrease) in
trade and other
payables 16,464,329 694,956 (2,511,781)
Increase/(decrease) in
provision for losses 1,511,647 (113,497) (167,690)
Increase/(decrease) in
deferred revenue 148,003 (1,086,779) (1,218,839)
Cash generated from
operations 4,590,237 (3,390,405) 2,590,725
---------------------- ---- ---------------------------- ---------------------------- ----------------------------
Interest paid (24,166) (22,298) (67,733)
Income taxes paid (391,500) (1,503,696) (8,420,884)
Net cash generated
from/(used in) operating
activities 4,174,571 (4,916,399) (5,897,892)
---------------------------- ---------------------------- ---------------------------- ----------------------------
Cash flows from
investing activities
Proceeds on sale of
financial assets 800,000 - 216,044
Purchases of
intangible assets (2,269,376) (2,236,466) (3,897,010)
Purchase of property,
plant and equipment (2,024,847) (542,036) (1,502,812)
Loan amounts advanced
to employees - - -
Loan repayments by
employees 34,818 3,224,491 3,275,871
Net cash outflow on
acquisition of
subsidiary (4,391,367) - (18,223,228)
Net cash (used in)/generated
from investing activities (7,850,772) 445,989 (20,131,135)
---------------------------- ---------------------------- ---------------------------- ----------------------------
Cash flows from
financing activities
Net proceeds from
issue of share
capital - 38,811,676 38,811,676
Distribution of
capital to
non-controlling
interests - - (106,964)
Net cash used in
settlement of share
options (183,850) - -
Acquisition of
non-controlling
interest (75,000) - -
Proceeds from
borrowings 17 - 1,750,000 3,500,000
Repayment of
borrowings 17 (3,623,059) (5,271,030) (5,770,065)
Net cash (used in)/generated
by financing activities (3,881,909) 35,290,646 36,434,647
---------------------------- ---------------------------- ---------------------------- ----------------------------
Net decrease in cash
and cash equivalents (7,558,110) 30,820,236 10,405,620
Cash and cash equivalents at
the beginning of the year 23,552,491 13,146,871 13,146,871
Cash and cash equivalents at
the end of the year 15,994,381 43,967,107 23,552,491
---------------------------- ---------------------------- ---------------------------- ----------------------------
FFI Holdings Plc
Consolidated statements of changes in equity
for the period ended 30 September 2018
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Equity attributable to owners of the parent
----------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total
Share Share Treasury Other Merger Foreign Share Retained equity Non- Total
capital premium shares reserve reserve exchange based earnings attributable controlling equity
to owners
payment of interest
reserve the parent
USD USD USD USD USD USD USD USD USD USD USD
----------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- --------------------- ------------------- -------------------
Balance at 31
March
2017 (Audited) 1,763,402 - - 14,731,074 (16,384,976) (324,367) - 17,995,209 17,780,342 139,120 17,919,462
----------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- --------------------- ------------------- -------------------
(Loss)/profit
for
the period - - - - - - - (3,682,918) (3,682,918) 74,776 (3,608,142)
Other
comprehensive
income for the
period - - - - - 106,238 - - 106,238 7,591 113,829
----------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- --------------------- ------------------- -------------------
Total
comprehensive
income/(loss)
for
the
period - - - - - 106,238 - (3,682,918) (3,576,680) 82,367 (3,494,313)
Issue of shares
during the
period 272,168 40,553,072 - - - - - - 40,825,240 - 40,825,240
Issuance costs - (2,013,564) - - - - - - (2,013,564) - (2,013,564)
Equity settled
share
based
payments - - - - - - 3,174,652 - 3,174,652 - 3,174,652 Balance at 30 September 2017 (unaudited) 2,035,570 38,539,508 - 14,731,074 (16,384,976) (218,129) 3,174,652 14,312,291 56,189,990 221,487 56,411,477 ----------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- --------------------- ------------------- ------------------- Profit/(loss) for the period - - - - - - - 5,111,687 5,111,687 (11,836) 5,099,851 Other comprehensive income for the period - - - - - 130,837 - - 130,837 1,224 132,061 ----------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- --------------------- ------------------- ------------------- Total comprehensive income/(loss) for the period - - - - - 130,837 - 5,111,687 5,242,524 (10,612) 5,231,912 Equity settled share based payments - - - - - - 632,859 - 632,859 - 632,859 Disposal of subsidiary - - - - - - - - - (1,930) (1,930) Distribution of capital to non-controlling interests - - - - - - - - - (105,034) (105,034) Balance at 31 March 2018 (Audited) 2,035,570 38,539,508 - 14,731,074 (16,384,976) (87,292) 3,807,511 19,423,978 62,065,373 103,911 62,169,284 ----------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- --------------------- ------------------- ------------------- Profit for the period - - - - - - - 3,498,470 3,498,470 (15,358) 3,483,112 Other comprehensive loss for the period - - - - - (214,991) - - (214,991) (2,901) (217,892) ----------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- --------------------- ------------------- ------------------- Total comprehensive income/(loss) for the period - - - - - (214,991) - 3,498,470 3,283,479 (18,259) 3,265,220 Discontinued operations (note 20) - - - - - - - - - (38,275) (38,275) Acquisition of subsidiary with non-controling interest (note 19) - - - - - - - - - 75,000 75,000 Net settlement of share options 10,096 - - - - - - (286,719) (276,623) - (276,623) Adjustment to share based payment reserve - - - - - - (2,831,427) (2,831,427) - - - Equity settled share based payment reserve - - - - - - 281,270 - 281,270 - 281,270 Balance at 30 September 2018 (Unaudited) 2,045,666 38,539,508 - 14,731,074 (16,384,976) (302,283) 1,257,354 25,467,156 65,353,499 122,377 65,475,876 ----------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- --------------------- ------------------- -------------------
Notes to the Consolidated Interim report
For the six months ended 30 September 2018
1. Nature of operations and general information
FFI Holdings Plc (the "Company") is the holding company of a group of companies (the "Group"), which collectively serves as a diversified service provider to the film and entertainment industry with activities across completion contracts, editing equipment and editing suite rentals, post production technical services, insurance services and content distribution.
