EUROPACORP (EPA:ECP) - 2018/19 half-year results
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13/12/2018 18:00
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PRESS RELEASE
2018/19 half-year results
> Return to a positive operating margin of EUR9.4 M, against EUR(31.9) M in
H1 2017/18
> Continued overhead cost reduction, in decrease by 34% compared to H1 2017/18
> Non-recurring impairments with no cash impact for about EUR(80) M
Saint-Denis, December 13, 2018 - EuropaCorp, producer and distributor of films
and TV series, announces today its revenue and consolidated half-year results
as at 30 September 2018.
Half-yearly results - H1 2018/19
Présentation IFRS 5*
Consolidated income
(EUR million) 30 Sept. 2018 30 Sept. 2017 Variation 30 Sept. 2018
(6 months) (6 months) (EURM) (6 months)
Revenue 81,4 140,2 -58,8 80,8
Cost of sales -71,8 -172,1 100,3 -71,4
Operating margin 9,6 -31,9 41,5 9,4
% of Revenue 11,8 % - 22,8 % 11,7 %
Operating income - 62,7 -55,3 -7,4 -55,1
% of Revenue - 77,0 % - 30,2 % - 68,2 %
Financial income -16,2 -10,2 -6,0 -16,2
Net Income
(Group share) - 88,9 -70,6 -18,3 -88,9
% of Revenue - 109,2 % - 41,1 % - 110,0 %
30 Sept. 2017 Variation
(6 months) - (EURM)
restated
137,6 -56,8
-169,5 98,1
-31,9 41,3
- 23,1 %
-64,9 9,8
- 47,2 %
-10,2 -6,0
-70,6 -18,3
- 51,3 %
* To be compliant with IFRS 5, the activity related to the catalogue Roissy
Films, held for sale as of 30 September 2018, has been restated within the
consolidated H1 2018/19 and H1 2017/18 financial statements above. The net
income for that specific line of business as of 30 September 2018 (-7,6 MEUR)
and 30 September 2017 (-0,7 MEUR ) has been booked directly in " Net Income -
Group Share ".
Same for the activities Music Publishing and French Television, sold or held
for sale as of 30 September 2017, with a net result of +10,4 MEUR for H1
2017/18.
> Revenues of EUR80.8 M, down by EUR(56.8) M compared to H1 2017/18, due to the
fact that Valerian and the City of a Thousand Planets was in the lineup of the
first semester of last financial year
Foreign Sales amounted to EUR11.8 M, or about 15% of total revenue. They are
down by EUR(58.2) M compared to N-1, because of the international deliveries of
Valerian and the City of a Thousand Planets during H1 2017/18. They included
notably the delivery of Taxi 5 and overages collected on the films Lucy, Taken
3 and Valerian and the City of a Thousand Planets.
Revenue from Theatrical Distribution stood at EUR5.7 M against EUR35.5 M during
H1 2017/18 which comprised notably the release of Valerian and the City of a
Thousand Planets, or a decrease of EUR(29.8) M. The semester was marked by the
theatrical release of Taxi 5 with 3.7 million admissions in France.
The Video & VOD segment in France and the United States came in at EUR8.8 M,
versus EUR8.9 M last year. This turnover was mainly driven by the video sales
(physical and VOD) in the United States, for EUR6 M.
The main sales were:
- For films from the lineup, Taxi 5, released in DVD in August 2018 in France ;
- For films from the catalogue, Valerian and the City of a Thousand Planets,
Coexister and Carbone notably.
Television sales & SVOD in France and the United States rose to EUR18.3 M in H1
2018/19, up by +EUR5.3 M (+41%) compared to N-1. This growth is linked to the
opening of new broadcasting rights windows in France, notably Valerian and the
City of a Thousand Planets and Coexister, as well as Lucy and Taken 2.
Revenue for the TV Series production activity amounted to EUR19.8 M, up by
+EUR15.8 M compared to N-1. This growth is mainly due to the delivery to NBC of
the last 6 episodes from the second season of the international series Taken,
as well as the international sales of this same series.
> Return to a positive operating margin of EUR9.4 M: operations of H1 2018/19
generated an operating margin of EUR19.2 M but the operating margin of the
semester was hampered by the EUR9.8 M impairment of a film to be released
during the following semester.
Given the recognition of non-recurring impairments, a loss of EUR(88.9) M was
incurred this semester, compared to EUR(70.6) M for the first semester of last
financial year
Consolidated net loss was EUR(88.9) M, versus EUR(70.6) M during the first
semester of the previous financial year which was marked by the poor
performance in theaters of films distributed in the United States.
The loss of H1 2018/19 is due to non-recurring impairments for EUR(80.7) M,
with no cash impact:
(a) The impairment of the intangible asset relating to the distribution of
films in the United States for an amount of EUR51.4 M, given the revision of
the forecasted net future receipts generated by this activity;
(b) A partial impairment of the US deferred tax assets, for an amount of EUR9.4
M, given the revision of the US forecasted net future receipts as well;
(c) The impairment of a film not yet released and greenlighted in 2016, for an
amount of EUR9.8 M, to reflect the current revenue estimates;
(d) The impairment of the goodwill Roissy Films for EUR7.6 M;
(e) A EUR2.4 M decrease in the French deferred tax assets linked to the
decrease of the tax rate.
