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 Eros International Plc Reports Fourth Quarter and Fiscal Year End 2019 Results
   Monday, July 15, 2019 7:59:00 AM ET

Reports Revenue of $270.1 million and Adjusted EBITDA(1) of $103.1 million

Digital and Ancillary Revenue Growth of 45% Year-Over-Year

Eros Now Paying Subscribers Reach 18.8 million

ISLE OF MAN--(BUSINESS WIRE)--Eros International PLC (NYSE:EROS) (“Eros” or the “Company”), a global Indian entertainment company, today announced unaudited financial results for the quarter and fiscal year ended March 31, 2019.

(USD in millions)

Gross Revenue (1)

$304.6

$268.1

$79.0

$86.7

$72.3

$66.6

Reported Revenue

270.1

261.3

69.7

76.8

63.4

60.2

Y/Y % Growth

3.4%

3.3%

-3.1%

17.8%

0.2%

-1.0%

Q/Q % Growth

 

 

-9.2%

21.1%

5.3%

-16.2%

 

 

 

 

 

 

 

Operating Profit

27.6

58.5

-4.4

13.2

8.4

10.4

Operating Profit Margin

10.2%

22.4%

-6.3%

17.2%

13.3%

17.3%

 

 

 

 

 

 

 

Adjusted EBITDA (1)

103.8

83.0

13.1

35.8

27.4

27.5

Adjusted EBITDA Margin

38.4%

31.8%

18.8%

46.6%

43.2%

45.7%

 

 

 

 

 

 

 

Global Paid EN Memberships

18.8

7.9

18.8

15.9

13.0

10.1

Y/Y Growth

138.0%

276.2%

138.0%

218.0%

251.4%

248.3%

Q/Q Growth

 

 

18.2%

22.3%

28.7%

27.8%

Global EN Registered Users

155

100

155

142

128

113

Paid / Registered Users

12.1%

7.9%

12.1%

11.2%

10.2%

8.9%

 

 

 

 

 

 

 

Films Released

72

24

16

25

17

14

 

 

 

 

 

 

 

Cash

$135.8

$87.8

$135.8

$134.9

$134.9

$86.1

Gross Debt

280.8

277.0

280.8

294

297

272.9

Net Debt

145.0

189.2

145.0

159.1

162.1

186.8



(1) A reconciliation of the non-GAAP financial measures discussed within this release to the Company's IFRS revenue and net income is included at the end of this release. See also “Non-GAAP Financial Measures”.

The Company made the following statement,

“This year Eros International Plc generated $270.1 million in revenue and $103.8 million in Adjusted EBITDA. The Company's Adjusted EBITDA margin expanded to 38.4% compared to FY 2018, which is a significant improvement. The Company’s Digital and Ancillary business generated $123.1 million in revenue, which represented over 46% of Eros' combined revenue, driven by the strong growth in its' Eros Now platform.

Eros Now has continued its rapid growth trajectory and reached 18.8 million paid monthly subscribers as of March 31, 2019, a 138% increase over last year. As previously announced, Eros achieved its year-end target of 16 million paying subscribers in just over nine months. The Company has a very strong slate of films and compelling original digital series, which it plans on releasing over the next twelve months that it expects to help drive the growth in its Eros Now business.

Eros’ balance sheet remains conservative and the Company is well-capitalized, with net debt of $145 million, a decrease of $14.1 million compared to the third quarter of FY 2019, and $135.8 million of cash and cash equivalents (including restricted deposits of $46.7 million). The Company has no meaningful near-term debt maturities payable in cash over the next twelve months.

As announced on June 19, 2019, Eros is currently assessing strategic alternatives for the Company with a view to maximizing shareholders’ value and have engaged Citigroup to assist with that review. The process is ongoing and the Company will update the market accordingly, as and when there are any material developments.

Eros also reminds investors that, as addressed in the Company’s July 2, 2019 press release, a short seller has made allegations against Eros which the Company believes is an improper attempt to harm the Company and drive down its stock price so that the short seller can benefit. Eros previously disclosed in March 2016 that the Company’s Audit Committee, with the assistance of Skadden Arps Slate Meagher & Flom LLP, completed an internal review of the Company’s financial reporting for the following areas: (i) UAE sales and revenue recognition, (ii) amortization policy of intangibles, including film and content costs, (iii) related party transactions, (iv) Eros Now registered users count, and (vi) Eros’ film library. Following that review—which covers many of the allegations repeated by the short seller—the Audit Committee was, and still remains, satisfied with the Company’s financial reporting and disclosures in its financial statements as filed with the SEC.

Results Overview

Growth in FY 2019 was fuelled primarily by Eros’ Digital and Ancillary business, including Eros Now, which generated total revenue of $123.1 million. The Company's theatrical and television syndication businesses generated $69.5 million and $77.4 million in revenue, respectively, over the same period. Eros Now reached 18.8 million paid subscribers as of March 31, 2019, which represents growth of 138% year-over-year, and registered users grew ~ 155 million, a 55% increase versus the prior year period. Eros Now’s registered user base of ~155 million grew by 13 million users in the last quarter alone, which the Company believes shows the large addressable market and consumer base it is able to harness.

Eros Now successfully converted a growing portion of its registered user base into paid subscribers over the past year to 12.1% when compared to 7.9% as of March 31, 2018. At the beginning of this fiscal year, the Company had converted an average of 8% of its registered users to paid subscribers. By March 31, 2019 that metric had increased to over 12%. Several internal metrics measured by Eros also demonstrate its progress in reaching more Eros Now users and creating an increasingly “sticky” subscriber base. Over the past twelve months Eros Now has seen quarterly growth rates of 27% on video plays and 25% on new unique devices.

China remains a very important market for Eros and the Company has made positive inroads in that market over the past few months. Most notably, in April 2019 Eros released Andhadhun in China, a thriller starring Tabu, Ayushmann Khurrana and Radhika Apte, which collected over $43 million in the Chinese box office in less than four weeks. Andhadhun is now the third highest grossing Indian film to ever be released in China. The Company expects to announce more theatrical releases in China in the near future.

Content

Over the last twelve months Eros has released 72 films and 11 digital series, one of the Company’s most prolific years in terms of output size. Consistent with Eros’ strategy to create compelling premium content within a controlled budget, it had many new releases this quarter, which spanned genres and budgets. In June 2019, Counterpoint Technology Market Research released an in-depth study on OTT platforms and consumption patterns in India which highlighted many encouraging engagement statistics. According to the study, Eros Now users were found to be the most engaged users among all leading OTT platforms in India. A total of 68% of Eros Now users watch content on the platform daily and a total of 27% of Eros Now users watch content on Smart TVs, the highest among all other leading OTT platforms. Furthermore, 9% of Eros Now users indicated that they spend more than 21 hours a week watching online content including 12% of Eros Now users in Tier II/III cities, which is the highest figure among all major platforms in India. Eros Now has a significant share (59%) of users in the 25-39 age bracket in Tier II/III cities. This is the highest percentage of millennials watching Eros Now among all major OTT platforms.

Eros Now also launched Eros Now Quickie earlier this year, an innovative platform for high quality short form original content. The Company has now launched ten original Quickie episodics including, ‘Date Gone Wrong’ and the fun-series ‘Paisa Fek Tamasha Dekh’ as well as over 26 ‘mini-movie’ premieres. Eros Now is planning to release 14 original Quickies over the course of the next twelve months.

Eros Now has launched 11 new original series over the past twelve months. The launch of Eros' digital series this year, comprising a broad mix of genres ranging from comedy to horror and crime thriller, has gained critical acclaim around the world. Eros Now won over ten awards for its' originals ‘Side Hero’ and ‘Smoke’ across various platforms. These series were a first step towards driving ‘binge watching’ habits on the platform. In addition, the Company's series ‘Smoke’ was nominated at SXSW under the ‘Title Design’ category. ‘Enaaya’ went live in January 2019 and is a music-based series focused on urban-youth and the first web series in India with a female lead. This was followed by the action series ‘Operation Cobra’ in February. March had two of the most varied content pieces in terms of genre, ‘Metro Park’ – a slice-of-life comedy series based on a middle class immigrant family based in New Jersey, and ‘Flip’, an anthology delving into the human psyche. Both series have been very well received among the respective audiences - registering some of the highest engagement Eros Now has received to date. Other key content releases included ‘The Investigation’, a crime thriller and ‘Tum Se Na Ho Payega’ a classic new age love story for a short-form content repertoire. ‘Modi – The Journey of A Common Man’ – a biography on the Indian Prime Minister kicked off its marketing campaign earlier this year and the series launched in the first quarter of Fiscal Year 2020. Eros also continues its strategy of weekly movie premieres and of launching new short form assets on the platform. All of these rich and varied series will add to the wide range of exclusive ‘Original’ assets available only on the Eros Now platform. Due to the success in particular of Smoke and Metro Park, the Company is already working on second seasons for both of these series.