The address of FFI Holdings Plc's registered office and principal place of business is 9000 Sunset Boulevard, Suite 1400, Los Angeles, CA 90069, United States.
FFI Holdings Plc's shares are listed on the London Stock Exchange's AIM market.
FFI Holdings Plc's consolidated financial statements are presented in US Dollars, which is the functional currency of the operating subsidiaries.
2. Accounting policies
2.1 Basis of preparation
The condensed consolidated interim financial information for the half year ended 30 September 2018 was approved by the Board of Directors and authorised for issue on 19 December 2018. The condensed consolidated interim financial statements are unaudited and do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The statutory accounts for the year ended 31 March 2018 have been filed with the Registrar of Companies at Companies House. The auditor's report on the statutory accounts for the year ended 31 March 2018 was unqualified and did not contain any statements under Section 498 (2) or (3) of the Companies Act 2006. The comparative information for the year ended 31 March 2018 presented in these condensed consolidated interim financial statements has been extracted from those accounts.
The consolidated annual financial statements for the year ended 31 March 2018 were prepared in accordance with IFRS adopted for use in the European Union (IFRS). Accordingly, these condensed, consolidated interim financial statements have been prepared in accordance with the recognition and measurement principles of IFRS and using accounting policies consistent with those which were adopted by the Group in the financial statements for the year ended 31 March 2018 and which will be used in the preparation of the financial statements for the year ended 31 March 2019.
IFRS 9 'Financial Instruments' became effective for annual periods beginning on or after 1 January 2018. This new standard introduces a classification and measurement approach for a variety of financial assets of which, except for trade receivables and borrowings, the Group has no dealings. For receivables, IFRS 9 replaces the 'incurred loss' model in IAS 39 with a forward-looking 'expected credit loss' (ECL model), which is to be calculated based on actual historical credit losses, of which the Group has had a negligible amount. The Group continues to evaluate the impact of IFRS 9 across all segments and does not believe that the new classification requirements will have a material impact on its account for trade receivables or loans that are managed on a fair value basis.
IFRS 15 'Revenue Recognition' became effective for accounting periods beginning on or after 1 January 2018. The majority of the Group's contracts with customers are not complex, with revenue being fixed and earned over a certain period of time. The Group continues to evaluate the impact of IFRS 15 across all operating segments and believes that all policies are in accordance with IFRS 15 and that there is no impact on revenue from the adoption of this standard.
There were no other new relevant standards or interpretations to be adopted for the six months ended 30 September 2018.
The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing their half-yearly financial statements.
2.2 Capital reorganisation
On 30 June 2017 FFI Holdings Plc entered into a share for share agreement with the ultimate beneficiaries of Film Finances, Inc. and Subsidiaries, whereby 136,043,872 new ordinary shares of GBP0.01 each were issued to the ultimate beneficiaries of Film Finances, Inc. and Subsidiaries in exchange for their shares in Film Finances, Inc. and Subsidiaries in the same proportion as their shareholding in Film Finances, Inc. and Subsidiaries. The transaction has been treated as a capital reorganisation and merger accounting principles applied in consolidating the results of FFI Holdings Plc and Film Finances, Inc. and Subsidiaries.
