Sales grew across the board at Entertainment One (ETO) in the reported period, but higher theatrical costs drove the film-and-TV producer and distributor's underlying cash profits down 28 per cent to £38m. Yet management stood by its full-year expectations, as it expects a strong second-half showing from blockbusters such as Girl on the Train.
The BFG, Bad Moms and other theatrical releases boosted box-office takings by more than half to $152m (£122m). But higher marketing and distribution costs meant the film division swung from an underlying cash profit of £12.9m to a loss of £2.3m. Investments in acquired movies more than tripled to about £98m.
More positively, underlying cash profits in the television business rose 18 per cent as it delivered the first season of Private Eyes and debuted hit drama Designated Survivor. And the family division grew both revenues and underlying cash profits by more than a tenth, as flagship brand Peppa Pig won over American preschoolers and gained ground in Asia. Indeed, this writer spotted a pair of plush piglets in the back of a Bangkok cab.
Management expects to release around 180 films into theatres and acquire or produce about 1,100 half-hours of television this financial year. The trade-off could be continued growth in content and production costs, which soared 89 per cent in the period.
Broker Numis expects adjusted pre-tax profits of £125m this financial year, giving EPS of 19p (from £104m and 19.4p in FY2015).
| ENTERTAINMENT ONE (ETO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 228p | MARKET VALUE: | £978m | |
| TOUCH: | 228-231p | 12-MONTH HIGH: | 263p | LOW: 125p |
| DIVIDEND YIELD: | 0.5% | PE RATIO: | 39 | |
| NET ASSET VALUE: | 155p* | NET DEBT: | 37% | |
| Half-year to 31 Aug | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 337 | 18.1 | 4.1† | nil |
| 2016 | 401 | 3.7 | 0.1 | nil |
| % change | +19 | -80 | -98 | - |
*Includes intangible assets of £706m, or 165p a share †Restated to reflect rights issue in Oct 2015 | ||||