As the Company looks ahead to Fiscal Year 2020, it believes it has a strong film slate, which includes Saif Ali Khan starrer ‘Kaptan’, the trilingual remake of ‘Haathi mere Saathi’ and ‘Kaamiyab’as well as a host of regional releases. In addition, Eros has a series of originals coming up on Eros Now that it expects to release in the coming quarters, including:

  • Flesh by Siddharth Anand (target release Q2 FY20)
  • Brahmm by Gaurav Sharma (target release Q2 FY20)
  • Halahal, a digital film by Zeishan Qadri (target release Q3 FY20)
  • Avatar: The Legend of Vishnu by Anirudh Pathak and Sree Narayan Singh (target release Q4 FY20)
  • Metro Park 2 by Abi Varghese and Ajayan Venugopalan (target release Q4 FY20)
  • Crisis by Gaurav Chawla and Nikhil Advani (target release Q4 FY20)
  • Ponnyein Selvin (target release FY Y21)
  • Smoke 2 by Neel Guha (target release FY Y21)
  • Bhumi by Pavan Kripalani (target release FY Y21)

Over the past twelve months Eros has digitally-premiered a total of 50 movies on Eros Now. This quarter, Eros Now successfully premiered 13 movies across seven Indian languages:

Eros Now Q4 FY19 Premieres

Film Title

Language

Kelavu Dinagala Nanthara

Kannada

Guha Manab - The Caveman

Bengali

Antareen

Assamese

Bhagshesh

Bengali

Asathoma Sadgamaya

Kannada

Wassup Zindagi

Gujarati

Crack

Kannada

Bobby

Malayalam

Roll No. 56

Gujarati

Vandi

Tamil

Hoyto Manush Noy

Bengali

Riktha

Kannada

Juvva

Telugu

Distribution and Alliances

Last quarter was a very productive period for Eros Now in terms of distribution partnerships. The Company completed several commercial deals and launched with two marquee partners in India, Tata Sky and BSNL. Both partnerships are in line with Eros’ strategy to focus on the growing direct-to-consumer (D2C) opportunity in India and have already helped increase Eros Now’s paid subscriber base and time spent per user. The Company also launched a partnership with Veriown, which targets consumers in rural India by powering villages with solar power panels. These panels will also power homes with entertainment, as television screens will be installed along with the solar panels. People who previously had no access to electricity or power will now become Eros Now viewers, which makes Eros Now the primary brand that rural consumers interact with when they enter the digital ecosystem. Through the Veriown partnership, Eros Now as a service is up and running across five villages in Uttar Pradesh and will be launching 10,000 screens in Rajasthan in the upcoming quarter.

Eros Now also announced several international distribution deals over the past few months, which the Company believes will help grow the overseas user base as well as increase its Average revenue per user (ARPU) levels going forward. In March 2019, Eros Now was announced as the only international partner to be included in Apple’s new entertainment app to be launched later this year. In addition, Eros Now announced distribution partnerships with Virgin Media in the UK, Vodafone Qatar and British Airways, among others. By the end of FY2019, Eros had over 50 global distribution partners around the world. Eros Now is preparing for the next phase of its international strategy with an aim to further consolidate from a niche play to a more main stream OTT system in certain key international territories. To this end, early work on technology, content, local marketing and partnerships have been initiated by the business heads.

Eros International Plc Financial Highlights :

 

 

Three Months Ended
March 31

 

 

Fiscal Ended
March 31

 

(dollars in millions)

 

2019

 

 

2018

 

 

% change

 

 

2019

 

 

2018

 

 

% change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

69.7

 

 

$

71.9

 

 

 

(3.1)%

 

 

$

270.1

 

 

$

261.3

 

 

 

3.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

33.5

 

 

 

37.9

 

 

 

(11.6)%

 

 

114.7

 

 

 

126.5

 

 

 

(9.3)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

 

(4.4)

 

 

 

20.3

 

 

 

(121.7)%

 

 

27.6

 

 

 

58.5

 

 

 

(52.8)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Revenue (1)

 

 

79.0

 

 

 

74.3

 

 

 

6.3%

 

 

 

304.6

 

 

 

268.1

 

 

 

13.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA(1)

 

$

13.1

 

 

$

24.1

 

 

 

(45.6)%

 

 

$

103.8

 

 

$

83.0

 

 

 

25.1%

 

(1) A reconciliation of the non-GAAP financial measures discussed within this release to the Company's 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 Twelve Months Ended March 31, 2019

Revenue

In the three months ended March 31, 2019, the Eros film slate was comprised of 16 films of which 16 were low budget films, as compared to 8 films in the three months ended March 31, 2018, of which one was medium budget and seven low budget films. In addition, Eros Now released seven original series titled Operation Cobra, Meri Khoj Mere Haath, Flip, Ennaya, Metro Park, Tum Se Na Ho Paayega and The Investigation during the three months ended March 31, 2019.

In the three months ended March 31, 2019, the Company’s slate of 16 films comprised of one Hindi film, 13 regional films and two Tamil/Telugu as compared to the same period last year where its slate of eight films comprised six Hindi films and two regional films.

In FY 2019, the Eros film slate was comprised of 72 films of which seven were medium budget and 65 were low budget films as compared to 24 films in fiscal 2018, of which one film was high budget, four were medium budget and 19 were low budget. In addition, Eros Now released 11 original series titled Side hero, Smoke, Date Gone Wrong, Paisa Fek Tamasha Dekh, Operation Cobra, Meri Khoj Mere Haath, Flip, Ennaya, Metro Park, Tum Se Na Ho Paayega and The Investigation during fiscal 2019.

In the fiscal 2019, the Company’s slate of 72 films comprised of 15 Hindi films, seven Tamil/Telugu film and 50 regional films as compared to the same period last year where its slate of 24 films comprised of 14 Hindi films, one Tamil/Telugu films and nine regional films.

Three months ended

High

Medium

Low

Total

March 31, 2019

-

-

16

16

March 31, 2018

-

1

7

8

Twelve months ended

High

Medium

Low

Total

March 31, 2019

-

7

65

72

March 31, 2018

1

4

19

24

The Company’s reported revenue for three and twelve months ended March 31, 2019 are $69.7 million and $270.1 million, respectively, compared to $71.9 million and $261.3 million for the three and twelve months ended March 31, 2018, respectively. Adjustments to reported revenues upon adoption of new accounting pronouncements for the three and twelve months ended March 31, 2019 are as set forth as below.

 

 

Three months ended March 31,

 

 

Twelve months ended March 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

Revenue (GAAP)

 

$

69.7

 

 

$

71.9

 

 

$

270.1

 

 

$

261.3

 

Adjustment towards significant financing component under IFRS 15

 

 

9.3

 

 

 

2.4

 

 

 

34.5

 

 

 

6.8

 

Gross Revenue (Non-GAAP)

 

$

79.0

 

 

$

74.3

 

 

$

304.6

 

 

$

268.1

 

Gross revenue for three and twelve months ended March 31, 2019, respectively are $79.0 million and $304.6 million compared to $74.3 million and $268.1 million for the three and twelve months ended March 31, 2018, respectively. Gross revenue for the three and twelve months ended March 31, 2019, respectively, have been adjusted towards significant impact of financing component on account of adoption of new accounting pronouncements IFRS 15 and in addition to those imported under guidance of IAS18

For the three months ended March 31, 2019, aggregate theatrical revenues decreased by 39.2% to $14.1 million from $23.2 million for the three months ended March 31, 2018 and in the twelve months ended March 31, 2019, revenue decreased by 12.1% to $69.5 million, compared to $79.1 million for the twelve months ended March 31, 2018. The variation in theatrical revenue is primarily due to the of films and release of more low budget films.

For the three months ended March 31, 2019, aggregate revenues from television syndication decreased by 19.1% to $22.0 million from $27.2 million for the three months ended March 31, 2018 and in the twelve months ended March 31, 2019, revenue from digital and ancillary decreased by 20.3% to $77.5 million, compared to $97.2 million for the twelve months ended March 31, 2018. The decrease is mainly due to due to mix of films and lower catalogue revenue during the period.

For the three months ended March 31, 2019, the aggregate revenues from digital and ancillary increased by 56.0% to $33.7 million from $21.6 million for the three months ended March 31, 2018 and in the twelve months ended March 31, 2019, revenue from digital and ancillary increased by 44.8% to $123.1 million, compared to $85.0 million for the twelve months ended March 31, 2018. The increase in revenue is primarily on account of contribution from catalogue revenues and digital business and an increase in revenue from OTT platform on account of an increase in subscribers by 138% when compared to the previous year.

Revenue from India decreased by 1.6% to $24.6 million in the three months ended March 31, 2019, compared to $25 million in the three months ended March 31, 2018 and in the twelve months ended March 31, 2019, revenue from India increased by 2.3% to $100.4 million, compared to $98.1 million for the twelve months ended March 31, 2018. The variation is due to the mix of films, partially offset by an increase in revenue from digital and ancillary business.

Revenue from Europe increased by 175.3% to $20.1 million in the three months ended March 31, 2019, compared to $7.3 million in the three months ended March 31, 2018 and in the twelve months ended March 31, 2019, revenue from Europe increased by 134.1% to $63.2 million, compared to $27.0 million for the twelve months ended March 31, 2018. This was due to higher contribution from the monetization of catalogue films, including digital and ancillary business.