The comparatives used within the consolidated interim financial statements reflect the financial performance and position of Film Finances, Inc. and Subsidiaries. The impact of merger accounting is to reflect the group as though it had always been in existence. Therefore the prior periods comparatives reflect those of Film Finances, Inc. and Subsidiaries. In the current period, the results reflect those of the whole group for the whole period. The only change to the reported balance sheet position is to reflect the share capital of FFI Holdings Plc rather than that of Film Finances, Inc. and Subsidiaries. The difference between the nominal value of the shares issued by FFI Holdings Plc in consideration for the share capital of Film Finances, Inc. and Subsidiaries and the share capital of Film Finances, Inc. and Subsidiaries is taken to the merger reserve.
At 15 June 2018, the Group settled share options on a net basis in accordance with the amendment to IFRS 2 'Share-based Payment.' The group issued shares equal to the fair market value of shares vested at date exercised less the employee's tax obligation due to this transaction, see note 10.
3. Segmental Information
For management purposes, the Group is organised into five operating segments; completion contracts, editing equipment rentals, technical services, insurance agency, and content distribution. The tax credit financing segment was discontinued during the period, see note 20. These segments are the basis on which the Group reports internally to the Directors, who have been identified as the chief operating decision makers.
Revenue and costs not included in one of these operating segments, for example corporate overhead, have not been allocated to an operating segment in line with the way they are reported to the chief operating decision makers.
The principal activities of the operating segments are as follows:
Completion Contracts
The main segment of the Group is to provide completion contracts to financers and distributors in connection with the production of film and television content.
Editing Equipment Rental
A segment of the Group provides film editing equipment and editing suite rentals. The Group acquired EPS-Cineworks, Inc. on 10 November 2017 to expand the editing equipment rentals segment. EPS-Cineworks, Inc. provides post-production equipment rental and software services with a focus on theatrical and television productions in North America.
Technical Services
Buff Dubs was acquired on 1 December 2017 and is a post-production services company in Australia with capabilities in encoding, transcoding, media duplication, and mastering for film and television productions. DAMSmart was acquired on 3 July 2018 to expand the technical services of the Group, see note 19.
Insurance Agency
Reel Media LLC was acquired on 20 December 2017 and is an insurance agency that helps provide insurance agency services for a variety of entertainment events including film, television, theatre, and concerts.
Content Distribution
A segment of the Group acquires and distributes film content. Signature Entertainment, a film distribution company based in the United Kingdom, was acquired on 24 April 2018 to expand the Group's content distribution segment, see note 19. Liquid Light was acquired during the period on 10 April 2018, see note 19.
For the
six months Completion Editing Technical Insurance Content Unallocated Group
ended 30 Contracts Equipment Services Agency Distribution Corporate
September Rental Expenses
2018 USD USD USD USD USD USD USD
---------- ---------- --------- ---------- ------------- -----------
Total revenue 16,837,358 9,851,405 2,769,479 10,945,241 5,236,834 - 45,640,317
---------------
Gross profit 12,573,699 5,445,449 1,513,209 6,630,115 2,155,223 - 28,317,695
--------------- ---------- ---------- --------- ---------- ------------- -----------
Operating
Profit/(loss) 1,427,423 1,360,563 355,261 1,769,403 673,763 (961,072) 4,625,341
--------------- ---------- ---------- --------- ---------- ------------- ----------- ----------
Finance income 92,795 - 1,024 8,350 - - 102,169
Finance costs (2,027) (16,776) (5,363) - (24,166)
--------------- ---------- ---------- --------- ---------- ------------- ----------- ----------
1,518,191 1,343,787 350,922 1,777,753 673,763 (961,072) 4,703,344
---------------
Net profit
from
joint venture - - - 11,777 - - 11,777
--------------- ---------- ---------- --------- ---------- ------------- -----------
Profit before
taxation 1,518,191 1,343,787 350,922 1,789,530 673,763 (961,072) 4,715,121
--------------- ---------- ---------- --------- ---------- ------------- ----------- ----------
For the
six months Completion Editing Technical Insurance Content Unallocated Group
ended 30 Contracts Equipment Services Agency Distribution Corporate
September Rental Expenses
2017 USD USD USD USD USD USD USD
------------------- ------------------- ------------------- ------------------- ------------------- -------------------
Total revenue 18,950,593 5,005,127 - - - - 23,955,720
---------------
Gross profit 15,659,691 2,857,323 - - - - 18,517,014
--------------- ------------------- ------------------- ------------------- ------------------- ------------------- -------------------
Operating
Profit/(loss) 5,590,050 1,191,843 - - - (8,874,975) (2,093,082)
--------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- -------------------
Finance