The operating margin stood at +EUR9.4 M versus EUR(31.9) M for H1 2017/18, or
an increase of +EUR41.3 M mainly linked to the absence of losses on the US
distribution activity, against EUR(49) M of operating losses in N-1.
Overheads were at EUR(13.6) M, or a decrease of EUR6.9 M compared to N-1
(-34%), confirming the effectiveness of the measures implemented by the Group
to reduce general expenses, which had already decreased by EUR15.9 M (-30%) at
the closing of the previous fiscal year.
Half-year financial income was EUR(16.2) M, versus EUR(10.2) M in N-1, and
consisted essentially of financial interests incurred over the period, notably
on the Secondary line of credit, as well as unrealized foreign exchange net
losses.
After taking into account taxes for EUR(9.3) M (against EUR(4.5) M in N-1),
half-year Net income (Group share) was EUR(88.9) M.
> Cash-flows
The net operating cash flows of the semester amounted to +EUR35.6 M, versus
+EUR74.8 M for the first semester of last financial year. This decrease is
linked to the cashing last year of the Minimums Garantis relating to the
delivery of the film Valerian and the City of a Thousand Planets to foreign
distributors as well as the significant French theatrical receipts for this
film.
During this first semester, the Company invested EUR9.8 M in the production of
films and series, versus EUR54.1 M during the first semester 2017/18. This
decrease is due to the significant investments last year in the series Taken
season 2 and in the films Taxi 5 and Carbone. Investments of this semester were
mainly on the production of English-language and French-language films (Anna
and Nous finirons ensemble).
> Key events since the beginning of the 2018/2019 financial year
As announced on September 20, 2018, the Company has entered into exclusive
negotiations with the group Gaumont in view of taking over the activity of
exploitation of films from the catalog Roissy Films. This process of sale,
still in progress, is subject to the realization of various suspensive
conditions.
> Financial structure
As of September 30, 2018, net debt was EUR221 M versus EUR230 M in N-1. The
next maturity dates relating to the Company's debt are in October 2019 for the
senior debt and April 2020 for the secondary one.
Other sales of non-strategic assets may occur in the short or medium term to
reinforce the financial capacity of the Company.
> Outlook
The Company pursues its strategy with 3 main objectives:
- Reinforce company's financial strength and restructure and/or refinance its
debts;
- Continue to reduce overheads;
- Prioritize the production of films with high coverage rate and de-risk the
model.
Kursk, by Thomas Vinterberg, starring Matthias Schoenaerts, Colin Firth and
Léa Seydoux, was released on 7 November 2018 in France and has had 119k
admissions to date.
The next two films to be released will be Anna, directed by Luc Besson, with
Sasha Luss, Cillian Murphy, Luke Evans and Helen Mirren, and Nous finirons
ensemble, directed by Guillaume Canet, with François Cluzet, Marion Cotillard
and Gilles Lellouche.
Concerning the TV series, following the sale of the French TV production
activity, the Company is focusing on the development and the production of
English-language TV series with strong international potential, such as:
- The Extraordinary Adventures of Adele Blanc Sec, based on the French graphic
novel by Jacques Tardi;
- Gray, based on an original idea by world-renowned bestselling novelist David
Baldacci;
- American Flagg!, based on the US graphic novel by Howard Chaykin.
Considering the loss recorded on the first semester due to the non-recurring
impairments, EuropaCorp will recognize a FY 2018/19 significantly in deficit.
ABOUT EUROPACORP
Founded in 1999, EuropaCorp has become one of Europe's leading film and
television studios.
The company's global activities span the entire film value chain with expertise
in production, theatrical distribution, video and VOD sales, international
sales, soundtrack publishing, and television sales. By directly managing the
production and distribution process, EuropaCorp is able to maintain quality and
creativity throughout the lifecycle of a film or television project. The
company has produced or coproduced over 110 films, distributed nearly 160 films
in French cinemas, and owns a catalogue of more than 500 French and English
language titles. Since 2000, the company has produced 8 of France's 20 highest
grossing films based on worldwide box-office. Starting in 2010, the company has
been active in producing television movies and episodic television series for
platforms around the world.
EuropaCorp was founded by French director, screenwriter and producer Luc
Besson. For more information, go to www.europacorp.com
Contacts
Groupe EuropaCorp
Lisa Reynaud / Investor Relations / investors@europacorp.com
Régis Lefèbvre / Communication / rlefebvre@europacorp.com
Tel: 01 55 99 50 00
NewCap
Pierre Laurent / NewCap
plaurent@newcap.fr / Tel: 01 44 71 94 94
EuropaCorp is listed in Compartment C of Euronext Paris
ISIN code: FR0010490920 - Ticker: ECP