Revenue from North America decreased by 57.2% to $0.2 million in the three months ended March 31, 2019, compared to $0.5 million in the three months ended March 31, 2018 and in the twelve months ended March 31, 2019, revenue from North America increased by 41.4% to $1.7 million, compared to $1.3 million for the twelve months ended March 31, 2018.

Revenue from the rest of the world decreased by 36.4% to $24.8 million in the three months ended March 31, 2019, compared to $39.0 million in the three months ended March 31, 2018 and in the twelve months ended March 31, 2019, revenue from rest of world decreased by 22.3% to $104.8 million, compared to $134.9 million for the twelve months ended March 31, 2018. This was due to lower catalogue sales during the period, partially offset by increase in revenue from digital and ancillary business.

Cost of sales

For the three months ended March 31, 2019, cost of sales increased by 6.5% to $36.3 million compared to $34.1 million in the three months ended March 31, 2018 and in the twelve months ended March 31, 2019, cost of sales increased by 15.4% to $155.4 million, compared to $134.7 million for the twelve months ended March 31, 2018. The increase was mainly due to higher amortization costs, higher marketing, advertising and distribution costs.

Gross profit

For the three months ended March 31, 2019, gross profit decreased by 11.6% to $33.5 million, compared to $37.9 million in the three months ended March 31, 2018. The decrease was mainly due to increase in amortization, marketing, advertising and distribution costs and adjustment on account of adoption of new accounting standards for three months ended March 31, 2019.

In the twelve months ended March 31, 2019, gross profit decreased by 9.3% to $114.7 million, compared to $126.5 million for the twelve months ended March 31, 2018. The decrease was mainly due to an increase in marketing, advertising and distribution costs and adjustment on account of adoption new accounting standard for the year ended March 31, 2019.

Adjusted EBITDA (Non- GAAP)

For the three months ended March 31, 2019, Adjusted EBITDA decreased by 45.6% to $13.1 million compared to $24.1 million in the three months ended March 31, 2018. The decrease in Adjusted EBITDA is on account of increased costs in amortization, marketing, advertising, distribution costs and impairment costs of content advances for three months ended March 31, 2019.

In the twelve months ended March 31, 2019, adjusted EBITDA increased by 25.1% to $103.8 million, compared to $83.0 million for the twelve months ended March 31, 2018. The increase in Adjusted EBITDA is due to several factors including increased group revenue and increased margin from catalogue revenues.

Net finance costs

For the three months ended March 31, 2019, net finance costs decreased by 66% to $1.7 million, compared to $5.0 million in the three months ended March 31, 2018 and in the twelve months ended March 31, 2019, net finance costs decreased by 56.7% to $7.7 million, compared to $17.8 million for the twelve months ended March 31, 2018 mainly due to unwinding of credit impairment loss reserve by $13.2 million and which was partially off-setted by lower capitalization of interest.

Income tax expense

For the twelve months ended March 31, 2019, income tax expenses decreased by 19.8% to $7.3 million, compared to $9.1 million in the twelve months ended March 31, 2018. Effective income tax rates were 11.60% and 19.6% for March 31, 2019 and March 31, 2018, respectively excluding non-deductible share-based payment charges, impairment loss 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.

Impairment Loss

The Company recorded an impairment loss, totaling to $423.3 million, mainly due to high discount rate and changes in the market conditions as morefully explained in Note 11 to unaudited condensed financial statements. The impairment loss was firstly allocated to the carrying amount of goodwill and Intangibles - trademark totaling $17.8 million and the residual amount totaling $405.5 million was allocated to Intangibles – content.

Trade Receivables

As of March 31, 2019, Trade Receivables decreased to $201 million from $225.0 million as of March 31, 2018 after considering expected credit loss reserve upon adoption of new accounting standards during the year.

Net Debt

As of March 31, 2019, net debt decreased by 23.4% to $145.0 million from $189.2 million as of March 31, 2018 primarily on account of additional equity infusion during the year amounting $54.8 million. The equity infusion was primarily received from promoters’ group $8.2 million and Reliance Industries $ 46.6 million at $14.6 and $15 per share, respectively.

Intangible assets

Our capital expenditures in fiscal 2019 were over $250 million.

Conference Call

The Company will host a conference call on Monday, July 15th, 2019, at 8:30 AM Eastern Standard Time.

To access the call please dial (888) 753-4238 from the United States, or +1 (706) 643-3355 from outside the U.S. The conference call I.D. number 5770459. Participants should dial in 5 to 10 minutes before the scheduled time.

A replay of the call can be accessed through July 29, 2019 by dialling (800) 585-8367 from the U.S., or +1 (404) 537-3406 from outside the U.S. The conference call I.D. number is 5770459. 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) is a leading global company in the Indian film entertainment industry 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 July 31, 2018 (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

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Amounts in thousands, except share and per share data)

 

 

 

 

As at March 31

 

 

 

Note

 

2019

 

 

2018

 

 

 

 

 

(in thousands)

 

ASSETS

 

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

 

 

Property and equipment

 

 

 

$

10,921

 

$

10,013

 

Goodwill

 

 

 

 

 

 

3,800

 

Intangible assets — trade name

 

 

 

 

 

 

14,000

 

Intangible assets — content

 

5

 

 

705,482

 

 

998,543

 

Intangible assets — others

 

 

 

 

4,884

 

 

5,280

 

Investments

 

 

 

 

2,650

 

 

27,257

 

Trade and other receivables

 

1

 

 

10,065

 

 

9,144

 

Income tax receivable

 

 

 

 

1,284

 

 

1,269

 

Restricted deposits

 

 

 

 

756

 

 

1,100

 

Deferred tax

 

 

 

 

1,263

 

 

351

 

Total non-current assets

 

 

 

$

737,305

 

$

1,070,757

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Inventories

 

 

 

$

435

 

$

353

 

Trade and other receivables

 

1

 

 

209,809

 

 

245,079

 

Investments

 

 

 

 

1,042

 

 

 

 

Cash and cash equivalents

 

 

 

 

89,117

 

 

87,762

 

Restricted deposits

 

 

 

 

55,858

 

 

6,368

 

Total current assets

 

 

 

 

356,261

 

 

339,562

 

Total assets

 

 

 

$

1,093,566

 

$

1,410,319

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Trade and other payables

 

 

 

$

83,487

 

$

72,142

 

Acceptances

 

3

 

 

8,366

 

 

8,898

 

Short-term borrowings

 

2

 

 

208,908

 

 

151,963

 

Current income tax payable

 

 

 

 

17,291

 

 

6,324

 

Total current liabilities

 

 

 

$

318,052

 

$

239,327

 

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

 

Long-term borrowings

 

2

 

$

71,920

 

$

124,983

 

Other long - term liabilities

 

 

 

 

13,898

 

 

3,073

 

Derivative financial instruments

 

 

 

 

620

 

 

 

Deferred income tax liabilities

 

 

 

 

27,427

 

 

39,519

 

Total non-current liabilities

 

 

 

$

113,865

 

$

167,575

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 

$

431,917

 

$

406,902

 

 

 

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

 

 

Share capital

 

4

 

$

39,326

 

$

35,334

 

Share premium

 

 

 

 

580,013

 

 

453,997

 

Reserves

 

 

 

 

2,240

 

 

422,992

 

Other components of equity

 

 

 

 

(79,696)

 

 

(48,649

)

JSOP reserve

 

 

 

 

(15,985)

 

 

(15,985

)

Share application money pending allotment

 

 

 

 

 

 

 

18,000

 

Equity attributable to equity holders of Eros International Plc

 

 

 

$

525,898

 

$

865,689

 

 

 

 

 

 

 

 

 

 

Non-controlling interest

 

 

 

 

135,751

 

 

137,728

 

Total equity

 

 

 

$

661,649

 

$

1,003,417

 

Total liabilities and shareholder’s equity

 

 

 

$

1,093,566

 

$

1,410,319

 

 

EROS INTERNATIONAL PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except share and per share data)

 

 

 

 

 

Three Months Ended
March 31,

 

 

Year Ended
March 31,

 

 

 

Note

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

8

 

$

69,745

 

 

$

71,926

 

 

$

270,126

 

 

$

261,253

 

Cost of sales

 

 

 

 

(36,252

)

 

 

(34,070

)

 

 

(155,396)

 

 

(134,708

)

Gross profit

 

 

 

 

33,493

 

 

 

37,856

 

 

 

114,730

 

 

 

126,545

 

Administrative cost

 

 

 

 

(37,891

)

 

 

(17,561

)

 

 

(87,134)

 

 

(68,029

)

Operating (loss)/profit

 

 

 

 

(4,398)

 

 

 

20,295

 

 

 

27,596

 

 

 

58,516

 

Financing costs

 

 

 

 

(7,419

)

 

 

(5,404

)

 

 

(24,093)

 

 

(19,668

)

Finance income

 

 

 

 

5,734

 

 

 

387

 

 

 

16,419

 