income 36,369 - - - - - 36,369
Finance
costs (1,034) - - - - - (1,034)
--------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- -------------------
5,625,385 1,191,843 - - - (8,874,975) (2,057,747)
---------------
Net profit
from
joint venture - - - - - - -
--------------- ------------------- ------------------- ------------------- ------------------- ------------------- -------------------
Profit before
taxation 5,625,385 1,191,843 - - - (8,874,975) (2,057,747)
--------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- -------------------
3. Segmental Information (continued)
For the Completion Editing Technical Insurance Content Unallocated Group
year ended Contracts Equipment Services Agency Distribution Corporate
31 March Rental Expenses
2018 USD USD USD USD USD USD USD
------------------- ------------------- ------------------- ------------------- ------------------- -------------------
Total revenue 39,527,383 13,806,215 1,073,939 2,191,835 2,000,000 - 58,599,372
---------------
Gross profit 34,284,721 7,551,319 460,909 1,268,296 1,000,000 - 44,565,245
--------------- ------------------- ------------------- ------------------- ------------------- ------------------- -------------------
Operating
Profit/(loss) 13,695,762 2,430,585 (203,971) (1,196,557) 1,000,000 (10,698,413) 5,027,406
--------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- -----------------
Finance
income 31,784 - - 4,175 - - 35,959
Finance
costs (33,421) (41,617) (1,657) - - - (76,695)
--------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- -----------------
13,694,125 2,388,968 (205,628) (1,192,382) 1,000,000 (10,698,413) 4,986,670
--------------- ------------------- ------------------- ------------------- ------------------- ------------------- ------------------- -----------------
Net profit
from
joint venture - - - 25,723 - - 25,723
---------------
Profit before
taxation 13,694,125 2,388,968 (205,628) (1,166,659) 1,000,000 (10,698,413) 5,012,393
--------------- ------------------- ------------------- ------------------- ------------------- ------------------- -------------------
Geographical segments
The Group's revenue from continuing operations from external customers by location of operations are detailed below:
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
30 September 30 September 31 March
2018 2017 2018
USD USD USD
--------------------- ------------------------------ ------------------------------ ---------------------------
Asia 3,149,915 2,519,290 5,302,189
Australia 4,729,384 912,472 2,964,810
Europe 7,801,268 2,858,199 6,357,528
Middle East & Africa 69,747 139,541 146,179
North America 29,890,003 17,526,218 41,828,666
South America - - 2,000,000
45,640,317 23,955,720 58,599,372
--------------------- ------------------------------ ------------------------------ ---------------------------
4. Expenses
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
30 September 30 September 31 March
2018 2017 2018
USD USD USD
------------------------- ------------------------------ ------------------------------ ---------------------------
Exceptional costs
Initial public offering
costs (note 5) - 8,874,975 8,874,084
Equity settled share
based payments 281,270 - 632,859
Acquisition costs 679,802 - 1,191,470
961,072 8,874,975 10,698,413
------------------------- ------------------------------ ------------------------------ ---------------------------
5. Initial public offering
On 30 June 2017 the Group published its AIM Admission Document following its successful $38.8m fundraising. Its ordinary shares of GBP0.01 each were admitted to trading on the AIM market on 30 June 2017.
The Group issued 157,041,248 shares at a price of $1.94 per share, valuing the group at approximately $306m on issue and raising $40.8m before expenses. Total expenses of the Initial public offering ('IPO') and fundraising were $10,888,539, of which $2,013,564 were directly attributable to the issue of the new shares and have been charged to the Share Premium account. The balance of $8,874,957 has been charged to the Consolidated Income Statement and included within administrative expenses in the period ended 30 September 2017. .
To facilitate the IPO, FFI Holdings Plc was incorporated on 30 May 2017 and acquired the entire issued share capital of Film Finances, Inc. and Subsidiaries under a share for share exchange on 30 June 2017.
5. Initial public offering (continued)
A number of one-off and non-cash items are summarised in the following table.
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
30 September 30 September 31 March
2018 2017 2018
USD USD USD
----------------------------- ------------------------------- -------------------------- --------------------------
Initial public offering costs
Expenses of the IPO - one off - 5,700,323 5,699,432
Equity settled share based
payment
transactions - non-cash - 3,174,652 3,174,652
- 8,874,975 8,874,084
------------------------------------------------------------- -------------------------- --------------------------
6. Taxation
The underlying tax charge is based on the expected effective tax rate for the full year to 31 March 2019. It is estimated that the tax charge in the period will be $1,277,380.
7. Earnings per share
Basic earnings per share has been calculated on the earnings after tax for the period and the weighted average number of ordinary shares in issue during the period.
