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Entertainment One's TV growth offsets film weakness

The film and television distributor and producer cashed in on Peppa Pig and a raft of hit TV series
May 25, 2016

Blockbusters such as Star Wars: The Force Awakens snatched audiences from The Hateful Eight and other films released by Entertainment One (ETO) in the year to 31 March 2016. But strong demand for TV shows including Peppa Pig and Grey's Anatomy drove adjusted operating profits up a fifth to £125m.

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The group, a film and television distributor and producer, released nearly 1,000 half-hours of TV programming, an increase of a third. That included new seasons of five hit series from The Mark Gordon Company, which it acquired in January 2015. The upshot was a 31 per cent rise in television revenues. Similarly, sales in the family segment leapt as management signed or renewed more than 500 broadcast, licensing and merchandising contracts. New children's show PJ Masks also became one of the Disney Channel's most popular shows.

Fewer theatrical releases and poor showings from some titles led to sharp declines in film revenues and profits. But management expects upcoming films such as The BFG to underpin a rally in the coming months. It also launched a restructuring programme that promises to generate £10m in annual cost savings within three years.

Broker Numis expects pre-tax profits of £124m for the September year-end, giving EPS of 19.5p, up from £101m and 19.4p in 2015.

ENTERTAINMENT ONE (ETO)
ORD PRICE:179pMARKET VALUE:£765m
TOUCH:178-179p12-MONTH HIGH:328pLOW: 125p
DIVIDEND YIELD:0.7%PE RATIO:18
NET ASSET VALUE:145p*NET DEBT:27%

Year to 31 MarTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201250323.18.8nil
20136295.5-0.5nil
201482321.57.21.0
201578644.012.7†1.1
201680347.99.81.2
% change+2+9-23+9

Ex-div: 7 Jul

Payment: 9 Sep

*Includes intangible assets of £674m, or 158p a share

†Adjusted to reflect rights issue in October 2015