 

 

1,855

 

Net finance costs

 

 

 

 

(1,685

)

 

 

(5,017

)

 

 

(7,674)

 

 

(17,813

)

Other gains/(losses)

 

9

 

 

1,085

 

 

 

(28,071

)

 

 

288

 

 

(41,321

)

(Loss)/profit before exceptional item and tax

 

 

 

 

(4,998)

 

 

 

(12,793)

 

 

 

20,210

 

 

 

(618

)

Impairment loss

 

11

 

 

(423,335

)

 

 

 

 

 

(423,335)

 

 

 

 

Loss after exceptional item but before tax

 

 

 

 

(428,333)

 

 

 

(12,793)

 

 

 

(403,125)

 

 

 

(618

)

Income tax

 

 

 

 

(520

)

 

 

(4,167

)

 

 

(7,328)

 

 

(9,127

)

Loss for the period

 

 

 

$

(428,853)

 

 

$

(16,960)

 

 

$

(410,453)

 

 

$

(9,745

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity holders of Eros International Plc

 

 

 

$

(432,438)

 

 

$

(20,177)

 

 

$

(423,867)

 

 

$

(22,575

)

Non-controlling interest

 

 

 

 

3,585

 

 

 

3,217

 

 

 

13,414

 

 

 

12,830

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earning/(loss) per share(cents)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic/Diluted earning/(loss) per share

 

7

 

 

(583.0)

 

 

 

(30.9)

 

 

 

(598.6)

 

 

 

(36.3

)

 

EROS INTERNATIONAL PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Amounts in thousands, except share and per share data)

 

 

 

Three Months Ended March 31,

 

 

Year Ended March 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

 

$

(428,853)

 

 

$

(16,960)

 

 

$

(410,453)

 

 

$

(9,745)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Items that will not be subsequently reclassified to profit or loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment of Investments

 

 

(24,687)

 

 

 

 

 

 

(24,687)

 

 

 

 

Revaluation of property and equipment

 

 

1,745

 

 

 

 

 

 

1,745

 

 

 

 

Items that will be subsequently reclassified to profit or loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchange differences on translating foreign operations

 

 

991

 

 

 

(3,161)

 

 

 

(13,936

)

 

 

(1,153)

 

Exchange differences on revaluation of property and equipment

 

 

78

 

 

 

6

 

 

 

78

 

 

 

6

 

Reclassification of the cash flow hedge to the statement of operations, net of tax

 

 

 

 

 

 

 

 

 

 

 

375

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other comprehensive loss for the period

 

$

(21,873)

 

 

$

(3,155

)

 

$

(36,800

)

 

$

(772)

 

Total comprehensive loss for the period, net of tax

 

$

(450,726)

 

 

$

(20,115)

 

 

$

(447,253)

 

 

$

(10,517)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity holders of Eros International Plc

 

$

(454,640)

 

 

$

(22,045)

 

 

$

(454,881

)

 

$

(23,106

)

Non-controlling interest

 

 

3,914

 

 

 

1,930

 

 

 

7,628

 

 

 

12,589

 

 

EROS INTERNATIONAL PLC

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands, except share and per share data)

 

 

 

 

 

Year Ended March 31,

 

 

 

 

 

 

(in thousands)

 

 

 

Note

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow from operating activities

 

 

 

 

 

 

 

 

 

 

 

Profit/(loss) before

 

 

 

$

(403,125)

 

$

(618

)

 

Adjustments for:

 

 

 

 

 

 

 

 

 

Depreciation

 

 

 

 

1,049

 

 

1,265

 

 

Share based payments

 

6

 

 

21,561

 

 

17,918

 

 

Amortization of intangible film and content rights

 

 

 

 

130,155

 

 

115,285

 

 

Amortization of other intangible assets

 

 

 

 

1,214

 

 

1,726

 

 

Other non-cash items

 

10

 

 

480,834

 

 

51,051

 

 

Net finance costs

 

 

 

 

20,901

 

 

17,813

 

 

Movement in trade and other receivables

 

 

 

 

(188,308)

 

 

(91,317

)

 

Movement in inventories

 

 

 

 

(99)

 

 

(219

)

 

Movement in trade and other payables

 

 

 

 

22,167

 

 

(1,215

)

 

Loss/(gain) on sale of property and equipment

 

 

 

 

97

 

 

(2

)

 

Cash generated from operations

 

 

 

 

86,446

 

 

111,687

 

 

Interest paid

 

 

 

 

(13,408)

 

 

(20,761

)

 

Income taxes paid

 

 

 

 

(7,558)

 

 

(7,683

)

 

Net cash generated from operating activities

 

 

 

$

65,480

 

$

83,243

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

Investment

 

 

 

$

(1,004)

 

$

 

 

Purchase of property and equipment

 

 

 

 

(501)

 

 

(913

)

 

Proceeds from disposal of property and equipment

 

 

 

 

6

 

 

70

 

 

Investment in restricted deposits held with banks

 

 

 

 

(49,555)

 

 

(27

)

 

Deconsolidation/acquisition of cash and cash equivalent in subsidiary

 

 

 

 

 

 

(9

)

 

Purchase of intangible film rights and content rights

 

 

 

 

(98,115)

 

 

(186,757

)

 

Purchase of other intangible assets

 

 

 

 

(907)

 

 

(321

)

 

Interest received

 

 

 

 

1,830

 

 

2,537

 

 

Net cash (used in) investing activities

 

 

 

$

(148,246)

 

$

(185,420

)

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

Proceeds from issue of share capital, net of transaction costs

 

 

 

$

54,820

 

$

16,645

 

 

Proceeds from issue of shares by subsidiary

 

 

 

 

77

 

 

556

 

 

Investment in shares of subsidiary

 

 

 

 

(2,892)

 

 

 

40,221

 

 

Share application money received pending allotment

 

 

 

 

 

 

18,000

 

 

(Repayment of)/ proceeds from/ short term debt with maturity less than three months (net)

 

 

 

 

 

 

211

 

 

Proceeds from short-term debt

 

 

 

 

103,365

 

 

48,249

 

 

Repayment of short-term debt

 

 

 

 

(59,014)

 

 

(43,785

)

 

Proceeds from long-term debt, net of transaction costs of Nil (2018: Nil)

 

 

 

 

 

 

111,278

 

 

Repayment of long-term debt

 

 

 

 

(12,239)

 

 

(113,960

)

 

Net cash generated from financing activities

 

 

 

$

84,117

 

$

77,415

 

 

 

 

 

 

 

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

 

 

 

1,351

 

 

(24,762

)

 

 

 

 

 

 

 

 

 

 

 

Effects of exchange rate changes on cash and cash equivalent

 

 

 

 

4

 

 

257

 

 

Cash and cash equivalents at beginning of year

 

 

 

 

87,762

 

 

112,267

 

 

Cash and cash equivalents at the end of year

 

 

 

$

89,117

 

$

87,762

 

 

The cash outflow towards intangible film rights and content right includes, interest paid and capitalized $9,592 (2018: $11,722 and 2017: $7,176)

Reconciliation of Liabilities arising from Financing activities:

 

 

Long term
debt(*)

 

 

Short term
debt

 

 

Total

 

As at March 31, 2018

 

$

188,909

 

 

$

87,755

 

 

$

276,664

 

Considered in cash flow (net)

 

 

(12,239)

 

 

44,351

 

32,112

Net finance cost in relation to convertible notes

 

 

10,682

 

 

 

 

 

10,682

Shares issued in lieu of convertible note

 

 

(49,741)

 

 

 

 

 

(49,741)

Movement in derivative financial instruments

 

 

902

 

 

 

 

 

 

902

 

Borrowing for purchase of property and equipment, net

 

 

424

 

 

 

 

 

 

424

 

Amortization of debt issuance cost

 

 

428

 

 

428

 

Transfer of long-term loan to short- term loan

 

 

(5,555)

 

 

 

5,555

 

 

 

 

Changes in fair value of convertible notes measured at fair value through profit and loss

 

 

21,398

 

 

 

 

 

21,398

 

Exchange adjustment

 

 

(7,052)

 

 

(4,369)

(11,421)

 

As at March 31, 2019

 

$

148,156

 

 

$

133,292

 

 

$

281,448

 

(*) including current portion and derivative financial instruments

 

 

Long term
debt(*)

 

 

Short term
debt

 

 

Total

 

As at March 31, 2017

 

$

198,792

 

 

$

83,631

 

 

$

282,423

 

Considered in cash flow (net)

 

 

(2,682

)

 

 

4,675

 

 

 

1,993

 

Net finance cost

 

 

3,575

 

 

 

 

 

 

3,575

 

Shares issued in lieu of convertible notes

 

 

(32,168

)

 

 

 

 

 

(32,168

)

Convertible notes measured at fair value through profit and loss

 

 

13,840

 

 

 

 

 

 

13,840

 

Amortization of debt issuance cost

 

 

664

 

 

 

(253

)

 

 

411

 

Exchange adjustment

 

 

6,888

 

 

 

(298

)

 

 

6,590

 

As at March 31, 2018

 

$

188,909

 

 

$

87,755

 

 

$

276,664

 

(*) including current portion and derivative financial instruments

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

 

 

 

March 31,
2019

 

 

March 31,
2018

 

 

 

 

 

Trade accounts receivables

 

$

242,357

 

 

$

235,191

 

Credit impairment (loss)

 

 

(41,335)

 

 

(10,193)

Trade accounts receivables net

 

 

201,022

 

 

 

224,998

 

 

 

 

 

 

 

 

 

 

Other receivables(*)

 

 

15,345

 

 

 

20,933

 

Prepaid charges

 

 

1,790

 

 

 

2,700

 

Accrued revenues

 

 

1,717

 

 

 

5,592

 

Trade and other receivables

 

$

219,874

 

 

$

254,223

 

 

 

 

 

 

 

 

 

 

Current

 

 

209,809

 

 

 

245,079

 

Non-current

 

 

10,065

 

 

 

9,144

 

 

 

$

219,874

 

 

$

254,223

 

(*) Includes derivative asset of $ Nil (2018: 282) and advance to content vendors $3,462 (2018: $10,607) (net of credit impairment loss of $447).