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
30 September 30 September 31 March
2018 2017 2018
USD USD USD
--------------------------- ---------------------------- ----------------------------- ----------------------------
Weighted average number of
shares in issue 157,430,746 146,542,561 151,791,904
--------------------------- ---------------------------- ----------------------------- ----------------------------
Profit for the year
attributable to owners of
the Company 3,498,470 (3,682,918) 1,428,769
--------------------------- ---------------------------- ----------------------------- ---------------------------- Total basic earnings/(loss) per ordinary share (cents) 2.22 (2.51) 0.94 --------------------------- ---------------------------- ----------------------------- ---------------------------- Weighted average number of shares in issue 157,430,746 146,542,561 151,791,904 Share options 595,191 1,918,219 1,918,219 --------------------------- ---------------------------- ----------------------------- ---------------------------- Weighted average fully diluted number of shares in issue 158,025,937 148,460,780 153,710,123 Total fully diluted earnings/(loss) per share (cents) 2.21 (2.48) 0.93 --------------------------- ---------------------------- ----------------------------- ---------------------------- Continuing earnings/(loss) for the year 3,437,741 (3,745,136) 1,334,030 --------------------------- ---------------------------- ----------------------------- ---------------------------- Continuing basic earnings/(loss) per share (cents) 2.18 (2.56) 0.88 --------------------------- ---------------------------- ----------------------------- ---------------------------- Continuing fully diluted earnings/(loss) per share (cents) 2.18 (2.52) 0.87 --------------------------- ---------------------------- ----------------------------- ----------------------------
8. Dividends
No dividends have been paid by the Group in any of the periods presented.
9. Share capital
Unaudited Unaudited Unaudited
Number of Number of Total
ordinary shares redeemable shares USD
--------------------------- ----------------------------- ---------------------------- ----------------------------
At 30 May 2017 on
incorporation 1 - -
Issued on 30 June 2017 - 50,000 64,810
Cancellation of shares 30
June 2017 - (50,000) (64,810)
Issued on 30 June 2017
related
to share for share
agreement 136,043,872 - 1,763,402
Issued on 30 June 2017
related to IPO 20,997,375 - 272,168
At 30 September 2017 and 31
March 2018 157,041,248 - 2,035,570
--------------------------- ----------------------------- ---------------------------- ----------------------------
Issued on 15 June 2018 778,995 - 10,096
At 30 September 2018 157,820,243 - 2,045,666
--------------------------- ----------------------------- ---------------------------- ----------------------------
10. Share-based payments
On 30 June 2017, the date of admission, the Group granted to two directors and one employee executive options to subscribe for ordinary shares. All options are equity settled. The executive options have an exercise price $0.40 per share.
The table below shows the number of executive options granted to each recipient:
President of Rainbow Production
Kevin Hyman Services, LLC 557,780
Timothy Trankina Chief Financial Officer 1,020,329
Antony Mitchell Chief Operating Officer 1,020,329
All executive options for Kevin Hyman and Timothy Trankina became fully vested and exercisable at the date of admission. In the case of Antony Mitchell, one-third of his executive options became fully vested and exercisable at the date of admission, and one-third will vest and become exercisable on each of the first two anniversaries of such date thereafter.
The executive options were exercised in full or in part by the recipient by following the procedures established by the Group. With respect to the executive options granted to Timothy Trankina, 765,247 of the executive options were exercised on 15 June 2018 and 255,082 of the executive options expire on the fifth anniversary of the date of grant. All executive options granted to Kevin Hyman were exercised on 15 June 2018. With respect to the executive options granted to Antony Mitchell, 340,110 of the executive options were exercised on 15 June 2018 and 680,219 expire no later than 15 June following the year in which such portion of his executive options vest. In each case, if the recipient's employment is terminated, all executive options must be exercised within 90 days after the date of termination, or the date on which such executive options otherwise expire.
At 30 June 2017, the date of admission, the Group had charged $3,174,652 as a share-based payment expense for all executive options fully vested and exercisable at the date of admission. At 31 March 2018, the Group charged an additional $632,859 as a share-based payment expense for the additional shares for Antony Mitchell that became fully vested and exercisable. At 31 March 2018 the Group had charged an aggregate amount of $3,807,511 as a share-based payment expense for all executive options fully vested and exercisable.
At 15 June 2018, the Group settled share options on a net basis by issuing shares equal to the fair market value of shares vested at date exercised less the employee's tax obligation due to this transaction. As a result, 1,663,137 in executive options were exercised in exchange for 778,995 ordinary shares. This reduced the share based payment reserve by $2,831,427. At 30 September 2018, the Group charged an additional $281,270 as a share-based payment expense for the additional shares for Antony Mitchell that became fully vested and exercisable. At 30 September the Group has charged an aggregate amount of $4,088,781 as a share-based payment expense for all executive options fully vested and exercisable.
Options were valued using a Black-Scholes model and will be charged through the profit and loss account over the vesting period. Volatility has been determined based on the historical common stock price volatility of selected guideline public companies over the last three years, as there is no historical stock price volatility for the Group. The risk-free rate represents the yield on US Treasury noted with a maturity that approximates the expected term of each series of options.