The movement in the allowances for expected credit losses is as follows:

 

 

 

 

 

Year ended March 31, 2019

 

 

Trade

Receivables

 

Other

Receivables

 

Total

Receivables

Balance at the beginning of the period

$

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)

Loans & Advances written off

 

 

(7,284)

 

(7,284)

Bad Debts written off

 

(13,031)

 

 

(13,031)

Translation adjustment

 

(160)

 

 

(160)

Balance at the end of the period

 

$ 41,335

$

447

$

41,782

 

(*) Incremental Impact on revenues, administrative cost and finance income on account of adoption of new standards was $24,273, $10,673 and $2,209, respectively, in addition to those reported under earlier IFRS guidance amounting to $ 10,193, $22,353 and $ 11,018 respectively.

2. BORROWINGS

An analysis of long-term borrowings is shown in the table below.

NominalAs At March 31
Interest RateMaturity

2019

2018

(in thousands)
Asset backed borrowings
Vehicle loan2.5 - 9.5%2017-22

$

382

$

560

Term loanMCLR +3.2% - 4.50%2019-22

12,947

22,430

Term loanBR + 2.75%2020-21

1,083

1,766

Term loan10.39% - 13.75%2020-23

251

9,580

 
Unsecured borrowings
Retail bond

6.50%

2021-22

65,215

70,055

Convertible Notes

14.23%

2020-21

68,349

86,010

$

133,564

$

156,065

 
Nominal value of borrowings

$

148,227

$

190,401

Cumulative effect of unamortized costs

(691)

(1,210)

Installments due within one year

(75,616)

(64,208)

Long-term borrowings — at amortized cost

$

71,920

$

124,983

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.

Analysis of short-term borrowings

 

 

Nominal

 

As at March 31

 

 

 

interest rate (%)

 

2019

 

 

2018

 

 

 

 

 

(in thousands)

 

Asset backed borrowings

 

 

 

 

 

 

 

 

 

 

Export credit, bill discounting and overdraft

 

MCLR +.40% to 4.60%

 

$

32,078

 

 

$

36,760

 

Export credit, bill discounting and overdraft

 

Base Rate + 0.5% to 1%

 

 

3,533

 

 

 

4,021

Export credit, bill discounting and overdraft

 

6,01% - 15.25%

 

 

26,719

 

 

 

23,963

 

Short term loan(*)

 

3.25% - 15.75%

 

 

70,962

 

 

 

23,011

 

 

 

 

 

$

133,292

 

 

$

87,755

 

Unsecured borrowings

 

 

 

 

 

 

 

 

 

 

Installments due within one year on long-term borrowings

 

 

 

 

75,616

 

 

 

64,208

 

Short-term borrowings - at amortized cost

 

 

 

$

208,908

 

 

$

151,963

 

(*)Borrowings of $46,497 is against restricted deposits.

Reconciliation of fair value measurement of Convertible Notes

 

 

March 31,
2019

Particulars

 

(in thousands)

 

 

 

As at March 31,2018

$

86,010

Interest

 

10,682

‘A’ ordinary shares issued in lieu of convertible notes

 

(49,741)

Loss on fair value of notes

 

21,398

As at March 31,2019

$

68,349

3. ACCEPTANCES

 

 

 

March 31,
2019

 

 

March 31,
2018

 

 

 

(in thousands)

 

Payable under the film financing arrangements

 

$

8,366

 

 

$

8,898

 

 

 

$

8,366

 

 

$

8,898

 

Acceptances comprise of 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, 2018

 

100,000,000

 

30,000

Ordinary shares of 30p each at March 31, 2019 (*)

 

150,000,000

 

45,000

(*) The Company increased authorized number of shares to 150,000,000 on October 25, 2018.

 

 

Number of Shares

 

USD

 

Allotted, called up and fully paid

 

A Ordinary
30p Shares(*)

 

B Ordinary
30p Shares(*)

 

(in thousands)

 

As at March 31, 2017

 

41,312,202

 

19,379,382

 

$

31,877

 

Issue of shares in the quarter ended June 30, 2017

 

12,000

 

 

 

5

 

Issue of shares in the quarter ended September 30, 2017

 

288,291

 

 

 

114

 

Issue of shares in the quarter ended December 31, 2017

 

1,681,520

 

 

 

657

 

Transfer of B Ordinary to A Ordinary share

 

9,666,667

 

(9,666,667)

 

 

 

Issue of shares in the quarter ended Mar 31, 2018

 

2,757,743

 

 

 

 

2,681

 

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

 

(*) 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 Ordinary shares as follows:

 

 

Number of Shares

 

 

 

March 31,

 

 

 

2019

 

2018

 

Issuance to Founders Group (**)

 

 

1,769,911

 

 

1,421,520

 

Issuance towards settlement of Convertible notes

 

 

4,411,359

 

 

2,624,668

 

Exercise against Restricted Share Unit/ Management scheme (*****)

 

 

770,541

 

 

683,158

 

Issuance towards Reliance Industries Limited (***)

 

 

3,111,088

 

 

 

2015 Share Plan (****)

 

 

10,416

 

 

10,208

 

Total

 

 

10,073,315

 

 

4,739,554

 

(*) Each A ordinary shares is entitled to one vote on all matters and each B shares is entitled to ten votes.

(**) Average exercise price of $14.69 (March 31, 2018 $11.6)

(***) Average exercise price of $15 (March 31, 2018 $Nil)

(****) Average exercise price of $7.92 (March 31, 2018 $8.71)

(*****) 366,000 shares exercised price at $0.39 (2018 $Nil)

5. INTANGIBLE ASSETS – CONTENT

 

Gross
Content
Assets

 

 

Accumulated
Amortization

 

 

Impairment Loss

 

 

Content
Assets

 

 

 

 

 

 

 

 

As at March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Film and content rights

 

$

1,675,406

 

 

$

(954,628)

$

(366,703)

 

$

354,075

 

 

Content advances

 

 

377,173

 

 

 

 

 

(38,832)

 

 

338,341

 

 

Film productions

 

 

13,066

 

 

 

 

 

 

13,066

 

 

Non-current content assets

 

$

2,065,645

 

 

$

(954,628)

$

(405,535)

 

$

705,482

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at March 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Film and content rights

 

$

1,493,099

 

 

$

(854,991

)

 

 

$

638,108

 

 

Content advances

 

 

349,568

 

 

 

 

 

 

 

349,568

 

 

Film productions

 

 

10,867

 

 

 

 

 

 

 

10,867

 

 

Non-current content assets

 

$

1,853,534

 

 

$

(854,991

)

 

 

$

998,543

 

 

 

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 March 31,

 

 

Year Ended March 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

IPO India Plan

 

$

167

 

 

$

342

 

 

$

1,198

 

 

$

1,572

 

JSOP Plan

 

 

 

 

 

 

 

 

 

 

 

615

 

Option award scheme 2012

 

 

 

 

 

 

 

 

 

 

 

197

 

2014 Share Plan

 

 

 

 

 

61

 

 

47

 

 

 

(22

)

2015 Share Plan(*)

 

 

100

 

 

 

14

 

 

 

3,059

 

 

 

100

 

Other share option awards (**)

 

 

1,191

 

 

 

1,412

 

 

 

5,346

 

 

 

7,283

 

Management scheme (staff share grant)(***)

 

 

5,030

 

 

 

2,587

 

 

 

11,911

 

 

 

8,173

 

 

 

$

6,488

 

 

$

4,416

 

 

$

21,561

 

 

$

17,918

 

(*) includes of 1,305,399 options granted towards Share Plan 2015 during twelve months ended March 31, 2019 at an average exercise price of $14.86 per share and average grant date fair value $2.6 per share.

(**) includes Restricted Share Unit (RSU) and Other share option plans. In respect of 211,567 units/options granted towards RSU during twelve months ended March 31, 2019, grant date fair value approximates intrinsic value.

(***) Includes 1,400,000 shares granted twelve months ended March 31, 2019 to management personnel.

 

EROS INTERNATIONAL PLC

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

 

7. EARNINGS/(LOSS) PER SHARE

 

 

 

Three months ended March 31,

 

 

Year Ended March 31,

 

 

 

2019

 

 

2018

 

 

2019

 

2018

 

 

 

Basic

 

 

Diluted

 

 

Basic

 

 

Diluted

 

 

Basic

 

 

Diluted

 

 

Basic

 

 

Diluted

 

Earnings/(loss) attributable to the equity holders of the parent

 

$

(432,438)

 

 

 

(432,438)

 

 

$

(20,177)

 

 

 

(20,177)

 

 

$

(423,867)

 

 

 

(423,867)

 

 

$

(22,575

)

 

 

(22,575

)

Potential dilutive effect related to share based compensation scheme in subsidiary undertaking

 

 

 

 

 

(79)

 

 

 

 

 

 

(127)

 

 

 

 

 

 

(214)

 

 

 

 

 

 

(475)

 

Adjusted earnings/(loss) attributable to equity holders of the parent

 

$

(432,438)

 

 

 

(432,517)

 

 

$

(20,177)

 

 

 

(20,304)

 

$

(423,867)

 

 

 

(424,081)

 

 

$

(22,575

)

 

 

(23,050

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares

 

 

74,175,349

 

 

 

74,175,349

 

 

 

65,271238

 

 

 

65,271238

 

 

 

70,813,270

 

 

 

70,813,270

 

 

 

62,151,155

 

 

 

62,151,155

 

Potential dilutive effect related to share based compensation scheme and senior convertible notes

 

 

 

 

 

1,188,178

 

 

 

 

 

 

12,357,201

 

 

 

 

 

 

1,470,797

 

 

 

 

 

 

1,331,211

 

Adjusted weighted average number of shares

 

 

74,175,349

 

 

 

75,363,527

 

 

 

65,271238

 

 

77,628,439

 

 

 

70,813,270

 

 

 

72,284,067

 

 

 

62,151,55

 

 

 

63,482,366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earning attributable to the equity holders of the parent per share (cents)

 

 

(583.0)

 

 

 

(583.0)

 

 

 

(30.9)

 

 

 

(30.9)

 

 

(598.6)

 

 

 

(598.6)

 

 

 

(36.3

)

 

 

(36.3

)

 

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 year ended March 31, 2019, 1,957,035 shares were not included in diluted earnings per share (2018: 1,025,000). 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.

Further, the Company have excluded convertible notes 7,567,962 shares because their effect was anti-dilutive (2018 : 12,399,780).

8. BUSINESS SEGMENTAL DATA

 

Three months ended March 31,

 

 

Year Ended March 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

Revenue by customer's location

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

India

 

$

27,900

 

 

$

28,693

 

 

$

116,078

 

 

$

109,986

 

Europe

 

 

1,439

 

 

 

5,442

 

 

 

2,345

 

 

 

7,739

 

North America

 

 

1,337

 

 

 

1,444

 

 

 

5,682

 

 

 

5,147

 

Rest of the world

 

 

39,069

 

 

 

36,347

 

 

 

146,021

 

 

 

138,381

 

Total Revenue

 

$

69,745

 

 

$

71,926

 

 

$

270,126

 

 

$

261,253

 

Revenue of $62,527 (2018: $67,993) from the United Arab Emirates is included within Rest of the world and revenue of $1,180 (2018: $5,200) from United Kingdom is included under Europe in the above table for the year ended March 31, 2019.

 

 

Three months ended March 31,

 

 

Year Ended March 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

Revenue by group's operation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

India

 

$

24,626

 

 

$

25,049

 

 

$

100,387

 

 

$

98,073

 

Europe

 

 

20,050

 

 

 

7,330

 

 

 

63,196

 

 

 

27,028

 

North America

 

 

232

 

 

 

542

 

 

 

1,759

 

 

 

1,244

 

Rest of the world

 

 

24,837

 

 

 

39,005

 

 

 

104,784

 

 

 

134,908

 

Total Revenue

 

$

69,745

 

 

$

71,926

 

 

$

270,126

 

 

$

261,253

 

Revenue of $81,409 (2018: $103,263) from the United Arab Emirates is included within Rest of the world and revenue of $63,196 (2018: $27,028) from the United Kingdom and Isle of Man are included under Europe in the above table for the year ended March 31, 2019.

 

 

Three months ended March 31,

 

 

Year Ended March 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

Revenue by source

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Theatrical

 

$

14,062

 

 

$

23,150

 

 

$

69,542

 

 

$

79,069

 

Satellite Content licensing

 

 

21,950

 

 

 

27,163

 

 

 

77,453

 

 

 

97,168

 

Digital and other ancillary

 

 

33,733

 

 

 

21,613

 

 

 

123,131

 

 

 

85,016

 

Total Revenue

 

$

69,745

 

 

$

71,926

 

 

$

270,126

 

 

$

261,253

 

EROS INTERNATIONAL PLC

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

9. OTHER GAINS/(LOSSES)

 

 

 

Three months ended
March 31,

 

 

Year ended
March 31,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

Foreign exchange (loss)/gain, net

 

$

(526)

 

 

$

(2,631)

 

 

$

4,708

 

 

$

(6,250

)

(Loss) on sale of property and equipment

 

 

(94)

 

 

20

 

 

(97)

 

 

2

Reversal of expected credit (loss)

 

 

6,240

 

 

 

 

 

 

20,698

 

 

 

 

Gain on available-for-sale financial assets

 

 

37

 

 

 

 

 

 

37

 

 

 

 

Impairment charge on available -for- sale financial assets

 

 

 

 

 

(2,436)

 

 

 

 

 

 

 

 

(2,436

)

Net (loss) on derecognition of financial assets measured at amortized cost, net(*)

 

 

(1,654)

 

 

(854

)

 

 

(5,988)

 

 

(3,562

)

(Loss) on settlement of derivative financial instruments

 

 

 

 

 

 

 

 

 

 

(586

)

(Loss) on deconsolidation of a subsidiary

 

 

 

 

(1,355

)

 

 

 

 

 

(14,649

)

Others

 

 

 

 

 

1

 

 

 

 

 

 

(Loss)/Gain on financial liability (convertible notes) measured at fair value through profit and loss

 

 

(2,918)

 

 

 

(20,816)

 

 

 

(21,398)

 

 

(13,840

)

Credit from Government of India

 

 

 

 

 

 

 

 

2,328

 

 

 

 

 

 

$

1,085

 

 

$

(28,071

)

 

$

288

 

$

(41,321

)

(*) 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

10 NON-CASH EXPENSE/(INCOME)

Significant non-cash expenses except loss on sale of assets, share based compensation, depreciation, derivative interest and amortization were as follows:

 

 

 

Year ended March 31,

 

 

 

 

2019

2018

Unrealized foreign exchange loss / (gain)

 

$

(3,329)

 

$

5,466

Credit impairment Loss, net

 

 

26,283

 

 

4,308

Impairment charge on available-for-sale financial assets

 

 

 

 

2,436

Net losses on de-recognition of financial assets measured at amortized cost, net

 

 

5,988

 

 

3,562

Loss on settlement of derivative financial instruments

 

 

 

 

586

Loss on financial liability (convertible notes) measures at fair value through profit and loss

 

 

21,398

 

 

13,840

Loss on deconsolidation of a subsidiary

 

 

 

 

14,649

Provisions for trade and other receivables

 

 

 

 

4,740

Provision no longer required, written-back

 

 

(120)

 

 

(124)

Impairment loss on content advances and loans and advances

 

 

7,284

 

 

353

Impairment charge on goodwill

 

 

 

 

1,205

Impairment loss

 

 

423,335

 

 

Others

 

 

(5)

 

 

30

 

 

$

480,834

 

$

51,051

 

11. IMPAIRMENT OF NON- CURRENT ASSETS

Impairment reviews in respect of goodwill and indefinite-lived intangible assets are performed annually. More regular reviews, and impairment reviews in respect of other non-current assets, are performed if events indicate that an impairment review is necessary. Examples of such triggering events would include a significant planned restructuring, a major change in market conditions or technology, reduction in market capitalization, expectations of future operating losses, or negative cash flows. The asset or Cash Generating Unit (CGU) is impaired if its carrying amount exceeds its recoverable amount. The recoverable amount is defined as the higher of the ‘fair value less costs of disposal’ (“FVLCD”) and the ‘value in use’ (“VIU”).

The Group identified one reporting segment and CGU, i.e. film content. The group performed impairment assessment as of March 31, 2019. The recoverable amount of the cash generating unit was determined based on value in use, which was higher than the FVLCD.

Value in use was determined based on future cash flows after considering current economic conditions and trends, estimated future operating results, growth rates and anticipated future economic conditions. The approach and key (unobservable) assumptions used to determine the cash generating unit’s value in use were as follows:

Assumptions

As at March 31, 2019

As at March 31, 2018

Growth rate applied beyond approved forecast period

4.00%

4.00%

Pre-tax discount rate

20.9%

18.9%

The Company considered it appropriate to undertake an impairment assessment with reference to the estimated cash flows for the period of four years developed using internal forecast and extrapolated for the fifth year. The growth rates used in the value in use calculation reflect those inherent within the Company’s internal forecast, which is primarily a function of the future assumptions, past performance and management’s expectation of future developments through fiscal 2024.