The assumptions used in valuing the executive options are a risk-free rate range of 1.23% - 1.45%, volatility range of 29% - 30.3%, and an expected life between 0.96 years and 2.5 years. The weighted average remaining contractual life of the options is 1 year. The fair value of the series of options has been calculated as $1.65 - $1.66.
11. Goodwill
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
30 September 30 September 31 March
2018 2017 2018
USD USD USD
------------------------- ------------------------------ ------------------------------ ---------------------------
Cost 31,215,954 8,540,934 9,871,423
Additional amount
recognised
from business
combinations
occurring during the
period
(note 19) 4,067,302 1,330,489 21,644,531
Reallocation - - (300,000)
Balance at end of period 35,283,256 9,871,423 31,215,954
------------------------- ------------------------------ ------------------------------ ---------------------------
12. Intangibles
Capitalised
Trade
Film Film Name Customer Software Total
Distribution Non-Competition Relationships
Rights Costs Agreement
USD USD USD USD USD USD USD
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------
Cost
At 1
April
2017 1,000,000 1,989,016 220,000 250,000 2,280,000 - 5,739,016
Additions - 2,236,466 - - - - 2,236,466
At 30
September
2017 1,000,000 4,225,482 220,000 250,000 2,280,000 - 7,975,482
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------
Amortisation
At 1
April
2017 - - (3,667) (3,472) (258,889) - (266,028)
Charge
for period - - (22,000) (20,833) (86,670) - (129,503)
At 30
September
2017 - - (25,667) (24,305) (345,559) - (395,531)
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------
Net carrying
amount
at
30 September
2017 1,000,000 4,225,482 194,333 225,695 1,934,441 - 7,579,951
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------
Cost
At 1
October
2017 1,000,000 4,225,482 220,000 250,000 2,280,000 - 7,975,482
Additions - 1,660,544 - - - - 1,660,544
Acquired
in business
combination - - 1,133,941 907,029 9,973,441 122,096 12,136,507
Disposal (1,000,000) - - - - - (1,000,000)
Reclass
to
receivable (4,394,633) - - - - (4,394,633)
At 31
March
2018 - 1,491,393 1,353,941 1,157,029 12,253,441 122,096 16,377,900
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------
Amortisation
At 1
October
2017 - - (25,667) (24,305) (345,559) - (395,531)
Charge
for period - - (93,597) (80,731) (333,868) (5,814) (514,010)
At 31
March
2018 - - (119,264) (105,036) (679,427) (5,814) (909,541)
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------
Net carrying
amount
at
31 March
2018 - 1,491,393 1,234,677 1,051,993 11,574,014 116,282 15,468,359
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------
Cost
At 1
April
2018 - 1,491,393 1,353,941 1,157,029 12,253,441 122,096 16,377,900
Additions - 2,269,376 - - - - 2,269,376
Acquired
in business
combination - - 719,968 121,272 4,004,560 - 4,845,800
At 30
September
2018 - 3,760,769 2,073,909 1,278,301 16,258,001 122,096 23,493,076
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------
Amortisation
At 1
April
2018 - - (119,264) (105,036) (679,427) (5,814) (909,541)
Charge
for period - - (179,578) (131,748) (642,776) (8,992) (963,094)
At 30
September
2018 - - (298,842) (236,784) (1,322,203) (14,806) (1,872,635)
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------
Net carrying
amount
at
30 September
2018 - 3,760,769 1,775,067 1,041,517 14,935,798 107,290 21,620,441
-------------- --------------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------
13. Film rights, net
The Group acquired all the assets and liabilities of Signature Entertainment on 25 April 2018, see note 19. As part of the acquisition the Group acquired film content licenses, which are part of Signature Entertainment's core business. The film rights are prepaid content costs paid by Signature Entertainment for the distribution rights primarily in the United Kingdom territories. These costs are capitalised and amortised over the expected life of the film.
Unaudited
Six months
ended
30 September
2018
USD
--------------------------- ---------------------------
Film rights acquired, see
note 19 4,656,545
Additions 2,926,029
----------------------------- ---------------------------
Total costs 7,582,574
Less: Amortisation (1,778,984)
Balance at end of period 5,803,590
----------------------------- ---------------------------
Amortisation is charged through cost related to revenues.
14. Trade and other receivables
Trade and other receivables consist of the following:
Unaudited Unaudited Audited
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2018 2017 2018
USD USD USD
---------------------------- ---------------------------- ---------------------------- ----------------------------
Trade receivables 14,361,468 1,450,046 4,684,233
Rebate receivable 3,093,077 5,817,911 3,122,784 Insurance receivable 986,136 312,558 723,524 Insurance agency receivable 13,312,032 - 4,353,349 Film costs receivable 673,553 - 4,394,633 Due from joint venture 430,143 - 430,143 Due from related parties 488,301 198,908 498,941 Other receivables 218,419 - 305,056 ---------------------------- ---------------------------- ---------------------------- ---------------------------- Total 33,563,129 7,779,423 18,512,663 ---------------------------- ---------------------------- ---------------------------- ----------------------------
15. Restricted cash
Restricted cash consist of the following:
Unaudited Unaudited Audited
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2018 2017 2018
USD USD USD
---------------------- ---------------------------- ------------------------------- -------------------------------
Held in fiduciary
capacity
for production (i) 54,338,329 50,557,951 56,119,649
Insurance premiums
held in
escrow (ii) 100,121 5,343,115 2,656,910
Insurance agency
(iii) 10,153,018 - 1,782,127
Captive (iv) 8,883,847 6,703,901 7,823,467
Certificate of
deposit 158,644 - -
73,633,959 62,604,967 68,382,153
---------------------- ---------------------------- ------------------------------- -------------------------------
(i) The Group acts in a fiduciary capacity on behalf of certain financiers of films. The Group receives cash, which is restricted in use for the production of films. The Group is required to fund the production of the related films according to the production funding agreement. The amounts are recorded in restricted cash with the corresponding payable recorded as payable to productions.
(ii) For periods prior to 1 October 2017, the Group reserved for approximately 9 percent of net bond fees as insurance premiums to be held in escrow to satisfy insurance premiums in the event that actual claims expense exceed stipulated levels. To the extent actual claims result in additional insurance premiums due, that incremental premium amount is carried forward to future insurance periods to offset rebates that would otherwise be payable to the Group and, in certain situations, the incremental premium amount is immediately due.
(iii) The insurance agency restricted cash is related to monies collected by Reel Media, LLC, which are due to underwriters.
(iv) The captive restricted cash is the cash held by FFI Insurance Limited to cover any potential claims.
16. Trade and other payables
Trade and other payables consist of the following:
Unaudited Unaudited Audited
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2018 2017 2018
USD USD USD
---------------------- ------------------------------- ------------------------------- ----------------------------
Trade payables 6,199,873 232,688 1,286,475
Accruals 3,780,766 2,494,482 2,125,479
Deferred revenue 6,636,145 5,397,539 5,265,479
No-claim bonus
payable 2,754,093 3,802,376 2,609,726
Insurance payable 2,749,772 8,649,255 5,187,468
Insurance agency 23,131,691 - 6,040,900
Other payables 9,848,363 553,590 5,328,818
Due to related
parties - 160,000 160,000
---------------------- ------------------------------- ------------------------------- ----------------------------
Total 55,100,703 21,289,930 28,004,345
---------------------- ------------------------------- ------------------------------- ----------------------------
17. Borrowings
Unaudited Unaudited Audited
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2018 2017 2018
USD USD USD
------------------- ------------------------------- ------------------------------- -------------------------------
Non-Current
Term Loan (related
party)
2-5 years 432,661 486,629 379,415
------------------- ------------------------------- ------------------------------- -------------------------------
432,661 486,629 379,415
Current
Term Loan (for
funding of
capitalised film
costs) - 1,750,000 -
Term Loan (related
party) 107,114 204,137 210,338
Equipment loans - - 73,081
Production loan - - 3,500,000
------------------- ------------------------------- ------------------------------- -------------------------------
107,114 1,954,137 3,783,419
Total Borrowings 539,775 2,440,766 4,162,834
------------------- ------------------------------- ------------------------------- -------------------------------
18. Other payables
Other payables consist of the following:
Rainbow Liquid
Production Buff Dubs Reel Media, Signature Light Total
Services, Pty., Ltd. LLC Entertainment
LLC
USD USD USD USD USD USD
------------------ --------------------- ------------------------ --------------------- --------------------- --------------------- ---------------------
Balance
At 1 April 2017 1,709,000 - - - - 1,709,000
Additions - - - - - -
Reclassification
to current - - - - - -
At 30 September
2017 1,709,000 - - - - 1,709,000 ------------------ --------------------- ------------------------ --------------------- --------------------- --------------------- --------------------- Additions - 877,565 13,153,000 - - 14,030,565 Reclassification to current (530,570) - - - - (530,570) At 31 March 2018 1,178,430 877,565 13,153,000 - - 15,208,995 ------------------ --------------------- ------------------------ --------------------- --------------------- --------------------- --------------------- Additions - - - 4,232,455 290,000 4,522,455 Reclassification to current - - - - - - At 30 September 2018 1,178,430 877,565 13,153,000 4,232,455 290,000 19,731,450 ------------------ --------------------- ------------------------ --------------------- --------------------- --------------------- ---------------------
19. Business Combinations
Subsidiaries acquired
Principal Date of acquisition Proportion Consideration
activity of voting transferred
equity interest USD
acquired
---------------------- ---------------------- --------------------- ----------------- ----------------------------
Signature 25 April
Entertainment Content distribution 2018 100% 13,560,004
Technical
DAMSmart services 3 July 2018 100% 1,512,432
10 April
Liquid Light Content distribution 2018 80% 375,000
----------------------------
15,447,436
----------------------------
Signature Entertainment and Liquid Light were acquired to expand the Group's content distribution segment.