Accordingly, the Group recorded an impairment loss, totaling to $ 423,335 thousand, as an exceptional item, within the Statement of Income for the year ended March 31, 2019 mainly due to high discount rate as explained in the table above and changes in the market conditions. The aforesaid impairment loss was firstly, allocated from the carrying amount of goodwill and Intangible assets - trademark totaling $ 17,800 thousand and the residual amount totaling $ 405,535 thousand was allocated to Intangible assets - content.

12. NEW STANDARDS ADOPTED AS AT APRIL 1, 2018

Adoption of IFRS 15, "Revenue from Contracts with Customers"

On April 1, 2018, the Group adopted IFRS 15, “Revenue from Contracts with Customers” (‘IFRS 15’), using the modified retrospective method applied to all contracts as of April 1, 2018. Results for reporting periods beginning after April 1, 2018 are presented under IFRS 15, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under IAS 18, Revenue (‘IAS 18’).

Revenue arises mainly from production and distribution of media content, television syndication or satellite rights and digital and ancillary rights.

The Group determines revenue recognition through the following steps:

1. Identification of the contract, or contracts, with a customer

2. Identification of the performance obligations in the contract

3. Determination of the transaction price

4. Allocation of the transaction price to the performance obligations in the contract

5. Recognition of revenue when, or as, a performance obligation/s are satisfied.

In all cases, the total transaction price for a contract is allocated amongst the various performance obligations based on their relative stand-alone selling prices. The transaction price for a contract excludes any amounts collected on behalf of third parties.

Revenue is recognised either at a point in time or over time, when (or as) the Group satisfies performance obligations by transferring the promised goods or services to its customers in an amount that reflects the consideration that it expects to receive in exchange for those services.

At contract inception, the Group assesses the services promised in the contracts with customers and identifies a performance obligation for each promise to transfer to the customer a service (or bundle of services) that is distinct. To identify the performance obligations, the Group considers all of the services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.

The Group recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these amounts within ‘Trade and other payables’ in the Statement of Financial Position. Similarly, if the Group satisfies a performance obligation before it receives the consideration, the Group recognises either a contract asset or accrued receivable within ‘Trade and other receivables’ in the Statement of Financial Position, depending on whether something other than the passage of time is required before the consideration is due.

For certain content licensing arrangements, the Group’s collection period range between 2 – 3 years from contract inception date. Under IFRS 15, an entity needs to adjust the promised amount of consideration for the effects of the time value of money if the timing of payments agreed to by the parties to the contract (either explicitly or implicitly) provides the customer or the entity with a significant benefit. As such, for arrangements where the implied collection period (or normal credit term) is considered to be more than 1 year, revenue is recognised after adjusting the promised amount of consideration for a significant financing component, using the discount rate that would be reflected in a separate financing transaction between the entity and its customer at contract inception. The effects of financing, i.e. unwinding of the financing component, is recognised separately from revenue from contracts with customers in the Statement of Income, within ‘Finance income’. Any subsequent change in collection date from the anticipated collection date considered on the contract inception date has been recognised separately in the Statement of Income, within ‘Other gains/(losses), net’.

Practical Expedients and Exemptions

The Group generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses.

Adoption of IFRS 9, "Financial Instruments"

On April 1, 2018, the Company adopted IFRS 9, “Financial Instruments” (‘IFRS 9’), using the modified retrospective method applied as of April 1, 2018. IFRS 9 Financial Instruments replaces IAS 39 ‘Financial Instruments: Recognition and Measurement’ requirements with effect from April 1, 2018. When adopting IFRS 9, the Group elected not to restate prior periods. Rather, differences arising from the adoption of IFRS 9 in relation to classification, measurement, and impairment are recognized in opening retained earnings as of April 1, 2018.

Major changes in IFRS 9 as compared to IAS 39 is on account of introduction of the expected credit loss model and the changes in categories of financial assets and financial liabilities.

The adoption of IFRS 9 has mostly impacted the following areas:

• The classification and measurement of the Group’s financial assets. Management holds most financial assets to hold and collect the associated cash flows.

• The impairment of financial assets applying the expected credit loss model. This applies now to the Group’s trade and other receivables. For contract assets arising from IFRS 15 and trade receivables, the Group applies a simplified model of recognising lifetime expected credit losses. For all other financial assets, expected credit losses are measured at an amount equal to the twenty-four month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL.

• The measurement of available for sale equity investments at cost less impairment. This investment is now measured at fair value with changes in fair value presented in other comprehensive income.

• The recognition of gains and losses arising from the Group’s own credit risk. The Group continues to elect the fair value option for certain financial liabilities which means that fair value movements from changes in the Group’s own credit risk are now presented in other comprehensive income rather than profit or loss.

Details showing the Classification and Measurement of the Company’s financial instruments on adoption of IFRS 9 as at April 1, 2018.

 

 

IAS 39 Category

 

IFRS 9 Category

 

Total
carrying value

 

 

Total
fair value

 

Financial Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

Loans and Receivables

 

At amortized cost

 

 

87,762

 

 

 

87,762

 

Restricted deposits

 

Loans and Receivables

 

At amortized cost

 

 

7,468

 

 

 

7,468

 

Investment in equity instruments

 

Available for sale financial assets

 

Financial assets at FVTOCI*

 

 

27,257

 

 

 

27,257

 

Trade and other receivables

 

Loans and Receivables

 

At amortized cost

 

 

235,726

 

 

 

235,726

 

Total

 

 

 

 

 

 

358,213

 

 

 

358,213

 

 

 

IAS 39 Category

 

IFRS 9 Category

 

Total
carrying value

 

 

Total
fair value

 

Financial Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Total borrowings (excluding convertible notes)

 

At amortized cost

 

At amortized cost

 

 

190,936

 

 

 

174,533

 

Convertible notes

 

Financial liabilities at FVTPL

 

Financial liabilities at FVTPL**

 

 

86,010

 

 

 

86,010

 

Trade and other payables

 

At amortized cost

 

At amortized cost

 

 

72,142

 

 

 

72,142

 

Acceptances

 

At amortized cost

 

At amortized cost

 

 

8,898

 

 

 

8,898

 

Total

 

 

 

 

 

 

357,986

 

 

 

341,583

 

* FVTOCI – Fair value through other comprehensive income.

** FVTPL - Fair value through profit and loss.

The cumulative effect of the changes made to the consolidated interim Statement of Financial Position as at April 1, 2018 in respect of the adoption of IFRS 9 were as follows:

Assets

 

As of
March 31,
2018
(Reported)

 

 

IFRS 9

 

 

As of
April 1,
2018

 

Trade and other receivables

 

$

254,223

 

 

$

(18,497

)

 

$

235,726

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

Currency translation reserve

 

 

(56,722

)

 

 

(34

)

 

 

(56,756

)

Retained earnings

 

 

375,260

 

 

 

(14,270

)

 

 

360,990

 

Deferred income tax liabilities

 

 

39,519

 

 

 

(673

)

 

 

38,846

 

Non-controlling interests

 

 

137,728

 

 

 

(3,520

)

 

 

134,208

 

However, as a result of adopting IFRS 15, amounts reported under IFRS 15 were not materially different from amounts that would have been reported under the previous revenue guidance of IAS 18, as such, cumulative adjustments to retained earnings is not material.

The Impact of adoption of IFRS 15 and IFRS 9 on our consolidated Statement of Financial Position as at March 31, 2019 were as follows:

Assets

 

Balance at March 31, 2019
(Reported)

 

 

IFRS 9

 

 

IFRS 15(*)

 

 

Balance at March 31, 2019
(without adoption
of IFRS 9/15)

 

Trade and other receivables

 

$

 

219,874

 

 

 

$

 

6,103

 

 

$

 

24,273

 

 

$

 

250,250

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency translation reserve

 

 

(64,075

)

 

 

(126

)

 

 

 

 

 

(64,201

)

Retained earnings

 

 

(49,207

)

 

 

 

(884

)

 

 

22,633

 

 

(27,458

)

 

Deferred income tax liabilities

 

 

27,427

 

 

 

 

921

 

 

 

 

 

 

28,348

 

 

Non-controlling interests

 

 

135,751

 

 

 

 

6,192

 

 

 

1,640

 

 

143,583

 

 

(*) incremental impact on account of adoption of IFRS 15 and IFSR 9, in addition to those reported under guidance of IAS 18 and IAS 39

The impact of adoption of IFRS 15 and IFRS 9 on the consolidated interim statement of income for three month ended March 31, 2019 was as follow.