DAMSmart was acquired to expand the Group's activities within technical services segment.
Consideration transferred
Signature DAMSmart Liquid Light Total
Entertainment
2018 USD USD USD USD
----------------- ------------------------------- ------------------------------- ------------------------------- -----------------------------
Cash 4,808,000 1,512,432 10,000 6,330,432
Contingent
consideration 6,251,000 - 290,000 6,541,000
Non-controlling
interest - - 75,000 75,000
Deferred
consideration 2,501,000 - - 2,501,000
----------------- ------------------------------- ------------------------------- ------------------------------- -----------------------------
13,560,000 1,512,432 375,000 15,447,432
19. Business Combinations (continued)
Recognised amounts of identifiable assets acquired and liabilities assumed
2018 Signature DAMSmart Liquid Light Total
Entertainment
USD USD USD USD
-------------- ---------------------------- ------------------------------ ----------------------------- ------------------------------
Current
assets
Cash and cash
equivalents 1,729,478 134,591 - 1,864,069
Trade and
other
receivables 4,465,530 73,568 - 4,539,098
Other current
assets - 2,009 - 2,009
-------------- ---------------------------- ------------------------------ ----------------------------- ------------------------------
6,195,008 210,168 - 6,405,176
Non-current
assets
Plant and
equipment - 192,523 - 192,523
Deposits 935,670 1,295 - 936,965
Film costs 4,656,545 - - 4,656,545
Identifiable
intangible
assets 4,274,000 556,800 15,000 4,845,800
-------------- ---------------------------- ------------------------------ ----------------------------- ------------------------------
9,866,215 750,618 15,000 10,631,833
Current
liabilities
Trade and
other
payables (2,491,674) (8,705) - (2,500,379)
Accrued
liabilities (2,759,158) (152,390) - (2,911,548)
Taxes payable (197,175) (47,773) - (244,948)
-------------- ---------------------------- ------------------------------ ----------------------------- ------------------------------
(5,448,007) (208,868) - (5,656,875)
Net balance
acquired 10,613,216 751,918 15,000 11,380,134
-------------- ---------------------------- ------------------------------ ----------------------------- ------------------------------
The receivables acquired (which principally comprise trade receivables) in these transactions have a fair value equal to the contractual amount. There are no contractual cash flows that are not expected to be collected as of the acquisition date.
Goodwill arising on acquisition
The fair value of identifiable net assets is based upon a preliminary assessment.
20. Discontinued operations
In September 2018, the Group discontinued the tax credit financing segment with the dissolution of KSD Holdings LLC and DSK Ventures Limited.
The tax credit financing segment was not previously classified as held for sale or as a discontinued operation. The comparative condensed consolidated statement of profit or loss has been restated to show the discontinued operation separately from continuing operations.
Unaudited Unaudited Audited
Six months Six months
ended ended Year ended
30 September 30 September 31 March
2018 2017 2018
USD USD USD
---------------------- ------------------------------ ------------------------------ ------------------------------
Revenue - 283,245 290,370
Expenses 7,096 (22,906) (33,709)
---------------------- ------------------------------ ------------------------------ ------------------------------
Profit before tax 7,096 260,339 256,661
Attributable income
tax expense - (123,345) (88,110) ---------------------- ------------------------------ ------------------------------ ------------------------------ Profit after tax 7,096 136,994 168,551 Non-controlling interests 38,275 - - ---------------------- ------------------------------ ------------------------------ ------------------------------ Net gain on disposal 38,275 - - Profit for the period from discounted operations of KSD Holdings LLC and DSK Ventures Limited 45,371 136,994 168,551 ---------------------- ------------------------------ ------------------------------ ------------------------------ Loss for the period from discounted operations of Film Finances Scandinavia APS and Nordic Capital Media - - (10,872) ---------------------- Profit for the period from discontinued operations 45,371 136,994 157,679 ---------------------- ------------------------------ ------------------------------ ------------------------------
21. Post balance sheet events
In November 2018, the Group closed on a $1.8m term loan facility under its Signature Entertainment subsidiary. The loan has a maturity date of October 2019 and an interest rate of 4.5% per annum.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
IR FKFDKKBDBPBD
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December 19, 2018 02:00 ET (07:00 GMT)
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