 

 

March 31, 2019
(Reported)

 

 

IFRS 9 (*)

 

 

IFRS 15(*)

 

 

March 31, 2019
(without adoption
of IFRS 9/15)

 

Revenue

 

$

69,745

 

 

$

 

 

$

6,632

 

 

$

76,377

 

Cost of sales

 

 

(36.252)

 

 

 

 

 

 

 

 

(36.252)

Gross profit

 

 

33,493

 

 

 

 

 

 

6,632

 

 

 

40,125

 

Administrative cost

 

 

(37,891)

 

 

700

 

 

 

 

 

 

(37,191)

 

Operating loss

 

 

(4,398)

 

 

 

700

 

 

 

6,632

 

 

 

2,934

 

Financing costs

 

 

(7,419)

 

 

 

 

 

 

 

 

(7,419)

 

Finance income

 

 

5,734

 

 

 

(3,705)

 

 

 

 

 

 

2,029

 

Net finance costs

 

 

(1,685)

 

 

(3,705)

 

 

 

 

 

(5,390)

 

Other gains/(losses)

 

 

1,085

 

 

 

(6,241

)

 

 

 

 

 

(5,156)

 

(Loss)/profit before exceptional item and tax

 

 

(4,998)

 

 

 

(9,246)

 

 

 

6,632

 

 

 

(7,612)

 

I Impairment loss

 

 

(423,335)

 

 

 

 

 

 

 

 

 

(423,335)

 

Loss/profit after exceptional item but before tax

 

 

(428,333)

 

 

 

(9,246)

 

 

 

6,632

 

 

 

(430,947)

 

Income tax

 

 

(520)

 

 

(248)

 

 

 

 

 

 

(768)

 

(Loss)/profit for the period

 

 

(428,853)

 

 

 

(9,494)

 

 

 

6,632

 

 

 

(431,715)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity holders of Eros International Plc

 

 

(432,438)

 

 

 

(9,828)

 

 

 

6,247

 

 

 

(436,019)

 

Non-controlling interest

 

 

3,585

 

 

 

334

 

 

 

385

 

 

 

4,304

 

(*) incremental impact on account of adoption of IFRS 15 and IFRS 9, in addition to those reported under revenue guidance of IAS 18 and IFRS 39.

The impact of adoption of IFRS 15 and IFRS 9 on the consolidated interim Statement of Income for twelve months ended March 31, 2019 was as follows:

 

 

March 31, 2019
(Reported)

 

 

IFRS 9(*)

 

 

IFRS 15(*)

 

 

March 31, 2019
(without adoption
of IFRS 9/15)

 

Revenue

 

$

270,126

 

 

$

 

 

$

24,273

 

 

$

294,399

 

Cost of sales

 

 

(155,396)

 

 

 

 

 

 

 

 

 

(155,396)

 

Gross profit

 

 

114,730

 

 

 

 

 

 

24,273

 

 

 

139,003

 

Administrative cost

 

 

(87,134)

 

 

 

10,673

 

 

 

 

 

 

(76,461)

 

Operating profit

 

 

27,596

 

 

 

10,673

 

 

 

24,273

 

 

 

62,542

 

Financing costs

 

 

(24,093)

 

 

 

 

 

 

 

 

 

(24,093)

 

Finance income

 

 

16,419

 

 

 

(2,209)

 

 

 

 

 

 

14,210

 

Net finance costs

 

 

(7,674)

 

 

 

(2,209)

 

 

 

 

 

 

(9,883)

 

Other gains/(losses)

 

 

288

 

 

 

(20,698)

 

 

 

 

 

 

(20,410)

 

(Loss)/profit before exceptional item and tax

 

 

20,210

 

 

 

(12,234)

 

 

 

24,273

 

 

 

32,249

 

Impairment loss

 

 

(423,335)

 

 

 

 

 

 

 

 

 

(423,335)

 

(Loss)/profit after exceptional item but before tax

 

 

(403,125)

 

 

 

(12,234)

 

 

 

24,273

 

 

 

(391,086)

 

Income tax

 

 

(7,328)

 

 

 

(248)

 

 

 

 

 

 

(7,576)

 

(Loss)/profit for the period

 

 

(410,453)

 

 

 

(12,482)

 

 

 

24,273

 

 

 

(398,662)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity holders of Eros International Plc

 

 

(423,867)

 

 

 

(15,154)

 

 

 

22,633

 

 

 

(416,388)

 

Non-controlling interest

 

 

13,414

 

 

 

2,672

 

 

 

1,640

 

 

 

17,726

 

(*) incremental impact on account of adoption of IFRS 15 and IFRS 9 in addition to those reported under guidance of IAS 18 and IAS 39

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 Gross Revenue (Non- GAAP)

In addition to the results prepared in accordance with IFRS, the Company has presented Gross Revenue. The Company uses Gross Revenue along with other IFRSs measures to evaluate operating performance. Gross Revenue is defined as reported revenue adjusted in respect of significant financing component that arises on account of normal credit terms provided to catalogue customers.

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, adjustment towards arisen significant discounting, 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:

  • is widely used by investors to measure a company’s operating performance without regard to items excluded from the calculation of such term, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors;
  • helps investors to evaluate and compare the results of Eros’ operations from period to period by removing the effect of the Company’s capital structure from its operating structure.

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.

NON GAAP FINANCIAL MEASURES

 

 

Three months ended March 31,

 

 

Year ended March 31,

 

 

 

 

2019

 

 

 

2018

 

 

 

2019

 

 

 

2018

 

 

 

(in thousand)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue (GAAP)

 

$

 

69,745

 

 

$

 

71,926

 

 

$

 

270,126

 

 

$

 

261,253

 

Adjustment towards significant financing component

 

 

9,303

 

 

 

2,412

 

 

 

34,467

 

 

 

6,816

 

Gross Revenue (Non -GAAP)

 

$

 

79,048

 

 

$

 

74,338

 

 

$

 

304,593

 

 

$

 

268,069

 

Adjusted EBITDA

 

 

Three months ended March 31,

 

 

Year ended March 31,

 

 

2019

 

2018

 

 

2019

 

2018

 

 

(in thousand)

 

Net income (GAAP)

 

$

 

(428,853

)

 

 

$

 

(16,960

)

 

 

$

 

(410,453

)

 

 

$

 

(9,745

)

 

Income tax expense

 

 

520

 

 

 

 

4,167

 

 

 

 

7,328

 

 

 

 

9,127

 

 

Net finance costs

 

 

1,685

 

 

 

 

5,017

 

 

 

 

7,674

 

 

 

 

17,813

 

 

Depreciation

 

 

226

 

 

 

 

427

 

 

 

 

1,049

 

 

 

 

1,265

 

 

Amortization(1)

 

 

227

 

 

 

 

614

 

 

 

 

1,214

 

 

 

 

1,726

 

 

EBITDA

 

 

(426,195

)

 

 

 

(6,735

)

 

 

 

(393,188

)

 

 

 

20,186

 

 

Share based payments(2)

 

 

6,488

 

 

 

 

4,416

 

 

 

 

21,561

 

 

 

 

17,918

 

 

Reversal credit impairment losses/(gains)(3)

 

 

(6,240

)

 

 

(138

)

 

 

 

(20,698

)

 

 

4,308

 

 

Credit impairment losses/(gains)

 

 

1,747

 

 

 

 

 

 

 

10,673

 

 

 

 

 

Adjustment arisen from significant discounting, component (3)

 

 

9,303

 

 

 

 

2,412

 

 

 

 

34,467

 

 

 

 

6,816

 

 

Net losses on de-recognition of financial assets measured at amortized cost, net

 

 

1,654

 

 

 

 

854

 

 

 

 

5,988

 

 

 

 

3,562

 

 

Loss/(Gain) on financial liability (convertible notes) measured at fair value through profit and loss

 

 

2,918

 

 

 

20,816

 

 

 

21,398

 

 

 

 

13,840

 

Closure of derivative asset

 

 

 

 

 

 

 

 

249

 

 

 

 

 

Loss on sale of property and equipment

 

 

94

 

 

 

 

(20

)

 

 

 

97

 

 

 

 

(2

)

 

Loss on settlement of derivative financial instruments

 

 

 

 

 

 

 

 

 

 

 

586

 

 

Loss on deconsolidation of a subsidiary

 

 

 

 

 

1,355

 

 

 

 

 

 

 

14,649

 

 

Impairment loss

 

 

423,335

 

 

 

 

1,205

 

 

 

 

423,335

 

 

 

 

1,205

 

 

Others

 

 

(37

)

 

 

 

(114

)

 

 

 

(37

)

 

 

 

(113

)

 

Adjusted EBITDA (Non-GAAP)

 

$

 

13,067

 

 

 

$

 

24,051

 

 

 

$

 

103,845

 

 

 

$

 

82,955

 

 

Amortizaton of intangible and content rights

 

 

33,997

 

 

 

 

27,963

 

 

 

 

130,155

 

 

 

 

115,285

 

 

Gross Adjusted EBITDA

 

$

 

47,064

 

 

 

$

 

52,014

 

 

 

$

 

234,000

 

 

 

$

 

198,240

 

 

(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.
(3) Comparatives number have been reclassified on account of adoption of IFRS 15.

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

 

Source: Eros International Plc



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